10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                

Commission File Number: 001-39919

MONTAUK RENEWABLES, INC.

(Exact name of registrant as specified in its charter)

Delaware	85-3189583
(State or Other Jurisdiction of Incorporation or	(IRS Employer Identification No.)
Organization)
680 Andersen Drive, 5th Floor Pittsburgh, Pennsylvania	15220
(Address of Principal Executive Offices)	(Zip Code)

(412) 747-8700

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	MNTK	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

The number of outstanding shares of the registrant’s common stock on August 4, 2022 was 143,603,681 shares.

TABLE OF CONTENTS

		Page
PART I FINANCIAL INFORMATION			6
ITEM 1.	FINANCIAL STATEMENTS		6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		32
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		53
ITEM 4.	CONTROLS AND PROCEDURES		53
PART II OTHER INFORMATION			54
ITEM 1.	LEGAL PROCEEDINGS		54
ITEM 1A.	RISK FACTORS		54
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		54
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		55
ITEM 4.	MINE SAFETY DISCLOSURES		55
ITEM 5.	OTHER INFORMATION		55
ITEM 6.	EXHIBITS		55
SIGNATURES			56

Glossary of Key Terms

This Quarterly Report on Form 10-Q uses several terms of art that are specific to our industry and business. For the convenience of the reader, a glossary of such terms is provided here. Unless we otherwise indicate, or unless the context requires otherwise, any references in this Quarterly Report on Form 10-Q to:

• “ADG” refers to anaerobic digested gas.

• “CARB” refers to the California Air Resource Board.

• “CNG” refers to compressed natural gas.

• “CI” refers to carbon intensity.

• “D3” refers to cellulosic biofuel with a 60% GHG reduction requirement.

• “EPA” refers to the U.S. Environmental Protection Agency.

• “Environmental Attributes” refer to 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.

• “FERC” refers to the U.S. Federal Energy Regulatory Commission.

• “GHG” refers to greenhouse gases.

• “JSE” refers to the Johannesburg Stock Exchange.

• “LCFS” refers to Low Carbon Fuel Standard.

• “LFG” refers to landfill gas.

• “MMBtu” refers to Metric Million British Thermal Unit.

• “PPAs” refers to power purchase agreements.

• “RECs” refers to Renewable Energy Credits.

• “Renewable Electricity” refers to electricity generated from renewable sources.

• “RFS” refers to the EPA’s Renewable Fuel Standard.

• “RINs” refers to Renewable Identification Numbers.

• “RNG” refers to renewable natural gas.

• “RVOs” refers to renewable volume obligations.

3

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of U.S. federal securities laws that involve substantial risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements refer to our current expectations and projections relating to our financial condition, results of operations, plans, objectives, strategies, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “assume,” “believe,” “can have,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “might,” “objective,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “would,” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operational performance or other events. For example, all statements we make relating to future results of operations, financial condition, expectations and plans of the Company, including expected benefits of the Pico feedstock amendment and the Montauk Ag project in North Carolina, the anticipated completion of the engine repairs at the Security facility, the resolution of gas collection issues at the McCarty facility, our estimated and projected costs, expenditures, and growth rates, our plans and objectives for future operations, growth, or initiatives, or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expect and, therefore, you should not unduly rely on such statements. The risks and uncertainties that could cause those actual results to differ materially from those expressed or implied by these forward-looking statements include but are not limited to:

• the impact of the ongoing COVID-19 pandemic on our business, financial condition and results of operations;

• our ability to develop and operate new renewable energy projects, including with livestock farms;

• reduction or elimination of government economic incentives to the renewable energy market;

• delays in acquisition, financing, construction and development of new projects, including expansion plans into new areas such as agricultural waste;

• the inability to complete strategic development opportunities;

• general economic conditions outside our control including the impacts of supply chain disruptions, inflationary cost increases, and other macroeconomic factors;

• the length of development and optimization cycles for new projects, including the design and construction processes for our renewable energy projects;

• dependence on third parties for the manufacture of products and services;

• the quantity, quality and consistency of our feedstock volumes from both landfill and livestock farm operations;

• identifying suitable locations for new projects;

• reliance on interconnections to distribution and transmission products for our Renewable Natural Gas and Renewable Electricity Generation segments;

• our projects not producing expected levels of output;

• the anticipated benefits of the Raeger capital improvement project, Pico feedstock amendment and the Montauk Ag project in North Carolina and the anticipated completion of engine repairs at the Security facility;

• potential benefits associated with the combustion-based oxygen removal condensate neutralization technology;

• resolution of gas collection issues at the McCarty facility;

• concentration of revenues from a small number of customers and projects;

• dependence on our landfill operators;

• our outstanding indebtedness and restrictions under our credit facility;

• our ability to extend our fuel supply agreements prior to expiration;

• our ability to meet milestone requirements under our PPAs;

4

• existing regulations and changes to regulations and policies that effect our operations;

• decline in public acceptance and support of renewable energy development and projects;

• our expectations regarding Environmental Attributes;

• our expectations regarding Environmental Attribute and commodity prices;

• our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act (“JOBS Act”);

• our expectations regarding future capital expenditures, including for the maintenance of facilities;

• our expectations regarding the use of net operating losses before expiration;

• our expectations regarding more attractive CI scores by regulatory agencies for our livestock farm projects;

• market volatility and fluctuations in commodity prices and the market prices of Environmental Attributes and the impact of any related hedging activity;

• regulatory changes in federal, state and international environmental attribute programs;

• profitability of our planned livestock farm projects;

• sustained demand for renewable energy;

• security threats, including cyber-security attacks;

• the need to obtain and maintain regulatory permits, approvals and consents;

• potential liabilities from contamination and environmental conditions;

• potential exposure to costs and liabilities due to extensive environmental, health and safety laws;

• impacts of climate change, changing weather patterns and conditions, and natural disasters;

• failure of our information technology and data security systems;

• increased competition in our markets;

• continuing to keep up with technology innovations;

• concentrated stock ownership by a few stockholders and related control over the outcome of all matters subject to a stockholder vote; and

• other risks and uncertainties detailed in the section titled “Risk Factors” in our latest Annual Report on Form 10-K.

We make many of our forward-looking statements based on our operating budgets and forecasts, which are based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.

All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in our other Securities and Exchange Commission (“SEC”) filings and public communications. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties. See the “Risk Factors” section in our latest Annual Report on Form 10-K.

We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to you. Furthermore, the forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

5

PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

	Page
Montauk Renewables, Inc.
Unaudited condensed consolidated financial statements
Condensed consolidated balance sheets		7
Condensed consolidated statements of operations		8
Condensed consolidated statements of stockholders’ equity		9
Condensed consolidated statements of cash flows		10
Notes to condensed consolidated financial statements		11

6

MONTAUK RENEWABLES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data):

	As of June 30, 2022			As of December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	72,195		$	53,266
Accounts and other receivables		23,998			9,338
Related party receivable		8,940			8,940
Current portion of derivative instrument		277			—
Prepaid expenses and other current assets		5,558			2,846
Assets held for sale		—			777
Total current assets	$	110,968		$	75,167
Restricted cash—non-current	$	328		$	328
Property, plant and equipment, net		176,077			180,893
Goodwill and intangible assets, net		13,660			14,113
Deferred tax assets		6,779			10,570
Non-current portion of derivative instrument		536			—
Operating lease right-of-use assets		203			305
Finance lease right-of-use assets		139			—
Other assets		5,561			5,104
Total assets	$	314,251		$	286,480
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,477		$	4,973
Accrued liabilities		17,848			10,823
Income tax payable		134			—
Current portion of operating lease liability		156			296
Current portion of finance lease liability		76			—
Current portion of derivative instrument		1,807			650
Current portion of long-term debt		7,834			7,815
Total current liabilities	$	32,332		$	24,557
Long-term debt, less current portion	$	67,465		$	71,392
Non-current portion of operating lease liability		30			27
Non-current portion of finance lease liability		61			—
Non-current portion of derivative instrument		—			189
Asset retirement obligation		5,368			5,301
Other liabilities		4,125			2,721
Total liabilities	$	109,381		$	104,187
STOCKHOLDERS’ EQUITY
Common stock, $0.01 par value, authorized 690,000,000 shares; 143,603,681 and 143,584,827 shares issued at June 30, 2022 and December 31, 2021, respectively; 141,290,748 and 141,015,213 shares outstanding at June 30, 2022 and December 31, 2021, respectively	$	1,410		$	1,410
Treasury stock, at cost, 959,344 and 950,214 shares June 30, 2022 and December 31, 2021, respectively		(10,904	)		(10,813	)
Additional paid-in capital		200,855			196,224
Retained earnings (deficit)		13,509			(4,528	)
Total stockholders’ equity	$	204,870		$	182,293
Total liabilities and stockholders’ equity	$	314,251		$	286,480

The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.

7

MONTAUK RENEWABLES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except for share and per share data):

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Total operating revenues	$	67,884		$	31,674		$	100,055		$	63,121
Operating expenses:
Operating and maintenance expenses	$	14,870		$	13,187		$	28,072		$	23,830
General and administrative expenses		8,753			7,341			17,248			27,761
Royalties, transportation, gathering and production fuel		15,090			5,986			22,296			12,204
Depreciation, depletion and amortization		5,134			5,660			10,286			11,396
Gain on insurance proceeds		—			—			(313	)		(82	)
Impairment loss		69			—			120			626
Transaction costs		5			37			32			125
Total operating expenses	$	43,921		$	32,211		$	77,741		$	75,860
Operating income (loss)	$	23,963		$	(537	)	$	22,314		$	(12,739	)
Other expenses (income):
Interest expense	$	271		$	720		$	303		$	1,366
Net loss (gain) on sale of fixed assets		—			22			(293	)		22
Other (income) expense		(25	)		(12	)		(40	)		23
Total other expenses (income)	$	246		$	730		$	(30	)	$	1,411
Income (loss) before income taxes	$	23,717			(1,267	)	$	22,344		$	(14,150	)
Income tax expense		4,565			3,385			4,307			4,767
Net income (loss)	$	19,152		$	(4,652	)	$	18,037		$	(18,917	)
Earnings (loss) per share:
Basic	$	0.14		$	(0.03	)	$	0.13		$	(0.13	)
Diluted	$	0.13		$	(0.03	)	$	0.13		$	(0.13	)
Weighted-average common shares outstanding:
Basic		141,129,457			141,015,213			141,087,699			141,015,213
Diluted		142,462,069			141,015,213			142,220,274			141,015,213

The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.

8

MONTAUK RENEWABLES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share data):

	Common Stock				Treasury Stock					Members’ Equity		Additional Paid-in Capital		Retained Earnings (Deficit)			Total Equity
	Shares		Amount		Shares		Amount
Balance at March 31, 2022		141,057,772	$	1,410		959,344	$	(10,904	)		—	$	198,558	$	(5,643	)	$	183,421
Vesting of stock awards		232,976		—		—		—			—		—		—			—
Net income		—		—		—		—			—		—		19,152			19,152
Stock-based compensation		—		—		—		—			—		2,297		—			2,297
Balance at June 30, 2022		141,290,748	$	1,410		959,344	$	(10,904	)	$	—	$	200,855	$	13,509		$	204,870

	Common Stock				Treasury Stock					Members’ Equity		Additional Paid-in Capital		Retained Earnings (Deficit)			Total Equity
	Shares		Amount		Shares		Amount
Balance at March 31, 2021		141,015,213	$	1,410		950,214	$	(10,813	)	$	—	$	188,403	$	(14,265	)	$	164,735
Net loss		—		—		—		—			—		—		(4,652	)		(4,652	)
Stock-based compensation		—		—		—		—			—		2,541		—			2,541
Balance at June 30, 2021		141,015,213	$	1,410		950,214	$	(10,813	)	$	—	$	190,944	$	(18,917	)	$	162,624

	Common Stock				Treasury Stock					Members’ Equity		Additional Paid-in Capital		Retained Earnings (Deficit)			Total Equity
	Shares		Amount		Shares		Amount
Balance at December 31, 2021		141,015,213	$	1,410		950,214	$	(10,813	)	$	—	$	196,224	$	(4,528	)	$	182,293
Vesting of stock awards		275,535				—		—			—		—		—
Treasury stock		—		—		9,130		(91	)		—		—		—			(91	)
Net income		—		—		—		—			—		—		18,037			18,037
Stock-based compensation		—		—		—		—			—		4,631		—			4,631
Balance at June 30, 2022		141,290,748	$	1,410		959,344	$	(10,904	)	$	—	$	200,855	$	13,509		$	204,870

	Common Stock				Treasury Stock					Members’ Equity			Additional Paid-in Capital		Retained Earnings (Deficit)			Total Equity
	Shares		Amount		Shares		Amount
Balance at December 31, 2020		—	$	—		—	$	—		$	159,622		$	—	$	—		$	159,622
Effect of reorganization transactions		138,312,713		1,383		—		—			(159,622	)		158,239		—
IPO common stock		2,702,500		27		—		—			—			15,566		—			15,593
Treasury stock		—		—		950,214	$	(10,813	)		—			—		—			(10,813	)
Net loss		—		—		—		—			—			—		(18,917	)		(18,917	)
Stock-based compensation		—		—		—		—			—			17,139		—			17,139
Balance at June 30, 2021		141,015,213	$	1,410		950,214	$	(10,813	)		—			190,944	$	(18,917	)	$	162,624

The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.

9

MONTAUK RENEWABLES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands):

	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities:
Net income (loss)	$	18,037		$	(18,917	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization		10,286			11,396
Provision for deferred income taxes		3,791			4,262
Stock-based compensation		4,631			17,139
Derivative mark-to-market adjustments and settlements		156			(724	)
Gain on property insurance proceeds		(313	)		(82	)
Earn out increase		1,403			—
Net (gain) loss on sale of assets		(293	)		22
Accretion of asset retirement obligations		127			215
Amortization of debt issuance costs		212			271
Impairment loss		120			626
Changes in operating assets and liabilities:
Accounts and other receivables and other current assets		(17,989	)		(3,553	)
Accounts payable and other accrued expenses		6,604			590
Net cash provided by operating activities	$	26,772		$	11,245
Cash flows from investing activities
Capital expenditures	$	(5,148	)	$	(4,469	)
Asset acquisition		—			(4,142	)
Proceeds from sale of assets		1,088			8
Proceeds from insurance recovery		313			82
Net cash used in investing activities	$	(3,747	)	$	(8,521	)
Cash flows from financing activities:
Repayments of long-term debt	$	(4,000	)	$	(5,000	)
Proceeds from initial public offering		—			15,593
Treasury stock purchase		(91	)		(10,813	)
Loan to Montauk Holdings Limited		—			(7,140	)
Finance lease payments		(4	)		—
Net cash used in financing activities	$	(4,095	)	$	(7,360	)
Net increase (decrease) in cash and cash equivalents and restricted cash	$	18,930		$	(4,636	)
Cash and cash equivalents and restricted cash at beginning of period	$	53,612		$	21,559
Cash and cash equivalents and restricted cash at end of period	$	72,542		$	16,923
Reconciliation of cash, cash equivalents, and restricted cash at end of period:
Cash and cash equivalents	$	72,195		$	16,350
Restricted cash and cash equivalents - current		19			—
Restricted cash and cash equivalents - non-current		328			573
	$	72,542		$	16,923

The accompanying notes to the unaudited condensed consolidated financial statements are an integral part of these statements.

10

MONTAUK RENEWABLES, INC.

NOTES TO CONDENSED UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(dollars in thousands, except per-share amounts)

NOTE 1 – DESCRIPTION OF BUSINESS

Operations and organization

Montauk Renewables’ Business

Montauk Renewables, Inc. (the “Company” or “Montauk Renewables”) is a renewable energy company specializing in the management, recovery and conversion of biogas into Renewable Natural Gas (“RNG”). The Company captures methane, preventing it from being released into the atmosphere, and converts it into either RNG or electrical power for the electrical grid (“Renewable Electricity”). The Company, headquartered in Pittsburgh, Pennsylvania, has more than 30 years of experience in the development, operation and management of landfill methane-fueled renewable energy projects. The Company has current operations at 15 operating projects located in California, Idaho, Ohio, Oklahoma, Pennsylvania, North Carolina and Texas. The Company sells RNG and Renewable Electricity, taking advantage of Environmental Attribute premiums available under federal and state policies that incentivize their use.

Two of the Company’s key revenue drivers are sales of captured gas and sales of Renewable Identification Numbers (“RINs”) to fuel blenders. The Renewable Fuel Standard (“RFS”) is an Environmental Protection Agency (“EPA”) administered federal law that requires transportation fuel to contain a minimum volume of renewable fuel. RNG derived from landfill methane, agricultural digesters and wastewater treatment facilities used as a vehicle fuel qualifies as a D3 (cellulosic biofuel with a 60% greenhouse gas reduction requirement) RIN. The RINs are compliance units for fuel blenders that were created by the RFS program in order to reduce greenhouse gases and imported petroleum into the United States.

An additional program utilized by the Company is the Low Carbon Fuel Standard (“LCFS”). This is state specific and is designed to stimulate the use of low-carbon fuels. To the extent that RNG from the Company’s facilities is used as a transportation fuel in states that have adopted an LCFS program, it is eligible to receive an Environmental Attribute additional to the RIN value under the federal RFS.

Another key revenue driver is the sale of captured electricity and the associated environmental premiums related to renewable sales. The Company’s electric facilities are designed to conform to and monetize various state renewable portfolio standards requiring a percentage of the electricity produced in that state to come from a renewable resource. Such premiums are in the form of Renewable Energy Credits (“RECs”). The Company’s largest electric facility, located in California, receives revenue for the monetization of RECs as a part of a purchase power agreement.

Collectively, the Company benefits from federal and state 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, as Environmental Attributes.

Background and Reorganization Transactions

On January 4, 2021, the Company, Montauk Holdings Limited (“MNK”) and Montauk Holdings USA, LLC (a direct wholly-owned subsidiary of MNK at the time, “Montauk USA”) entered into a series of transactions, including an equity exchange and a distribution collectively referred to as the “Reorganization Transactions,” that resulted in the Company owning all of the assets and entities (other than Montauk USA) previously owned by Montauk USA, and Montauk Renewables became a direct wholly-owned subsidiary of MNK. Prior to the Reorganization Transactions, MNK’s business and operations were conducted entirely through Montauk USA and its U.S. subsidiaries, and MNK held no substantial assets other than equity of Montauk USA. The Company had no significant operations or assets prior to January 4, 2021 when it engaged in the equity exchange with Montauk USA and MNK.

11

After completion of the Reorganization Transactions, (i) Montauk USA ceased to own any substantial assets and (ii) all entities through which MNK’s business and operations were conducted became owned, directly or indirectly, by the Company. MNK adopted a plan contemporaneously with the completion of the Reorganization Transactions that authorized the liquidation and dissolution of MNK.

On January 15, 2021, MNK sold the membership interest of Montauk USA to a third party. On January 26, 2021, MNK distributed all of the outstanding shares of the Company’s common stock as a pro rata dividend to the holders of MNK’s ordinary shares (the “Distribution”), subject to any tax withholding obligations under applicable South African law. Each ordinary share of MNK outstanding on January 21, 2021, the record date for the Distribution (the “Record Date”), entitled the holder thereof to receive one share of the Company’s common stock.

On January 26, 2021, the Company closed the initial public offering of its common stock on the Nasdaq Capital Market (the “IPO”) with the shares traded under the symbol “MNTK”. Montauk Renewables issued 2,702,500 shares at $8.50 per share and received gross proceeds of $22,971. The Company’s common stock was also secondarily listed on the Johannesburg Stock Exchange (“JSE”) under the trading symbol “MKR”.

On January 26, 2021, the Company entered into a Loan Agreement and Secured Promissory Note (as amended on February 22, 2021 and December 22, 2021) with MNK pursuant to which the Company advanced a cash loan to MNK for MNK to pay its dividends tax liability arising from the Reorganization Transactions under the South African Income Tax Act, 1962 (Act No. 58 of 1962), as amended. The terms of the loan following the amendments are substantially similar to the initial loan agreement and were primarily entered into to increase the principal amount outstanding under the loan to $8,940 in the aggregate, in accordance with Montauk Renewables’ obligations set forth in the Transaction Implementation Agreement. MNK is currently an affiliate of the Company and certain of the Company’s directors and executive officers are also directors and executive officers of MNK. See Note 18 for more information.

MNK was delisted from the JSE on January 26, 2021. MNK is expected to be liquidated within 24 months of the Distribution.

12

COVID-19

In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic and recommended containment and mitigation measures worldwide. In response to the COVID-19 pandemic and related mitigation measures, the Company established the Infectious Disease and Response Committee (the “IDRC”) to lead the development and implementation of Montauk Renewables’ Infectious Disease and Response Plan and to oversee the company’s response to any infectious disease event. These measures resulted in additional costs, which is expected to continue in order to address employee safety.

The Company has not experienced any material disruptions in its ability to continue business operations nor did the Company experience material negative impacts to the financial results due to the COVID-19 pandemic for the year ended December 31, 2021 and the six months ended June 30, 2022.

The situation surrounding the COVID-19 pandemic remains uncertain. The extent to which the COVID-19 pandemic may affect the Company’s operating results, financial condition, or liquidity in the future will depend on future developments, including the duration of the pandemic, the emergence of more contagious or virulent strains of the virus, travel restrictions, business and workforce disruptions, the availability, uptake and efficacy of vaccines, and the effectiveness of actions taken to contain and treat the disease. Even after the COVID-19 pandemic has subsided, the Company may experience materially adverse impacts to the business due to any resulting supply chain disruptions or economic downturn. Furthermore, the impacts of potential worsening of global economic conditions, inflation, and continued disruptions to and volatility in the financial markets remain unknown.

13

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions of the SEC on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2022 (the “2021 Annual Report”). The results of operations for the three months and six months ended June 30, 2022 in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2021, has been derived from the audited financial statements as of that date. For further information, refer to the Company’s audited financial statements and notes thereto included for the year ended December 31, 2021 in the 2021 Annual Report.

Retrospective Presentation

As discussed in Note 1, as a result of the Reorganization Transactions, the Company acquired the assets and entities (excluding Montauk USA) that were previously owned by MNK. As part of the Reorganization Transactions, a 1:1 pro rata distribution of shares of the Company’s common stock was made to holders of MNK’s ordinary shares. This pro rata distribution resulted in the ownership of the Company after the Reorganization Transactions being identical to the ownership of MNK prior to the Reorganization Transactions and was therefore akin to a common control transaction. All members’ equity in the financial statements and notes have been retrospectively adjusted to give effect to the 1:1 distribution ratio, as if such pro rata distribution occurred as of all pre-IPO periods presented.

Segment Reporting

The Company reports segment information in three segments: RNG, Renewable Electricity Generation and Corporate. This is consistent with the internal reporting provided to the chief operating decision maker who evaluates operating results and performance. The aforementioned business services and offerings described in Note 1 are grouped and defined by management as two distinct operating segments: RNG and Renewable Electricity Generation. Below is a description of the Company’s operating segments and other activities.

The RNG segment represents the sale of gas sold at fixed-price contracts, counterparty share RNG volumes and applicable Environmental Attributes. This business unit represents the majority of the revenues generated by the Company. The Renewable Electricity Generation segment represents the sale of captured electricity and applicable Environmental Attributes. Corporate & Other relates to additional discrete financial information for the corporate function. It is primarily used as a shared service center for maintaining functions such as executive, accounting, treasury, legal, human resources, tax, environmental, engineering and other operations functions not otherwise allocated to a segment. As such, the corporate entity is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation to the Company’s consolidated financial statements.

14

Use of Estimates

The preparation of financial statements, in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Equity-Based Compensation

The Company accounts for equity-based compensation under the provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation, (“ASC 718”). ASC 718 requires compensation costs related to share-based payment transactions, measured based on the fair value of the instruments issued, be recognized in the consolidated financial statements over the requisite service period of the award. Stock options are initially measured on the grant date using the Black-Scholes valuation model, which requires the use of subjective assumptions related to the expected stock price volatility, term, risk-free interest rate and dividend yield. For restricted stock and restricted stock units, the Company determines the grant date fair value based on the closing market price per share of the stock on the date of the grant.

Recently Issued Accounting Standards

In September 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses. The new guidance changes how entities measure credit losses on financial instruments and the timing of when such losses are recorded. The new standard is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt: Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments and contracts in an entity’s own equity. This guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those years, with early adoption permitted only as of annual reporting periods beginning after December 15, 2020. The Company currently does not anticipate this ASU will have a material impact on its consolidated financial statements or related financial statement disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company’s current debt agreement bears interest at the Bloomberg Short-Term Bank Yield Index Rate plus an applicable margin. LIBOR is no longer utilized as a reference rate.

NOTE 3 – ASSET IMPAIRMENT

The Company recorded $69 and $0 in impairment losses for the three months ended June 30, 2022 and 2021, respectively. Impairment losses of $120 and $626 were recorded for the six months ended June 30, 2022 and 2021, respectively. The 2022 impairments recorded to date relate to computer software and hardware no longer being utilized ($51), an amended customer contract ($27) and miscellaneous capital assets no longer in use under current operations ($42). The 2021 impairment was due to a notice received from a landfill host in February 2021 amending the underlying gas rights agreement to remove and begin decommissioning activities related to one of the Company’s renewable electric generation sites.

NOTE 4 – REVENUES FROM CONTRACTS WITH CUSTOMERS

The following tables display the Company’s revenue by major source, excluding realized and unrealized gains or losses under the Company’s gas hedge program, based on product type and timing of transfer of goods and services for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30, 2022
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	1,250	$	14,637	$	15,887
Natural Gas Environmental Attributes		48,647		—		48,647
Electric Commodity		—		2,648		2,648
Electric Environmental Attributes		1,715		—		1,715
	$	51,612	$	17,285	$	68,897
Operating Segment:
RNG	$	49,897	$	14,637	$	64,534
REG		1,715		2,648		4,363
	$	51,612	$	17,285	$	68,897

15

	Three Months Ended June 30, 2021
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	6,332	$	6,627	$	12,959
Natural Gas Environmental Attributes		14,622		—		14,622
Electric Commodity		—		2,299		2,299
Electric Environmental Attributes		1,794		—		1,794
	$	22,748	$	8,926	$	31,674
Operating Segment:
RNG	$	20,954	$	6,627	$	27,581
REG		1,794		2,299		4,093
	$	22,748	$	8,926	$	31,674

	Six Months Ended June 30, 2022
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	1,655	$	24,125	$	25,780
Natural Gas Environmental Attributes		71,357		—		71,357
Electric Commodity		—		5,032		5,032
Electric Environmental Attributes		3,364		—		3,364
	$	76,376	$	29,157	$	105,533
Operating Segment:
RNG	$	73,012	$	24,125	$	97,137
REG		3,364		5,032		8,396
	$	76,376	$	29,157	$	105,533

	Six Months Ended June 30, 2021
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	10,308	$	13,322	$	23,630
Natural Gas Environmental Attributes		32,074		—		32,074
Electric Commodity		—		4,572		4,572
Electric Environmental Attributes		2,845		—		2,845
	$	45,227	$	17,894	$	63,121
Operating Segment:
RNG	$	42,382	$	13,322	$	55,704
REG		2,845		4,572		7,417
	$	45,227	$	17,894	$	63,121

16

NOTE 5 – ACCOUNTS AND OTHER RECEIVABLES

The Company extends credit based upon an evaluation of the customer’s financial condition and, while collateral is not required, the Company periodically receives surety bonds that guarantee payment. Credit terms are consistent with industry standards and practices. Reserves for uncollectible accounts, if any, are recorded as part of General and administrative expenses in the condensed consolidated statements of operations. For the three and six months ended June 30, 2022 and 2021, there were no reserves for uncollectible accounts.

Accounts and other receivables consist of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022		December, 31 2021
Accounts receivables	$	23,902	$	9,281
Other receivables		93		26
Reimbursable expenses		3		31
Accounts and other receivables	$	23,998	$	9,338

NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

During the second quarter of 2021, the Company purchased $1,585 in RINs. As of June 30, 2021, the Company assessed the RINs’ carrying value at $875. A $710 reduction to net realizable value was recorded for the three months and six month ended June 30, 2021. This adjustment is included in Operating and maintenance expenses within the Condensed consolidated statements of operations for the three and six months ended June 30, 2021. There were no such adjustments during the three or six months ended June 30, 2022 and the Company did not have any purchased RINs as of June 30, 2022 and December 31, 2021.

NOTE 7 – ASSETS HELD FOR SALE

In 2021, the Company initiated a plan to sell nitrogen oxide (“NOx”) emissions allowances credits. The Company concluded that it met the criteria under applicable guidance for a long-lived asset to be held for sale, and accordingly reclassified the emissions allowances of $777 as current assets held for sale on the Consolidated Balance Sheet at December 31, 2021. The Company estimated the fair value of these assets and concluded that the fair value exceeded the carrying value and no impairment was recorded by the Company for the year ended December 31, 2021. In March 2022, the NOx emissions allowances credits were sold for $1,088. A $311 gain on sale of intangible assets was recorded for the six months ended June 30, 2022.

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NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consists of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022			December 31, 2021
Land	$	595		$	595
Buildings and improvements		29,078			28,693
Machinery and equipment		249,322			246,670
Gas mineral rights		34,551			34,551
Construction work in progress		13,631			12,725
Total		327,177			323,234
Less: Accumulated depreciation and amortization		(151,100	)		(142,341	)
Property, plant & equipment, net	$	176,077		$	180,893

Depreciation expense for property plant and equipment was $4,789 and $4,843 for the three months ended June 30, 2022 and 2021, respectively, and $9,599 and $9,798 for the six months ended June 30, 2022 and 2021, respectively. Amortization expense for gas mineral rights was $129 and $445 for the three months ended June 30, 2022 and 2021, respectively, and $257 and $936 for the six months ended June 30, 2022 and 2021, respectively.

NOTE 9 – GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill and Intangible assets consist of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022		December 31, 2021
Goodwill	$	60	$	60
Intangible assets with indefinite lives:
Land use rights		329		329
Intangible assets with finite lives:
Interconnections, net of accumulated amortization of $3,447 and $3,034	$	12,113	$	12,526
Customer contracts, net of accumulated amortization of $16,945 and $17,085	$	1,158	$	1,198
Total intangible assets with finite lives:	$	13,271	$	13,724
Total Goodwill and Intangible assets	$	13,660	$	14,113

The weighted average remaining useful life of the customer contracts and interconnection is approximately 17 years and 16 years, respectively. Amortization expense was $216 and $372 for the three months ended June 30, 2022 and 2021, respectively, and $430 and $662 for the six months ended June 30, 2022 and 2021, respectively.

NOTE 10 – ASSET RETIREMENT OBLIGATIONS

The following table summarizes the activity associated with asset retirement obligations of the Company as of June 30, 2022 and December 31, 2021:

	Six Months Ended June 30, 2022			Year Ended December 31, 2021
Asset retirement obligations - beginning of period	$	5,301		$	5,689
Accretion expense		127			(160	)
Decommissioning		(60	)		(228	)
Asset retirement obligations - end of period	$	5,368		$	5,301

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NOTE 11 – DERIVATIVE INSTRUMENTS

To mitigate market risk associated with fluctuations in energy commodity prices (natural gas) and interest rates, the Company utilizes various derivative contracts to secure energy commodity pricing and interest rates under a board-approved program. The Company does not apply hedge accounting to any of its derivative instruments, and all realized and unrealized gains and losses from changes in derivative values are recognized in earnings each period. As a result of the economic hedging strategies employed, the Company had the following realized and unrealized gains and losses in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021:​​​​​​​

	Three Months Ended
Derivative Instrument	June 30, 2022			June 30, 2021
Commodity contracts:
Realized natural gas	$	(2,655	)	$	—
Unrealized natural gas		1,644			—
Interest rate swaps		614			306
Net gain (loss)	$	(397	)	$	306

	Six Months Ended
Derivative Instrument	June 30, 2022			June 30, 2021
Commodity contracts:
Realized natural gas	$	(3,671	)	$	—
Unrealized natural gas		(1,807	)		—
Interest rate swaps		1,651			724
Net gain (loss)	$	(3,827	)	$	724

19

NOTE 12 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s assets and liabilities that are measured at fair value on a recurring basis include the following as of June 30, 2022 and December 31, 2021, set forth by level, within the fair value hierarchy:

	June 30, 2022
	Level 1			Level 2		Level 3			Total
Commodity derivative liability	$	(1,807	)		—		—		$	(1,807	)
Interest rate swap derivative asset		—			813		—			813
Asset retirement obligations		—			—		(5,368	)		(5,368	)
Earn-out liability		—			—		(4,125	)		(4,125	)
	$	(1,807	)	$	813	$	(9,493	)	$	(10,487	)

	December 31, 2021
	Level 1		Level 2			Level 3			Total
Interest rate swap derivative liability	$	—	$	(839	)	$	—		$	(839	)
Asset retirement obligations		—		—			(5,301	)		(5,301	)
Earn-out liability		—		—			(2,721	)		(2,721	)
	$	—	$	(839	)	$	(8,022	)	$	(8,861	)

A summary of changes in the fair values of the Company’s Level 3 instruments, attributable to asset retirement obligations, for the six months ended June 30, 2022 and the year ended December 31, 2021 is included in Note 10. In addition, certain assets are measured at fair value on a non-recurring basis when an indicator of impairment is identified and the assets’ fair values are determined to be less than its carrying value. See Note 3 for additional information.

NOTE 13 – ACCRUED LIABILITIES

The Company’s accrued liabilities consists of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022		December 31, 2021
Accrued expenses	$	6,166	$	3,551
Payroll and related benefits		2,346		1,239
Royalty		7,243		4,630
Utility		1,699		1,274
Other		394		129
Accrued liabilities	$	17,848	$	10,823

NOTE 14 – DEBT

The Company’s debt consists of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022			December 31, 2021
Term loans	$	76,000		$	80,000
Less: current principal maturities		(8,000	)		(8,000	)
Less: debt issuance costs (on long-term debt)		(535	)		(608	)
Long-term debt	$	67,465		$	71,392
Current portion of long- term debt		7,834			7,815
	$	75,299		$	79,207

20

Amended Credit Agreement

On December 12, 2018, Montauk Energy Holdings LLC (“MEH”) entered into the Second Amended and Restated Revolving Credit and Term Loan Agreement (as amended, “Credit Agreement”), by and among MEH, the financial institutions from time to time party thereto as lenders and Comerica Bank, as the administrative agent, sole lead arranger and sole bookrunner (“Comerica”). The Credit Agreement (i) amended and restated in its entirety MEH’s prior revolving credit and term loan facility, dated as of August 4, 2017, as amended, with Comerica and certain other financial institutions and (ii) replaced in its entirety the prior credit agreement, dated as of August 4, 2017, as amended, between Comerica and Bowerman Power LFG, LLC, a wholly-owned subsidiary of MEH.

On March 21, 2019, MEH entered into the first amendment to the Credit Agreement (the “First Amendment”), which clarified a variety of terms, definitions and calculations in the Credit Agreement. The Credit Agreement requires the Company to maintain customary affirmative and negative covenants, including certain financial covenants, which are measured at the end of each fiscal quarter.

On August 28, 2019 the Company received a temporary waiver for an anticipated Event of Default (as defined in the Credit Agreement) for the consecutive three-month period ended on August 31, 2019 (the “Specified Event of Default”). The Specified Event of Default was waived through October 1, 2019. On September 12, 2019, the Company entered into the second amendment to the Credit Agreement (the “Second Amendment”). Among other matters, the Second Amendment redefined the Fixed Charge Coverage Ratio (as defined in the Credit Agreement), reduced the commitments under the revolving credit facility to $80,000, redefined the Total Leverage Ratio (as defined in the Credit Agreement) and eliminated the RIN Floor (as defined in the Second Amendment) as an Event of Default. In connection with the Second Amendment, the Company paid down the outstanding term loan by $38,250 and the resulting quarterly principal installments were reduced to $2,500.

In connection with the completion of the Reorganization Transactions and the IPO, the Company entered into the third amendment to the Credit Agreement (the “Third Amendment”). This amendment permitted the Change of Control provisions, as defined in the underlying agreement, to permit the Reorganization Transactions and IPO to be completed.

On December 21, 2021, MEH entered into the Fourth Amendment to the Credit Agreement (the “Fourth Amendment”). The current credit agreement, which is secured by a lien on substantially all assets of the Company and certain of its subsidiaries, provides for a $80,000 term loan and a $120,000 revolving credit facility. The term loan amortizes in quarterly installments of $2,000 through 2024, then increases to $3,000 from 2025 to 2026, with a final payment of $32,000 in late 2026.

As of June 30, 2022, $76,000 was outstanding under the term loan. In addition, the Company had $3,905 of outstanding letters of credit as of June 30, 2022. Amounts available under the revolving credit facility are reduced by any amounts outstanding under letters of credit. As of June 30, 2022, the Company’s capacity available for borrowing under the revolving credit facility was $116,095. Borrowings of the term loans and revolving credit facility bear interest at the Bloomberg Short-Term Bank Yield Index Rate plus an applicable margin. Interest rates as of June 30, 2022 and December 31, 2021 were 3.41% and 2.91%, respectively.

The Company accounted for the Fourth Amendment as both a debt modification and debt extinguishment in accordance with ASC 470, Debt (“ASC 470”). In connection with the Credit Agreement, the Company paid $2,027 in fees. Of this amount, $326 was expensed and $1,701 was capitalized and will be amortized over the life of the Credit Agreement. Amortized debt issuance expense was $104 and $133 for the three months ended June 30, 2022 and 2021, respectively, and $212 and $271 for the six months ended June 30, 2022 and 2021, respectively, and was recorded within interest expense on the condensed consolidated statement of operations.

As of June 30, 2022, the Company was in compliance with all applicable financial covenants under the Credit Agreement.

21

NOTE 15 – INCOME TAXES

The Company’s provision for income taxes in interim periods is typically computed by applying the estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. For the three months ended June 30, 2022, the Company utilized full year pre-tax income and calculated an estimated effective tax rate. The Company utilized an estimated effective tax rate for the six months ended June 30, 2022. For the three months ended June 30, 2021, the Company utilized full year pre-tax income and calculated an estimated effective tax rate. The Company utilized an estimated effective tax rate for the six months ended June 30, 2021.

	Three Months Ended
	June 30, 2022			June 30, 2021
Provision for income taxes	$	4,565		$	3,385
Effective tax rate		19	%		(267	)%
	Six Months Ended
	June 30, 2022			June 30, 2021
Provision (benefit) for income taxes	$	4,307		$	4,767
Effective tax rate		19	%		(34	)%

The effective tax rate of 19% for the three months ended June 30, 2022 was higher than the rate for the three months ended June 30, 2021 of (267)% primarily due to the current year permanent disallowance of officers’ compensation being less than the prior year permanent disallowance of officers’ compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

The effective tax rate of 19% for the six months ended June 30, 2022 was higher than the effective rate for the six months ended June 30, 2021 of (34)% primarily due to the use of year to date pre-tax income used to complete the effective tax rate calculation and a required Code section 162(m) executive compensation limitation permanent adjustment. The June 30, 2022 tax rate included utilization of production tax credits and certain discrete items.

NOTE 16 – SHARE-BASED COMPENSATION

In January 2021, Montauk Renewables undertook the Reorganization Transactions which resulted in the Company owning all of the assets and entities (excluding Montauk USA) through which MNK’s business and operations were conducted. As a result of the Distribution, the options outstanding under MNK’s Employee Share Appreciation Rights Scheme (the “SAR Plan”) were cancelled. The Company recorded $2,050 of accelerated compensation expense in its consolidated statements of operations within general and administrative expenses in connection with the cancellation of the options under the SAR Plan for the six months ended June 30, 2021.

The board of directors of Montauk Renewables adopted the Montauk Renewables, Inc. Equity and Incentive Compensation Plan (“MRI EICP”) in January 2021. Following the closing of the IPO, the board of directors of Montauk Renewables approved the grant of non-qualified stock options, restricted stock units and restricted stock awards to the employees of Montauk Renewables and its subsidiaries in January 2021. In connection with the restricted stock awards, the officers of the Company made elections under Section 83(b) of the Code. Pursuant to such elections, the Company withheld 950,214 shares of common stock from such awards at a price of $11.38 per share from such awards. The Company records and reports share-based compensation for stock options, restricted stock, and restricted stock units over the requisite vesting period, and such awards will be settled in shares of common stock of Montauk Renewables. As of June 30, 2022, unrecognized MRI EICP compensation expense for awards the Company expects to vest approximated $23,132 and will be recognized though 2026.

22

In connection with a May 2021 asset acquisition, 1,250,000 restricted stock awards (“RS Awards”) were granted to two employees of the Company in connection with their respective employment. The RS Awards were to vest over a five-year period and subject to the achievement of time and performance-based vesting criteria over such period. In May 2022, the RS Awards were amended to remove the performance-based vesting criteria and will only be subject to time-based vesting requirements over a five-year period. The awards were revalued at $15,500. Stock compensation expense related to the two awards were $409 for the three and six months ended June 30, 2022. The amended awards vest through 2026.

Restricted stock, restricted stock unit and option awards are subject to various vesting schedules and are subject to the terms and conditions of the MRI EICP and related award agreements including, in the case of the restricted stock awards, each officer having made an election under Section 83(b) of the Code. The Company recorded $10,813 of compensation expense in its condensed consolidated statements of operations within general and administrative expenses for the six months ended June 30, 2021 in connection with the withheld 950,214 shares associated with the Section 83(b) elections.

Options granted under the MRI EICP allow the recipient to receive the Company’s common stock equal to the appreciation in the fair market value of the Company’s common stock between the date the award was granted and the exercise and settlement of options into shares as of the exercise date. The fair value of the MRI EICP options were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions (no dividends were expected):

	Grant Date
Risk-free interest rate		0.5	%
Expected volatility		32.0	%
Expected option life (in years)		5.5
Grant-date fair value	$	3.44

23

The following table summarizes the restricted shares, restricted stock units and options outstanding under the MRI EICP as June 30, 2022 and June 30, 2021, respectively:

	Restricted Shares					Restricted Stock Units					Options
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Exercise Price
End of period - December 31, 2021		2,569,613		$	10.08		377,984		$	10.23		950,214		$	11.38
Beginning of period - January 1, 2022		2,569,613		$	10.08		377,984		$	10.23		950,214		$	11.38
Granted		1,250,000			12.40
Vested		(256,681	)		11.38		(27,984	)		11.38		(950,214	)		11.38
Forfeited		(1,250,000	)		9.04							—			—
End of period – June 30, 2022		2,312,932		$	11.75		350,000		$	10.13		—		$	—

950,214 options vested for the three and six months ended June 30, 2022. None of the 950,214 vested options were exercised during either the three or six months ended June 30, 2022.

	Restricted Shares					Restricted Stock Units					Options
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Exercise Price
End of period - December 31, 2020		—		$	—		—		$	—		—	$	—
Beginning of period-January 1, 2021		—		$	—		—		$	—		—	$	—
Granted		2,269,827			11.20		29,304			11.38		950,214		11.38
Vested		(950,214	)		11.38		—			—		—		—
Forfeited		—			—		(1,056	)		11.38		—		—
Exercised		—			—		—			—		—		—
End of period – June 30, 2021		1,319,613		$	11.07		28,248		$	11.38		950,214	$	11.38

NOTE 17 – DEFINED CONTRIBUTION PLAN

The Company maintains a 401(k) defined contribution plan for eligible employees. The Company matches 50% of an employee’s deferrals up to 4%. The Company also contributes 3% of eligible employee’s compensation expense as a safe harbor contribution. The matching contributions vest ratably over four years of service, while the safe harbor contributions vest immediately. Incurred expense related to the 401(k) plan was $185 and $134 for the three months ended June 30, 2022 and 2021, respectively, and $353 and $269 for the six months ended June 30, 2022 and 2021, respectively.

Note 18 – RELATED PARTY TRANSACTIONS

On January 26, 2021, the Company entered into a Loan Agreement and Secured Promissory Note (the “Promissory Note”) with MNK. MNK is currently an affiliate of the Company and certain of the Company’s directors and executive officers are also directors and executive officers of MNK. Pursuant to the Initial Promissory Note, the Company advanced a cash loan of $5,000 to MNK for MNK to pay its dividends tax liability arising from the Reorganization Transactions under the South African Income Tax Act, 1962 (Act No. 58 of 1962), as amended (the “South African Income Tax Act”). On February 22, 2021 and December, 22, 2021, the Company and MNK amended and restated the Promissory Note (together, the “Amended Promissory Note”) to increase the principal amount of the loan to a total of $8,940, in the aggregate, in accordance with the Company’s obligations set forth in the Transaction Implementation Agreement entered into by and among the Company, MNK and the other party thereto, dated November 6, 2020, and amended on January 14, 2021. The terms of the Amended Promissory Note provide the Company a security interest of 800,000 shares of the Company and require MNK to use the proceeds of any such sale of the shares to repay the Amended Promissory Note. The Amended Promissory Note also includes default provisions in which MNK may deliver any unsold shares of the Company back to Montauk Renewables to satisfy repayment of the note, subject to compliance with the laws and regulations of South Africa. The Amended Promissory Note matures on December 31, 2022.

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Under applicable guidance for variable interest entities in ASC 810, Consolidation, the Company determined that MNK is a variable interest entity. The Company concluded that it is not the primary beneficiary of the variable interest entity, as the Company does not have a controlling financial interest and does not have the power to direct the activities that most significantly impact the economic performance of MNK. Accordingly, the Company concluded that presentation of the Amended Promissory Note as a related party receivable remains appropriate.

Related Party Reimbursements

Periodically the Company will reimburse MNK and HCI Managerial Services Proprietary Limited, the administrator for the Company’s secondary listing on the JSE, for expenses incurred on behalf of the Company. Amounts reimbursed were $5 and $3 for the three months ended June 30, 2022 and 2021, respectively, and $7 and $730 for the six months ended June 30, 2022 and 2021, respectively. $26 and $0 were owed as of June 30, 2022 and December 31, 2021, respectively.

NOTE 19 – SEGMENT INFORMATION

The Company’s reportable segments for the three and six months ended June 30, 2022 and 2021 are Renewable Natural Gas and Renewable Electricity Generation. Renewable Natural Gas includes the production of RNG. Renewable Electricity Generation includes generation of electricity at biogas-to-electricity plants. The corporate entity is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation of the Company’s condensed consolidated financial statements. The following tables are consistent with the manner in which the chief operating decision maker evaluates the performance of each segment and allocates the Company’s resources. In the following tables “RNG” refers to Renewable Natural Gas and “REG” refer to Renewable Electricity Generation.

	Three Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Total revenue	$	64,566	$	4,329		$	(1,011	)	$	67,884
Net income (loss)		35,240		(1,415	)		(14,673	)		19,152
EBITDA (1)		38,920		(14	)		(9,784	)		29,122
Adjusted EBITDA (1)		38,947		28			(11,423	)		27,552
Total assets		149,351		55,791			109,109			314,251
Capital expenditures		2,803		(32	)		1			2,772

(1) Second quarter of 2022 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the three months ended June 30, 2022:

	Three Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Net income (loss)	$	35,240	$	(1,415	)	$	(14,673	)	$	19,152
Depreciation and amortization		3,680		1,401			53			5,134
Interest expense		—		—			271			271
Income tax expense		—		—			4,565			4,565
EBITDA	$	38,920	$	(14	)	$	(9,784	)	$	29,122
Impairment loss		27		42			—			69
Transaction costs		—		—			5			5
Unrealized gains on hedging activities							(1,644	)		(1,644	)
Adjusted EBITDA	$	38,947	$	28		$	(11,423	)	$	27,552

	Three Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Total revenue	$	27,581	$	4,093		$	—		$	31,674
Net income (loss)		7,573		(27	)		(12,198	)		(4,652	)
EBITDA (1)		11,854		1,307			(8,048	)		5,113
Adjusted EBITDA (1)		11,854		1,307			(8,011	)		5,150
Total assets		156,505		53,369			41,774			251,648
Capital expenditures		2,708		425			—			3,133

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(1) Second quarter of 2021 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the three months ended June 30, 2021:

	Three Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Net income (loss)	$	7,573	$	(27	)	$	(12,198	)	$	(4,652	)
Depreciation and amortization		4,281		1,334			45			5,660
Interest expense		—		—			720			720
Income tax expense		—		—			3,385			3,385
EBITDA	$	11,854	$	1,307		$	(8,048	)	$	5,113
Impairment loss		—		—			—			—
Transaction costs		—		—			37			37
Adjusted EBITDA	$	11,854	$	1,307		$	(8,011	)	$	5,150

For the three months ended June 30, 2022 and 2021, four and six customers, respectively, made up greater than 10% of total revenues.

	Three Months Ended June 30, 2022
	RNG			REG		Corporate		Total
Customer A		24.9	%		—		—		24.9	%
Customer B		15.0	%		—		—		15.0	%
Customer C		12.5	%		—		—		12.5	%
Customer D		10.1	%		—		—		10.1	%

	Three Months Ended June 30, 2021
	RNG			REG			Corporate		Total
Customer A		17.5	%		—			—		17.5	%
Customer B		16.6	%		—			—		16.6	%
Customer C		13.0	%		—			—		13.0	%
Customer D		—			12.1	%		—		12.1	%
Customer E		11.9	%		—			—		11.9	%
Customer F		11.8	%		—			—		11.8	%

The Company’s reportable segments for the six months ended June 30, 2022 and 2021 are Renewable Natural Gas and Renewable Electricity Generation.

	Six Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Total revenue	$	97,233	$	8,300		$	(5,478	)	$	100,055
Net income (loss)		48,180		(2,594	)		(27,549	)		18,037
EBITDA (1)		55,538		201			(22,806	)		32,933
Adjusted EBITDA (1)		55,583		(68	)		(20,916	)		34,599
Total assets		149,351		55,791			109,109			314,251
Capital expenditures		3,814		1,328			6			5,148

(1) First six months of 2022 EBITDA and Adjusted EBITDA Reconciliations

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The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the six months ended June 30, 2022:

	Six Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Net Income (loss)	$	48,180	$	(2,594	)	$	(27,549	)	$	18,037
Depreciation and amortization		7,358		2,795			133			10,286
Interest expense		—		—			303			303
Income tax expense		—		—			4,307			4,307
EBITDA	$	55,538	$	201		$	(22,806	)	$	32,933
Impairment loss		27		42			51			120
Transaction costs		—		—			32			32
Net loss (gain) on sale of assets		18		(311	)		—			(293	)
Unrealized losses on hedging activities		—		—			1,807			1,807
Adjusted EBITDA	$	55,583	$	(68	)	$	(20,916	)	$	34,599

	Six Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Total revenue	$	55,704	$	7,417		$	—		$	63,121
Net income (loss)		18,134		(2,268	)		(34,783	)		(18,917	)
EBITDA (1)		26,633		542			(28,563	)		(1,388	)
Adjusted EBITDA (1)		26,633		1,168			(28,438	)		(637	)
Total assets		156,505		53,369			41,774			251,648
Capital expenditures		4,020		449			—			4,469

(2) First six months of 2021 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the six months ended June 30, 2021:

	Six Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Net income (loss)	$	18,134	$	(2,268	)	$	(34,783	)	$	(18,917	)
Depreciation and amortization		8,499		2,808			89			11,396
Interest expense		—		—			1,366			1,366
Income tax expense		—		2			4,765			4,767
EBITDA	$	26,633	$	542		$	(28,563	)	$	(1,388	)
Impairment loss		—		626			—			626
Transaction costs		—		—			125			125
Adjusted EBITDA	$	26,633	$	1,168		$	(28,438	)	$	(637	)

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For the six months ended June 30, 2022 and 2021, three and six customers, respectively, made up greater than 10% of total revenues.

	Six Months Ended June 30, 2022
	RNG			REG		Corporate		Total
Customer A		24.7	%		—		—		24.7	%
Customer B		13.6	%		—		—		13.6	%
Customer C		13.6	%		—		—		13.6	%

	Six Months Ended June 30, 2021
	RNG			REG			Corporate		Total
Customer A		13.8	%		—			—		13.8	%
Customer B		13.1	%		—			—		13.1	%
Customer C		13.1	%		—			—		13.1	%
Customer D		11.5	%		—			—		11.5	%
Customer E		11.1	%		—			—		11.1	%
Customer F		—			11.0	%		—		11.0	%

NOTE 20 – LEASES

The Company leases office space and other office equipment under operating lease arrangements (with initial terms greater than twelve months), expiring in various years through 2027. These leases have been entered into to better enable the Company to conduct business operations. Office space is leased to provide adequate workspace for all employees in Pittsburgh, Pennsylvania and Houston, Texas. Office space and office equipment agreements that exceed 12 months are accounted for as operating leases in accordance with ASC 842, Lease Accounting.

The Company also leases safety equipment for the various operational sites in the United States. The term of certain equipment exceeds twelve months and is accordingly classified as a finance lease under ASC 842. The finance leases expire in 2024 and were entered into in order to provide a safe work environment for operational employees.

The Company determines if an arrangement is, or contains, a lease at inception based on whether that contract conveys the right to control the use of an identified asset in exchange for consideration for a period of time. For all operating and finance lease arrangements, the Company presents at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

The Company has elected, as a practical expedient, not to separate non-lease components from lease components, and instead account for each separate component as a single lease component for all lease arrangements, as lessee. In addition, the Company has elected, as a practical expedient, not to apply lease recognition requirements to leases with a term of one year or less. In determination of the lease term, the Company considers the likelihood of lease renewal options and lease termination provisions.

The Company uses its incremental borrowing rate, as the basis to calculate the present value of future lease payments, at lease commencement. The incremental borrowing rate represents the rate that would approximate the rate to borrow funds on a collateralized basis over a similar term and in a similar economic environment.

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Supplemental information related to operating lease arrangements was as follows:

	Three Months Ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	82		$	64
Weighted average remaining lease term (in years)		1.28			1.70
Weighted average discount rate		5.00	%		5.00	%

	Six Months Ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	199		$	140
Weighted average remaining lease term (in years)		1.28			1.70
Weighted average discount rate		5.00	%		5.00	%

Future minimum operating lease payments are as follows:

Year Ending
Remainder of 2022	$	166
2023		11
2024		5
2025		4
2026		4
2027		1
Interest		(5	)
Total	$	186

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Supplemental information related to finance lease arrangements was as follows:

	Three and Six Months Ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of financing lease liabilities	$	6		$	—
Weighted average remaining lease term (in years)		1.87			—
Weighted average discount rate		5.00	%		—

Future minimum finance lease payments are as follows:

Year Ending
Remainder of 2022	$	44
2023		75
2024		24
Interest		(6	)
Total	$	137

NOTE 21 – INCOME (LOSS) PER SHARE

Basic and diluted income (loss) per share was computed using the following common share data for the three and six months ended June 30, 2022:

	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021
Net income (loss)	$	19,152	$	(4,652	)
Basic weighted-average shares outstanding		141,129,457		141,015,213
Dilutive effect of share-based awards		1,332,612		—
Diluted weighted-average shares outstanding		142,462,069		141,015,213
Basic income (loss) per share	$	0.14	$	(0.03	)
Diluted income (loss) per share	$	0.13	$	(0.03	)

	Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
Net income (loss)	$	18,037	$	(18,917	)
Basic weighted-average shares outstanding		141,087,699		141,015,213
Dilutive effect of share-based awards		1,132,575		—
Diluted weighted-average shares outstanding		142,220,274		141,015,213
Basic income (loss) per share	$	0.13	$	(0.13	)
Diluted income (loss) per share	$	0.13	$	(0.13	)

As a result of incurring a net loss for the three and six months ended June 30, 2021, potential common shares of 2,569,613 were excluded from diluted loss per share because the effect would have been antidilutive.

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NOTE 22 – SUBSEQUENT EVENTS

The Company evaluated its June 30, 2022 condensed consolidated financial statements through the date the financial statements were issued. The Company is not aware of any subsequent events which would require recognition or disclosure in the consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q. Throughout this section, dollar amounts are expressed in thousands, except for per share amounts and MMBtu and RIN pricing amounts and unless otherwise indicated.

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A.–Risk Factors” of our 2021 Annual Report and elsewhere in this report.

Overview

Montauk Renewables is a renewable energy company specializing in the recovery and processing of biogas from landfills and other non-fossil fuel sources for beneficial use as a replacement to fossil fuels. We develop, own, and operate RNG projects, using proven technologies that supply RNG into the transportation industry and use RNG to produce Renewable Electricity. 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.

Biogas is produced by microbes as they break down organic matter in the absence of oxygen (during a process called anaerobic digestion). Our two current sources of commercial scale biogas are LFG or ADG. We typically secure our biogas feedstock through long-term fuel supply agreements and property lease agreements with biogas site hosts. Once we secure long-term fuel supply rights, we design, build, own, and operate facilities that convert the biogas into RNG or use the processed biogas to produce Renewable Electricity. We sell the RNG and Renewable Electricity through a variety of term length agreements. Because we are capturing waste methane and making use of a renewable source of energy, our RNG and Renewable Electricity generate valuable Environmental Attributes which we are able to monetize under federal and state renewable initiatives.

Our current operating projects produce either RNG or Renewable Electricity by processing biogas from landfill sites or agricultural waste from livestock farms. We view agricultural waste from livestock farms as a significant opportunity for us to expand our RNG business, and we continue to evaluate other agricultural feedstock opportunities. We believe that our business model and technology are highly scalable given availability of biogas from agriculturally derived sources, which will allow us to continue to grow through prudent development and complimentary acquisitions.

Recent Developments

Raeger Capital Improvement

In June 2022, our Board of Directors approved a capital improvement project to make upgrades to our Raeger facility that will increase production. This facility is currently being impacted by requirements to meet federal pipeline tariffs which limit the oxygen content of product gas. The pipeline tariffs have resulted in limitations in our ability to process all existing feedstock. During the second quarter of 2022, we completed our analysis of process facility improvements necessary to meet these more stringent tariff requirements. We expect construction on this capital project to commence during the third quarter of 2022 and become commercially operational during the second half of 2023. Based on the current production of the Raeger facility, we currently anticipate an approximate increase of 50% of average daily production. This project was not originally included in our 2022 capital budget and has resulted in an increase in our non-development capital expenditures. More information on the increase in our non-development capital expenditures can be found in the “Capital Expenditures” within the Liquidity and Capital Resources of this Item 2.

Combustion Based Oxygen Removal Condensate Neutralization Patent

In July 2022, we announced that 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. Without a mitigating measure such as this technology, low pH can result in additional expenses to remedy damage associated with accelerated degradation in gas processing components as well as downtime for equipment replacement and troubleshooting. We currently have this technology deployed at one of our RNG facilities.

Pico Digestion Capacity Increase

Our Pico facility continues to meet our production expectations after the completion of the improvements to the existing digestion process. Production has more than doubled in the first half of 2022 as compared to production volumes in the first half of 2021. We continue to anticipate that CARB will complete their review of our CI Score Pathway and we expect to receive approval of our score during the fourth quarter of 2022. While we continue to store gas in 2022, we expect to begin to release gas from storage in the third quarter of 2022. We do not expect to earn LCFS credit revenue on 2022 production until 2023, but we do anticipate recognizing revenues on RINs generated from gas released from storage during the second half of 2022.

Related to our Pico feedstock amendment, which increased the amount of feedstock supplied to the facility for processing over a one to three-year period (the “Pico Feedstock Amendment”), the dairy began to deliver the first of three increases in feedstock volumes in the third quarter of 2022 and we have made another payment to the dairy as required in the Pico Feedstock Agreement. The improved efficiencies of our existing digestion process and the water management improvements have enabled us to process the increased feedstock volumes which we currently expect to increase by five to ten percent. We expect the final phase of designing our digestion capacity project to be completed during the third quarter of 2022, including the water management and purification improvements. We currently expect the dairy to begin delivering the second increase in feedstock volumes during the first half of 2023.

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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”). The assets acquired include real property, intellectual property, mobile equipment, and other equipment related to operating the business and real property of an approximate 9.35 acre parcel in Magnolia, North Carolina. We subsequently closed on a transaction to acquire approximately 146 acres and an approximately 500,000 square foot existing structure in Turkey, North Carolina which we plan to use as we 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, which is currently functional in Magnolia. We have not completed our improvements, however, and have not reached commercial operations at this location. The improvements to the reactor technology are intended to be deployed at the Turkey location.

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. Our Magnolia, North Carolina location has an existing electricity interconnection which can be reactivated. We are also in varying stages of discussions with potential power purchasers.

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. 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 during 2022 based on the current development timeline. We intend to contract with additional farms to secure feedstock sources, as we commission commercial production and increase our production capabilities, which we anticipate will secure additional feedstock for future production processes.

Key Trends

Market Trends Affecting the Renewable Fuel Market

We believe demand for RNG produced from biogas remains strong due to increasing public policy initiatives focused on reducing greenhouse gas emissions, including methane, as well as continued public and private sector interest in the development of additional renewable energy sources to offset traditional fossil fuel energy sources.

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 them to compete successfully in multiple markets. Our operating model is nimble, as we commonly use modular equipment; our RNG processing equipment is more efficient than its fossil-fuel counterparts.

• Demand for compressed natural gas (“CNG”) from natural gas-fueled vehicles. The RNG we create is pipeline quality and can be used for transportation fuel when converted to CNG. CNG is commonly used by medium-duty fleets that are close to fueling stations, such as city fleets, local delivery trucks and waste haulers.

• Regulatory requirements, market pressure and public relations challenges increase the time, cost and difficulty of permitting new fossil fuel-fired facilities.

Factors Affecting Our Future Operating Results:

Conversion of Electricity Projects to RNG Projects:

We periodically evaluate opportunities to convert existing facilities from Renewable Electricity to RNG production. These opportunities tend to be most attractive for any merchant electricity facilities given the favorable economics for the sale of RNG plus RINs relative to the sale of market rate electricity plus RECs. 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. This timing effect may adversely affect our operating results as a result of our potential conversion of Renewable Electricity projects. 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.

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Acquisition and Development Pipeline

The timing and extent of our development pipeline affects our operating results due to:

• Impact of Higher Selling, General and Administrative Expenses Prior to the Commencement of a Project’s Operation: We incur significant expenses in the development of new RNG projects. Further, the receipt of RINs is delayed, and typically does not commence for a period of four to six months after the commencement of injecting RNG into a pipeline, pending final registration approval of the project by the EPA and then the subsequent completion of a third-party quality assurance plan certification. During such time, the RNG is either physically or theoretically stored and later withdrawn from storage to allow for the generation of RINs.

• Shifts in Revenue Composition for Projects from New Fuel Sources: As we expand into livestock farm projects, our revenue composition from Environmental Attributes will change. We believe that livestock farms offer us a lucrative opportunity, as the value of LCFS credits for dairy farm projects, for example, are a multiple of those realized from landfill projects due to the significantly more attractive CI score of livestock farms.

• Incurrence of Expenses Associated with Pursuing Prospective Projects That Do Not Come to Fruition: We incur expenses to pursue prospective projects with the goal of a site host accepting our proposal or being awarded a project 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.

• Increased Construction Costs Related to Material Cost Inflation: Due to the variability of our development and construction cycle of approximately 12 to 24 months, we believe that we could incur increased raw material costs for development projects related to inflation or supply chain disruptions. Although these factors have not had a material impact on our business or results of operations to date for development projects, these price increases and disruptions in construction could lead to future material, design, or transportation delays, which could increase the costs of our development.

Regulatory, Environmental and Social Trends

Regulatory, environmental and social factors are key drivers that incentivize the development of RNG and Renewable Electricity projects and influence the economics of these projects. We are subject to the possibility of legislative and regulatory changes to certain incentives, such as RINs, RECs and GHG initiatives. In accordance with the consent decree entered into between the EPA and Growth Energy approved by the U.S. District Court for the District of Columbia, the EPA issued the final Renewable Fuel Standards for 2020, 2021, and 2022 on June 3, 2022. Final volumes for cellulosic biofuel were set at 510, 560 and 630 million RINs for the three years 2020, 2021 and 2022, respectively. While final volumes set for all three years were lower than proposed, the EPA partially offset the lower volumes by issuing its final notice, also on June 3, 2022, to deny the remaining 69 petitions for RFS Small Refinery Exemptions. It is not certain whether the EPA will set RFS volume obligations for one year or multiple years going forward, however, per the settlement agreement with Growth Energy, the EPA must issue a proposed 2023 RVO no later than November 16, 2022 with final volume requirements established by June 11, 2023.

Changes to the LCFS program require annual verification of the CI score assigned to a project. Annual verification could significantly affect the profitability of a project, particularly in the case of a livestock farm project. CARB has provided notice that they plan to finalize their review of the Pico facility’s provisional CI application and release it to the validation body (“VB”) during the third quarter of 2022. We currently expect the VB will complete the validation of the Pico facility’s provisional CI application during the fourth quarter of 2022.

Factors Affecting Revenue

Our total operating revenues include renewable energy and related sales of Environmental Attributes. Renewable energy sales primarily consist of the sale of biogas, including LFG and ADG, which is either sold or converted to Renewable Electricity. Environmental Attributes are generated and monetized from the renewable energy.

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We report revenues from two operating segments: Renewable Natural Gas and Renewable Electricity Generation. Corporate relates to additional discrete financial information for the corporate function; primarily used as a shared service center for maintaining functions described below and not otherwise allocated to a segment. As such, the corporate entity is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation to the Company’s consolidated financial statements.

• Renewable Natural Gas Revenues: We record revenues from the production and sale of RNG and the generation and sale of the Environmental Attributes derived from RNG, such as RINs and LCFS credits. 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 monetize a portion of our RNG production under fixed-price and counterparty sharing agreements, which provide floor prices in excess of commodity indices and sharing percentages of the monetization of Environmental Attributes. Under these sharing arrangements, we receive a portion of the profits derived from counterparty monetization of the Environmental Attributes in excess of the floor prices. We have entered into fixed-price agreements to replace the counter-party sharing arrangements expiring during 2022.

• Renewable Electricity Generation Revenues: We record revenues from the production and sale of Renewable Electricity and the generation and sale of the Environmental Attributes, such as RECs, derived from Renewable Electricity. 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. Based on current rates, we expect our gas commodity hedge program to continue to be priced below actual index prices through the end of this fiscal year at which time the hedge program will expire. Corporate also relates to additional discrete financial information for the corporate function; primarily used as a shared service center for maintaining functions such as executive, accounting, treasury, legal, human resources, tax, environmental, engineering and other operations functions not otherwise allocated to a segment.

Our 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. Due to these factors, we place a primary focus on managing production volumes and operating and maintenance expenses as these factors are more controllable by us.

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, 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 strive to proactively address any issues that may arise through preventative maintenance, process improvement and flexible redeployment of equipment to maximize production and useful life

• A 2021 cold weather event impacted our Atascocita, Galveston, McCarty, and Coastal Plains facilities located in Texas. Production at these facilities was temporarily idled due to the loss of power from February 14 through February 20, 2021 and force majeure events were declared by certain of our counter-parties or by us for the period February 12 through February 22, 2021 related to these weather events. Operations at these facilities have subsequently resumed.

• The landfill host at our McCarty facility recently changed its wellfield collection system which has contributed to elevated nitrogen in the feedstock received by our facility. Additionally, the landfill host modified the wellfield bifurcation approach which has impacted the quantity of feedstock received at the facility. We are working with the landfill host but have currently experienced lower volumes of feedstock available to be processed at the McCarty facility. We currently expect lower than historical volumes through the end of 2022.

• Our Pico facility has resumed operations and ramp up activities related to the existing digester cleanout activities have been completed. Production volume performance continues to meet our expectations during the post cleanout period. Our improvement project has impacted the timeline related to modeling the CI Score pathway model. Our 2022 production will be stored until CARB completes its CI Score Pathway. We do not currently expect to receive LCFS credit revenue on 2022 production until 2023.

• Quality of Biogas: We are reliant upon the quality and availability of biogas from our site partners. The quality of the waste at our landfill project sites is subject to change based on the volume and type of waste accepted. Variations in the quality of the biogas could affect our RNG production levels. At three of our projects, we operate the wellfield collection system, which allows greater control over the quality and consistency of the collected biogas. At two of our projects, we have operating and management agreements by which we earn revenue for managing the wellfield collection systems. Additionally, our dairy farm project benefits from the consistency of feedstock and controlled environment of collection of waste to improve biogas quality.

• RNG Production from Our Growth Projects: We anticipate increased production at certain of our existing projects as open landfills continue to take in additional waste and the amount of gas available for collection increases. 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.

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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. We sell the RNG produced from our projects under a variety of termed agreements to counterparties, with contract terms 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. All of the Renewable Electricity produced at our biogas-to-electricity projects is sold under long-term contracts to creditworthy counterparties, typically under a fixed price arrangement with escalators.

The pricing of Environmental Attributes, which accounts for a substantial portion of our revenues, is subject to volatility based on a variety of factors, including regulatory and administrative actions and commodity pricing.

Our Pico project is expected to be awarded a more attractive CI by CARB, thereby generating LCFS credits at a multiple of those generated by our landfill projects.

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. A decision not to commit to transfer available RINs during a period will impact our revenue and operating profit. As of June 30, 2022, we had approximately 1,562 RINs in inventory as compared to 1,641 RINs in inventory for the period ended June 30, 2021. Our current RIN commitments scheduled for transfer are at an average D3 RIN price of approximately $3.49 with commitments substantively through September 2022. We have not currently committed all of our expected 2022 third quarter RIN generation or a significant portion of expected 2022 fourth quarter RIN generation. We believe the reduction in RIN price during the third quarter of 2022 to be temporary and, accordingly, will look to transfer expected RINs generated during the 2022 fourth quarter when the RIN price historically increases in connection with the end of an RVO compliance year. Realized prices for Environmental Attributes monetized in a year may not correspond directly to index prices due to the forward selling of commitments.

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. 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.

• Royalties, Transportation, Gathering and Production Fuel Expenses: Royalties represent payments made to our facility hosts, typically structured as a percentage of revenue. Transportation and gathering expenses include capacity and metering expenses representing the costs of delivering our RNG and Renewable Electricity production to our customers. These expenses include payments to pipeline operators and other agencies that allow for the transmission of our gas and electricity commodities to end users. Production fuel expenses generally represent alternative royalty payments based on quantity usage of biogas feedstock.

• General and Administrative Expenses: General and administrative expenses primarily consist of corporate expenses and unallocated support functions for our operating facilities, including personnel costs for executive, finance, accounting, investor relations, legal, human resources, operations, engineering, environmental registration and reporting, health and safety, IT and other administrative personnel and professional fees and general corporate expenses. We expect increased general and administrative expenses associated with our ongoing development of Montauk Ag Renewables in 2022. We also expect increased general and administrative expenses associated with our board of directors approving the payment of cash fees to non-employee directors beginning in 2022. The Company accounts for share-based compensation related to grants made through its equity and incentive compensation plan under FASB ASC 718. We expect the amendment to the RS Awards to increase general and administrative expenses approximately $1,227 quarterly through the end of 2022. For more information, see Note 16 to our unaudited condensed consolidated financial statements related to share-based compensation.

• Depreciation and Amortization: Expenses related to the recognition of the useful lives of our intangible and fixed assets. We spend significant capital to build and own our facilities. In addition to development capital, we annually reinvest to maintain these facilities.

• Impairment Loss: Expenses related to reductions in the carrying value(s) of fixed and/or intangible assets based on periodic evaluations whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

• Transaction Costs: Transaction costs primarily consist of expenses incurred for due diligence and other activities related to potential acquisitions and other strategic transactions.

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Key Operating Metrics

Total operating revenues reflect both sales of renewable energy and sales of related Environmental Attributes. As a result, our revenues are primarily affected by unit production of RNG and Renewable Electricity, production of Environmental Attributes, and the prices at which we monetize such production. Set forth below is an overview of these key metrics:

• Production volumes: We review performance by site based on unit of production calculations for RNG and Renewable Electricity, measured in terms of MMBtu and MWh, respectively. While unit of production measurements can be influenced by schedule facility maintenance schedules, the metric is used to measure the efficiency of operations and the impact of optimization improvement initiatives. We monetize a majority of our RNG commodity production under variable-price agreements, based on indices. A portion of our Renewable Natural Gas segment commodity production is monetized under fixed-priced contracts. Our Renewable Electricity Generation segment commodity production is primarily monetized under fixed-priced PPAs.

• Production of Environmental Attributes: We monetize Environmental Attributes derived from our production of RNG and Renewable Electricity. We carry-over a portion of the RINs generated from RNG production to the following year and monetize the carried over RINs in such following calendar year. A majority of our Renewable Natural Gas segment Environmental Attributes are self-monetized, though a portion are generated and monetized by third parties under counterparty sharing agreements. A majority of our Renewable Electricity Generation segment Environmental Attributes are monetized as a component of our fixed-price PPAs.

• Average realized price per unit of production: Our profitability is highly dependent on the commodity prices for natural gas and electricity, and the Environmental Attribute prices for RINs, LCFS credits, and RECs. Realized prices for Environmental Attributes monetized in a year may not correspond directly with that year’s production as attributes may be carried over and subsequently monetized. Realized prices for Environmental Attributes monetized in a year may not correspond directly to index prices due to the forward selling of commitments.

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Comparison of Three Months Ended June 30, 2022 and 2021

The following table summarizes the key operating metrics described above, which metrics we use to measure performance.

(in thousands, unless otherwise indicated)	Three Months Ended June 30,						Change			Change %
	2022			2021
Revenues
Renewable Natural Gas Total Revenues	$	64,566		$	27,581		$	36,985			134.1	%
Renewable Electricity Generation Total Revenues	$	4,329		$	4,093		$	236			5.8	%
RNG Metrics
CY RNG production volumes (MMBtu)		1,469			1,416			53			3.7	%
Less: Current period RNG volumes under fixed/floor-price contracts		(328	)		(487	)		159			(32.6	%)
Plus: Prior period RNG volumes dispensed in current period		372			342			30			8.8	%
Less: Current period RNG production volumes not dispensed		(447	)		(339	)		(108	)		31.9	%
Total RNG volumes available for RIN generation (1)		1,066			932			134			14.4	%
RIN Metrics
Current RIN generation ( x 11.727) (2)		12,499			10,935			1,564			14.3	%
Less: Counterparty share (RINs)		(1,346	)		(1,248	)		(98	)		7.9	%
Plus: Prior period RINs carried into CY		4,394			234			4,160			1777.8	%
Less: CY RINs carried into next CY		—			—			—			—
Total RINs available for sale (3)		15,547			9,921			5,626			56.7	%
Less: RINs sold		(14,438	)		(8,750	)		(5,688	)		65.0	%
RIN Inventory		1,109			1,171			(62	)		(5.3	%)
RNG Inventory (volumes not dispensed for RINs) (4)		447			339			108			31.9	%
Average Realized RIN price	$	3.38		$	1.78		$	1.60			89.9	%
Operating Expenses
Renewable Natural Gas Operating Expenses	$	25,605		$	15,954		$	9,651			60.5	%
Operating Expenses per MMBtu (actual)	$	17.43		$	11.27		$	6.16			54.7	%
Renewable Electricity Generation Operating Expenses	$	4,284		$	2,776		$	1,508			54.3	%
$/MWh (actual)	$	91.15		$	59.09		$	32.06			54.3	%
Other Metrics
Renewable Electricity Generation Volumes Produced (MWh)		47			47			—			—
Average Realized Price $/MWh (actual)	$	92.11		$	87.12		$	4.99			5.7	%

(1) RINs are generated in the month that the gas is dispensed to generate RINs, which occurs the month after the gas is produced. Volumes under fixed/floor-price arrangements generate RINs which we do not self-market.

(2) One MMBtu of RNG has the same energy content as 11.727 gallons of ethanol, and thus may generate 11.727 RINs under the RFS program.

(3) Represents RINs available to be self-marketed by us during the reporting period.

(4) Represents gas production which has not been dispensed to generate RINs.

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The following table summarizes our revenues, expenses and net income for the periods set forth below:

(in thousands, unless otherwise indicated)	Three Months Ended June 30,								Change %
	2022		2021			Change
Total operating revenues	$	67,884	$	31,674		$	36,210			114.3	%
Operating expenses:
Operating and maintenance expenses		14,870		13,187			1,683			12.8	%
General and administrative expenses		8,753		7,341			1,412			19.2	%
Royalties, transportation, gathering and production fuel		15,090		5,986			9,104			152.1	%
Depreciation and amortization		5,134		5,660			(526	)		(9.3	%)
Impairment loss		69		—			69
Transaction costs		5		37			(32	)		(86.5	%)
Total operating expenses		43,921		32,211			11,710			36.4	%
Operating income (loss)	$	23,963	$	(537	)	$	24,500			(4,562.4	%)
Other expenses:		246		730			(484	)		(66.3	%)
Income tax expense		4,565		3,385			1,180			34.9	%
Net income (loss)	$	19,152	$	(4,652	)	$	23,804			511.7	%

Revenues for the Three Months Ended June 30, 2022 and 2021

Total revenues in the second quarter of 2022 were $67,884 an increase of $36,210 (114.3%) compared to $31,674 in the second quarter of 2021. The increase is primarily related to an increase in pricing of gas commodity indices and average realized RIN pricing during the second quarter of 2022 compared to the second quarter of 2021. Gas commodity indices increased 153.4% in the second quarter of 2022 to $7.17 compared to $2.83 in the second quarter of 2021. Realized RIN pricing increased 89.9% during the second quarter of 2022 compared to the second quarter of 2021. Also impacting the increase are gains recognized in the second quarter of 2022 related to gas commodity hedging activities of $1,644. The increase was offset by lower revenues recognized under our counter party sharing agreements of $1,059 in the second quarter of 2022 compared to $6,143 in the second quarter of 2021.

Renewable Natural Gas Revenues

We produced 1,469 MMBtu of RNG during the second quarter of 2022, an increase of 53 MMBtu over the 1,416 MMBtu (3.7%) produced in the second quarter of 2021. Our Pico facility produced 29 MMBtu more in the second quarter of 2022 compared to the second quarter of 2021 as a result of improvements related to the existing digestion process. Also contributing to the increase is our Galveston facility producing 37 MMBtu more in the second quarter of 2022 compared to the second quarter of 2021 as a result of process efficiency gains resulting from the second quarter of 2021 repairs related to the hydrogen sulfide contaminants in the methane feedstock.

Revenues from the Renewable Natural Gas segment in the second quarter of 2022 were $64,566, an increase of $36,985 (134.1%) compared to $27,581 in the second quarter of 2021. Average commodity pricing for natural gas for the second quarter of 2022 was $7.17 per MMBtu, 153.4% higher than the second quarter of 2021. During the second quarter of 2022, we self-monetized 14,438 RINs, representing a 5,688 increase (65.0%) compared to 8,750 in the second quarter of 2021. The increase was primarily related to our first quarter of 2022 decision not to self-market a significant number of RINs due to our belief that D3 RIN index volatility was temporary. Average pricing realized on RIN sales during the second quarter of 2022 was $3.38 as compared to $1.78 in the second quarter of 2021, an increase of 89.9%. This compares to the average D3 RIN index price for the second quarter of 2022 of $3.22 being approximately 4.9% higher than the average D3 RIN index price in the second quarter of 2021. At June 30, 2022, we had approximately 447 MMBtu available for RIN generation and we had approximately 1,109 RINs generated and unsold. At June 30, 2021, we had approximately 339 MMBtu available for RIN generation and approximately 1,171 RINs generated and unsold.

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Renewable Electricity Generation Revenues

We produced approximately 47 MWh in Renewable Electricity in both the second quarter of 2022 and 2021. Our Security facility produced approximately 3 MWh in second quarter of 2022 compared to zero production in second quarter of 2021 as a result of our ongoing engine restoration project. Our Pico facility produced 3 MWh less in the second quarter of 2022 compared to the second quarter of 2021 due to preventative engine maintenance.

Revenues from Renewable Electricity facilities in the second quarter of 2022 were $4,329, an increase of $236 (5.8%) compared to $4,093 in the second quarter of 2021. The increase is a due to our Security facility production volumes.

In the second quarter of 2022, 99% of Renewable Electricity Generation segment revenues were derived from the monetization of Renewable Electricity at fixed prices associated with underlying PPAs, as compared to 100% in the second quarter of 2021. This provides the Company with certainty of price resulting from our Renewable Electricity sites.

Corporate Analysis

In the second quarter of 2022, our gas commodity hedge program was priced at rates below actual index prices.    However, we did recognize a gain of $1,644 as a result of our gas commodity hedge activities as compared to not having any gas hedge programs in the second quarter of 2021. Based on current rates, we expect our gas commodity hedge program to continue to be priced below actual index prices through the year-end 2022 at which time the hedge program will expire. In the second quarter of 2021, we recorded an adjustment of $710, associated with our purchase of RINs, to reduce the carrying value of those RINs to net realizable value. This adjustment was included within operating and maintenance expenses in the condensed consolidated statement of operations. We did not have market purchased RINs during the second quarter of 2022.

Expenses for the Three Months Ended June 30, 2022 and 2021

General and Administrative Expenses

Total general and administrative expenses were $8,753 for the second quarter of 2022, an increase of $1,412 (19.2%) compared to $7,341 for the second quarter of 2021. Professional fees increased approximately $531 (64.9%) during the second quarter of 2022 as compared to the second quarter of 2021. Our board of directors approved the payment of cash fees to non-employee members beginning in 2022 leading to increased fees of $161 in the second quarter of 2022 as compared to the second quarter of 2021. Finally, our general and administrative expense for the second quarter of 2022 increased approximately $708 compared to the second quarter of 2021 associated with the Montauk Ag Renewables Acquisition.

Renewable Natural Gas Expenses

Operating and maintenance expenses for our RNG facilities in the second quarter of 2022 were $10,981, an increase of $822 (8.1%) as compared to $10,159 in the second quarter of 2021. Our McCarty facility incurred increased preventative maintenance expenses of approximately $314. Our Pico facility operating and maintenance expenses increased approximately $670 as a result of scheduled engine preventative maintenance in second quarter of 2022 as compared to second quarter of 2021. Offsetting the increase was our Galveston facility having lower operating and maintenance expenses of approximately $686 in second quarter of 2022 as compared to second quarter of 2021 due to the repairs related to the hydrogen sulfide contaminants. Utility expense for our RNG facilities in the second quarter of 2022 increased approximately $939 (30.9%) compared to the utility expense for our RNG facilities in the second quarter of 2021.

Royalties, transportation, gathering and production fuel expenses for the Company’s RNG facilities for the second quarter of 2022 were $14,624, an increase of $9,087 (164.1%) compared to $5,537 in the second quarter of 2021. Royalties, transportation, gathering and production fuel expenses increased as a percentage of RNG revenues to 22.6% for the second quarter of 2022 from 20.1% in the second quarter of 2021. The increase in royalties, transportation, gathering and production fuel expenses is primarily related to the increase in RNG revenues in the second quarter of 2022 compared to the second quarter of 2021.

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Renewable Electricity Expenses

Operating and maintenance expenses for our Renewable Electricity facilities in the second quarter of 2022 were $3,818, an increase of $1,490 (64.0%) compared to $2,328 in the second quarter of 2021. The increase is primarily related to scheduled preventative maintenance at our Bowerman facility, which was approximately $1,322 higher in the second quarter of 2022 compared to the second quarter of 2021.

Royalties, transportation, gathering and production fuel expenses for our Renewable Electricity facilities for the second quarter of 2022 were $466, an increase of $18 (4.0%) compared to $448 in the second quarter of 2021. As a percentage of Renewable Electricity Generation segment revenues, royalties, transportation, gathering and production fuel expenses decreased to 10.8% from 11.0%.

Royalty Payments

Royalties, transportation, gathering, and production fuel expenses in the second quarter of 2022 were $15,090, an increase of $9,104 (152.1%) compared to $5,986 in the second quarter of 2021. We make royalty payments to our fuel supply site partners on the commodities we produce and the associated Environmental Attributes. These royalty payments are typically structured as a percentage of revenue subject to a cap, with fixed minimum payments when Environmental Attribute prices fall below a defined threshold. To the extent commodity and Environmental Attributes’ prices fluctuate, our royalty payments may fluctuate upon renewal or extension of a fuel supply agreement or in connection with new projects. Our fuel supply agreements are typically structured as 20-year contracts, providing long-term visibility into the margin impact of future royalty payments.

Depreciation

Depreciation and amortization in the second quarter of 2022 was $5,134, a decrease of $526 (9.3%) compared to $5,660 in the second quarter of 2021. The decrease is associated with assets remaining in service being fully amortized and depleted.

Impairment loss

We calculated and recorded an impairment loss of $69 in the second quarter of 2022, an increase of $69 compared to the second quarter of 2021. The impairment in the second quarter of 2022 is related to an amended customer contract of $27 and miscellaneous capital assets no longer in use of $42.

Other Expenses

Other expenses in the second quarter of 2022 were $246, a decrease of $484 (66.3%) compared to other expenses of $730 in the second quarter of 2021. The decrease is primarily related to our favorable interest rate swap contract resulting in a reduction of interest expense of $449 from the second quarter of 2022 compared to the second quarter of 2021.

Income Tax Expense

Income tax expense for the three months ended June 30, 2022 was calculated using an estimated effective tax rate which differs from the U.S. federal statutory rate of 21% primarily due to the adjustment for production tax credits.

The effective tax rate of 19.2% for the three months ended June 30, 2022 was higher than the rate for the three months ended June 30, 2021 of (267.2)% primarily due to the use of year to date pre-tax income to complete the effective tax rate calculation and a required Code Section 162(m) executive compensation limitation permanent adjustment. The June 30, 2022 rate included utilization of production tax credits and certain discrete items.

Operating Profit (Loss) for the Three Months Ended June 30, 2022 and 2021

Operating profit in the second quarter of 2022 was $23,965, an increase of $24,502 (4,562.8%) compared to an operating loss of $537 in the second quarter of 2021. RNG operating profit for the second quarter of 2022 was $35,255, an increase of $27,652 (363.7%) compared to $7,603 in the second quarter of 2021. Renewable Electricity Generation operating loss for the second quarter of 2022 was $1,396, a decrease of $1,412 (8825.0%) compared to an operating profit of $16 for the second quarter of 2021.

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Results of Operations

Comparison of Six Months Ended June 30, 2022 and 2021

The following table summarizes the key operating metrics described above, which metrics we use to measure performance.

(in thousands, unless otherwise indicated)	Six Months Ended June 30,
	2022			2021			Change			Change %
Revenues
Renewable Natural Gas Total Revenues	$	97,233		$	55,704		$	41,529			74.6	%
Renewable Electricity Generation Total Revenues	$	8,300		$	7,417		$	883			11.9	%
RNG Metrics
CY RNG production volumes (MMBtu)		2,838			2,764			74			2.7	%
Less: Current period RNG volumes under fixed/floor-price contracts		(639	)		(939	)		300			(31.9	%)
Plus: Prior period RNG volumes dispensed in current period		372			353			19			5.4	%
Less: Current period RNG production volumes not dispensed		(447	)		(339	)		(108	)		31.9	%
Total RNG volumes available for RIN generation (1)		2,124			1,839			285			15.5	%
RIN Metrics
Current RIN generation ( x 11.727) (2)		24,907			21,551			3,356			15.6	%
Less: Counterparty share (RINs)		(2,562	)		(2,395	)		(167	)		7.0	%
Plus: Prior period RINs carried into CY		140			110			30			27.3	%
Less: CY RINs carried into next CY		—			—			—			—
Total RINs available for sale (3)		22,485			19,266			3,219			16.7	%
Less: RINs sold		(20,923	)		(17,625	)		(3,298	)		18.7	%
RIN Inventory		1,562			1,641			(79	)		(4.8	%)
RNG Inventory (volumes not dispensed for RINs) (4)		447			339			108			31.9	%
Average Realized RIN price	$	3.39		$	1.77		$	1.62			91.5	%
Operating Expenses
Renewable Natural Gas Operating Expenses	$	41,950		$	29,088		$	12,862			44.2	%
Operating Expenses per MMBtu (actual)	$	14.78		$	10.53		$	4.25			40.4	%
Renewable Electricity Generation Operating Expenses	$	8,021		$	6,169		$	1,852			30.0	%
$/MWh (actual)	$	87.18		$	65.42		$	21.76			33.3	%
Other Metrics
Renewable Electricity Generation Volumes Produced (MWh)		92			94			(2	)		(2.1	%)
Average Realized Price $/MWh (actual)	$	90.22		$	78.65		$	11.57			14.7	%

(1) RINs are generated in the month that the gas is dispensed to generate RINs, which occurs the month after the gas is produced. Volumes under fixed/floor-price arrangements generate RINs which we do not self-market.

(2) One MMBtu of RNG has the same energy content as 11.727 gallons of ethanol, and thus may generate 11.727 RINs under the RFS program.

(3) Represents RINs available to be self-marketed by us during the reporting period.

(4) Represents gas production which has not been dispensed to generate RINs.

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The following table summarizes our revenues, expenses and net income for the periods set forth below:

(in thousands, unless otherwise indicated)	Six Months Ended June30,
	2022			2021			Change			Change %
Total operating revenues	$	100,055		$	63,121		$	36,934			58.5	%
Operating expenses:
Operating and maintenance expenses		28,072			23,830			4,242			17.8	%
General and administrative expenses		17,248			27,761			(10,513	)		(37.9	%)
Royalties, transportation, gathering and production fuel		22,296			12,204			10,092			82.7	%
Depreciation and amortization		10,286			11,396			(1,110	)		(9.7	%)
Gain on insurance proceeds		(313	)		(82	)		(231	)		281.7	%
Impairment loss		120			626			(506	)		(80.8	%)
Transaction costs		32			125			(93	)		(74.4	%)
Total operating expenses		77,741			75,860			1,881			2.5	%
Operating income (loss)	$	22,314		$	(12,739	)	$	35,053			(275.2	%)
Other (income) expenses:		(30	)		1,411			(1,441	)		(102.1	%)
Income tax expense		4,307			4,767			(460	)		(9.6	%)
Net income (loss)	$	18,037		$	(18,917	)	$	36,954			(195.3	%)

Revenues for the Six Months Ended June 30, 2022 and 2021

Total revenues in the first six months of 2022 were $100,055, an increase of $36,934 (58.5%) compared to $63,121 in the first six months of 2021. The increase is primarily related to an increase in pricing of gas commodity indices and average realized RIN pricing during the first six months of 2022 compared to the first six months of 2021. Gas commodity indices increased 119.6% in the first six months of 2022 of $6.06 compared to $2.76 in the first six months of 2021. Realized RIN pricing increased 91.5% during the first six months of 2022 compared to the first six months of 2021. The increase was offset by lower revenues recognized under our counter party sharing agreements of $1,246 in the first six months of 2022 compared to $9,930 in the first six months of 2021. Also impacting the increase are losses recognized in the first six months of 2022 related to gas commodity hedging activities of $1,807.

Renewable Natural Gas Revenues

We produced 2,838 MMBtu of RNG during the first six months of 2022, an increase of 74 MMBtu over the 2,764 MMBtu (2.7%) produced in the first six months of 2021. Our Pico facility produced 50 MMBtu more in the first six months of 2022 compared to the second quarter of 2021 as a result of improvements related to the existing digestion process. Our Galveston facility produced 103 MMBtu more in the first six months of 2022 compared to the first six months of 2021 as a result of higher inlet gas due to wellfield changes and plant efficiency optimization of process equipment. Offsetting the increase are lower production volumes at our McCarty and Atascocita facilities. Our McCarty facility produced 37 fewer MMBtu in the first six months of 2022 compared to the first six months due to wellfield changes by our landfill host. Also, our Atascocita facility produced 46 fewer MMBtu in the first six months of 2022 compared to the first six months of 2021 due to a process equipment failure that has since been repaired.

Revenues from the Renewable Natural Gas segment in the first six months of 2022 were $97,233, an increase of $41,529 (74.6%) compared to $55,704 in the first six months of 2021. Average commodity pricing for natural gas for the first six months of 2022 was $6.06 per MMBtu, 153.4% higher than the first six months of 2021. During the first six months of 2022, we self-monetized 20,923 RINs, representing a 3,298 increase (18.7%) compared to 17,625 in the first six months of 2021. The increase was primarily related to inter-period timing on transfers of RINs as the majority of our RINs are self-marketed resulting in higher commitments for the first six months of 2022 versus the first six months of 2021. Average pricing realized on RIN sales during the first six months of 2022 was $3.39 as compared to $1.77 in the first six months of 2021, an increase of 91.5%. This compares to the average D3 RIN index price for the first six months of 2022 of $3.23 being approximately 15.4% higher than the average D3 RIN index price in the first six months of 2021. At June 30, 2022, we had approximately 447 MMBtu available for RIN generation and we had approximately 1,562 RINs generated and unsold. At June 30, 2021, we had approximately 339 MMBtu available for RIN generation and approximately 1,641 RINs generated and unsold.

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Renewable Electricity Generation Revenues

We produced 92 MWh in Renewable Electricity during the first six months of 2022, a decrease of 2 MWh (2.1%) over the 94 MWh produced in the first six months of 2021. Our Bowerman facility produced 2 MWh less in the first six months of 2022 compared to the first six months of 2021 due to preventative engine maintenance.

Revenues from Renewable Electricity facilities in the first six months of 2022 were $8,300, an increase of $883 (11.9%) compared to $7,417 in the first six months of 2021. Our Bowerman facility was impacted in the fourth quarter of 2020 by the California wildfires forcing it to temporarily shut down the facility. This shut down delayed the timing of monetization of the Environmental Attributes associated with the Bowerman facility and resulted in approximately $530 in reduced revenues in the first six months of 2021 as compared to the first six months of 2022. Also contributing to the increase is our Security engine restoration resulting in $287 in higher revenues for the first six months of 2022 as compared to zero in first six months of 2021.

In the first six months of 2022, 99.0% of Renewable Electricity Generation segment revenues were derived from the monetization of Renewable Electricity at fixed prices associated with underlying PPAs, as compared to 100% in the first six months of 2021. This provides the Company with certainty of price resulting from our Renewable Electricity sites.

Corporate Analysis

In the first six months of 2022, our gas commodity hedge program was priced at rates below actual index prices, resulting in recognized losses of $1,807. We did not have any gas hedge programs in the first six months of 2021. Based on current rates, we expect our gas commodity hedge program to continue to be priced below actual index prices through the year-end 2022 at which time the hedge program will expire. In the first six months of 2021, we recorded an adjustment of $710, associated with our purchase of RINs, to reduce the carrying value of those RINs to net realizable value. This adjustment was included within operating and maintenance expenses in the unaudited condensed consolidated statement of operations. We did not have market purchased RINs or other purchases of environment attributes during the first six months of 2022.

Expenses for the Six Months Ended June 30, 2022 and 2021

General and Administrative Expenses

Total general and administrative expenses were $17,248 for the first six months of 2022, a decrease of $10,513 (37.9%) compared to $27,761 for the first six months of 2021. Employee related costs, including stock-based compensation, decreased approximately $11,337 (53.3%) in the first six months of 2022 as compared to the first six months of 2021. This decrease is primarily related to our accounting for the cancellation of MNK options and January 2021 grants of restricted stock, non-qualified stock options, and restricted stock units to the Company’s employees. Our corporate insurance premiums increased approximately $243 (9.4%) during the first six months of 2022 compared to the first six months of 2021, primarily related to premium increases. Our board of directors approved the payments of cash fees to non-employee members resulting in increased fees of approximately $336 in the first six months of 2022. Finally, our general and administrative expense for the first six months of 2022 increased approximately $1,163 compared to the first six months of 2021 associated with the Montauk Ag Renewables Acquisition.

Renewable Natural Gas Expenses

Operating and maintenance expenses for our RNG facilities in the first six months of 2022 were $20,540, an increase of $2,780 (15.7%) as compared to $17,760 in the first six months of 2021. The increase is driven by increased RNG utilities of approximately $3,086 (119.4%) in first six months of 2022 compared to the first six months of 2021. The reason is caused by a weather event in the first quarter of 2021 impacting our Houston based facilities being favorably impacted by lower utility rates.

Royalties, transportation, gathering and production fuel expenses for the Company’s RNG facilities for the first six months of 2022 were $21,410, an increase of $10,082 (89.0%) compared to $11,328 in the first six months of 2021. Royalties, transportation, gathering and production fuel expenses increased as a percentage of RNG revenues to 22.0% for the first six months of 2022 from 20.3% in the first six months of 2021. The increase in royalties, transportation, gathering and production fuel expenses is primarily related to the increase in RNG revenues in the first six months of 2022 compared to the first six months of 2021.

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Renewable Electricity Expenses

Operating and maintenance expenses for our Renewable Electricity facilities in the first six months of 2022 were $7,134, an increase of $1,841 (34.8%) compared to $5,293 in the first six months of 2021. The increase is primarily related to scheduled preventative engine maintenance at our Bowerman facility, which was approximately $1,780 higher in the first six months of 2022 compared to the first six months of 2021.

Royalties, transportation, gathering and production fuel expenses for our Renewable Electricity facilities for the first six months of 2022 were $887, an increase of $11 (1.3%) compared to $876 in the first six months of 2021. As a percentage of Renewable Electricity Generation segment revenues, royalties, transportation, gathering and production fuel expenses decreased to 10.7% from 11.8%.

Royalty Payments

Royalties, transportation, gathering, and production fuel expenses in the first six months of 2022 were $22,296, an increase of $10,092 (82.7%) compared to $12,204 in the first six months of 2021. We make royalty payments to our fuel supply site partners on the commodities we produce and the associated Environmental Attributes. These royalty payments are typically structured as a percentage of revenue subject to a cap, with fixed minimum payments when Environmental Attribute prices fall below a defined threshold. To the extent commodity and Environmental Attributes’ prices fluctuate, our royalty payments may fluctuate upon renewal or extension of a fuel supply agreement or in connection with new projects. Our fuel supply agreements are typically structured as 20-year contracts, providing long-term visibility into the margin impact of future royalty payments.

Depreciation

Depreciation and amortization in the first six months of 2022 was $10,286, a decrease of $1,110 (9.7%) compared to $11,396 in the first six months of 2021. The decrease is associated with assets remaining in service being fully amortized and depleted.

Impairment loss

We calculated and recorded an impairment loss of $120 in the first six months of 2022, a decrease of $506 (80.8%) compared to $626 in the first six months of 2021. The impairment in the second quarter of 2022 is related to related to computer software and hardware no longer being utilized of $51, an amended customer contract of $27 and miscellaneous capital assets no longer in use of $42. The impairment in the first six months of 2021 was due to decommissioning a previously converted electricity site to RNG as we had been contractually obligated to maintain the site.

Other (Income) Expenses

Other income in the first six months of 2022 was $30, an increase of $1,441 (102.1%) compared to other expenses of $1,411 in the first six months of 2021. Of the increase, $1,063 is related to our favorable interest rate swap contract resulting in reduction of interest expense from the first six months of 2022 compared to the first six months of 2021. Also we sold for $1,088 NOx emission allowance credits for a gain of $311.

Income Tax Expense

Income tax expense for the six months ended June 30, 2022 was calculated using an estimated effective tax rate which differs from the U.S. federal statutory rate of 21% primarily due to the adjustment for production tax credits.

The effective tax rate of 19.3% for the six months ended June 30, 2022 was higher than the rate for the six months ended June 30, 2021 of (33.7)% primarily due to the use of year to date pre-tax income to complete the effective tax rate calculation and a required Code Section 162(m) executive compensation limitation permanent adjustment. The June 30, 2022 rate included utilization of production tax credits and certain discrete items.

Operating Profit for the Six Months Ended June 30, 2022 and 2021

Operating profit in the first six months of 2022 was $22,607, an increase of $35,347 (277.4%) compared to an operating loss of $12,740 in the first six months of 2021. RNG operating profit for the first six months of 2022 was $48,211, an increase of $30,013 (164.9%) compared to $18,198 in the first six months of 2021. Renewable Electricity Generation operating loss for the first six months of 2022 was $2,557, a decrease of $354 (16.1%) compared to an operating loss of $2,203 for the first six months of 2021.

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Non-GAAP Financial Measures:

The following table presents EBITDA and Adjusted EBITDA, non-GAAP financial measures for each of the periods presented below. We present EBITDA and Adjusted EBITDA because we believe the measures assist investors in analyzing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. In addition, EBITDA and Adjusted EBITDA are financial measurements of performance that management and the board of directors use in their financial and operational decision-making and in the determination of certain compensation programs. EBITDA and Adjusted EBITDA are supplemental performance measures that are not required by or presented in accordance with GAAP. EBITDA and Adjusted EBITDA should not be considered alternatives to net income or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities or a measure of our liquidity or profitability.

The following table provides our EBITDA and Adjusted EBITDA for the periods presented, as well as a reconciliation to net income, which is the most directly comparable GAAP measure, for the three months ended June 30, 2022 and 2021:

	Three Months Ended June 30,
	2022			2021
Net income (loss)	$	19,152		$	(4,652	)
Depreciation and amortization		5,134			5,660
Interest expense		271			720
Income tax expense		4,565			3,385
Consolidated EBITDA		29,122			5,113
Impairment loss (1)		69			—
Transaction costs		5			37
Unrealized gains on hedging activities		(1,644	)		—
Adjusted EBITDA	$	27,552		$	5,150

(1) During the three months ended June 30, 2022, we recorded an impairment of $69 related to an amended customer contract and miscellaneous capital assets no longer in use under current operations. During the three months ended June 30, 2021, there was no impairment of assets recognized.

The following table provides our EBITDA and Adjusted EBITDA for the periods presented, as well as a reconciliation to net income, which is the most directly comparable GAAP measure, for the six months ended June 30, 2022 and 2021:

	Six Months Ended June 30,
	2022			2021
Net income (loss)	$	18,037		$	(18,917	)
Depreciation and amortization		10,286			11,396
Interest expense		303			1,366
Income tax expense		4,307			4,767
Consolidated EBITDA		32,933			(1,388	)
Impairment loss (1)		120			626
Transaction costs		32			125
Net gain on sale of assets		(293	)		—
Unrealized losses on hedging activities		1,807			—
Adjusted EBITDA	$	34,599		$	(637	)

(1) During the six months ended June 30, 2022, we recorded an impairment of $120 related to the assessment that certain computer software and hardware that was no longer being utilized, an amended customer contract and miscellaneous capital assets no longer in use under current operations. During the six months ended June 30, 2021, $626 of impairment was recorded related to a landfill hosts request for us to decommission a facility previously converted to an RNG facility.

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Liquidity and Capital Resources

Sources of Liquidity

At June 30, 2022 and June 30, 2021, our cash and cash equivalents, net of restricted cash, was $72,195 and $16,350 respectively. We intend to fund near-term development projects using cash flows from operations and borrowings under our revolving credit facility. 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 at least the next 12 months. However, we are subject to business and operational risks that could adversely affect our cash flows and liquidity.

At June 30, 2022, we had debt before debt issuance costs of $76,000, compared to debt before debt issuance costs of $80,000 at December 31, 2021.

Our debt before issuance costs (in thousands) are as follows:

	June 30, 2022		December 31, 2021
Term Loans	$	76,000	$	80,000
Revolving Credit Facility		—		—
Debt before debt issuance costs	$	76,000	$	80,000

Amended Credit Agreement

On December 21, 2021, the Company entered into the Fourth Amendment with Comerica and certain other financial institutions. The current credit agreement, which is secured by a lien on 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 June 30, 2022, $76,000 was outstanding under the term loan and we had no outstanding borrowings under the revolving credit facility. The term loan amortizes in quarterly installments of $2,000 through 2024, then increases to $3,000 through 2026, with a final payment of $32,000 in late 2026 with an interest rate of 3.41% and 2.91% at June 30, 2022 and December 31, 2021, respectively. The revolving and term loans under the Amended Credit Agreement bear interest at the Bloomberg Short-Term Bank Yield Index Rate plus an applicable margin based on our Total Leverage Ratio (in each case, as those terms are defined in the Amended Credit Agreement).

The Amended Credit Agreement contains customary covenants applicable to us and certain of our subsidiaries, including financial covenants. 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. Consolidated 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.

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 3.50 to 1.00 as of the end of any fiscal quarter from December 31, 2021 through June 29, 2023, 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

As of June 30, 2022, we were in compliance with all applicable financial covenants under the Amended Credit Agreement.

The Amended Credit Agreement replaced our prior credit agreements with Comerica and a portion of the proceeds of the term loan made under the Amended Credit Agreement were used by us to, among other things, fully satisfy an aggregate of $59,197 outstanding principal under such credit agreements. For additional information regarding the Amended Credit Agreement, see Note 14— Debt to our unaudited condensed consolidated financial statements.

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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 2022 capital expenditures to range between $12,000 and $14,000, an increase from our previous estimate range of $10,000 and $12,000. Our 2022 capital plans include annual preventative maintenance expenditures, annual wellfield expansion projects, other specific facility improvements, and information technology improvements. Additionally, we currently estimate that our existing 2022 development capital expenditures will range between $30,000 and $35,000. Our Amended Credit Agreement provides us with a $120,000 revolving credit facility, with a $75,000 accordion option, providing us with access to additional capital to implement our acquisition and development strategy. We are currently in various stages of discussions regarding a variety of strategic growth opportunities. Included amongst these opportunities are: approximately up to twelve LFG RNG sites, and waste water treatment to RNG opportunities. We are evaluating a portfolio of potential LFG RNG sites for development. We expect to make a decision on whether we will respond to the development proposal opportunities during the third quarter of 2022. While a definitive decision has not been received, we believe the multiple ADG sites which were included as possible opportunities are no longer being offered for strategic consideration. If we ultimately enter into definitive agreements for any of these opportunities, we expect to incur material capital expenditures related to either acquisition costs or development costs, or both. As we continue to explore strategic growth opportunities and while we have entered into nonbinding letters of intent for certain of these opportunities, we provide no assurances that our plans related to any or all of these strategic opportunities will progress to definitive agreements. We believe that our existing cash and cash equivalents, cash generated from operations, and credit availability under our Amended Credit Agreement would allow us to pursue and close on our identified strategic growth opportunities.

Cash Flow

The following table presents information regarding our cash flows and cash equivalents for the six months ended June 30, 2022 and 2021:

	Six Months Ended June 30,
	2022			2021
Net cash flows provided by operating activities		26,772		$	11,245
Net cash flows used in investing activities		(3,747	)		(8,521	)
Net cash flows used in financing activities		(4,095	)		(7,360	)
Net increase (decrease) in cash and cash equivalents		18,930			(4,636	)
Restricted cash, end of period		347			573
Cash and cash equivalents and restricted, end of period		72,542			16,923

For the first six months of 2022, we generated $26,772 of cash from operating activities, a 138.1% increase from $11,245 in the first six months of 2021. For the first six months of 2022, income and adjustments to income from operating activities were $20,120 compared to $33,125 in first six months of 2021. Working capital and other assets and liabilities provided $11,385 in the first six months of 2022 compared to $2,963 provided in the first six months of 2021.

Our net cash flows used in investing activities has historically focused on project development and facility maintenance. Our capital expenditures for the first six months of 2022 were $5,148, of which $1,277 were related to the ongoing development of Montauk Ag Renewables in North Carolina. Partially offsetting this use were proceeds of $1,088 related to the sale of NOx emissions allowance credits in the first six months of 2022.

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Our net cash flows used in financing activities of $4,095 for the first six months of 2022 decreased by $3,265 compared to cash used in financing activities in the first six months of 2021 of $7,360. The closing of our January 2021 IPO provided $12,401 in proceeds after payment of commissions and expenses. In connection with withholding shares from restricted stock awards pursuant to elections made by employees under Section 83(b) of the Code, the Company reacquired 950,214 shares with a value of approximately $10,813. Additionally, in connection with the Distribution, we loaned $8,940, in the aggregate to MNK for its dividends tax liability arising under the South African Income Tax Act, 1962, as amended. The Company has a security interest in 800,000 shares of its common stock owned by MNK, which if sold by MNK, MNK has agreed to use towards repaying this loan.

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 described below. Although these arrangements serve a variety of our business purposes, we are not dependent on them to maintain our liquidity and capital resources, and we are not aware of any circumstances that are reasonably likely to cause the off-balance sheet arrangements to have a material adverse effect on liquidity and capital resources.

The Company has contractual obligations involving asset retirement obligations. See Note 10 in the unaudited condensed consolidated financial statements for further information regarding the asset retirement obligations.

The Company has contractual obligations under our debt agreement, including interest payments and principal repayments. See Note 14 in the unaudited condensed consolidated financial statements for further discussion of the contractual commitments under our debt agreements, including the timing of principal repayments. During the first six months of 2022, we had approximately $3,905 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 draw downs on these outstanding letters of credit. During the first six months of 2021, we did not have off-balance sheet arrangements other than outstanding letters of credit of approximately $5,765.

The Company has contractual obligations involving operating leases. See Note 20 in the unaudited condensed consolidated financial statements for further information related to the lease obligations. In 2022, the company entered into a new, ten year corporate office lease with monthly rent payments of approximately $43 per month beginning in 2023, the first full year of the lease. The lease includes annual rent increases.

The Company has other contractual obligations associated with our fuel supply agreements. The expiration of these agreements range between 5-21 years. The minimum royalty and capital obligation associated with these agreements range from $7 to $1,380.

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Critical Accounting Policies and Estimates

Our unaudited condensed 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. 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. 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. 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. 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.

The nature of the Company’s contracts may give rise to several types of variable consideration, such as periodic price increases. This variable consideration is outside of the Company’s influence as the variable consideration is dictated by the market. Therefore, the variable consideration associated with the long-term contracts is considered fully constrained.

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RINs

We generate D3 RINs through our production and sale of RNG used for transportation purposes as prescribed under the RFS program. Our operating costs are associated with the production of RNG. 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. Revenue is recognized on these Environmental Attributes when there is an agreement in place to monetize the credits at an agreed upon price with a customer and transfer of control has occurred. We enter into forward commitments to transfer RINs. These forward commitments are based on D3 RIN index prices at the time of the commitment. Realized prices for RINs monetized in a year may not correspond directly to index prices due to the forward selling of commitments.

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. The RECs are generated as an output of our renewable operating projects. The RECs that we generate are able to be separated and sold independently from the electricity produced. Therefore, no cost is allocated to the REC when it is generated. Revenue is recognized on these Environmental Attributes when there is an agreement in place to monetize the credits at an agreed upon price with a customer and transfer of control has occurred.

Income Taxes

We are subject to income taxes in the U.S. federal jurisdiction and various state and local jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply.

Our net deferred tax asset position is a result of net operating losses (“NOLs”), fixed assets, intangibles, and tax credit carryforwards. The realization of deferred tax assets is dependent upon our ability to generate sufficient future taxable income during the periods in which those temporary differences become deductible, prior to the expiration of the tax attributes. 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.

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. As of each reporting date, management considers new evidence, both positive and negative, when determining the future realization of our deferred tax assets. We account for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. Given our current level of pre-tax earnings and forecasted future pre-tax earnings, we expect to generate income before taxes in the United States in future periods at a level that would fully utilize our U.S. federal NOL carryforwards and the majority of its state NOL carryforwards prior to their expiration.

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. The interconnection intangible asset is the exclusive right to utilize an interconnection line between the operating project and a utility substation to transmit produced electricity. Included in that right is full maintenance provided on this line by the utility. Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful life. We evaluate our finite-lived intangible assets for impairment as events or changes in circumstances indicate the carrying value of these assets may not be fully recoverable. Events that could result in an impairment include, among others, a significant decrease in the market price or the decision to close a site.

51

If finite-lived or indefinite-lived intangible assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The fair value is determined based on the present value of expected future cash flows. We use our best estimates in making these evaluations, however, actual future pricing, operating costs and discount rates could vary from the assumptions used in our estimates and the impact of such variations could be material.

Our assessment of the recoverability of finite-lived and indefinite-lived intangible assets is determined by performing monitoring assessment of the future cash flows associated with the underlying gas rights agreements. The cash flows estimates are performed at the operating unit level and based on the average remaining length of the gas rights agreements. Based on our analysis, we concluded the cashflows generated to be well in excess of the carrying amounts. Changes in market conditions related to the various price indexes used in estimating these cash flows could adversely affect these estimates.

Finite-Lived Asset Impairment

In accordance with FASB ASC Topic 360, Property, Plant and Equipment and intangible assets with finite useful lives are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset or asset group to future undiscounted cash flows expected to be generated by the asset or asset group. Such estimates are based on certain assumptions, which are subject to uncertainty and may materially differ from actual results, including considering project specific assumptions for long-term credit prices, escalated future project operating costs and expected site operations. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value is generally determined by considering (i) internally developed discounted cash flows for the asset group, (ii) third-party valuations, and/or (iii) information available regarding the current market value for such assets. We use our best estimates in making these evaluations and consider various factors, including future pricing and operating costs. However, actual future market prices and project costs could vary from the assumptions used in our estimates and the impact of such variations could be material. Based on our annual cashflow assessment conducted for monitoring potential indicators of impairment, we concluded 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. Separate from our cash flows assessment, we identified discrete events and recorded impairment of $120 and $626 for the six months ended June 30, 2022 and 2021, respectively. See Note 3 in the unaudited condensed consolidated financial statements for further information related to asset impairments.

Emerging Growth Company

We are an emerging growth company, as defined in the JOBS Act. The JOBS Act allows emerging growth companies to delay the adoption of new or revised accounting standards until such time as those standards apply to private companies. 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.

52

Recent Accounting Pronouncements

For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2, “Summary of Significant Accounting Policies” of Part I, Item 1 of our unaudited condensed consolidated financial statements in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes since our disclosure in Quantitative and Qualitative Disclosures About Market Risk included as Item 7A in our 2021 Annual Report.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act, as of the end of the period covered by this quarterly report. Disclosure controls and procedures are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, including our principal executive officer and principal financial officer, after evaluating the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, concluded that as of such date, our disclosure controls and procedures were effective at a reasonable level of assurance.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

53

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we and our subsidiaries may be parties to legal proceedings arising in the normal course of our business. We and our subsidiaries are currently not a party, nor is our property subject, to any material pending legal proceedings.

ITEM 1A. RISK FACTORS

We face a number of risks that could materially and adversely affect our business, results of operations, cash flow, liquidity, or financial condition. A discussion of our risk factors can be found in Part I, “Item 1A Risk Factors” in our 2021 Annual Report. The impact of COVID-19 may exacerbate the risks discussed in Part I, “Item 1A. Risk Factors” in our 2021 Annual Report, any of which could have a material effect on us.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 our IPO. The underwriter for the IPO was Roth Capital Partners. 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. 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. 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.

54

Since the closing of the IPO, approximately $12.5 million of the net proceeds from the IPO have been used by Montauk Renewables in connection with due diligence and the consummation of the Montauk Ag Renewables Acquisition in May 2021, the purchase of the real estate and property in October 2021 related to Montauk Ag Renewables, and subsequent development activities related to Montauk Ag Renewables. An immaterial amount has been used relating to other possible acquisitions and projects. The remaining net proceeds of approximately $2.5 million is held as cash.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number	Description
2.1	First Amendment to Membership Interest and Asset Purchase Agreement, dated May 26, 2022, by and among J.P. Carroll & Co., LLC, Eagle Creek Ranch, L.L.C., NR3 Nutrient Recovery, LLC, Joseph P. Carroll, Jr., Martin A. Redeker, Montauk Ag Renewables, LLC and Montauk Energy Holdings, LLC (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K (File No. 333-251312), filed June 1, 2022)
31.1	Certification of the Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act
31.2	Certification of the Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

55

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

August 9, 2022	MONTAUK RENEWABLES, INC.
	By:	/s/ SEAN F. MCCLAIN
		Sean F. McClain
		President, Chief Executive Officer and Director   (Principal Executive Officer)
	By:	/s/ KEVIN A. VAN ASDALAN
		Kevin A. Van Asdalan
		Chief Financial Officer   (Principal Financial and Accounting Officer)

56

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT, AS AMENDED

I, Sean F. McClain, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Montauk Renewables, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2022

/s/ Sean F. McClain

Sean F. McClain

Chief Executive Officer and President

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT, AS AMENDED

I, Kevin A. Van Asdalan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Montauk Renewables, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2022

/s/ Kevin A. Van Asdalan

Kevin A. Van Asdalan

Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Montauk Renewables, Inc. (the “Company”) for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: August 9, 2022

/s/ Sean F. McClain

Sean F. McClain

Chief Executive Officer and President

(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Montauk Renewables, Inc. (the “Company”) for the period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

Date: August 9, 2022

/s/ Kevin A. Van Asdalan

Kevin A. Van Asdalan

Chief Financial Officer

(Principal Financial Officer)

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2022	Aug. 04, 2022
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Registrant Name	MONTAUK RENEWABLES, INC.
Entity File Number	001-39919
Entity Incorporation, State or Country Code	DE
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Filer Category	Accelerated Filer
Entity Tax Identification Number	85-3189583
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Address, Address Line One	680 Andersen Drive
Entity Address, Address Line Two	5th Floor Pittsburgh
Entity Address, State or Province	PA
Entity Address, City or Town	Pittsburgh
Entity Address, Postal Zip Code	15220
City Area Code	412
Local Phone Number	747-8700
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	MNTK
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		143,603,681
Entity Central Index Key	0001826600
Entity Ex Transition Period	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 72,195	$ 53,266
Accounts and other receivables	23,998	9,338
Related party receivable	8,940	8,940
Current portion of derivative instrument	277	0
Prepaid expenses and other current assets	5,558	2,846
Assets held for sale	0	777
Total current assets	110,968	75,167
Restricted cash—non-current	328	328
Property, plant and equipment, net	176,077	180,893
Goodwill and intangible assets, net	13,660	14,113
Deferred tax assets	6,779	10,570
Non-current portion of derivative instrument	536	0
Operating lease right-of-use assets	203	305
Finance lease right-of-use assets	139	0
Other assets	5,561	5,104
Total assets	314,251	286,480
Current liabilities:
Accounts payable	4,477	4,973
Accrued liabilities	17,848	10,823
Income tax payable	134	0
Current portion of operating lease liability	156	296
Current portion of finance lease liability	76	0
Current portion of derivative instrument	1,807	650
Current portion of long-term debt	7,834	7,815
Total current liabilities	32,332	24,557
Long-term debt, less current portion	67,465	71,392
Non-current portion of operating lease liability	30	27
Non-current portion of finance lease liability	61	0
Non-current portion of derivative instrument	0	189
Asset retirement obligation	5,368	5,301
Other liabilities	4,125	2,721
Total liabilities	109,381	104,187
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, authorized 690,000,000 shares; 143,603,681 and 143,584,827 shares issued at June 30, 2022 and December 31, 2021, respectively; 141,290,748 and 141,015,213 shares outstanding at June 30, 2022 and December 31, 2021, respectively	1,410	1,410
Treasury stock, at cost, 959,344 and 950,214 shares June 30, 2022 and December 31, 2021, respectively	(10,904)	(10,813)
Additional paid-in capital	200,855	196,224
Retained earnings (deficit)	13,509	(4,528)
Total stockholders' equity	204,870	182,293
Total liabilities and stockholders' equity	$ 314,251	$ 286,480

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Common stock par or stated value per share	$ 0.01	$ 0.01
Common stock shares authorized	690,000,000	690,000,000
Common stock shares issued	143,603,681	143,584,827
Common stock shares outstanding	141,290,748	141,015,213
Treasury stock shares	959,344	950,214

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Total operating revenues	$ 67,884	$ 31,674	$ 100,055	$ 63,121
Operating expenses:
Operating and maintenance expenses	14,870	13,187	28,072	23,830
General and administrative expenses	8,753	7,341	17,248	27,761
Royalties, transportation, gathering and production fuel	15,090	5,986	22,296	12,204
Depreciation, depletion and amortization	5,134	5,660	10,286	11,396
Gain on insurance proceeds	0	0	(313)	(82)
Impairment loss	69	0	120	626
Transaction costs	5	37	32	125
Total operating expenses	43,921	32,211	77,741	75,860
Operating income (loss)	23,963	(537)	22,314	(12,739)
Other expenses (income):
Interest expense	271	720	303	1,366
Net loss (gain) on sale of fixed assets	0	22	(293)	22
Other (income) expense	(25)	(12)	(40)	23
Total other expenses (income)	246	730	(30)	1,411
Income (loss) before income taxes	23,717	(1,267)	22,344	(14,150)
Income tax expense	4,565	3,385	4,307	4,767
Net income (loss)	$ 19,152	$ (4,652)	$ 18,037	$ (18,917)
Earnings (loss) per share:
Basic	$ 0.14	$ (0.03)	$ 0.13	$ (0.13)
Diluted	$ 0.13	$ (0.03)	$ 0.13	$ (0.13)
Weighted-average common shares outstanding:
Basic	141,129,457	141,015,213	141,087,699	141,015,213
Diluted	142,462,069	141,015,213	142,220,274	141,015,213

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock [Member]	Treasury Stock [Member]	Members Equity [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]
Beginning balance at Dec. 31, 2020	$ 159,622	$ 0	$ 0	$ 159,622	$ 0	$ 0
Beginning balance, shares at Dec. 31, 2020		0	0
Effect of reorganization transactions		$ 1,383		$ (159,622)	158,239
Effect of reorganization transactions, shares		138,312,713
IPO common stock	15,593	$ 27			15,566
IPO common stock, shares		2,702,500
Treasury stock, shares			950,214
Treasury stock	(10,813)		$ (10,813)
Net income (loss)	(18,917)					(18,917)
Stock-based compensation	17,139				17,139
Ending balance at Jun. 30, 2021	162,624	$ 1,410	$ (10,813)		190,944	(18,917)
Ending balance, shares at Jun. 30, 2021		141,015,213	950,214
Beginning balance at Mar. 31, 2021	164,735	$ 1,410	$ (10,813)	$ 0	188,403	(14,265)
Beginning balance, shares at Mar. 31, 2021		141,015,213	950,214
Net income (loss)	(4,652)					(4,652)
Stock-based compensation	2,541				2,541
Ending balance at Jun. 30, 2021	162,624	$ 1,410	$ (10,813)		190,944	(18,917)
Ending balance, shares at Jun. 30, 2021		141,015,213	950,214
Beginning balance at Dec. 31, 2021	182,293	$ 1,410	$ (10,813)	$ 0	196,224	(4,528)
Beginning balance, shares at Dec. 31, 2021		141,015,213	950,214
Treasury stock, shares			9,130
Treasury stock	(91)		$ (91)
Net income (loss)	18,037					18,037
Stock-based compensation	4,631				4,631
Vesting of stock awards , shares		275,535
Ending balance at Jun. 30, 2022	204,870	$ 1,410	$ (10,904)		200,855	13,509
Ending balance, shares at Jun. 30, 2022		141,290,748	959,344
Beginning balance at Mar. 31, 2022	183,421	$ 1,410	$ (10,904)	$ 0	198,558	(5,643)
Beginning balance, shares at Mar. 31, 2022		141,057,772	959,344
Net income (loss)	19,152					19,152
Stock-based compensation	2,297				2,297
Vesting of stock awards , shares		232,976
Ending balance at Jun. 30, 2022	$ 204,870	$ 1,410	$ (10,904)		$ 200,855	$ 13,509
Ending balance, shares at Jun. 30, 2022		141,290,748	959,344

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Cash flows from operating activities:
Net income (loss)	$ 19,152	$ (4,652)	$ 18,037	$ (18,917)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization			10,286	11,396
Provision for deferred income taxes			3,791	4,262
Stock-based compensation			4,631	17,139
Derivative mark-to-market adjustments and settlements			156	(724)
Gain on property insurance proceeds			(313)	(82)
Earn out increase			1,403	0
Net (gain) loss on sale of assets			(293)	22
Accretion of asset retirement obligations			127	215	$ (160)
Amortization of debt issuance costs	104	133	212	271
Impairment loss			120	626
Accounts and other receivables and other current assets			(17,989)	(3,553)
Accounts payable and other accrued expenses			6,604	590
Net cash provided by operating activities			26,772	11,245
Cash flows from investing activities
Capital expenditures			(5,148)	(4,469)
Asset acquisition			0	(4,142)
Proceeds from sale of assets			1,088	8
Proceeds from insurance recovery			313	82
Net cash used in investing activities			(3,747)	(8,521)
Cash flows from financing activities:
Repayments of long-term debt			(4,000)	(5,000)
Proceeds from initial public offering			0	15,593
Treasury stock purchase			(91)	(10,813)
Loan to Montauk Holdings Limited			0	(7,140)
Finance lease payments			(4)	0
Net cash used in financing activities			(4,095)	(7,360)
Net increase (decrease) in cash and cash equivalents and restricted cash			18,930	(4,636)
Cash and cash equivalents and restricted cash at beginning of period			53,612	21,559	21,559
Cash and cash equivalents and restricted cash at end of period	72,542	16,923	72,542	16,923	53,612
Reconciliation of cash, cash equivalents, and restricted cash at end of year:
Cash and cash equivalents	72,195	16,350	72,195	16,350	53,266
Restricted cash and cash equivalents - current	19	0	19	0
Restricted cash and cash equivalents - non-current	328	573	328	573	328
Reconciliation of cash, cash equivalents, and restricted cash at end of year	$ 72,542	$ 16,923	$ 72,542	$ 16,923	$ 53,612

XML

Description of Business

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Description of Business

NOTE 1 – DESCRIPTION OF BUSINESS

Operations and organization

Montauk Renewables’ Business

Montauk Renewables, Inc. (the “Company” or “Montauk Renewables”) is a renewable energy company specializing in the management, recovery and conversion of biogas into Renewable Natural Gas (“RNG”). The Company captures methane, preventing it from being released into the atmosphere, and converts it into either RNG or electrical power for the electrical grid (“Renewable Electricity”). The Company, headquartered in Pittsburgh, Pennsylvania, has more than 30 years of experience in the development, operation and management of landfill methane-fueled renewable energy projects. The Company has current operations at 15 operating projects located in California, Idaho, Ohio, Oklahoma, Pennsylvania, North Carolina and Texas. The Company sells RNG and Renewable Electricity, taking advantage of Environmental Attribute premiums available under federal and state policies that incentivize their use.

Two of the Company’s key revenue drivers are sales of captured gas and sales of Renewable Identification Numbers (“RINs”) to fuel blenders. The Renewable Fuel Standard (“RFS”) is an Environmental Protection Agency (“EPA”) administered federal law that requires transportation fuel to contain a minimum volume of renewable fuel. RNG derived from landfill methane, agricultural digesters and wastewater treatment facilities used as a vehicle fuel qualifies as a D3 (cellulosic biofuel with a 60% greenhouse gas reduction requirement) RIN. The RINs are compliance units for fuel blenders that were created by the RFS program in order to reduce greenhouse gases and imported petroleum into the United States.

An additional program utilized by the Company is the Low Carbon Fuel Standard (“LCFS”). This is state specific and is designed to stimulate the use of low-carbon fuels. To the extent that RNG from the Company’s facilities is used as a transportation fuel in states that have adopted an LCFS program, it is eligible to receive an Environmental Attribute additional to the RIN value under the federal RFS.

Another key revenue driver is the sale of captured electricity and the associated environmental premiums related to renewable sales. The Company’s electric facilities are designed to conform to and monetize various state renewable portfolio standards requiring a percentage of the electricity produced in that state to come from a renewable resource. Such premiums are in the form of Renewable Energy Credits (“RECs”). The Company’s largest electric facility, located in California, receives revenue for the monetization of RECs as a part of a purchase power agreement.

Collectively, the Company benefits from federal and state 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, as Environmental Attributes.

Background and Reorganization Transactions

On January 4, 2021, the Company, Montauk Holdings Limited (“MNK”) and Montauk Holdings USA, LLC (a direct wholly-owned subsidiary of MNK at the time, “Montauk USA”) entered into a series of transactions, including an equity exchange and a distribution collectively referred to as the “Reorganization Transactions,” that resulted in the Company owning all of the assets and entities (other than Montauk USA) previously owned by Montauk USA, and Montauk Renewables became a direct wholly-owned subsidiary of MNK. Prior to the Reorganization Transactions, MNK’s business and operations were conducted entirely through Montauk USA and its U.S. subsidiaries, and MNK held no substantial assets other than equity of Montauk USA. The Company had no significant operations or assets prior to January 4, 2021 when it engaged in the equity exchange with Montauk USA and MNK.

After completion of the Reorganization Transactions, (i) Montauk USA ceased to own any substantial assets and (ii) all entities through which MNK’s business and operations were conducted became owned, directly or indirectly, by the Company. MNK adopted a plan contemporaneously with the completion of the Reorganization Transactions that authorized the liquidation and dissolution of MNK.

On January 15, 2021, MNK sold the membership interest of Montauk USA to a third party. On January 26, 2021, MNK distributed all of the outstanding shares of the Company’s common stock as a pro rata dividend to the holders of MNK’s ordinary shares (the “Distribution”), subject to any tax withholding obligations under applicable South African law. Each ordinary share of MNK outstanding on January 21, 2021, the record date for the Distribution (the “Record Date”), entitled the holder thereof to receive one share of the Company’s common stock.

On January 26, 2021, the Company closed the initial public offering of its common stock on the Nasdaq Capital Market (the “IPO”) with the shares traded under the symbol “MNTK”. Montauk Renewables issued 2,702,500 shares at $8.50 per share and received gross proceeds of $22,971. The Company’s common stock was also secondarily listed on the Johannesburg Stock Exchange (“JSE”) under the trading symbol “MKR”.

On January 26, 2021, the Company entered into a Loan Agreement and Secured Promissory Note (as amended on February 22, 2021 and December 22, 2021) with MNK pursuant to which the Company advanced a cash loan to MNK for MNK to pay its dividends tax liability arising from the Reorganization Transactions under the South African Income Tax Act, 1962 (Act No. 58 of 1962), as amended. The terms of the loan following the amendments are substantially similar to the initial loan agreement and were primarily entered into to increase the principal amount outstanding under the loan to $8,940 in the aggregate, in accordance with Montauk Renewables’ obligations set forth in the Transaction Implementation Agreement. MNK is currently an affiliate of the Company and certain of the Company’s directors and executive officers are also directors and executive officers of MNK. See Note 18 for more information.

MNK was delisted from the JSE on January 26, 2021. MNK is expected to be liquidated within 24 months of the Distribution.

COVID-19

In March 2020, the World Health Organization classified the outbreak of COVID-19 as a pandemic and recommended containment and mitigation measures worldwide. In response to the COVID-19 pandemic and related mitigation measures, the Company established the Infectious Disease and Response Committee (the “IDRC”) to lead the development and implementation of Montauk Renewables’ Infectious Disease and Response Plan and to oversee the company’s response to any infectious disease event. These measures resulted in additional costs, which is expected to continue in order to address employee safety.

The Company has not experienced any material disruptions in its ability to continue business operations nor did the Company experience material negative impacts to the financial results due to the COVID-19 pandemic for the year ended December 31, 2021 and the six months ended June 30, 2022.

The situation surrounding the COVID-19 pandemic remains uncertain. The extent to which the COVID-19 pandemic may affect the Company’s operating results, financial condition, or liquidity in the future will depend on future developments, including the duration of the pandemic, the emergence of more contagious or virulent strains of the virus, travel restrictions, business and workforce disruptions, the availability, uptake and efficacy of vaccines, and the effectiveness of actions taken to contain and treat the disease. Even after the COVID-19 pandemic has subsided, the Company may experience materially adverse impacts to the business due to any resulting supply chain disruptions or economic downturn. Furthermore, the impacts of potential worsening of global economic conditions, inflation, and continued disruptions to and volatility in the financial markets remain unknown.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions of the SEC on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2022 (the “2021 Annual Report”). The results of operations for the three months and six months ended June 30, 2022 in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2021, has been derived from the audited financial statements as of that date. For further information, refer to the Company’s audited financial statements and notes thereto included for the year ended December 31, 2021 in the 2021 Annual Report.

Retrospective Presentation

As discussed in Note 1, as a result of the Reorganization Transactions, the Company acquired the assets and entities (excluding Montauk USA) that were previously owned by MNK. As part of the Reorganization Transactions, a 1:1 pro rata distribution of shares of the Company’s common stock was made to holders of MNK’s ordinary shares. This pro rata distribution resulted in the ownership of the Company after the Reorganization Transactions being identical to the ownership of MNK prior to the Reorganization Transactions and was therefore akin to a common control transaction. All members’ equity in the financial statements and notes have been retrospectively adjusted to give effect to the 1:1 distribution ratio, as if such pro rata distribution occurred as of all pre-IPO periods presented.

Segment Reporting

The Company reports segment information in three segments: RNG, Renewable Electricity Generation and Corporate. This is consistent with the internal reporting provided to the chief operating decision maker who evaluates operating results and performance. The aforementioned business services and offerings described in Note 1 are grouped and defined by management as two distinct operating segments: RNG and Renewable Electricity Generation. Below is a description of the Company’s operating segments and other activities.

The RNG segment represents the sale of gas sold at fixed-price contracts, counterparty share RNG volumes and applicable Environmental Attributes. This business unit represents the majority of the revenues generated by the Company. The Renewable Electricity Generation segment represents the sale of captured electricity and applicable Environmental Attributes. Corporate & Other relates to additional discrete financial information for the corporate function. It is primarily used as a shared service center for maintaining functions such as executive, accounting, treasury, legal, human resources, tax, environmental, engineering and other operations functions not otherwise allocated to a segment. As such, the corporate entity is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation to the Company’s consolidated financial statements.

Use of Estimates

The preparation of financial statements, in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Equity-Based Compensation

The Company accounts for equity-based compensation under the provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation, (“ASC 718”). ASC 718 requires compensation costs related to share-based payment transactions, measured based on the fair value of the instruments issued, be recognized in the consolidated financial statements over the requisite service period of the award. Stock options are initially measured on the grant date using the Black-Scholes valuation model, which requires the use of subjective assumptions related to the expected stock price volatility, term, risk-free interest rate and dividend yield. For restricted stock and restricted stock units, the Company determines the grant date fair value based on the closing market price per share of the stock on the date of the grant.

Recently Issued Accounting Standards

In September 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses. The new guidance changes how entities measure credit losses on financial instruments and the timing of when such losses are recorded. The new standard is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt: Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments and contracts in an entity’s own equity. This guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those years, with early adoption permitted only as of annual reporting periods beginning after December 15, 2020. The Company currently does not anticipate this ASU will have a material impact on its consolidated financial statements or related financial statement disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company’s current debt agreement bears interest at the Bloomberg Short-Term Bank Yield Index Rate plus an applicable margin. LIBOR is no longer utilized as a reference rate.

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Asset Impairment

6 Months Ended

Jun. 30, 2022

Asset Impairment Charges [Abstract]

Asset Impairment

NOTE 3 – ASSET IMPAIRMENT

The Company recorded $69 and $0 in impairment losses for the three months ended June 30, 2022 and 2021, respectively. Impairment losses of $120 and $626 were recorded for the six months ended June 30, 2022 and 2021, respectively. The 2022 impairments recorded to date relate to computer software and hardware no longer being utilized ($51), an amended customer contract ($27) and miscellaneous capital assets no longer in use under current operations ($42). The 2021 impairment was due to a notice received from a landfill host in February 2021 amending the underlying gas rights agreement to remove and begin decommissioning activities related to one of the Company’s renewable electric generation sites.

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Revenues from Contracts with Customers

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenues from Contracts with Customers

NOTE 4 – REVENUES FROM CONTRACTS WITH CUSTOMERS

The following tables display the Company’s revenue by major source, excluding realized and unrealized gains or losses under the Company’s gas hedge program, based on product type and timing of transfer of goods and services for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30, 2022
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	1,250	$	14,637	$	15,887
Natural Gas Environmental Attributes		48,647		—		48,647
Electric Commodity		—		2,648		2,648
Electric Environmental Attributes		1,715		—		1,715
	$	51,612	$	17,285	$	68,897
Operating Segment:
RNG	$	49,897	$	14,637	$	64,534
REG		1,715		2,648		4,363
	$	51,612	$	17,285	$	68,897

	Three Months Ended June 30, 2021
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	6,332	$	6,627	$	12,959
Natural Gas Environmental Attributes		14,622		—		14,622
Electric Commodity		—		2,299		2,299
Electric Environmental Attributes		1,794		—		1,794
	$	22,748	$	8,926	$	31,674
Operating Segment:
RNG	$	20,954	$	6,627	$	27,581
REG		1,794		2,299		4,093
	$	22,748	$	8,926	$	31,674

	Six Months Ended June 30, 2022
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	1,655	$	24,125	$	25,780
Natural Gas Environmental Attributes		71,357		—		71,357
Electric Commodity		—		5,032		5,032
Electric Environmental Attributes		3,364		—		3,364
	$	76,376	$	29,157	$	105,533
Operating Segment:
RNG	$	73,012	$	24,125	$	97,137
REG		3,364		5,032		8,396
	$	76,376	$	29,157	$	105,533

	Six Months Ended June 30, 2021
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	10,308	$	13,322	$	23,630
Natural Gas Environmental Attributes		32,074		—		32,074
Electric Commodity		—		4,572		4,572
Electric Environmental Attributes		2,845		—		2,845
	$	45,227	$	17,894	$	63,121
Operating Segment:
RNG	$	42,382	$	13,322	$	55,704
REG		2,845		4,572		7,417
	$	45,227	$	17,894	$	63,121

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Accounts and Other Receivables

6 Months Ended

Jun. 30, 2022

Receivables, Net, Current [Abstract]

Accounts and Other Receivables

NOTE 5 – ACCOUNTS AND OTHER RECEIVABLES

The Company extends credit based upon an evaluation of the customer’s financial condition and, while collateral is not required, the Company periodically receives surety bonds that guarantee payment. Credit terms are consistent with industry standards and practices. Reserves for uncollectible accounts, if any, are recorded as part of General and administrative expenses in the condensed consolidated statements of operations. For the three and six months ended June 30, 2022 and 2021, there were no reserves for uncollectible accounts.

Accounts and other receivables consist of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022		December, 31 2021
Accounts receivables	$	23,902	$	9,281
Other receivables		93		26
Reimbursable expenses		3		31
Accounts and other receivables	$	23,998	$	9,338

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Prepaid Expenses and Other Current Assets

6 Months Ended

Jun. 30, 2022

Prepaid Expense and Other Assets, Current [Abstract]

Prepaid Expense and Other Current Assets

NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

During the second quarter of 2021, the Company purchased $1,585 in RINs. As of June 30, 2021, the Company assessed the RINs’ carrying value at $875. A $710 reduction to net realizable value was recorded for the three months and six month ended June 30, 2021. This adjustment is included in Operating and maintenance expenses within the Condensed consolidated statements of operations for the three and six months ended June 30, 2021. There were no such adjustments during the three or six months ended June 30, 2022 and the Company did not have any purchased RINs as of June 30, 2022 and December 31, 2021.

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Assets Held For Sale

6 Months Ended

Jun. 30, 2022

Asset Held For Sale [Abstract]

Asset Held For Sale

NOTE 7 – ASSETS HELD FOR SALE

In 2021, the Company initiated a plan to sell nitrogen oxide (“NOx”) emissions allowances credits. The Company concluded that it met the criteria under applicable guidance for a long-lived asset to be held for sale, and accordingly reclassified the emissions allowances of $777 as current assets held for sale on the Consolidated Balance Sheet at December 31, 2021. The Company estimated the fair value of these assets and concluded that the fair value exceeded the carrying value and no impairment was recorded by the Company for the year ended December 31, 2021. In March 2022, the NOx emissions allowances credits were sold for $1,088. A $311 gain on sale of intangible assets was recorded for the six months ended June 30, 2022.

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Property, Plant and Equipment, Net

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, Net

NOTE 8 – PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consists of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022			December 31, 2021
Land	$	595		$	595
Buildings and improvements		29,078			28,693
Machinery and equipment		249,322			246,670
Gas mineral rights		34,551			34,551
Construction work in progress		13,631			12,725
Total		327,177			323,234
Less: Accumulated depreciation and amortization		(151,100	)		(142,341	)
Property, plant & equipment, net	$	176,077		$	180,893

Depreciation expense for property plant and equipment was $4,789 and $4,843 for the three months ended June 30, 2022 and 2021, respectively, and $9,599 and $9,798 for the six months ended June 30, 2022 and 2021, respectively. Amortization expense for gas mineral rights was $129 and $445 for the three months ended June 30, 2022 and 2021, respectively, and $257 and $936 for the six months ended June 30, 2022 and 2021, respectively.

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Goodwill And Intangible Assets, Net

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill And Intangible Assets, Net

NOTE 9 – GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill and Intangible assets consist of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022		December 31, 2021
Goodwill	$	60	$	60
Intangible assets with indefinite lives:
Land use rights		329		329
Intangible assets with finite lives:
Interconnections, net of accumulated amortization of $3,447 and $3,034	$	12,113	$	12,526
Customer contracts, net of accumulated amortization of $16,945 and $17,085	$	1,158	$	1,198
Total intangible assets with finite lives:	$	13,271	$	13,724
Total Goodwill and Intangible assets	$	13,660	$	14,113

The weighted average remaining useful life of the customer contracts and interconnection is approximately 17 years and 16 years, respectively. Amortization expense was $216 and $372 for the three months ended June 30, 2022 and 2021, respectively, and $430 and $662 for the six months ended June 30, 2022 and 2021, respectively.

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Assets Retirement Obligations

6 Months Ended

Jun. 30, 2022

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

NOTE 10 – ASSET RETIREMENT OBLIGATIONS

The following table summarizes the activity associated with asset retirement obligations of the Company as of June 30, 2022 and December 31, 2021:

	Six Months Ended June 30, 2022			Year Ended December 31, 2021
Asset retirement obligations - beginning of period	$	5,301		$	5,689
Accretion expense		127			(160	)
Decommissioning		(60	)		(228	)
Asset retirement obligations - end of period	$	5,368		$	5,301

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Derivative Instruments

6 Months Ended

Jun. 30, 2022

Derivative Instrument Detail [Abstract]

Derivative Instruments

NOTE 11 – DERIVATIVE INSTRUMENTS

To mitigate market risk associated with fluctuations in energy commodity prices (natural gas) and interest rates, the Company utilizes various derivative contracts to secure energy commodity pricing and interest rates under a board-approved program. The Company does not apply hedge accounting to any of its derivative instruments, and all realized and unrealized gains and losses from changes in derivative values are recognized in earnings each period. As a result of the economic hedging strategies employed, the Company had the following realized and unrealized gains and losses in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021:​​​​​​​

	Three Months Ended
Derivative Instrument	June 30, 2022			June 30, 2021
Commodity contracts:
Realized natural gas	$	(2,655	)	$	—
Unrealized natural gas		1,644			—
Interest rate swaps		614			306
Net gain (loss)	$	(397	)	$	306

	Six Months Ended
Derivative Instrument	June 30, 2022			June 30, 2021
Commodity contracts:
Realized natural gas	$	(3,671	)	$	—
Unrealized natural gas		(1,807	)		—
Interest rate swaps		1,651			724
Net gain (loss)	$	(3,827	)	$	724

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

NOTE 12 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s assets and liabilities that are measured at fair value on a recurring basis include the following as of June 30, 2022 and December 31, 2021, set forth by level, within the fair value hierarchy:

	June 30, 2022
	Level 1			Level 2		Level 3			Total
Commodity derivative liability	$	(1,807	)		—		—		$	(1,807	)
Interest rate swap derivative asset		—			813		—			813
Asset retirement obligations		—			—		(5,368	)		(5,368	)
Earn-out liability		—			—		(4,125	)		(4,125	)
	$	(1,807	)	$	813	$	(9,493	)	$	(10,487	)

	December 31, 2021
	Level 1		Level 2			Level 3			Total
Interest rate swap derivative liability	$	—	$	(839	)	$	—		$	(839	)
Asset retirement obligations		—		—			(5,301	)		(5,301	)
Earn-out liability		—		—			(2,721	)		(2,721	)
	$	—	$	(839	)	$	(8,022	)	$	(8,861	)

A summary of changes in the fair values of the Company’s Level 3 instruments, attributable to asset retirement obligations, for the six months ended June 30, 2022 and the year ended December 31, 2021 is included in Note 10. In addition, certain assets are measured at fair value on a non-recurring basis when an indicator of impairment is identified and the assets’ fair values are determined to be less than its carrying value. See Note 3 for additional information.

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Accrued Liabilities

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Accrued Liabilities

NOTE 13 – ACCRUED LIABILITIES

The Company’s accrued liabilities consists of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022		December 31, 2021
Accrued expenses	$	6,166	$	3,551
Payroll and related benefits		2,346		1,239
Royalty		7,243		4,630
Utility		1,699		1,274
Other		394		129
Accrued liabilities	$	17,848	$	10,823

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Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt

NOTE 14 – DEBT

The Company’s debt consists of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022			December 31, 2021
Term loans	$	76,000		$	80,000
Less: current principal maturities		(8,000	)		(8,000	)
Less: debt issuance costs (on long-term debt)		(535	)		(608	)
Long-term debt	$	67,465		$	71,392
Current portion of long- term debt		7,834			7,815
	$	75,299		$	79,207

Amended Credit Agreement

On December 12, 2018, Montauk Energy Holdings LLC (“MEH”) entered into the Second Amended and Restated Revolving Credit and Term Loan Agreement (as amended, “Credit Agreement”), by and among MEH, the financial institutions from time to time party thereto as lenders and Comerica Bank, as the administrative agent, sole lead arranger and sole bookrunner (“Comerica”). The Credit Agreement (i) amended and restated in its entirety MEH’s prior revolving credit and term loan facility, dated as of August 4, 2017, as amended, with Comerica and certain other financial institutions and (ii) replaced in its entirety the prior credit agreement, dated as of August 4, 2017, as amended, between Comerica and Bowerman Power LFG, LLC, a wholly-owned subsidiary of MEH.

On March 21, 2019, MEH entered into the first amendment to the Credit Agreement (the “First Amendment”), which clarified a variety of terms, definitions and calculations in the Credit Agreement. The Credit Agreement requires the Company to maintain customary affirmative and negative covenants, including certain financial covenants, which are measured at the end of each fiscal quarter.

On August 28, 2019 the Company received a temporary waiver for an anticipated Event of Default (as defined in the Credit Agreement) for the consecutive three-month period ended on August 31, 2019 (the “Specified Event of Default”). The Specified Event of Default was waived through October 1, 2019. On September 12, 2019, the Company entered into the second amendment to the Credit Agreement (the “Second Amendment”). Among other matters, the Second Amendment redefined the Fixed Charge Coverage Ratio (as defined in the Credit Agreement), reduced the commitments under the revolving credit facility to $80,000, redefined the Total Leverage Ratio (as defined in the Credit Agreement) and eliminated the RIN Floor (as defined in the Second Amendment) as an Event of Default. In connection with the Second Amendment, the Company paid down the outstanding term loan by $38,250 and the resulting quarterly principal installments were reduced to $2,500.

In connection with the completion of the Reorganization Transactions and the IPO, the Company entered into the third amendment to the Credit Agreement (the “Third Amendment”). This amendment permitted the Change of Control provisions, as defined in the underlying agreement, to permit the Reorganization Transactions and IPO to be completed.

On December 21, 2021, MEH entered into the Fourth Amendment to the Credit Agreement (the “Fourth Amendment”). The current credit agreement, which is secured by a lien on substantially all assets of the Company and certain of its subsidiaries, provides for a $80,000 term loan and a $120,000 revolving credit facility. The term loan amortizes in quarterly installments of $2,000 through 2024, then increases to $3,000 from 2025 to 2026, with a final payment of $32,000 in late 2026.

As of June 30, 2022, $76,000 was outstanding under the term loan. In addition, the Company had $3,905 of outstanding letters of credit as of June 30, 2022. Amounts available under the revolving credit facility are reduced by any amounts outstanding under letters of credit. As of June 30, 2022, the Company’s capacity available for borrowing under the revolving credit facility was $116,095. Borrowings of the term loans and revolving credit facility bear interest at the Bloomberg Short-Term Bank Yield Index Rate plus an applicable margin. Interest rates as of June 30, 2022 and December 31, 2021 were 3.41% and 2.91%, respectively.

The Company accounted for the Fourth Amendment as both a debt modification and debt extinguishment in accordance with ASC 470, Debt (“ASC 470”). In connection with the Credit Agreement, the Company paid $2,027 in fees. Of this amount, $326 was expensed and $1,701 was capitalized and will be amortized over the life of the Credit Agreement. Amortized debt issuance expense was $104 and $133 for the three months ended June 30, 2022 and 2021, respectively, and $212 and $271 for the six months ended June 30, 2022 and 2021, respectively, and was recorded within interest expense on the condensed consolidated statement of operations.

As of June 30, 2022, the Company was in compliance with all applicable financial covenants under the Credit Agreement.

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Income Taxes

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 15 – INCOME TAXES

The Company’s provision for income taxes in interim periods is typically computed by applying the estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. For the three months ended June 30, 2022, the Company utilized full year pre-tax income and calculated an estimated effective tax rate. The Company utilized an estimated effective tax rate for the six months ended June 30, 2022. For the three months ended June 30, 2021, the Company utilized full year pre-tax income and calculated an estimated effective tax rate. The Company utilized an estimated effective tax rate for the six months ended June 30, 2021.

	Three Months Ended
	June 30, 2022			June 30, 2021
Provision for income taxes	$	4,565		$	3,385
Effective tax rate		19	%		(267	)%
	Six Months Ended
	June 30, 2022			June 30, 2021
Provision (benefit) for income taxes	$	4,307		$	4,767
Effective tax rate		19	%		(34	)%

The effective tax rate of 19% for the three months ended June 30, 2022 was higher than the rate for the three months ended June 30, 2021 of (267)% primarily due to the current year permanent disallowance of officers’ compensation being less than the prior year permanent disallowance of officers’ compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

The effective tax rate of 19% for the six months ended June 30, 2022 was higher than the effective rate for the six months ended June 30, 2021 of (34)% primarily due to the use of year to date pre-tax income used to complete the effective tax rate calculation and a required Code section 162(m) executive compensation limitation permanent adjustment. The June 30, 2022 tax rate included utilization of production tax credits and certain discrete items.

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Share-Based Compensation

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

NOTE 16 – SHARE-BASED COMPENSATION

In January 2021, Montauk Renewables undertook the Reorganization Transactions which resulted in the Company owning all of the assets and entities (excluding Montauk USA) through which MNK’s business and operations were conducted. As a result of the Distribution, the options outstanding under MNK’s Employee Share Appreciation Rights Scheme (the “SAR Plan”) were cancelled. The Company recorded $2,050 of accelerated compensation expense in its consolidated statements of operations within general and administrative expenses in connection with the cancellation of the options under the SAR Plan for the six months ended June 30, 2021.

The board of directors of Montauk Renewables adopted the Montauk Renewables, Inc. Equity and Incentive Compensation Plan (“MRI EICP”) in January 2021. Following the closing of the IPO, the board of directors of Montauk Renewables approved the grant of non-qualified stock options, restricted stock units and restricted stock awards to the employees of Montauk Renewables and its subsidiaries in January 2021. In connection with the restricted stock awards, the officers of the Company made elections under Section 83(b) of the Code. Pursuant to such elections, the Company withheld 950,214 shares of common stock from such awards at a price of $11.38 per share from such awards. The Company records and reports share-based compensation for stock options, restricted stock, and restricted stock units over the requisite vesting period, and such awards will be settled in shares of common stock of Montauk Renewables. As of June 30, 2022, unrecognized MRI EICP compensation expense for awards the Company expects to vest approximated $23,132 and will be recognized though 2026.

In connection with a May 2021 asset acquisition, 1,250,000 restricted stock awards (“RS Awards”) were granted to two employees of the Company in connection with their respective employment. The RS Awards were to vest over a five-year period and subject to the achievement of time and performance-based vesting criteria over such period. In May 2022, the RS Awards were amended to remove the performance-based vesting criteria and will only be subject to time-based vesting requirements over a five-year period. The awards were revalued at $15,500. Stock compensation expense related to the two awards were $409 for the three and six months ended June 30, 2022. The amended awards vest through 2026.

Restricted stock, restricted stock unit and option awards are subject to various vesting schedules and are subject to the terms and conditions of the MRI EICP and related award agreements including, in the case of the restricted stock awards, each officer having made an election under Section 83(b) of the Code. The Company recorded $10,813 of compensation expense in its condensed consolidated statements of operations within general and administrative expenses for the six months ended June 30, 2021 in connection with the withheld 950,214 shares associated with the Section 83(b) elections.

Options granted under the MRI EICP allow the recipient to receive the Company’s common stock equal to the appreciation in the fair market value of the Company’s common stock between the date the award was granted and the exercise and settlement of options into shares as of the exercise date. The fair value of the MRI EICP options were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions (no dividends were expected):

	Grant Date
Risk-free interest rate		0.5	%
Expected volatility		32.0	%
Expected option life (in years)		5.5
Grant-date fair value	$	3.44

The following table summarizes the restricted shares, restricted stock units and options outstanding under the MRI EICP as June 30, 2022 and June 30, 2021, respectively:

	Restricted Shares					Restricted Stock Units					Options
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Exercise Price
End of period - December 31, 2021		2,569,613		$	10.08		377,984		$	10.23		950,214		$	11.38
Beginning of period - January 1, 2022		2,569,613		$	10.08		377,984		$	10.23		950,214		$	11.38
Granted		1,250,000			12.40
Vested		(256,681	)		11.38		(27,984	)		11.38		(950,214	)		11.38
Forfeited		(1,250,000	)		9.04							—			—
End of period – June 30, 2022		2,312,932		$	11.75		350,000		$	10.13		—		$	—

950,214 options vested for the three and six months ended June 30, 2022. None of the 950,214 vested options were exercised during either the three or six months ended June 30, 2022.

	Restricted Shares					Restricted Stock Units					Options
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Exercise Price
End of period - December 31, 2020		—		$	—		—		$	—		—	$	—
Beginning of period-January 1, 2021		—		$	—		—		$	—		—	$	—
Granted		2,269,827			11.20		29,304			11.38		950,214		11.38
Vested		(950,214	)		11.38		—			—		—		—
Forfeited		—			—		(1,056	)		11.38		—		—
Exercised		—			—		—			—		—		—
End of period – June 30, 2021		1,319,613		$	11.07		28,248		$	11.38		950,214	$	11.38

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Defined Contribution Plan

6 Months Ended

Jun. 30, 2022

Retirement Benefits [Abstract]

Defined Contribution Plan

NOTE 17 – DEFINED CONTRIBUTION PLAN

The Company maintains a 401(k) defined contribution plan for eligible employees. The Company matches 50% of an employee’s deferrals up to 4%. The Company also contributes 3% of eligible employee’s compensation expense as a safe harbor contribution. The matching contributions vest ratably over four years of service, while the safe harbor contributions vest immediately. Incurred expense related to the 401(k) plan was $185 and $134 for the three months ended June 30, 2022 and 2021, respectively, and $353 and $269 for the six months ended June 30, 2022 and 2021, respectively.

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Related Party Transactions

6 Months Ended

Jun. 30, 2022

Related Party Transactions [Abstract]

Related Party Transactions

Note 18 – RELATED PARTY TRANSACTIONS

On January 26, 2021, the Company entered into a Loan Agreement and Secured Promissory Note (the “Promissory Note”) with MNK. MNK is currently an affiliate of the Company and certain of the Company’s directors and executive officers are also directors and executive officers of MNK. Pursuant to the Initial Promissory Note, the Company advanced a cash loan of $5,000 to MNK for MNK to pay its dividends tax liability arising from the Reorganization Transactions under the South African Income Tax Act, 1962 (Act No. 58 of 1962), as amended (the “South African Income Tax Act”). On February 22, 2021 and December, 22, 2021, the Company and MNK amended and restated the Promissory Note (together, the “Amended Promissory Note”) to increase the principal amount of the loan to a total of $8,940, in the aggregate, in accordance with the Company’s obligations set forth in the Transaction Implementation Agreement entered into by and among the Company, MNK and the other party thereto, dated November 6, 2020, and amended on January 14, 2021. The terms of the Amended Promissory Note provide the Company a security interest of 800,000 shares of the Company and require MNK to use the proceeds of any such sale of the shares to repay the Amended Promissory Note. The Amended Promissory Note also includes default provisions in which MNK may deliver any unsold shares of the Company back to Montauk Renewables to satisfy repayment of the note, subject to compliance with the laws and regulations of South Africa. The Amended Promissory Note matures on December 31, 2022.

Under applicable guidance for variable interest entities in ASC 810, Consolidation, the Company determined that MNK is a variable interest entity. The Company concluded that it is not the primary beneficiary of the variable interest entity, as the Company does not have a controlling financial interest and does not have the power to direct the activities that most significantly impact the economic performance of MNK. Accordingly, the Company concluded that presentation of the Amended Promissory Note as a related party receivable remains appropriate.

Related Party Reimbursements

Periodically the Company will reimburse MNK and HCI Managerial Services Proprietary Limited, the administrator for the Company’s secondary listing on the JSE, for expenses incurred on behalf of the Company. Amounts reimbursed were $5 and $3 for the three months ended June 30, 2022 and 2021, respectively, and $7 and $730 for the six months ended June 30, 2022 and 2021, respectively. $26 and $0 were owed as of June 30, 2022 and December 31, 2021, respectively.

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Segment Information

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Segment Information

NOTE 19 – SEGMENT INFORMATION

The Company’s reportable segments for the three and six months ended June 30, 2022 and 2021 are Renewable Natural Gas and Renewable Electricity Generation. Renewable Natural Gas includes the production of RNG. Renewable Electricity Generation includes generation of electricity at biogas-to-electricity plants. The corporate entity is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation of the Company’s condensed consolidated financial statements. The following tables are consistent with the manner in which the chief operating decision maker evaluates the performance of each segment and allocates the Company’s resources. In the following tables “RNG” refers to Renewable Natural Gas and “REG” refer to Renewable Electricity Generation.

	Three Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Total revenue	$	64,566	$	4,329		$	(1,011	)	$	67,884
Net income (loss)		35,240		(1,415	)		(14,673	)		19,152
EBITDA (1)		38,920		(14	)		(9,784	)		29,122
Adjusted EBITDA (1)		38,947		28			(11,423	)		27,552
Total assets		149,351		55,791			109,109			314,251
Capital expenditures		2,803		(32	)		1			2,772

(1) Second quarter of 2022 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the three months ended June 30, 2022:

	Three Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Net income (loss)	$	35,240	$	(1,415	)	$	(14,673	)	$	19,152
Depreciation and amortization		3,680		1,401			53			5,134
Interest expense		—		—			271			271
Income tax expense		—		—			4,565			4,565
EBITDA	$	38,920	$	(14	)	$	(9,784	)	$	29,122
Impairment loss		27		42			—			69
Transaction costs		—		—			5			5
Unrealized gains on hedging activities							(1,644	)		(1,644	)
Adjusted EBITDA	$	38,947	$	28		$	(11,423	)	$	27,552

	Three Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Total revenue	$	27,581	$	4,093		$	—		$	31,674
Net income (loss)		7,573		(27	)		(12,198	)		(4,652	)
EBITDA (1)		11,854		1,307			(8,048	)		5,113
Adjusted EBITDA (1)		11,854		1,307			(8,011	)		5,150
Total assets		156,505		53,369			41,774			251,648
Capital expenditures		2,708		425			—			3,133

(1) Second quarter of 2021 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the three months ended June 30, 2021:

	Three Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Net income (loss)	$	7,573	$	(27	)	$	(12,198	)	$	(4,652	)
Depreciation and amortization		4,281		1,334			45			5,660
Interest expense		—		—			720			720
Income tax expense		—		—			3,385			3,385
EBITDA	$	11,854	$	1,307		$	(8,048	)	$	5,113
Impairment loss		—		—			—			—
Transaction costs		—		—			37			37
Adjusted EBITDA	$	11,854	$	1,307		$	(8,011	)	$	5,150

For the three months ended June 30, 2022 and 2021, four and six customers, respectively, made up greater than 10% of total revenues.

	Three Months Ended June 30, 2022
	RNG			REG		Corporate		Total
Customer A		24.9	%		—		—		24.9	%
Customer B		15.0	%		—		—		15.0	%
Customer C		12.5	%		—		—		12.5	%
Customer D		10.1	%		—		—		10.1	%

	Three Months Ended June 30, 2021
	RNG			REG			Corporate		Total
Customer A		17.5	%		—			—		17.5	%
Customer B		16.6	%		—			—		16.6	%
Customer C		13.0	%		—			—		13.0	%
Customer D		—			12.1	%		—		12.1	%
Customer E		11.9	%		—			—		11.9	%
Customer F		11.8	%		—			—		11.8	%

The Company’s reportable segments for the six months ended June 30, 2022 and 2021 are Renewable Natural Gas and Renewable Electricity Generation.

	Six Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Total revenue	$	97,233	$	8,300		$	(5,478	)	$	100,055
Net income (loss)		48,180		(2,594	)		(27,549	)		18,037
EBITDA (1)		55,538		201			(22,806	)		32,933
Adjusted EBITDA (1)		55,583		(68	)		(20,916	)		34,599
Total assets		149,351		55,791			109,109			314,251
Capital expenditures		3,814		1,328			6			5,148

(1) First six months of 2022 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the six months ended June 30, 2022:

	Six Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Net Income (loss)	$	48,180	$	(2,594	)	$	(27,549	)	$	18,037
Depreciation and amortization		7,358		2,795			133			10,286
Interest expense		—		—			303			303
Income tax expense		—		—			4,307			4,307
EBITDA	$	55,538	$	201		$	(22,806	)	$	32,933
Impairment loss		27		42			51			120
Transaction costs		—		—			32			32
Net loss (gain) on sale of assets		18		(311	)		—			(293	)
Unrealized losses on hedging activities		—		—			1,807			1,807
Adjusted EBITDA	$	55,583	$	(68	)	$	(20,916	)	$	34,599

	Six Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Total revenue	$	55,704	$	7,417		$	—		$	63,121
Net income (loss)		18,134		(2,268	)		(34,783	)		(18,917	)
EBITDA (1)		26,633		542			(28,563	)		(1,388	)
Adjusted EBITDA (1)		26,633		1,168			(28,438	)		(637	)
Total assets		156,505		53,369			41,774			251,648
Capital expenditures		4,020		449			—			4,469

(2) First six months of 2021 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the six months ended June 30, 2021:

	Six Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Net income (loss)	$	18,134	$	(2,268	)	$	(34,783	)	$	(18,917	)
Depreciation and amortization		8,499		2,808			89			11,396
Interest expense		—		—			1,366			1,366
Income tax expense		—		2			4,765			4,767
EBITDA	$	26,633	$	542		$	(28,563	)	$	(1,388	)
Impairment loss		—		626			—			626
Transaction costs		—		—			125			125
Adjusted EBITDA	$	26,633	$	1,168		$	(28,438	)	$	(637	)

For the six months ended June 30, 2022 and 2021, three and six customers, respectively, made up greater than 10% of total revenues.

	Six Months Ended June 30, 2022
	RNG			REG		Corporate		Total
Customer A		24.7	%		—		—		24.7	%
Customer B		13.6	%		—		—		13.6	%
Customer C		13.6	%		—		—		13.6	%

	Six Months Ended June 30, 2021
	RNG			REG			Corporate		Total
Customer A		13.8	%		—			—		13.8	%
Customer B		13.1	%		—			—		13.1	%
Customer C		13.1	%		—			—		13.1	%
Customer D		11.5	%		—			—		11.5	%
Customer E		11.1	%		—			—		11.1	%
Customer F		—			11.0	%		—		11.0	%

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Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

NOTE 20 – LEASES

The Company leases office space and other office equipment under operating lease arrangements (with initial terms greater than twelve months), expiring in various years through 2027. These leases have been entered into to better enable the Company to conduct business operations. Office space is leased to provide adequate workspace for all employees in Pittsburgh, Pennsylvania and Houston, Texas. Office space and office equipment agreements that exceed 12 months are accounted for as operating leases in accordance with ASC 842, Lease Accounting.

The Company also leases safety equipment for the various operational sites in the United States. The term of certain equipment exceeds twelve months and is accordingly classified as a finance lease under ASC 842. The finance leases expire in 2024 and were entered into in order to provide a safe work environment for operational employees.

The Company determines if an arrangement is, or contains, a lease at inception based on whether that contract conveys the right to control the use of an identified asset in exchange for consideration for a period of time. For all operating and finance lease arrangements, the Company presents at the commencement date: a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

The Company has elected, as a practical expedient, not to separate non-lease components from lease components, and instead account for each separate component as a single lease component for all lease arrangements, as lessee. In addition, the Company has elected, as a practical expedient, not to apply lease recognition requirements to leases with a term of one year or less. In determination of the lease term, the Company considers the likelihood of lease renewal options and lease termination provisions.

The Company uses its incremental borrowing rate, as the basis to calculate the present value of future lease payments, at lease commencement. The incremental borrowing rate represents the rate that would approximate the rate to borrow funds on a collateralized basis over a similar term and in a similar economic environment.

Supplemental information related to operating lease arrangements was as follows:

	Three Months Ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	82		$	64
Weighted average remaining lease term (in years)		1.28			1.70
Weighted average discount rate		5.00	%		5.00	%

	Six Months Ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	199		$	140
Weighted average remaining lease term (in years)		1.28			1.70
Weighted average discount rate		5.00	%		5.00	%

Future minimum operating lease payments are as follows:

Year Ending
Remainder of 2022	$	166
2023		11
2024		5
2025		4
2026		4
2027		1
Interest		(5	)
Total	$	186

Supplemental information related to finance lease arrangements was as follows:

	Three and Six Months Ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of financing lease liabilities	$	6		$	—
Weighted average remaining lease term (in years)		1.87			—
Weighted average discount rate		5.00	%		—

Future minimum finance lease payments are as follows:

Year Ending
Remainder of 2022	$	44
2023		75
2024		24
Interest		(6	)
Total	$	137

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Income (loss) per share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Income (loss) per share

NOTE 21 – INCOME (LOSS) PER SHARE

Basic and diluted income (loss) per share was computed using the following common share data for the three and six months ended June 30, 2022:

	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021
Net income (loss)	$	19,152	$	(4,652	)
Basic weighted-average shares outstanding		141,129,457		141,015,213
Dilutive effect of share-based awards		1,332,612		—
Diluted weighted-average shares outstanding		142,462,069		141,015,213
Basic income (loss) per share	$	0.14	$	(0.03	)
Diluted income (loss) per share	$	0.13	$	(0.03	)

	Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
Net income (loss)	$	18,037	$	(18,917	)
Basic weighted-average shares outstanding		141,087,699		141,015,213
Dilutive effect of share-based awards		1,132,575		—
Diluted weighted-average shares outstanding		142,220,274		141,015,213
Basic income (loss) per share	$	0.13	$	(0.13	)
Diluted income (loss) per share	$	0.13	$	(0.13	)

As a result of incurring a net loss for the three and six months ended June 30, 2021, potential common shares of 2,569,613 were excluded from diluted loss per share because the effect would have been antidilutive.

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Subsequent Events

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

NOTE 22 – SUBSEQUENT EVENTS

The Company evaluated its June 30, 2022 condensed consolidated financial statements through the date the financial statements were issued. The Company is not aware of any subsequent events which would require recognition or disclosure in the consolidated financial statements.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions of the SEC on Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of the Company’s financial position and of the results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2022 (the “2021 Annual Report”). The results of operations for the three months and six months ended June 30, 2022 in this report are not necessarily indicative of the results that may be expected for any other interim period or for the full year. The balance sheet at December 31, 2021, has been derived from the audited financial statements as of that date. For further information, refer to the Company’s audited financial statements and notes thereto included for the year ended December 31, 2021 in the 2021 Annual Report.

Retrospective Presentation

Retrospective Presentation

As discussed in Note 1, as a result of the Reorganization Transactions, the Company acquired the assets and entities (excluding Montauk USA) that were previously owned by MNK. As part of the Reorganization Transactions, a 1:1 pro rata distribution of shares of the Company’s common stock was made to holders of MNK’s ordinary shares. This pro rata distribution resulted in the ownership of the Company after the Reorganization Transactions being identical to the ownership of MNK prior to the Reorganization Transactions and was therefore akin to a common control transaction. All members’ equity in the financial statements and notes have been retrospectively adjusted to give effect to the 1:1 distribution ratio, as if such pro rata distribution occurred as of all pre-IPO periods presented.

Segment Reporting

Segment Reporting

The Company reports segment information in three segments: RNG, Renewable Electricity Generation and Corporate. This is consistent with the internal reporting provided to the chief operating decision maker who evaluates operating results and performance. The aforementioned business services and offerings described in Note 1 are grouped and defined by management as two distinct operating segments: RNG and Renewable Electricity Generation. Below is a description of the Company’s operating segments and other activities.

The RNG segment represents the sale of gas sold at fixed-price contracts, counterparty share RNG volumes and applicable Environmental Attributes. This business unit represents the majority of the revenues generated by the Company. The Renewable Electricity Generation segment represents the sale of captured electricity and applicable Environmental Attributes. Corporate & Other relates to additional discrete financial information for the corporate function. It is primarily used as a shared service center for maintaining functions such as executive, accounting, treasury, legal, human resources, tax, environmental, engineering and other operations functions not otherwise allocated to a segment. As such, the corporate entity is not determined to be an operating segment but is discretely disclosed for purposes of reconciliation to the Company’s consolidated financial statements.

Use of Estimates

Use of Estimates

The preparation of financial statements, in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Equity-Based Compensation

Equity-Based Compensation

The Company accounts for equity-based compensation under the provisions of Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation, (“ASC 718”). ASC 718 requires compensation costs related to share-based payment transactions, measured based on the fair value of the instruments issued, be recognized in the consolidated financial statements over the requisite service period of the award. Stock options are initially measured on the grant date using the Black-Scholes valuation model, which requires the use of subjective assumptions related to the expected stock price volatility, term, risk-free interest rate and dividend yield. For restricted stock and restricted stock units, the Company determines the grant date fair value based on the closing market price per share of the stock on the date of the grant.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In September 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses. The new guidance changes how entities measure credit losses on financial instruments and the timing of when such losses are recorded. The new standard is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU 2020-06, Debt: Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments and contracts in an entity’s own equity. This guidance is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those years, with early adoption permitted only as of annual reporting periods beginning after December 15, 2020. The Company currently does not anticipate this ASU will have a material impact on its consolidated financial statements or related financial statement disclosures.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company’s current debt agreement bears interest at the Bloomberg Short-Term Bank Yield Index Rate plus an applicable margin. LIBOR is no longer utilized as a reference rate.

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Revenues from Contracts with Customers (Tables)

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Summary of Company's Revenue by Major Source

The following tables display the Company’s revenue by major source, excluding realized and unrealized gains or losses under the Company’s gas hedge program, based on product type and timing of transfer of goods and services for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended June 30, 2022
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	1,250	$	14,637	$	15,887
Natural Gas Environmental Attributes		48,647		—		48,647
Electric Commodity		—		2,648		2,648
Electric Environmental Attributes		1,715		—		1,715
	$	51,612	$	17,285	$	68,897
Operating Segment:
RNG	$	49,897	$	14,637	$	64,534
REG		1,715		2,648		4,363
	$	51,612	$	17,285	$	68,897

	Three Months Ended June 30, 2021
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	6,332	$	6,627	$	12,959
Natural Gas Environmental Attributes		14,622		—		14,622
Electric Commodity		—		2,299		2,299
Electric Environmental Attributes		1,794		—		1,794
	$	22,748	$	8,926	$	31,674
Operating Segment:
RNG	$	20,954	$	6,627	$	27,581
REG		1,794		2,299		4,093
	$	22,748	$	8,926	$	31,674

	Six Months Ended June 30, 2022
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	1,655	$	24,125	$	25,780
Natural Gas Environmental Attributes		71,357		—		71,357
Electric Commodity		—		5,032		5,032
Electric Environmental Attributes		3,364		—		3,364
	$	76,376	$	29,157	$	105,533
Operating Segment:
RNG	$	73,012	$	24,125	$	97,137
REG		3,364		5,032		8,396
	$	76,376	$	29,157	$	105,533

	Six Months Ended June 30, 2021
	Goods transferred at a point in time		Goods transferred over time		Total
Major Goods/Service Line:
Natural Gas Commodity	$	10,308	$	13,322	$	23,630
Natural Gas Environmental Attributes		32,074		—		32,074
Electric Commodity		—		4,572		4,572
Electric Environmental Attributes		2,845		—		2,845
	$	45,227	$	17,894	$	63,121
Operating Segment:
RNG	$	42,382	$	13,322	$	55,704
REG		2,845		4,572		7,417
	$	45,227	$	17,894	$	63,121

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Accounts and Other Receivables (Tables)

6 Months Ended

Jun. 30, 2022

Receivables, Net, Current [Abstract]

Schedule of Accounts and Other Receivables

Accounts and other receivables consist of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022		December, 31 2021
Accounts receivables	$	23,902	$	9,281
Other receivables		93		26
Reimbursable expenses		3		31
Accounts and other receivables	$	23,998	$	9,338

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Property, Plant and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2022

Property, Plant and Equipment [Abstract]

Summary of Property Plant and Equipment

Property, plant and equipment consists of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022			December 31, 2021
Land	$	595		$	595
Buildings and improvements		29,078			28,693
Machinery and equipment		249,322			246,670
Gas mineral rights		34,551			34,551
Construction work in progress		13,631			12,725
Total		327,177			323,234
Less: Accumulated depreciation and amortization		(151,100	)		(142,341	)
Property, plant & equipment, net	$	176,077		$	180,893

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Goodwill And Intangible Assets, Net (Tables)

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

schedule of Intangible Assets

Goodwill and Intangible assets consist of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022		December 31, 2021
Goodwill	$	60	$	60
Intangible assets with indefinite lives:
Land use rights		329		329
Intangible assets with finite lives:
Interconnections, net of accumulated amortization of $3,447 and $3,034	$	12,113	$	12,526
Customer contracts, net of accumulated amortization of $16,945 and $17,085	$	1,158	$	1,198
Total intangible assets with finite lives:	$	13,271	$	13,724
Total Goodwill and Intangible assets	$	13,660	$	14,113

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Asset Retirement Obligations (Tables)

6 Months Ended

Jun. 30, 2022

Asset Retirement Obligation Disclosure [Abstract]

Summary of Activity Associated with Asset Retirement Obligations

The following table summarizes the activity associated with asset retirement obligations of the Company as of June 30, 2022 and December 31, 2021:

	Six Months Ended June 30, 2022			Year Ended December 31, 2021
Asset retirement obligations - beginning of period	$	5,301		$	5,689
Accretion expense		127			(160	)
Decommissioning		(60	)		(228	)
Asset retirement obligations - end of period	$	5,368		$	5,301

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Derivative Instrument Detail [Abstract]

Summary of Realized and Unrealized Gains and Losses of Derivative Instrument

As a result of the economic hedging strategies employed, the Company had the following realized and unrealized gains and losses in the condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021:

	Three Months Ended
Derivative Instrument	June 30, 2022			June 30, 2021
Commodity contracts:
Realized natural gas	$	(2,655	)	$	—
Unrealized natural gas		1,644			—
Interest rate swaps		614			306
Net gain (loss)	$	(397	)	$	306

	Six Months Ended
Derivative Instrument	June 30, 2022			June 30, 2021
Commodity contracts:
Realized natural gas	$	(3,671	)	$	—
Unrealized natural gas		(1,807	)		—
Interest rate swaps		1,651			724
Net gain (loss)	$	(3,827	)	$	724

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Summary of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The Company’s assets and liabilities that are measured at fair value on a recurring basis include the following as of June 30, 2022 and December 31, 2021, set forth by level, within the fair value hierarchy:

	June 30, 2022
	Level 1			Level 2		Level 3			Total
Commodity derivative liability	$	(1,807	)		—		—		$	(1,807	)
Interest rate swap derivative asset		—			813		—			813
Asset retirement obligations		—			—		(5,368	)		(5,368	)
Earn-out liability		—			—		(4,125	)		(4,125	)
	$	(1,807	)	$	813	$	(9,493	)	$	(10,487	)

	December 31, 2021
	Level 1		Level 2			Level 3			Total
Interest rate swap derivative liability	$	—	$	(839	)	$	—		$	(839	)
Asset retirement obligations		—		—			(5,301	)		(5,301	)
Earn-out liability		—		—			(2,721	)		(2,721	)
	$	—	$	(839	)	$	(8,022	)	$	(8,861	)

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Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Summary of Accrued Liabilities

The Company’s accrued liabilities consists of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022		December 31, 2021
Accrued expenses	$	6,166	$	3,551
Payroll and related benefits		2,346		1,239
Royalty		7,243		4,630
Utility		1,699		1,274
Other		394		129
Accrued liabilities	$	17,848	$	10,823

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Debt (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Summary of Company Debt

The Company’s debt consists of the following as of June 30, 2022 and December 31, 2021:

	June 30, 2022			December 31, 2021
Term loans	$	76,000		$	80,000
Less: current principal maturities		(8,000	)		(8,000	)
Less: debt issuance costs (on long-term debt)		(535	)		(608	)
Long-term debt	$	67,465		$	71,392
Current portion of long- term debt		7,834			7,815
	$	75,299		$	79,207

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

The Company’s provision for income taxes in interim periods is typically computed by applying the estimated annual effective tax rates to income or loss before income taxes for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. For the three months ended June 30, 2022, the Company utilized full year pre-tax income and calculated an estimated effective tax rate. The Company utilized an estimated effective tax rate for the six months ended June 30, 2022. For the three months ended June 30, 2021, the Company utilized full year pre-tax income and calculated an estimated effective tax rate. The Company utilized an estimated effective tax rate for the six months ended June 30, 2021.

	Three Months Ended
	June 30, 2022			June 30, 2021
Provision for income taxes	$	4,565		$	3,385
Effective tax rate		19	%		(267	)%
	Six Months Ended
	June 30, 2022			June 30, 2021
Provision (benefit) for income taxes	$	4,307		$	4,767
Effective tax rate		19	%		(34	)%

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

Summary of Fair Value of MRI EICP Options and Valuation Assumptions

The fair value of the MRI EICP options were estimated using the Black-Scholes option pricing model with the following weighted-average assumptions (no dividends were expected):

	Grant Date
Risk-free interest rate		0.5	%
Expected volatility		32.0	%
Expected option life (in years)		5.5
Grant-date fair value	$	3.44

Summary of Outstanding Activity of Options,Restricted Stock and Restricted Stock Units under MRI EICP

The following table summarizes the restricted shares, restricted stock units and options outstanding under the MRI EICP as June 30, 2022 and June 30, 2021, respectively:

	Restricted Shares					Restricted Stock Units					Options
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Exercise Price
End of period - December 31, 2021		2,569,613		$	10.08		377,984		$	10.23		950,214		$	11.38
Beginning of period - January 1, 2022		2,569,613		$	10.08		377,984		$	10.23		950,214		$	11.38
Granted		1,250,000			12.40
Vested		(256,681	)		11.38		(27,984	)		11.38		(950,214	)		11.38
Forfeited		(1,250,000	)		9.04							—			—
End of period – June 30, 2022		2,312,932		$	11.75		350,000		$	10.13		—		$	—

	Restricted Shares					Restricted Stock Units					Options
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Exercise Price
End of period - December 31, 2020		—		$	—		—		$	—		—	$	—
Beginning of period-January 1, 2021		—		$	—		—		$	—		—	$	—
Granted		2,269,827			11.20		29,304			11.38		950,214		11.38
Vested		(950,214	)		11.38		—			—		—		—
Forfeited		—			—		(1,056	)		11.38		—		—
Exercised		—			—		—			—		—		—
End of period – June 30, 2021		1,319,613		$	11.07		28,248		$	11.38		950,214	$	11.38

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Summary of Reconciliation of the Company's Reportable Segments' Net Income from Continuing Operations

The following tables are consistent with the manner in which the chief operating decision maker evaluates the performance of each segment and allocates the Company’s resources. In the following tables “RNG” refers to Renewable Natural Gas and “REG” refer to Renewable Electricity Generation.

	Three Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Total revenue	$	64,566	$	4,329		$	(1,011	)	$	67,884
Net income (loss)		35,240		(1,415	)		(14,673	)		19,152
EBITDA (1)		38,920		(14	)		(9,784	)		29,122
Adjusted EBITDA (1)		38,947		28			(11,423	)		27,552
Total assets		149,351		55,791			109,109			314,251
Capital expenditures		2,803		(32	)		1			2,772

(1) Second quarter of 2022 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the three months ended June 30, 2022:

	Three Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Net income (loss)	$	35,240	$	(1,415	)	$	(14,673	)	$	19,152
Depreciation and amortization		3,680		1,401			53			5,134
Interest expense		—		—			271			271
Income tax expense		—		—			4,565			4,565
EBITDA	$	38,920	$	(14	)	$	(9,784	)	$	29,122
Impairment loss		27		42			—			69
Transaction costs		—		—			5			5
Unrealized gains on hedging activities							(1,644	)		(1,644	)
Adjusted EBITDA	$	38,947	$	28		$	(11,423	)	$	27,552

	Three Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Total revenue	$	27,581	$	4,093		$	—		$	31,674
Net income (loss)		7,573		(27	)		(12,198	)		(4,652	)
EBITDA (1)		11,854		1,307			(8,048	)		5,113
Adjusted EBITDA (1)		11,854		1,307			(8,011	)		5,150
Total assets		156,505		53,369			41,774			251,648
Capital expenditures		2,708		425			—			3,133

(1) Second quarter of 2021 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the three months ended June 30, 2021:

	Three Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Net income (loss)	$	7,573	$	(27	)	$	(12,198	)	$	(4,652	)
Depreciation and amortization		4,281		1,334			45			5,660
Interest expense		—		—			720			720
Income tax expense		—		—			3,385			3,385
EBITDA	$	11,854	$	1,307		$	(8,048	)	$	5,113
Impairment loss		—		—			—			—
Transaction costs		—		—			37			37
Adjusted EBITDA	$	11,854	$	1,307		$	(8,011	)	$	5,150

The Company’s reportable segments for the six months ended June 30, 2022 and 2021 are Renewable Natural Gas and Renewable Electricity Generation.

	Six Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Total revenue	$	97,233	$	8,300		$	(5,478	)	$	100,055
Net income (loss)		48,180		(2,594	)		(27,549	)		18,037
EBITDA (1)		55,538		201			(22,806	)		32,933
Adjusted EBITDA (1)		55,583		(68	)		(20,916	)		34,599
Total assets		149,351		55,791			109,109			314,251
Capital expenditures		3,814		1,328			6			5,148

(1) First six months of 2022 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the six months ended June 30, 2022:

	Six Months Ended June 30, 2022
	RNG		REG			Corporate			Total
Net Income (loss)	$	48,180	$	(2,594	)	$	(27,549	)	$	18,037
Depreciation and amortization		7,358		2,795			133			10,286
Interest expense		—		—			303			303
Income tax expense		—		—			4,307			4,307
EBITDA	$	55,538	$	201		$	(22,806	)	$	32,933
Impairment loss		27		42			51			120
Transaction costs		—		—			32			32
Net loss (gain) on sale of assets		18		(311	)		—			(293	)
Unrealized losses on hedging activities		—		—			1,807			1,807
Adjusted EBITDA	$	55,583	$	(68	)	$	(20,916	)	$	34,599

	Six Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Total revenue	$	55,704	$	7,417		$	—		$	63,121
Net income (loss)		18,134		(2,268	)		(34,783	)		(18,917	)
EBITDA (1)		26,633		542			(28,563	)		(1,388	)
Adjusted EBITDA (1)		26,633		1,168			(28,438	)		(637	)
Total assets		156,505		53,369			41,774			251,648
Capital expenditures		4,020		449			—			4,469

(2) First six months of 2021 EBITDA and Adjusted EBITDA Reconciliations

The following table is a reconciliation of the Company’s reportable segments’ net income (loss) from continuing operations to Adjusted EBITDA for the six months ended June 30, 2021:

	Six Months Ended June 30, 2021
	RNG		REG			Corporate			Total
Net income (loss)	$	18,134	$	(2,268	)	$	(34,783	)	$	(18,917	)
Depreciation and amortization		8,499		2,808			89			11,396
Interest expense		—		—			1,366			1,366
Income tax expense		—		2			4,765			4,767
EBITDA	$	26,633	$	542		$	(28,563	)	$	(1,388	)
Impairment loss		—		626			—			626
Transaction costs		—		—			125			125
Adjusted EBITDA	$	26,633	$	1,168		$	(28,438	)	$	(637	)

Summary of Revenue by Major Customers

For the three months ended June 30, 2022 and 2021, four and six customers, respectively, made up greater than 10% of total revenues.

	Three Months Ended June 30, 2022
	RNG			REG		Corporate		Total
Customer A		24.9	%		—		—		24.9	%
Customer B		15.0	%		—		—		15.0	%
Customer C		12.5	%		—		—		12.5	%
Customer D		10.1	%		—		—		10.1	%

	Three Months Ended June 30, 2021
	RNG			REG			Corporate		Total
Customer A		17.5	%		—			—		17.5	%
Customer B		16.6	%		—			—		16.6	%
Customer C		13.0	%		—			—		13.0	%
Customer D		—			12.1	%		—		12.1	%
Customer E		11.9	%		—			—		11.9	%
Customer F		11.8	%		—			—		11.8	%

For the six months ended June 30, 2022 and 2021, three and six customers, respectively, made up greater than 10% of total revenues.

	Six Months Ended June 30, 2022
	RNG			REG		Corporate		Total
Customer A		24.7	%		—		—		24.7	%
Customer B		13.6	%		—		—		13.6	%
Customer C		13.6	%		—		—		13.6	%

	Six Months Ended June 30, 2021
	RNG			REG			Corporate		Total
Customer A		13.8	%		—			—		13.8	%
Customer B		13.1	%		—			—		13.1	%
Customer C		13.1	%		—			—		13.1	%
Customer D		11.5	%		—			—		11.5	%
Customer E		11.1	%		—			—		11.1	%
Customer F		—			11.0	%		—		11.0	%

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Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Summary of Supplemental Information Related To Operating Leases

Supplemental information related to operating lease arrangements was as follows:

	Three Months Ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	82		$	64
Weighted average remaining lease term (in years)		1.28			1.70
Weighted average discount rate		5.00	%		5.00	%

	Six Months Ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of operating lease liabilities	$	199		$	140
Weighted average remaining lease term (in years)		1.28			1.70
Weighted average discount rate		5.00	%		5.00	%

Summary of Future Minimum Operating Lease Payments

Future minimum operating lease payments are as follows:

Year Ending
Remainder of 2022	$	166
2023		11
2024		5
2025		4
2026		4
2027		1
Interest		(5	)
Total	$	186

Summary of Supplemental information Related To Finance Leases

Supplemental information related to finance lease arrangements was as follows:

	Three and Six Months Ended June 30,
	2022			2021
Cash paid for amounts included in the measurement of financing lease liabilities	$	6		$	—
Weighted average remaining lease term (in years)		1.87			—
Weighted average discount rate		5.00	%		—

Summary of Future Minimum Finance Lease Payments

Future minimum finance lease payments are as follows:

Year Ending
Remainder of 2022	$	44
2023		75
2024		24
Interest		(6	)
Total	$	137

XML

Income (loss) per share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Schedule of Basic income (loss) per share

Basic and diluted income (loss) per share was computed using the following common share data for the three and six months ended June 30, 2022:

	Three Months Ended June 30, 2022		Three Months Ended June 30, 2021
Net income (loss)	$	19,152	$	(4,652	)
Basic weighted-average shares outstanding		141,129,457		141,015,213
Dilutive effect of share-based awards		1,332,612		—
Diluted weighted-average shares outstanding		142,462,069		141,015,213
Basic income (loss) per share	$	0.14	$	(0.03	)
Diluted income (loss) per share	$	0.13	$	(0.03	)

	Six Months Ended June 30, 2022		Six Months Ended June 30, 2021
Net income (loss)	$	18,037	$	(18,917	)
Basic weighted-average shares outstanding		141,087,699		141,015,213
Dilutive effect of share-based awards		1,132,575		—
Diluted weighted-average shares outstanding		142,220,274		141,015,213
Basic income (loss) per share	$	0.13	$	(0.13	)
Diluted income (loss) per share	$	0.13	$	(0.13	)

XML

Description of Business - Additional Information (Detail) $ / shares in Units, $ in Thousands		6 Months Ended
	Jan. 26, 2021 USD ($) $ / shares shares	Jun. 30, 2022
Number of years of experience		30 years
Number of current operations		15
Percent of greenhouse gas reduction requirement		60.00%
Sale of stock, Number of shares issued in transaction | shares	2,702,500
Sale of stock, price per share | $ / shares	$ 8.5
Sale of stock, Consideration received on transaction	$ 22,971
Principal amount of loan	$ 8,940

XML

Summary of Significant Accounting Policies - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2022 ReportableSegments
Accounting Policies [Line Items]
Exchange of shares of the company's common stock	1
Pro rata exchange occurred as of all pre-IPO periods presented	1
Number of reportable segments	3

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Asset Impairment - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Impairment loss	$ 69	$ 0	$ 120	$ 626
Computer software and hardware [Member]
Impairment loss			(51)
Customer Contracts [Member]
Impairment loss			(27)
Miscellaneous capital assets [Member]
Impairment loss			$ (42)

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Revenues from Contracts with Customers - Summary of Company's Revenue by Major Source (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	$ 68,897	$ 31,674	$ 105,533	$ 63,121
RNG [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	64,534	27,581	97,137	55,704
REG [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	4,363	4,093	8,396	7,417
Natural Gas Commodity [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	15,887	12,959	25,780	23,630
Natural Gas Environmental Attributes [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	48,647	14,622	71,357	32,074
Electric Commodity [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	2,648	2,299	5,032	4,572
Electric Environmental Attributes [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	1,715	1,794	3,364	2,845
Goods transferred at a point in time [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	51,612	22,748	76,376	45,227
Goods transferred at a point in time [Member] | RNG [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	49,897	20,954	73,012	42,382
Goods transferred at a point in time [Member] | REG [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	1,715	1,794	3,364	2,845
Goods transferred at a point in time [Member] | Natural Gas Commodity [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	1,250	6,332	1,655	10,308
Goods transferred at a point in time [Member] | Natural Gas Environmental Attributes [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	48,647	14,622	71,357	32,074
Goods transferred at a point in time [Member] | Electric Environmental Attributes [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	1,715	1,794	3,364	2,845
Goods transferred over time [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	17,285	8,926	29,157	17,894
Goods transferred over time [Member] | RNG [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	14,637	6,627	24,125	13,322
Goods transferred over time [Member] | REG [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	2,648	2,299	5,032	4,572
Goods transferred over time [Member] | Natural Gas Commodity [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	14,637	6,627	24,125	13,322
Goods transferred over time [Member] | Electric Commodity [Member]
Disaggregation of Revenue [Line Items]
Revenues from Contracts with Customers	$ 2,648	$ 2,299	$ 5,032	$ 4,572

XML

Accounts and Other Receivables - Schedule of Accounts and Other Receivables (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Receivables, Net, Current [Abstract]
Accounts receivables	$ 23,902	$ 9,281
Other receivables	93	26
Reimbursable expenses	3	31
Accounts and other receivables	$ 23,998	$ 9,338

XML

Accounts and Other Receivables - Additional Information (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Receivables, Net, Current [Abstract]
Reserve expense receivables current	$ 0	$ 0

XML

Prepaid Expenses and Other Current Assets - Additional Information (Detail) - Renewable Identification Numbers [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Prepaid Expense and Other Current Assets [Line Items]
Regulatory assets purchased		$ 1,585
Regulatory assets	$ 0		$ 0		$ 0
Operating and Maintenance Expenses [Member]
Prepaid Expense and Other Current Assets [Line Items]
Rins impairment adjustment	$ 0	710	$ 0	$ 710
Prepaid Expenses and Other Current Assets [Member]
Prepaid Expense and Other Current Assets [Line Items]
Rins Carrying Value		$ 875		$ 875

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Assets Held For Sale -Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Dec. 31, 2021
Sale of allowances credits	$ 1,088
Nitrogen Oxide (NOx) Credits [Member]
Asset held for sale		$ 777
Gain on sale of intangible assets	$ 311

XML

Property, Plant and Equipment, Net - Summary of Property Plant and Equipment (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 327,177	$ 323,234
Less: Accumulated depreciation and amortization	(151,100)	(142,341)
Property, Plant & Equipment, Net	176,077	180,893
Land [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	595	595
Buildings and improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	29,078	28,693
Machinery and equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	249,322	246,670
Gas mineral rights [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	34,551	34,551
Construction work in progress [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 13,631	$ 12,725

XML

Property, Plant and Equipment, Net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Property, Plant and Equipment [Line Items]
Depreciation expense	$ 4,789	$ 4,843	$ 9,599	$ 9,798
Gas mineral rights [Member]
Property, Plant and Equipment [Line Items]
Adjustment for amortization	$ 129	$ 445	$ 257	$ 936

XML

Goodwill And Intangible Assets, Net - Schedule of Intangible Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Schedule Of Intangible Assets And Goodwill [Line Items]
Goodwill	$ 60	$ 60
Finite-Lived Intangible Assets, Net [Abstract]
Intangible assets with finite lives	13,271	13,724
Total Goodwill and Intangible Assets	13,660	14,113
Interconnection [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Intangible assets with finite lives	12,113	12,526
Customer Contracts [Member]
Finite-Lived Intangible Assets, Net [Abstract]
Intangible assets with finite lives	1,158	1,198
Land Use Rights [Member]
Indefinite-lived Intangible Assets (Excluding Goodwill) [Abstract]
Intangible assets with indefinite lives	$ 329	$ 329

XML

Goodwill And Intangible Assets, Net - Schedule of Intangible Assets (Detail) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Interconnection [Member]
Schedule Of Intangible Assets And Goodwill [Line Items]
Finite lived intangible assets accumulated amortization	$ 3,447	$ 3,034
Customer Contracts [Member]
Schedule Of Intangible Assets And Goodwill [Line Items]
Finite lived intangible assets accumulated amortization	$ 16,945	$ 17,085

XML

Goodwill And Intangible Assets, Net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 216	$ 372	$ 430	$ 662
Customer Contracts [Member]
Finite-Lived Intangible Assets [Line Items]
Finite lived intangible asset useful life	17 years
Interconnection [Member]
Finite-Lived Intangible Assets [Line Items]
Finite lived intangible asset useful life		16 years

XML

Assets Retirement Obligations - Summary of Activity Associated with Asset Retirement Obligations (Detail) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Asset Retirement Obligation Disclosure [Abstract]
Asset retirement obligations - beginning of period	$ 5,301	$ 5,689	$ 5,689
Accretion expense	127	$ 215	(160)
Decommissioning	(60)		(228)
Asset retirement obligations - end of period	$ 5,368		$ 5,301

XML

Derivative Instruments - Summary of Realized and Unrealized Gains and Losses of Derivative Instrument (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Derivative [Line Items]
Net gain (loss)	$ (397)	$ 306	$ (3,827)	$ 724
Commodity Contract [Member] | Natural Gas and Natural Gas Liquids [Member] | Sales [Member]
Derivative [Line Items]
Net gain (loss)	(2,655)	0	(3,671)	0
Commodity Contract [Member] | Natural Gas and Natural Gas Liquids [Member] | Other Income [Member]
Derivative [Line Items]
Net gain (loss)	1,644	0	(1,807)	0
Interest Rate Swap [Member] | Interest Expense [Member]
Derivative [Line Items]
Net gain (loss)	$ 614	$ 306	$ 1,651	$ 724

XML

Fair Value of Financial Instruments - Summary of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset retirement obligations	$ (5,368)	$ (5,301)	$ (5,689)
Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commodity derivative liability	(1,807)
Interest rate swap derivative asset	813
Interest rate swap derivative liability		(839)
Asset retirement obligations	(5,368)	(5,301)
Earn-out liability	(4,125)	(2,721)
Fair Value, Net Asset (Liability)	(10,487)	(8,861)
Fair Value, Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commodity derivative liability	(1,807)
Interest rate swap derivative asset	0
Interest rate swap derivative liability		0
Asset retirement obligations	0	0
Earn-out liability	0	0
Fair Value, Net Asset (Liability)	(1,807)	0
Fair Value, Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commodity derivative liability	0
Interest rate swap derivative asset	813
Interest rate swap derivative liability		(839)
Asset retirement obligations	0	0
Earn-out liability	0	0
Fair Value, Net Asset (Liability)	813	(839)
Fair Value, Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Commodity derivative liability	0
Interest rate swap derivative asset	0
Interest rate swap derivative liability		0
Asset retirement obligations	(5,368)	(5,301)
Earn-out liability	(4,125)	(2,721)
Fair Value, Net Asset (Liability)	$ (9,493)	$ (8,022)

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Accrued Liabilities - Summary of Accrued Liabilities (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued expenses	$ 6,166	$ 3,551
Payroll and related benefits	2,346	1,239
Royalty	7,243	4,630
Utility	1,699	1,274
Other	394	129
Accrued Liabilities	$ 17,848	$ 10,823

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Debt - Summary of Company Debt (Detail) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Less: current principal maturities	$ (8,000)	$ (8,000)
Less: debt issuance costs (on long-term debt)	(535)	(608)
Long-term debt	67,465	71,392
Current portion of long-term debt	7,834	7,815
Debt, Long-term and Short-term, Combined Amount	75,299	79,207
Term Loans [Member]
Debt Instrument [Line Items]
Term loans	76,000	$ 80,000
Long-term debt	$ 76,000

XML

Debt - Additional Information (Detail) - USD ($) $ in Thousands			3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 21, 2021	Sep. 12, 2019	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Extinguishment of Debt [Line Items]
Line of Credit Facility, Interest Rate During Period					3.41%		2.91%
Debt Issuance Costs, Net			$ 326		$ 326
Debt Issuance Costs, capitalized			1,701		1,701
Amortized debt issuance expense			104	$ 133	212	$ 271
Long-term debt			67,465		67,465		$ 71,392
Payment of debt modification charges					2,027
Term Loans [Member]
Extinguishment of Debt [Line Items]
Long-term debt			76,000		76,000
Revolving Credit Facility [Member]
Extinguishment of Debt [Line Items]
Line of Credit Facility, Current Borrowing Capacity			116,095		116,095
Letter of Credit [Member]
Extinguishment of Debt [Line Items]
Line of Credit Facility, Maximum Amount Outstanding During Period			3,905		3,905
MEH [Member] | Second Amendment [Member]
Extinguishment of Debt [Line Items]
Line of Credit	$ 80,000	$ 80,000
Repayments of Lines of Credit	120,000	38,250
MEH [Member] | Term Loans [Member]
Extinguishment of Debt [Line Items]
Debt Instrument, Periodic Payment, Principal		$ 2,500
MEH [Member] | Term Loans [Member] | Second Amendment And Restated Revolving Credit And Term Loan Agreement [Member] | Through Two Thousand And Twenty Four [Member]
Extinguishment of Debt [Line Items]
Debt Instrument, Periodic Payment, Principal	$ 2,000
MEH [Member] | Term Loans [Member] | Second Amendment And Restated Revolving Credit And Term Loan Agreement [Member] | From Two Thousand And Twenty Five And Upto Two Thousand And Twetny Six [Member]
Extinguishment of Debt [Line Items]
Long-term debt			3,000		3,000
Debt Instrument, Periodic Payment Terms, Balloon Payment to be Paid			$ 32,000		$ 32,000

XML

Income Taxes - Schedule of Effective Income Tax Rate Reconciliation (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax Disclosure [Abstract]
Provision (benefit) for income taxes	$ 4,565	$ 3,385	$ 4,307	$ 4,767
Effective tax rate	19.00%	(267.00%)	19.00%	(34.00%)

XML

Income Taxes - Additional Information (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax [Line Items]
Effective tax rate	19.00%	(267.00%)	19.00%	(34.00%)

XML

Share-Based Compensation - Summary of Fair Value of MRI EICP Options and Valuation Assumptions (Detail) - MRI EICP [Member]	6 Months Ended
	Jun. 30, 2022 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rate	0.50%
Expected volatility	32.00%
Expected option life	5 years 6 months
Grant-date fair value	$ 3.44

XML

Share-Based Compensation - Summary of Outstanding Activity of Options,Restricted Stock and Restricted Stock Units under MRI EICP (Detail) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Restricted Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Beginning of period		0
Number of Shares, Granted	1,250,000
Weighted Average Grant Date Fair Value, Beginning of period		$ 0
Weighted Average Grant Date Fair Value, Granted	$ 12.4
Restricted Shares [Member] | MRI EICP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Beginning of period	2,569,613	0
Number of Shares, Granted		2,269,827
Number of Shares, Vested	(256,681)	(950,214)
Number of Shares, Forfeited	(1,250,000)
Number of Shares, End of period	2,312,932	1,319,613
Weighted Average Grant Date Fair Value, Beginning of period	$ 10.08	$ 0
Weighted Average Grant Date Fair Value, Granted		11.2
Weighted Average Grant Date Fair Value, Vested	11.38	11.38
Weighted Average Grant Date Fair Value, Forfeited	9.04
Weighted Average Grant Date Fair Value, End of period	$ 11.75	$ 11.07
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Beginning of period		0
Weighted Average Grant Date Fair Value, Beginning of period		$ 0
Restricted Stock Units [Member] | MRI EICP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Beginning of period	377,984	0
Number of Shares, Granted		29,304
Number of Shares, Vested	(27,984)	0
Number of Shares, Forfeited		(1,056)
Number of Shares, End of period	350,000	28,248
Weighted Average Grant Date Fair Value, Beginning of period	$ 10.23	$ 0
Weighted Average Grant Date Fair Value, Granted		11.38
Weighted Average Grant Date Fair Value, Vested	11.38
Weighted Average Grant Date Fair Value, Forfeited		11.38
Weighted Average Grant Date Fair Value, End of period	$ 10.13	$ 11.38
Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Beginning of period		0
Options [Member] | MRI EICP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Beginning of period	950,214	0
Number of Shares, Granted		950,214
Number of Shares, Vested	(950,214)
Number of Shares, Forfeited	0	0
Number of Shares, Exercised		$ 0
Number of Shares, End of period	0	950,214
Weighted Average Grant Date Fair Value, Beginning of period	$ 11.38	$ 0
Weighted Average Grant Date Fair Value, Granted		11.38
Weighted Average Grant Date Fair Value, Vested	11.38	0
Weighted Average Grant Date Fair Value, Forfeited	0	0
Weighted Average Exercise Price, Exercised		0
Weighted Average Grant Date Fair Value, End of period	$ 0	$ 11.38

XML

Share-Based Compensation - Additional Information (Detail) $ / shares in Units, $ in Thousands			3 Months Ended		6 Months Ended
	May 31, 2022 USD ($)	Jan. 31, 2021 $ / shares shares	Jun. 30, 2022 USD ($) shares	Mar. 31, 2021 USD ($)	Jun. 30, 2022 USD ($) Employees shares	Jun. 30, 2021 USD ($) shares
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share Based Compensation Expense					$ 4,631	$ 17,139
SAR Plan [Member] | General and Administrative Expense [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share based compensation expense				$ 2,050
MRI EICP [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Common stock shares withheld | shares		950,214	950,214		950,214
Exercise price of common stock | $ / shares		$ 11.38
Share Based Compensation Expense					$ 23,132
MRI EICP [Member] | Section 83 (B) [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Common stock shares withheld | shares						950,214
MRI EICP [Member] | General and Administrative Expense [Member] | Section 83 (B) [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share based compensation expense					$ 10,813
Restricted Stock [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Maximum Number of Shares Per Employee | shares					1,250,000
Number of employees | Employees					2
Time Based Restricted Stock Awards [Member]
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Share Based Compensation Expense			$ 409		$ 409
Share-Based compensation arrangement by share-Based payment award, equity instruments other than options, revalued amount	$ 15,500

XML

Defined Contribution Plan - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, employer matching contribution, percent of match			50.00%
Defined contribution plan, employer matching contribution, percent of employees' gross pay			4.00%
Defined contribution plan, cost	$ 185	$ 134	$ 353	$ 269
Safe Harbor Contribution [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined contribution plan, maximum annual contributions per employee, percent			3.00%
Defined contribution plan, employer matching contribution, vesting period			4 years

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Related Party Transactions - Additional Information (Detail) - USD ($)		3 Months Ended		6 Months Ended
	Jan. 26, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Related Party Transaction [Line Items]
Notes receivable from related parties current		$ 8,940		$ 8,940
Debt conversion, converted instrument, shares issued				800,000
MNK [Member] | Loans Advanced To Related Parties [Member]
Related Party Transaction [Line Items]
Payment towards advances to related parties	$ 5,000
MNK And Hosken Consolidated Investments Limited [Member]
Related Party Transaction [Line Items]
Reimbursments received from related party		5,000	$ 3,000	$ 7,000	$ 730,000
Due to related party		$ 26,000		$ 26,000		$ 0

XML

Segment Information - Summary of Reconciliation of the Company's Reportable Segments' Net Income from Continuing Operations (Detail) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2022		Jun. 30, 2021		Jun. 30, 2022		Jun. 30, 2021		Dec. 31, 2021
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total revenue	$ 67,884		$ 31,674		$ 100,055		$ 63,121
Net income (loss)	19,152		(4,652)		18,037		(18,917)
EBITDA	29,122	[1]	5,113	[2]	32,933	[3]	(1,388)	[4]
Adjusted EBITDA	27,552	[1]	5,150	[2]	34,599	[3]	(637)	[4]
Total assets	314,251		251,648		314,251		251,648		$ 286,480
Capital expenditures	2,772		3,133		5,148		4,469
Depreciation and amortization	5,134		5,660		10,286		11,396
Interest expense	271		720		303		1,366
Income tax expense	4,565		3,385		4,307		4,767
Impairment loss	69		0		120		626
Net loss (gain) on sale of assets	0		22		(293)		22
Transaction costs	5		37		32		125
Unrealized gains (losses) on hedging activities	(1,644)				1,807
RNG [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total revenue	64,566		27,581		97,233		55,704
Net income (loss)	35,240		7,573		48,180		18,134
EBITDA	38,920	[1]	11,854	[2]	55,538	[3]	26,633	[4]
Adjusted EBITDA	38,947	[1]	11,854	[2]	55,583	[3]	26,633	[4]
Total assets	149,351		156,505		149,351		156,505
Capital expenditures	2,803		2,708		3,814		4,020
Depreciation and amortization	3,680		4,281		7,358		8,499
Impairment loss	27				27
Net loss (gain) on sale of assets					18
REG [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total revenue	4,329		4,093		8,300		7,417
Net income (loss)	(1,415)		(27)		(2,594)		(2,268)
EBITDA	(14)	[1]	1,307	[2]	201	[3]	542	[4]
Adjusted EBITDA	28	[1]	1,307	[2]	(68)	[3]	1,168	[4]
Total assets	55,791		53,369		55,791		53,369
Capital expenditures	(32)		425		1,328		449
Depreciation and amortization	1,401		1,334		2,795		2,808
Income tax expense							2
Impairment loss	42				42		626
Net loss (gain) on sale of assets	(311)
Corporate [Member]
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items]
Total revenue	(1,011)				(5,478)
Net income (loss)	(14,673)		(12,198)		(27,549)		(34,783)
EBITDA	(9,784)	[1]	(8,048)	[2]	(22,806)	[3]	(28,563)	[4]
Adjusted EBITDA	(11,423)	[1]	(8,011)	[2]	(20,916)	[3]	(28,438)	[4]
Total assets	109,109		41,774		109,109		41,774
Capital expenditures	1				6
Depreciation and amortization	53		45		133		89
Interest expense	271		720		303		1,366
Income tax expense	4,565		3,385		4,307		4,765
Impairment loss					51
Transaction costs	5		$ 37		32		$ 125
Unrealized gains (losses) on hedging activities	$ (1,644)				$ 1,807

[1] Second quarter of 2022 EBITDA and Adjusted EBITDA Reconciliations

[2] Second quarter of 2021 EBITDA and Adjusted EBITDA Reconciliations

[3] First six months of 2022 EBITDA and Adjusted EBITDA Reconciliations

[4] First six months of 2021 EBITDA and Adjusted EBITDA Reconciliations

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Segment Information - Summary of Revenue by Major Customers (Detail) - Customer Concentration Risk [Member] - Revenue Benchmark [Member]	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Customer A [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	24.90%	17.50%	24.70%	13.80%
Customer B [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	15.00%	16.60%	13.60%	13.10%
Customer C [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	12.50%	13.00%	13.60%	13.10%
Customer D [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	10.10%	12.10%		11.50%
Customer E [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage		11.90%		11.10%
Customer F [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage		11.80%		11.00%
RNG [Member] | Customer A [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	24.90%	17.50%	24.70%	13.80%
RNG [Member] | Customer B [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	15.00%	16.60%	13.60%	13.10%
RNG [Member] | Customer C [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	12.50%	13.00%	13.60%	13.10%
RNG [Member] | Customer D [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage	10.10%			11.50%
RNG [Member] | Customer E [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage		11.90%		11.10%
RNG [Member] | Customer F [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage		11.80%
REG [Member] | Customer D [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage		12.10%
REG [Member] | Customer F [Member]
Revenue, Major Customer [Line Items]
Concentration risk, percentage				11.00%

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Leases - Summary of Supplemental Information Related To Operating Leases (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Cash paid for amounts included in the measurement of operating lease liabilities	$ 82	$ 64	$ 199	$ 140
Weighted average remaining lease term (in years)	1 year 3 months 10 days	1 year 8 months 12 days	1 year 3 months 10 days	1 year 8 months 12 days
Weighted average discount rate	5.00%	5.00%	5.00%	5.00%

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Leases - Summary of Future Minimum Operating Lease Payments (Detail) $ in Thousands	Jun. 30, 2022 USD ($)
Leases [Abstract]
Remainder of 2022	$ 166
2023	11
2024	5
2025	4
2026	4
2027	1
Interest	(5)
Total	$ 186

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Leases - Summary of Supplemental Information Related To Finance Leases (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Cash paid for amounts included in the measurement of financing lease liabilities	$ 6	$ 0
Weighted average remaining lease term (in years)	1 year 10 months 13 days
Weighted average discount rate	5.00%	0.00%

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Leases - Summary of Future Minimum Finance Lease Payments (Detail) $ in Thousands	Jun. 30, 2022 USD ($)
Finance Lease, Liability, Payment, Due [Abstract]
Remainder of 2022	$ 44
2023	75
2024	24
Interest	(6)
Total	$ 137

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Income (loss) per share - Schedule of Loss Per Share, Basic and Diluted (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Share [Abstract]
Net income (loss)	$ 19,152	$ (4,652)	$ 18,037	$ (18,917)
Basic weighted-average shares outstanding	141,129,457	141,015,213	141,087,699	141,015,213
Dilutive effect of share-based awards	1,332,612	0	1,132,575	0
Diluted weighted-average shares outstanding	142,462,069	141,015,213	142,220,274	141,015,213
Basic income (loss) per share	$ 0.14	$ (0.03)	$ 0.13	$ (0.13)
Diluted income (loss) per share	$ 0.13	$ (0.03)	$ 0.13	$ (0.13)

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Income (loss) per share - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2021 shares
Earnings Per Share [Abstract]
Antidilutive excluded from diluted net loss per share	2,569,613