10-Q
falseQ2--12-310001826600Second quarter of 2022 EBITDA and Adjusted EBITDA ReconciliationsSecond quarter of 2021 EBITDA and Adjusted EBITDA ReconciliationsFirst six months of 2022 EBITDA and Adjusted EBITDA ReconciliationsFirst six months of 2021 EBITDA and Adjusted EBITDA Reconciliations 0001826600 2022-06-30 0001826600 2021-12-31 0001826600 2022-04-01 2022-06-30 0001826600 2021-04-01 2021-06-30 0001826600 2022-01-01 2022-06-30 0001826600 2021-01-01 2021-06-30 0001826600 2021-06-30 0001826600 2021-01-26 2021-01-26 0001826600 2021-01-26 0001826600 2021-01-01 2021-12-31 0001826600 2022-08-04 0001826600 2022-03-31 0001826600 2021-03-31 0001826600 2020-12-31 0001826600 us-gaap:LandMember 2022-06-30 0001826600 us-gaap:BuildingAndBuildingImprovementsMember 2022-06-30 0001826600 us-gaap:OtherMachineryAndEquipmentMember 2022-06-30 0001826600 us-gaap:DrillingRightsMember 2022-06-30 0001826600 us-gaap:ConstructionInProgressMember 2022-06-30 0001826600 mntk:LandUseRightsMember 2022-06-30 0001826600 mntk:InterconnectionMember 2022-06-30 0001826600 us-gaap:CustomerContractsMember 2022-06-30 0001826600 mntk:RenewableNaturalGasMember 2022-06-30 0001826600 mntk:RenewableElectricityGenerationMember 2022-06-30 0001826600 us-gaap:CorporateMember 2022-06-30 0001826600 us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001826600 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001826600 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001826600 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2022-06-30 0001826600 mntk:TermLoansMember 2022-06-30 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2022-06-30 0001826600 us-gaap:RevolvingCreditFacilityMember 2022-06-30 0001826600 mntk:FromTwoThousandAndTwentyFiveAndUptoTwoThousandAndTwetnySixMember mntk:SecondAmendmentAndRestatedRevolvingCreditAndTermLoanAgreementMember mntk:TermLoansMember mntk:MehMember 2022-06-30 0001826600 us-gaap:LetterOfCreditMember 2022-06-30 0001826600 mntk:MnkAndHoskenConsolidatedInvestmentsLimitedMember 2022-06-30 0001826600 mntk:RenewableIdentificationNumbersMember 2022-06-30 0001826600 us-gaap:LandMember 2021-12-31 0001826600 us-gaap:BuildingAndBuildingImprovementsMember 2021-12-31 0001826600 us-gaap:OtherMachineryAndEquipmentMember 2021-12-31 0001826600 us-gaap:DrillingRightsMember 2021-12-31 0001826600 us-gaap:ConstructionInProgressMember 2021-12-31 0001826600 mntk:LandUseRightsMember 2021-12-31 0001826600 mntk:InterconnectionMember 2021-12-31 0001826600 us-gaap:CustomerContractsMember 2021-12-31 0001826600 us-gaap:FairValueMeasurementsRecurringMember us-gaap:FairValueInputsLevel1Member 2021-12-31 0001826600 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001826600 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001826600 us-gaap:FairValueMeasurementsRecurringMember 2021-12-31 0001826600 mntk:TermLoansMember 2021-12-31 0001826600 mntk:NitrogenOxidenoxCreditsMember 2021-12-31 0001826600 mntk:MnkAndHoskenConsolidatedInvestmentsLimitedMember 2021-12-31 0001826600 mntk:RenewableIdentificationNumbersMember 2021-12-31 0001826600 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001826600 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001826600 mntk:NaturalGasCommodityMember us-gaap:TransferredAtPointInTimeMember 2022-04-01 2022-06-30 0001826600 us-gaap:TransferredOverTimeMember mntk:NaturalGasCommodityMember 2022-04-01 2022-06-30 0001826600 mntk:NaturalGasCommodityMember 2022-04-01 2022-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:NaturalGasEnvironmentalAttributesMember 2022-04-01 2022-06-30 0001826600 mntk:NaturalGasEnvironmentalAttributesMember 2022-04-01 2022-06-30 0001826600 us-gaap:TransferredOverTimeMember mntk:ElectricCommodityMember 2022-04-01 2022-06-30 0001826600 mntk:ElectricCommodityMember 2022-04-01 2022-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:ElectricEnvironmentalAttributesMember 2022-04-01 2022-06-30 0001826600 mntk:ElectricEnvironmentalAttributesMember 2022-04-01 2022-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember 2022-04-01 2022-06-30 0001826600 us-gaap:TransferredOverTimeMember 2022-04-01 2022-06-30 0001826600 mntk:RenewableNaturalGasMember us-gaap:TransferredAtPointInTimeMember 2022-04-01 2022-06-30 0001826600 mntk:RenewableNaturalGasMember us-gaap:TransferredOverTimeMember 2022-04-01 2022-06-30 0001826600 mntk:RenewableNaturalGasMember 2022-04-01 2022-06-30 0001826600 mntk:RenewableElectricityGenerationMember us-gaap:TransferredAtPointInTimeMember 2022-04-01 2022-06-30 0001826600 us-gaap:TransferredOverTimeMember mntk:RenewableElectricityGenerationMember 2022-04-01 2022-06-30 0001826600 mntk:RenewableElectricityGenerationMember 2022-04-01 2022-06-30 0001826600 us-gaap:DrillingRightsMember 2022-04-01 2022-06-30 0001826600 us-gaap:CustomerContractsMember 2022-04-01 2022-06-30 0001826600 srt:NaturalGasPerThousandCubicFeetMember us-gaap:SalesMember us-gaap:CommodityContractMember 2022-04-01 2022-06-30 0001826600 srt:NaturalGasPerThousandCubicFeetMember us-gaap:OtherIncomeMember us-gaap:CommodityContractMember 2022-04-01 2022-06-30 0001826600 us-gaap:InterestRateSwapMember us-gaap:InterestExpenseMember 2022-04-01 2022-06-30 0001826600 us-gaap:CorporateMember 2022-04-01 2022-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerAMember mntk:RenewableNaturalGasMember 2022-04-01 2022-06-30 0001826600 mntk:CustomerAMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2022-04-01 2022-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:RenewableNaturalGasMember mntk:CustomerBMember 2022-04-01 2022-06-30 0001826600 mntk:CustomerBMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2022-04-01 2022-06-30 0001826600 mntk:RenewableNaturalGasMember mntk:CustomerCMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2022-04-01 2022-06-30 0001826600 mntk:CustomerCMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2022-04-01 2022-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerDMember mntk:RenewableNaturalGasMember 2022-04-01 2022-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerDMember 2022-04-01 2022-06-30 0001826600 mntk:TimeBasedRestrictedStockAwardsMember 2022-04-01 2022-06-30 0001826600 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001826600 mntk:MnkAndHoskenConsolidatedInvestmentsLimitedMember 2022-04-01 2022-06-30 0001826600 mntk:RenewableIdentificationNumbersMember mntk:OperatingAndMaintenanceExpensesMember 2022-04-01 2022-06-30 0001826600 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001826600 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:NaturalGasCommodityMember 2021-04-01 2021-06-30 0001826600 mntk:NaturalGasCommodityMember us-gaap:TransferredOverTimeMember 2021-04-01 2021-06-30 0001826600 mntk:NaturalGasCommodityMember 2021-04-01 2021-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:NaturalGasEnvironmentalAttributesMember 2021-04-01 2021-06-30 0001826600 mntk:NaturalGasEnvironmentalAttributesMember 2021-04-01 2021-06-30 0001826600 us-gaap:TransferredOverTimeMember mntk:ElectricCommodityMember 2021-04-01 2021-06-30 0001826600 mntk:ElectricCommodityMember 2021-04-01 2021-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:ElectricEnvironmentalAttributesMember 2021-04-01 2021-06-30 0001826600 mntk:ElectricEnvironmentalAttributesMember 2021-04-01 2021-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember 2021-04-01 2021-06-30 0001826600 us-gaap:TransferredOverTimeMember 2021-04-01 2021-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:RenewableNaturalGasMember 2021-04-01 2021-06-30 0001826600 mntk:RenewableNaturalGasMember us-gaap:TransferredOverTimeMember 2021-04-01 2021-06-30 0001826600 mntk:RenewableNaturalGasMember 2021-04-01 2021-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:RenewableElectricityGenerationMember 2021-04-01 2021-06-30 0001826600 mntk:RenewableElectricityGenerationMember us-gaap:TransferredOverTimeMember 2021-04-01 2021-06-30 0001826600 mntk:RenewableElectricityGenerationMember 2021-04-01 2021-06-30 0001826600 us-gaap:DrillingRightsMember 2021-04-01 2021-06-30 0001826600 mntk:InterconnectionMember 2021-04-01 2021-06-30 0001826600 srt:NaturalGasPerThousandCubicFeetMember us-gaap:SalesMember us-gaap:CommodityContractMember 2021-04-01 2021-06-30 0001826600 srt:NaturalGasPerThousandCubicFeetMember us-gaap:OtherIncomeMember us-gaap:CommodityContractMember 2021-04-01 2021-06-30 0001826600 us-gaap:InterestExpenseMember us-gaap:InterestRateSwapMember 2021-04-01 2021-06-30 0001826600 us-gaap:CorporateMember 2021-04-01 2021-06-30 0001826600 mntk:RenewableNaturalGasMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerAMember 2021-04-01 2021-06-30 0001826600 mntk:CustomerAMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-04-01 2021-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerBMember mntk:RenewableNaturalGasMember 2021-04-01 2021-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerBMember 2021-04-01 2021-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerCMember 2021-04-01 2021-06-30 0001826600 mntk:CustomerDMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-04-01 2021-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerEMember mntk:RenewableNaturalGasMember 2021-04-01 2021-06-30 0001826600 mntk:CustomerEMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-04-01 2021-06-30 0001826600 mntk:RenewableNaturalGasMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember mntk:CustomerCMember 2021-04-01 2021-06-30 0001826600 mntk:CustomerDMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:RenewableElectricityGenerationMember 2021-04-01 2021-06-30 0001826600 mntk:CustomerFMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:RenewableNaturalGasMember 2021-04-01 2021-06-30 0001826600 us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember mntk:CustomerFMember 2021-04-01 2021-06-30 0001826600 mntk:RenewableIdentificationNumbersMember 2021-04-01 2021-06-30 0001826600 mntk:MnkAndHoskenConsolidatedInvestmentsLimitedMember 2021-04-01 2021-06-30 0001826600 mntk:RenewableIdentificationNumbersMember mntk:OperatingAndMaintenanceExpensesMember 2021-04-01 2021-06-30 0001826600 us-gaap:TreasuryStockMember 2022-01-01 2022-06-30 0001826600 us-gaap:RetainedEarningsMember 2022-01-01 2022-06-30 0001826600 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-06-30 0001826600 mntk:ComputerSoftwareAndHardwareMember 2022-01-01 2022-06-30 0001826600 us-gaap:CustomerContractsMember 2022-01-01 2022-06-30 0001826600 mntk:MiscellaneousCapitalAssetsMember 2022-01-01 2022-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:NaturalGasCommodityMember 2022-01-01 2022-06-30 0001826600 us-gaap:TransferredOverTimeMember mntk:NaturalGasCommodityMember 2022-01-01 2022-06-30 0001826600 mntk:NaturalGasCommodityMember 2022-01-01 2022-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:NaturalGasEnvironmentalAttributesMember 2022-01-01 2022-06-30 0001826600 mntk:NaturalGasEnvironmentalAttributesMember 2022-01-01 2022-06-30 0001826600 mntk:ElectricCommodityMember us-gaap:TransferredOverTimeMember 2022-01-01 2022-06-30 0001826600 mntk:ElectricCommodityMember 2022-01-01 2022-06-30 0001826600 mntk:ElectricEnvironmentalAttributesMember us-gaap:TransferredAtPointInTimeMember 2022-01-01 2022-06-30 0001826600 mntk:ElectricEnvironmentalAttributesMember 2022-01-01 2022-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember 2022-01-01 2022-06-30 0001826600 us-gaap:TransferredOverTimeMember 2022-01-01 2022-06-30 0001826600 mntk:RenewableNaturalGasMember us-gaap:TransferredAtPointInTimeMember 2022-01-01 2022-06-30 0001826600 mntk:RenewableNaturalGasMember us-gaap:TransferredOverTimeMember 2022-01-01 2022-06-30 0001826600 mntk:RenewableNaturalGasMember 2022-01-01 2022-06-30 0001826600 mntk:RenewableElectricityGenerationMember us-gaap:TransferredAtPointInTimeMember 2022-01-01 2022-06-30 0001826600 us-gaap:TransferredOverTimeMember mntk:RenewableElectricityGenerationMember 2022-01-01 2022-06-30 0001826600 mntk:RenewableElectricityGenerationMember 2022-01-01 2022-06-30 0001826600 us-gaap:DrillingRightsMember 2022-01-01 2022-06-30 0001826600 us-gaap:CommodityContractMember us-gaap:SalesMember srt:NaturalGasPerThousandCubicFeetMember 2022-01-01 2022-06-30 0001826600 srt:NaturalGasPerThousandCubicFeetMember us-gaap:OtherIncomeMember us-gaap:CommodityContractMember 2022-01-01 2022-06-30 0001826600 us-gaap:InterestRateSwapMember us-gaap:InterestExpenseMember 2022-01-01 2022-06-30 0001826600 us-gaap:CorporateMember 2022-01-01 2022-06-30 0001826600 mntk:RenewableNaturalGasMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerAMember 2022-01-01 2022-06-30 0001826600 mntk:CustomerAMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2022-01-01 2022-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerBMember mntk:RenewableNaturalGasMember 2022-01-01 2022-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerBMember 2022-01-01 2022-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerCMember 2022-01-01 2022-06-30 0001826600 mntk:CustomerCMember mntk:RenewableNaturalGasMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2022-01-01 2022-06-30 0001826600 mntk:SafeHarborContributionMember 2022-01-01 2022-06-30 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2022-01-01 2022-06-30 0001826600 us-gaap:RestrictedStockMember 2022-01-01 2022-06-30 0001826600 us-gaap:RestrictedStockMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2022-01-01 2022-06-30 0001826600 us-gaap:RestrictedStockUnitsRSUMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2022-01-01 2022-06-30 0001826600 us-gaap:EmployeeStockOptionMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2022-01-01 2022-06-30 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember us-gaap:GeneralAndAdministrativeExpenseMember mntk:SectionEightyThreeBMember 2022-01-01 2022-06-30 0001826600 mntk:TimeBasedRestrictedStockAwardsMember 2022-01-01 2022-06-30 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2022-01-01 2022-06-30 0001826600 us-gaap:CommonStockMember 2022-01-01 2022-06-30 0001826600 mntk:MnkAndHoskenConsolidatedInvestmentsLimitedMember 2022-01-01 2022-06-30 0001826600 mntk:NitrogenOxidenoxCreditsMember 2022-01-01 2022-06-30 0001826600 mntk:OperatingAndMaintenanceExpensesMember mntk:RenewableIdentificationNumbersMember 2022-01-01 2022-06-30 0001826600 us-gaap:CommonStockMember 2021-01-01 2021-06-30 0001826600 mntk:MembersEquityMember 2021-01-01 2021-06-30 0001826600 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-06-30 0001826600 us-gaap:TreasuryStockMember 2021-01-01 2021-06-30 0001826600 us-gaap:RetainedEarningsMember 2021-01-01 2021-06-30 0001826600 mntk:NaturalGasCommodityMember us-gaap:TransferredAtPointInTimeMember 2021-01-01 2021-06-30 0001826600 mntk:NaturalGasCommodityMember us-gaap:TransferredOverTimeMember 2021-01-01 2021-06-30 0001826600 mntk:NaturalGasCommodityMember 2021-01-01 2021-06-30 0001826600 mntk:NaturalGasEnvironmentalAttributesMember us-gaap:TransferredAtPointInTimeMember 2021-01-01 2021-06-30 0001826600 mntk:NaturalGasEnvironmentalAttributesMember 2021-01-01 2021-06-30 0001826600 mntk:ElectricCommodityMember us-gaap:TransferredOverTimeMember 2021-01-01 2021-06-30 0001826600 mntk:ElectricCommodityMember 2021-01-01 2021-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:ElectricEnvironmentalAttributesMember 2021-01-01 2021-06-30 0001826600 mntk:ElectricEnvironmentalAttributesMember 2021-01-01 2021-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember 2021-01-01 2021-06-30 0001826600 us-gaap:TransferredOverTimeMember 2021-01-01 2021-06-30 0001826600 mntk:RenewableNaturalGasMember us-gaap:TransferredAtPointInTimeMember 2021-01-01 2021-06-30 0001826600 us-gaap:TransferredOverTimeMember mntk:RenewableNaturalGasMember 2021-01-01 2021-06-30 0001826600 mntk:RenewableNaturalGasMember 2021-01-01 2021-06-30 0001826600 us-gaap:TransferredAtPointInTimeMember mntk:RenewableElectricityGenerationMember 2021-01-01 2021-06-30 0001826600 us-gaap:TransferredOverTimeMember mntk:RenewableElectricityGenerationMember 2021-01-01 2021-06-30 0001826600 mntk:RenewableElectricityGenerationMember 2021-01-01 2021-06-30 0001826600 us-gaap:DrillingRightsMember 2021-01-01 2021-06-30 0001826600 srt:NaturalGasPerThousandCubicFeetMember us-gaap:SalesMember us-gaap:CommodityContractMember 2021-01-01 2021-06-30 0001826600 us-gaap:CommodityContractMember us-gaap:OtherIncomeMember srt:NaturalGasPerThousandCubicFeetMember 2021-01-01 2021-06-30 0001826600 us-gaap:InterestRateSwapMember us-gaap:InterestExpenseMember 2021-01-01 2021-06-30 0001826600 us-gaap:CorporateMember 2021-01-01 2021-06-30 0001826600 mntk:CustomerAMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember mntk:RenewableNaturalGasMember 2021-01-01 2021-06-30 0001826600 mntk:CustomerAMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-01-01 2021-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerBMember mntk:RenewableNaturalGasMember 2021-01-01 2021-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerBMember 2021-01-01 2021-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerCMember 2021-01-01 2021-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerDMember mntk:RenewableNaturalGasMember 2021-01-01 2021-06-30 0001826600 mntk:CustomerDMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-01-01 2021-06-30 0001826600 us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:CustomerEMember mntk:RenewableNaturalGasMember 2021-01-01 2021-06-30 0001826600 mntk:CustomerEMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-01-01 2021-06-30 0001826600 mntk:CustomerCMember mntk:RenewableNaturalGasMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-01-01 2021-06-30 0001826600 mntk:CustomerFMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember mntk:RenewableElectricityGenerationMember 2021-01-01 2021-06-30 0001826600 mntk:CustomerFMember us-gaap:CustomerConcentrationRiskMember us-gaap:SalesRevenueNetMember 2021-01-01 2021-06-30 0001826600 us-gaap:RestrictedStockMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-01-01 2021-06-30 0001826600 us-gaap:RestrictedStockUnitsRSUMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-01-01 2021-06-30 0001826600 us-gaap:EmployeeStockOptionMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-01-01 2021-06-30 0001826600 mntk:MnkAndHoskenConsolidatedInvestmentsLimitedMember 2021-01-01 2021-06-30 0001826600 mntk:RenewableIdentificationNumbersMember mntk:OperatingAndMaintenanceExpensesMember 2021-01-01 2021-06-30 0001826600 mntk:MnkMember mntk:LoansAdvancedToRelatedPartiesMember 2021-01-26 2021-01-26 0001826600 mntk:SecondAmendmentMember mntk:MehMember 2019-09-12 2019-09-12 0001826600 mntk:MehMember mntk:TermLoansMember 2019-09-12 2019-09-12 0001826600 mntk:SecondAmendmentMember mntk:MehMember 2019-09-12 0001826600 mntk:MehMember mntk:SecondAmendmentMember 2021-12-21 2021-12-21 0001826600 mntk:SecondAmendmentAndRestatedRevolvingCreditAndTermLoanAgreementMember mntk:TermLoansMember mntk:MehMember mntk:ThroughTwoThousandAndTwentyFourMember 2021-12-21 2021-12-21 0001826600 mntk:SecondAmendmentMember mntk:MehMember 2021-12-21 0001826600 us-gaap:StockAppreciationRightsSARSMember us-gaap:GeneralAndAdministrativeExpenseMember 2021-01-01 2021-03-31 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-01-31 2021-01-31 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-01-31 0001826600 mntk:RenewableNaturalGasMember 2021-06-30 0001826600 mntk:RenewableElectricityGenerationMember 2021-06-30 0001826600 us-gaap:CorporateMember 2021-06-30 0001826600 mntk:SectionEightyThreeBMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-06-30 0001826600 mntk:RenewableIdentificationNumbersMember us-gaap:PrepaidExpensesAndOtherCurrentAssetsMember 2021-06-30 0001826600 mntk:TimeBasedRestrictedStockAwardsMember 2022-05-31 2022-05-31 0001826600 us-gaap:CommonStockMember 2022-03-31 0001826600 us-gaap:TreasuryStockMember 2022-03-31 0001826600 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001826600 us-gaap:RetainedEarningsMember 2022-03-31 0001826600 mntk:MembersEquityMember 2022-03-31 0001826600 us-gaap:CommonStockMember 2022-06-30 0001826600 us-gaap:TreasuryStockMember 2022-06-30 0001826600 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001826600 us-gaap:RetainedEarningsMember 2022-06-30 0001826600 mntk:MembersEquityMember 2022-06-30 0001826600 us-gaap:CommonStockMember 2021-03-31 0001826600 us-gaap:TreasuryStockMember 2021-03-31 0001826600 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001826600 us-gaap:RetainedEarningsMember 2021-03-31 0001826600 mntk:MembersEquityMember 2021-03-31 0001826600 us-gaap:CommonStockMember 2021-06-30 0001826600 us-gaap:TreasuryStockMember 2021-06-30 0001826600 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001826600 us-gaap:RetainedEarningsMember 2021-06-30 0001826600 mntk:MembersEquityMember 2021-06-30 0001826600 us-gaap:CommonStockMember 2021-12-31 0001826600 us-gaap:TreasuryStockMember 2021-12-31 0001826600 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001826600 us-gaap:RetainedEarningsMember 2021-12-31 0001826600 mntk:MembersEquityMember 2021-12-31 0001826600 us-gaap:RestrictedStockMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-12-31 0001826600 us-gaap:RestrictedStockUnitsRSUMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-12-31 0001826600 us-gaap:EmployeeStockOptionMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-12-31 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember us-gaap:RestrictedStockMember 2022-06-30 0001826600 us-gaap:RestrictedStockUnitsRSUMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2022-06-30 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember us-gaap:EmployeeStockOptionMember 2022-06-30 0001826600 mntk:MembersEquityMember 2020-12-31 0001826600 us-gaap:CommonStockMember 2020-12-31 0001826600 us-gaap:TreasuryStockMember 2020-12-31 0001826600 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001826600 us-gaap:RetainedEarningsMember 2020-12-31 0001826600 us-gaap:RestrictedStockMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2020-12-31 0001826600 us-gaap:RestrictedStockUnitsRSUMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2020-12-31 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember us-gaap:EmployeeStockOptionMember 2020-12-31 0001826600 us-gaap:RestrictedStockMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-06-30 0001826600 mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember us-gaap:RestrictedStockUnitsRSUMember 2021-06-30 0001826600 us-gaap:EmployeeStockOptionMember mntk:MontaukRenewablesIncEquityAndIncentiveCompensationPlanMember 2021-06-30 0001826600 us-gaap:RestrictedStockMember 2020-12-31 0001826600 us-gaap:RestrictedStockUnitsRSUMember 2020-12-31 0001826600 us-gaap:EmployeeStockOptionMember 2020-12-31 iso4217:USD xbrli:shares utr:Year xbrli:pure iso4217:USD xbrli:shares mntk:Employees mntk:ReportableSegments
Table of Contents
 
 
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
TABLE OF CONTENTS
 
        
Page
 
   
     6  
     
ITEM 1.
       6  
     
ITEM 2.
       32  
     
ITEM 3.
       53  
     
ITEM 4.
       53  
   
     54  
     
ITEM 1.
       54  
     
ITEM 1A.
       54  
     
ITEM 2.
       54  
     
ITEM 3.
       55  
     
ITEM 4.
       55  
     
ITEM 5.
       55  
     
ITEM 6.
       55  
   
     56  
 

Table of Contents
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

Table of Contents
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

Table of Contents
   
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

Table of Contents
PART I FINANCIAL INFORMATION
 
ITEM 1.
FINANCIAL STATEMENTS
 
    
Page
 
Montauk Renewables, Inc
.
  
Unaudited condensed consolidated financial statements
  
     7  
     8  
     9  
     10  
     11  
 
6

Table of Contents
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
E
arn 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 wit
h 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 t
he 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 o
f $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 a
t $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.
 
17

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  
    
 
 
   
 
 
 
 
18

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 t
o $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 b
y $38,250
and the resulting quarterly principal installments were reduced t
o $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 o
f (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