Q1 2022 Archaea Energy Inc Earnings Call

Greetings and welcome to RQ Energy, Inc., 1Q, 2020, Good morning.

Greetings and welcome to our key Energy Inc.

Once your 2022 earnings conference call and webcast.

At this time, all participants are in listen-only mode. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is for you.

At this time all participants are in listen only mode. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

And I would like to turn the conference over to your host, Megan Light, Vice President of Investor Relations.

I'd now like to turn the conference over to your host Megan Light Vice President of Investor Relations. Please go ahead.

Thank you and good morning, everyone. Welcome to Archia Energy Inc. first quarter, 2022 earnings conference call with me today are Nick Storks, Archie Chief Executive Officer and Brian McCarthy, Archie Chief Investment Officer and Interim Chief Financial Officer.

And good morning, everyone. Welcome to Archea Energy, Inc. First quarter 2020 earnings Conference call with me today are next door Archaean, Chief Executive Officer, and Brian Mccarthy <unk> Chief investment Officer.

<unk> financial officer.

Arkea released preliminary financial and operating results for the first quarter 2022 this morning, and those results are available on the investor relations portion of our website at arkeaenergy.com.

<unk> released preliminary financial and operating results for the first quarter of 2022. This morning, and those results are available on the Investor Relations portion of our website at Archea energy Dot com.

The presentation and access to the webcast for this call are also available on our website, and after completion of this call, a replay will be available for 12 people.

Houston and access to the webcast for this call are also available on our website and after completion of this call a replay will be available for 12 months.

Before we begin, I'd like to remind you that our remarks on this call, including answers to your questions, contain forward-looking statements, which involve risks, uncertainties, and assumptions.

Before we begin I'd like to remind you that our remarks on this call including answers to your questions contain forward looking statements, which involve risks uncertainties and assumptions.

Board-looking statements are not a guarantee of performance and actual results can differ materially from what is contained in such a statement.

Forward looking statements are not a guarantee of performance and actual results could differ materially from what is contained in such statements.

Several factors that can cause or contribute to such differences are described on slide 2.

Several factors that could cause or contribute to such differences are described on slide two of our presentation.

The forward-looking statement reflects our views as of the date of this call, and ARCHIA does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the call.

These forward looking statements reflect our views as of the date of this call and argue that does not undertake any obligation to update forward looking statements to reflect events or circumstances. After the date of this call.

Additionally, this call will contain discussion of certain non- GAAP measures , concluding but not limited to adjusted ease.

Additionally, this call will contain discussion of certain non-GAAP measures, including but not limited to adjusted EBITDA.

A definition of non- GAAP measures used and a reconciliation of these measures to the nearest GAP measure is included in the appendix of the presentation.

It has been a non-GAAP measure and a reconciliation of these measures to the nearest GAAP measure is included in the appendix of the presentation.

This call will also contain discussion of estimated long-term annual earnings power which referred to estimated long-term annual adjusted EBITDA after specified projects within the company's R&D development backlog for which gas rights agreements are currently in place or are expected to be in place after closing pending transactions are completed in

This call will also contain a discussion of estimated long term annual earnings power with referred to estimate as long term annual adjusted EBITDA after specified projects within the company's R&D development backlog for wet gas rights agreement currently in place or are expected to be in place. After closing pending transactions are completed and ramped up the <unk>.

Full flows.

Our presentation includes additional information regarding estimated long-term annual earnings power and the underlying assumptions used in this.

Our presentation includes additional information regarding estimated long term annual earnings power and the underlying assumptions used in his estimation.

Certain assumptions regarding these estimates are inherently uncertain and, as a result, our actual long-term annual earnings power may be different from this estimate and such differences may be much more.

Certain assumptions regarding these estimates are inherently uncertain and as a result, our actual long term annual earnings power may be different from those estimates and such differences may be material.

A reconciliation of estimated long-term adjusted EBITDA to net income or loss, the closest US GAAP financial measure, cannot be provided without unreasonable efforts due to the inherent difficulty in quantifying burden.

A reconciliation of estimated long term adjusted EBITDA to net income or loss the closest U S. GAAP financial measure cannot be provided without unreasonable efforts due to the inherent difficulty in quantifying certain amount.

We believe the non- GAAP measures presented provide relevant and useful information in evaluating the effectiveness of our operations.

We believe the non-GAAP measures presented to provide relevant and useful information and evaluating the effectiveness of our operating performance in a manner that is consistent with management's evaluation of financial and operating performance.

in a manner that is consistent with management's evaluation of financial and operational.

non-GAAP financial measures should be considered in addition to the results reported in accordance with GAAP and should not be considered in isolation or as a substitute for GAAP.

non-GAAP financial measures should be considered in addition to the results reported in accordance with GAAP and should not be considered in isolation or as a substitute for GAAP results.

Nick will begin today's call by providing an overview of first quarter results, recent highlights, and an update on our strategic priorities and estimated long-term annual earnings hours.

Nick will begin today's call by providing an overview of first quarter results recent highlights and an update on our strategic priorities and estimated long term annual earnings power.

Brian will then give a commercial update and review financial results in 2022 guidance.

Ryan will then give a commercial update and review financial results in 2022 guidance. We will then open the call for questions.

And now I will turn the call over to Nick Stortz, RTS Chief Executive Officer.

And now I will turn the call over to next door, Archie as Chief Executive Officer.

Good morning everyone and thank you for being here for ARCHIA's first quarter 2022 earnings call.

Good morning, everyone and thank you for being here for <unk> first quarter 2022 earnings call.

We are excited to be here today to discuss the momentous achievements of the RQ team across many aspects of our business so far this year.

We are excited to be here today to discuss the momentous achievement of the RQ team across many aspects of our business. So far this year.

Our first quarter results coupled with two transformational strategic transactions.

Our first quarter results, coupled with two transformational strategic transactions are new lightning renewables joint venture with Republic.

Our new Lightning Renewables Joint Venture with Republic and our Agreement to Acquire in Genco represent an important positive inflection point for our community.

Our agreement to acquire <unk> Genco represent an important positive inflection point for argue.

We have now cemented our run rate to dramatically increase our estimated long-term earnings power or earn

We have now submitted our run rate to dramatically increase our estimated long term earnings power.

Or earnings power for sure.

And we are committed to positioning ARCHIA as an industry-leading, profitable, multi-decade provider of decarbonization solutions that deliver value to our shareholders, partners, and community.

And we are committed to positioning <unk> as an industry, leading profitable multi decade provider of de carbonization solutions that deliver value to our shareholders partners and communities.

I'd like to start by sharing a few key highlights of our performance since the start of the

I'd like to start by sharing a few key highlights of our performance since the start of the year.

First, for the first quarter of 2022, we reported R&G production sold of 1.54 million MMBQ. Electricity production sold of 166,000 megawatt hours.

For the first quarter 2022, we reported R&D production sold of $1 $5 4 million F&B to electricity production sold of 166000 megawatt hours adjusted EBITDA of $20 6 million and net loss of $33 2 million.

Adjusted EBITDA of 20.6 million and that loss of 33.2 million.

Our performance was positively impacted by strong market pricing of environmental attributes, natural gas, and natural gas.

Our performance was positively impacted by strong market pricing of environmental attributes natural gas and electricity.

and to a lesser extent, negatively impacted by increased GNA expenses driven by increased headcount and other costs related to scaling for future growth, along with certain acquisition and other transaction costs.

And to a lesser extent negatively impacted by increased G&A expenses, driven by increased head count and other costs related to scaling for future growth.

Along with certain acquisition and other transaction costs and severance costs.

Based on our first quarter results, which were in line with our expectations, we are pleased to reaffirm our 2022 Adjusted Evadon Production Guidance today.

Based on our first quarter results, which were in line with our expectations. We are pleased to reaffirm our 2022 adjusted EBITDA production guidance today.

Strategically, we recently announced two landmark transactions, an agreement to acquire Ingenco and the formation of a new joint venture with Republic Circle.

Strategically, we recently announced two landmark transactions and agreement to acquire and Genco and the formation of a new joint venture with Republic services.

lightning renewables for the development of 39 R&G facilities at landfills owned or operated by Republic across the country.

<unk> renewables with the development of 39 R&D facilities at landfills owned or operated by Republic across the U S.

As a result of these transactions, we've added 50 projects to our development backlog since our last call and a total of 53 projects year to date, including the two gas rights agreements we signed and the acquisition of the landfill gas to electric facility, which occurred early in the first quarter in which we discussed in our fourth quarter.

As a result of these transactions we've added 50 projects toward development backlog since our last call and a total of 53 projects year to date, including the two gas rates agreements, we signed in the acquisition of the landfill gas to electric facility, which occurred early in the first quarter and which we discussed in our fourth quarter call.

Since that call, we have more than doubled the number of projects in our backlog, bringing our total to 88 projects.

Since that call, we have more than doubled the number of projects in our backlog, bringing our total to 88 projects, which we have gas rights agreements in place or expect to have gas rights agreements in place after the Genco acquisition closes.

which we have gas rights agreements in place, or expect to have gas rights agreements in place after the Ingenco Agreement.

We expect the Republican and Genco transactions to be transformative to our business, enabling us to scale.

We expect the Republican and genco transactions to be transformative to our business.

Enabling us to scale faster than we previously anticipated.

Since our initial business combination was announced in April 2021, we have added 60 total projects to our development.

Since our initial business combination was announced in April 2021, we've added 60 total projects toward development backlog.

And we have expanded our earnings power to approximately $600 million in potential annual adjusted EBITDA once all projects in our backlog are completed and ramped up.

And we've expanded our earnings power to approximately $600 million in potential annual adjusted EBITDA. Once all projects in our backlog are completed and wrapped up.

We see the appendix for a presentation for additional information regarding earning power and the underlying assumptions we use to catch.

Please see the appendix to our presentation for additional information regarding earnings power and the underlying assumptions, we use to calculate it.

As we discussed in our last call, we signed a historic, long-term fixed-price contract with Fortis BC in January , with a sale of up to 7.6 million MMBT of R&G per year, with volumes expected to commence this year and ramp up to full volumes in 2025.

As we discussed on our last call, we signed historic long term fixed price contract with Fortis BC in January the sale of up $7 6 million Btu of R&D per year with volumes expected to commence this year and ramp up to full volumes in 2025.

We believe this is the largest long-term R&G supply contract signed to date.

We believe this is the largest long term LNG supply contract signed to date.

remain as bullish as ever about the supply and demand dynamics of the orange.

We remain as bullish as ever about the supply and demand dynamics of the LNG market.

We continue to advance conversations with an array of potential off-take partners, and we expect to sign additional long-term fixed-price contracts in the coming year.

Continuing to advanced conversations with an array of potential offtake partners and we expect to sign additional long term fixed price contracts in the coming months.

Operationally, we have achieved milestones at key R&G facilities in line with our 2022 development plan and guidance.

Operationally, we have achieved milestones or key LNG facilities in line with our 2022 development plan and guidance as we announced on the last call. We achieved commercial operations at the stores LNG facilities.

As we announced in the last call, we achieved commercial operations at the SOAR's R&G facility.

our first anaerobic digester in January , showcasing the capabilities of our team across biogas.

Our first anaerobic digester in January showcasing the capabilities of our team across biogas sources.

After placing our SIRNG facility into service in late December 2021, we performed electrical overhaul and plant redundancy upgrades at the facility earlier this year. While we experienced a brief outage while completing our work during facilities ramp up process, we believe this downtime has already proven worthwhile.

After placing our <unk> facility into service in late December 2021, we performed electrical overhaul and plant redundancy upgrades at.

At the facility earlier this year, while we experienced a brief outage, while completing our work doing facilities ramp up process. We believe this downtime has already proven worthwhile.

and we'll continue to do so. As the size has been operating at over 99% uptime and above target methane recovery levels using full flows from the Keystone landfill since the maintenance was completed.

And we'll continue to do so as the XI has been operating at over 99% uptime and above target methane recovery levels using full flows and the Keystone landfill since the maintenance was completed.

We also recently began utilizing gas flows from the Alliance landfill as by after receiving necessary approvals earlier.

We also recently began utilizing gas flows from the alliance landfill as Si after receiving necessary approvals earlier this month.

We also recently achieved a significant increase in method recovery at our Seneca RNG facility after upgrading the CO2 separation system and the nitrogen removal system. The first two optimizations...

We also recently achieved a significant increase in metal recovery at our Seneca R&D facility after upgrading the <unk> separation system in the nitrogen removal system.

First to optimization stages, we expect at Seneca.

We're incorporating lessons learned at ASI and Seneca into other optimization and new build projects to accelerate timelines and maximize uptime and methane recovery, thereby increasing

Corporate and lessons learned at assai in Seneca into other optimization and newbuild projects to accelerate timelines and maximize uptime and methane recovery, thereby increasing expected project returns.

With respect to technology and project development, we remain on track to deploy our RKOv1 plant design in the 2nd half of the year. We expect RKOv1 to deliver reduced construction timelines and improve project economics, reducing plant capital expenditures approximately 40% compared to industry average.

With respect to technology and project development, we remain on track to deploy our archived version one plant design in the second half of the year, we expect our Q version, one to deliver reduced construction timelines and improve project economics, reducing planned capital expenditures of approximately 40% compared to industry averages.

And have incorporated the expected cost savings from market version 1 into our 2022 guidance and estimated long term annual earnings power.

And have incorporated the expected cost savings from marquee version, one into our 2020 guidance an estimated long term annual earnings power.

We expect this meaningful cost reduction to open new development opportunities for low-flow landfill sites that were previously non-accompanied.

Expect this meaningful cost reduction to open new development opportunities for low flow landfill sites that were previously not economic.

In April , we announced that we have entered into a definitive purchase and sale agreement to acquire Ingenco for $215 million of cash, subject to customary closing.

In April we announced that we have entered into definitive purchase and sale agreement to acquire in genco for $215 million of cash subject to customary closing adjustments. The acquisition will add 14 landfill gas electricity plants to our asset platform and we expect to build R&D facilities on 11, and genco sites overtime and <unk>.

The acquisition will add 14 landfill gas electricity plants to our asset platform, and we expect to build R&G facilities on 11 and Genco sites over time.

In addition, the acquisition brings approximately 70 employees who add valuable expertise to our highly skilled and experienced team at Arch.

<unk> the acquisition brings approximately 70 employees, who add valuable expertise to our highly skilled and experienced team at arc.

The acquisition includes the gas rights for the Ingenko sites and Ingenko's acid base is located on landfills with strong growth potential.

The acquisition includes the gas rates for the Genco sites.

And Genco has the asset base is located on landfills with strong growth potential with.

with over 40 years of permitted waste acceptance on average across.

With over 40 years of permitted waste acceptance on average across sites.

The 11 sites where we expect to build RNG facilities have current cumulative gross flows of over 5 million MBQ per year.

11 sites, where we expect to build R&D facilities have current cumulative gross flows of over 5 million btu per year.

The acquisition has an estimated multiple of approximately 6x total capital expenditures including the acquisition and R&G development costs to the estimated long-term annual adjusted EBITDA associated with the INGENCO asset.

The acquisition is estimated multiple of approximately <unk> total capital expenditures, including the acquisition and R&D development costs for the <unk>.

Estimated long term annual adjusted EBITDA associated with the <unk> assets.

We expect this acquisition to close on or after July .

We expect this acquisition to close on or after July one 2022.

The Ingenco acquisition highlights our ability to acquire electricity generation assets along with the long term gas rights at scale and at attractive.

In Genco acquisition highlights our ability to acquire electric electricity generation assets, along with the long term gas rates at scale and at attractive multiples.

These projects also provide us the potential future operating efficiencies and economic upside from generating our own power on these sites after R&G facilities are completed. Plus the option is

These projects also provide us the potential future operating efficiencies and economic upside from generating our own power on these sites. After LNG facilities are completed.

Plus the option to sell excess power into the market. We are increasingly excited about the synergies of co locating co locating electric assets with our R&D facilities as electricity is one of the main components of operating expense for LNG production.

We are increasingly excited about the synergies of co-locating electric assets with our RNG

as electricity is one of the main components of operating expense for our

Having the option to generate our own power using natural gas at these sites gives us both security of supply and potential cost savings compared to buy.

Having the option to generate our own power using natural gas at these sites gives us both security of supply and potential cost savings compared to buying electricity grid.

Last week, we announced that we have formed a landmark joint venture with Republic Services, one of the largest provider.

Last week, we announced that we have formed a landmark joint venture with Republic services, one of the largest providers of environmental services in the United States.

The joint venture, called Lightning Renewables, is the largest landfill gas to R&D development venture in the industry to date. Lightning Renewables has signed a long-term master gas sale and development agreement to develop R&D facilities at 39 landfill sites owned or operated by Republic across the country.

Joint venture called Lightning renewables is the largest landfill gas to argue development venture in the industry to date late.

Renewables has signed a long term master gas sale and development agreement to develop R&D facilities at 39 landfill sites owned or operated by Republic across the U S.

Joint investments into lightning renewables are expected to total $1.1 billion.

Joining investments into lightning renewables are expected to total $1 1 billion.

including approximately $780 million to be invested by Arcea over the course of several

Including approximately $780 million will be invested by archaea over the course of several years.

RQ will hold a 60% ownership interest in Lightning.

<unk> will hold a 60% ownership interest in <unk>.

Development projects within Lightning Renewables are located at high quality landfill sites with strong growth potential and current cumulative gross flows of approximately 13 million MMB2 per year.

The development projects within lending renewables are located are high quality landfill sites with strong growth potential and current cumulative gross flows of approximately $13 million <unk> per year.

RQ will develop, engineer, construct, and operate the R&G facilities within the JV. We will receive fees for the engineering procurement and construction management services during development and construction, and fees for operation and maintenance services after.

Archie will develop engineered construct and operate the LNG facilities within the JV, we will receive fees for engineering procurement and construction management services during development and construction and fees for operation and maintenance services after completion.

Development and construction of certain projects within Lightning Renewables are expected to begin in 2022, with completion and commissioning of the projects planned through 2027.

<unk> and construction of certain projects within lighting renewables are expected to begin in 2022 with completion and commissioning of the projects planned through 2027.

We estimate build multiples on average of approximately four and a half times across the 39 projects within lightning renewables based on our

We estimate build multiples on average of approximately four five times across the 39 projects within Lightning renewables based on argue as expected net economics.

We expect potential for the addition of incremental projects into lightning renewables over time, as well as additional potential economic upside for the JV and for Arkea through initiatives, including well filled optimization, carbon intensity reduction initiatives and low carbon.

We expect potential for the addition of incremental projects into lightning renewables overtime as well as additional potential economic upside to the JV and for archaea through initiatives, including Westfield optimization carbon intensity reduction initiatives and low carbon hydrogen projects.

We are honored to have been selected by Republic as a partner for this JV, which is the beginning

We are honored to have been selected by Republic as a partner for this JV, which is the beginning of a renewable energy platform that will become a critical component of our kids mission to achieve best in class environmental stewardship and greenhouse gas emission reductions.

that will become a critical component of Arkea's mission to achieve best-in-class environmental stewardship in greenhouse gas emissions.

We are focused on long-term value-oriented capital investments that are expected to make a meaningful sustainability impact for future generations. We are completely aligned.

We are focused on long term value oriented capital investments that are expected to make a meaningful sustainability impact for future generations and we are completely aligned in this vision with Republic.

Lightning renewables in the Injenko acquisition are both incredible achievements in adding to our backlog of high quality development.

Lending renewables and the Genco acquisition are both incredible achievements and adding to our backlog of high quality development projects, including these transactions. We that is 53 development projects to our backlog year to date.

Including these transactions, we've added 53 development projects to our backlog year.

Our total development backlog today includes 80 projects for which we have gas rights agreements in place or expect to have gas rights agreements in place after the 8th.

Our total development backlog today includes 88 projects for which we have gas rights agreements in place or expect to have gas rates ingredients in place after the genco acquisition closes.

We have more than doubled the number of projects in our backlog here today. We have no intention of stopping.

We have more than doubled the number of projects in our backlog year to date, we have no intention of stopping here.

We are continuing to aggressively seek additional development sites within our target return parameters, which include a minimum of 10% cash-on-cash, unleveled returns in a downside case scenario based on long-term contracted volume.

We are continuing to aggressively seek additional development sites within our target return parameters, which include a minimum of 10% cash on cash Unlevered returns and a downside case scenario based on long term contracted volumes only.

Republican and JNCO transactions highlight our ability to continue winning new projects at these attractions.

Publican in Genco transactions highlight our ability to continue winning new projects at these attractive returns.

We're also excited about the meaningful, expected contributions of the Lightning Renovals and Ingenko Transactions to the earnings power of our business.

We're also excited about the meaningful expected contributions of the whitening renewables and in Genco transactions to the earnings power of our business.

Cumulatively, these transactions are expected to add approximately $200 million to our

Emulated Lee these transactions are expected to add approximately $200 million to our earnings power.

We are excited about the positive impact the lighting renewables and enginco transactions will have on our long-term development.

We are excited about the positive impact the lightning renewables in a genco transactions will have on our long term development plan.

And we're actively optimizing the pace and timing of these new development projects within our broader project.

And we are actively optimizing the pace and timing of these new development projects within our broader project Pavel.

We expect to provide a more fulsome update on our optimized long-term development plan at a later date.

We expect to provide a more fulsome update on our optimized long term development plan at a later date.

In the meantime, it is certain that these two transactions will add to our total expected capital needs over the near term, including acquisition and development.

In the meantime, it is certain that these two transactions will add to our total expected capital needs over the near term, including acquisition and development costs were.

We are exploring options to fund these costs and expect to enter into one or more capital markets or private financing transactions. We are committed to securing financial resources.

We are exploring options to fund these costs and expect to enter into one or more capital markets, where private financing transactions.

We are committed to securing financing as soon as practicable to.

meet our near-term capital needs and at the most favorable terms available to Arkea and with the highest value

To meet our near term capital needs and at the most favorable terms available to archaea and with the highest value to our stakeholders.

including the expected impact from all ADA projects in our backlog and our operating assets. We now estimate our earnings power could be approximately $600 million annually.

Including the expected impact from all EDA projects in our backlog and our operating assets. We now estimate our earnings power could be approximately $600 million annually. Once all projects are completed and ramped up with estimates of LNG production of approximately $50 million in Btu annually.

once all projects are completed and ramped up, with estimated RMG production of approximately 50 million.

That is potential long-term annual production approximately nine times the combined company's 2021 production and potential earnings power approximately eight times the company's 2021 adjusted even.

That is potential long term annual production of approximately nine times, the combined company's 2021 production and potential earnings power approximately eight times the company's 2021 adjusted EBITDA.

We expect to achieve this new earnings power in around six to eight years, depending on the speed at which we can scale our development.

We expect to achieve this new earnings power in around six to eight years, depending on the speed at which we can scale our development capabilities.

This potential earnings power includes only projects for which gas rates agreements are in place or expected to be in place after the Injenko acquisition closes and use what we believe to be a conservative

This potential earnings power includes only projects for which gastro agreements are in place or expected to be in place. After the <unk> acquisition closes and use what we believe to be a conservative.

assumption set on revenues with fixed-price volumes only under long-term contracts in place today. In $1.50 per D-3 rent, it will be $1.50 per D-3.

Assumption set on revenues with fixed price volumes only under long term contracts in place today and $1 50 per <unk>.

$140 per metric ton LCFS credit and $3 per MBQ brown gas pricing on uncontracted volumes with no impacts from carbon sequestration, carbon density reduction,

$40 per metric ton LC, thus credits and $3 per MB cube Brown gas pricing on contracted volumes with no impacts from carbon sequestration carbon intensity reduction initiatives or high probably or high probability opportunities in our development pipeline.

or high probability opportunities in our development.

We also assume our electricity facilities remain in operation following construction of RNG facilities on electric sites with natural gas supply costs of $3.00.

We also assume our electricity facilities remain in operation following construction of R&D facilities on electric sites with natural gas supply costs of $3 per btu.

Please refer to the appendix of our presentation for more information on our assumptions related to a potential error.

Please refer to the appendix of our presentation for more information on our assumptions related to our potential earnings power.

I'm incredibly proud of the progress our team has made on expanding new earnings power repair.

I'm incredibly proud of the progress our team has made on expanding the earnings power of our business, which is now 50% higher than what we reported on our last quarterly call and I am proud of the high quality development backlog that we've built thus far.

which is now 50% higher than what we reported on our last quarterly call. And I'm proud of the high quality development backlog that we've built thus far.

Not only do many sites within our backlog have potential for increased landfill gas flows, but also the corresponding gas rights agreements have terms to enable our RNG production well and as-

Not only do many sites within our backlog have potential for increased landfill gas flows, but also the corresponding gas rates agreements have terms to enable our R&D production well into the future. The weighted average remaining life of our gas rates agreements across all existing R&D sites and R&D development sites, approximately 32 and a half years. This.

The weighted average remaining life of our gas rates agreements across all existing R&G sites and R&G development sites is approximately 32 and half.

This gives us true line of sight to sustainable multi-decade environmental solutions for our partners and value for our stakeholders. Your acceleration.

Gives us true line of sight to sustainable multi decade, environmental solutions for our partners and value for our stakeholders.

We are accelerating our growth mission and are excited about the future.

Our team is focused on executing our development plan, beginning to execute on projects within Lightning Renewables this year, and successfully closing and integrating the InGenCo acquisition.

Our team is focused on executing our development plan beginning to execute on projects within lightning renewables this year and successfully closing and integrating the genco acquisition, while also seeking additional growth opportunities.

As we move forward to the second half of 2022, we are committed to rapidly executing on this mission.

As we move forward to the second half of 2022, we are committed to rapidly executing on this mission.

This is a critical period in the evolution of the industry and.

And we are committed to positioning archaea as a market leader in order to secure a meaningful portion of the significant market growth opportunity.

And we are committed to positioning <unk> as a market leader in order to secure a meaningful portion of the significant market growth opportunity.

And with that, I'll turn the call over to Brian , who will provide a commercial update and review of our financial results in 2022 guidance. Thank you.

And with that I'll turn the call over to Brian who will provide a commercial update and review of our financial results and 2022 guidance.

Thank you Nick and good morning all.

I'm happy to be here today to provide an update on commercial developments and review our financial results and guidance.

I'm happy to be here today to provide an update on commercial development and review our financial results and guidance.

As <expletive> mentioned, we remain as excited as ever about the dynamics of the RNG market, which continues to be supply constrained amid growing demand from an increasing number of market participants with regulatory or existential mandates to decarbonize. There have been a few exceptionally large RNG targets, including the RNG market, that have

As <expletive> mentioned, we remain as excited as ever about the dynamics of the R&D market, which continues to be supply constrained amid growing demand from an increasing number of market participants with regulatory or existential mandates to decarbonize.

There had been a few exceptionally large R&D targets.

From an applicable to gas utilities include.

including the initiatives from our current customers and the CPUC target that we discussed on our last call.

Including the initiatives from our core customers and the CPUC target that we discussed on our last call.

Additionally, in April , National Grid announced a new goal to source at least 30 million MMBtu of its gas supply from RNG by 2030.

Additionally in April .

National grid announced a new goal to source at least $30 million and then btu of its gas supply from R&D by 2030.

To put the volumes in perspective, 30 million MMBTU is equivalent to over 40% of the entire U.S. R&G market in 2021, and approximately 60% of ARCHIUS estimated long-term R&G production.

To put the volumes in perspective, 30 million Btu is equivalent to over 40% of the entire U S. R&D market in 2021, and approximately 60% of Archaeas estimated long term R&D production.

We are continuing to progress commercial discussions with a number of utilities that are looking to R&G as a mode of decarbonization, as well as a wide range.

We are continuing to progress commercial discussions with a number of utilities that are looking to <unk> as a mode of decarbonization.

As well as a wide range of other potential customers.

We will continue to leave No Stone Unturned as we seek additional long-term, fixed-price contracts to further de-risk the underlying cash flows of our business, and we expect to have additional commercial...

We will continue to leave no stone unturned as we seek additional long term fixed price contracts to further de risk the underlying cash flows of our business and we expect to have additional commercial news in the coming months.

And now I would like to review our first quarter 2022 results.

And now I would like to review, our first quarter 2022 results.

For the first quarter, we produced and sold 1.54 million MMBTU of RNG and 166,000 megawatt hours of electricity.

For the first quarter, we produced and sold 154 million and then Btu of RMG at 166000 megawatt hours of electricity.

R&G production was positively impacted by production from our SI and SORIA facilities and negatively impacted by some weather-related downtime at certain facilities and downtime at a SI related to maintenance activities.

R&D production was positively impacted by production from our Si and <unk> facilities.

And negatively impacted by some weather related downtime at certain facilities and downtime at assai.

Weighted to maintenance activities.

We are undertaking weatherization initiatives to minimize any future cold weather related disturbances. And as Nick mentioned, performance has been very strong at a sigh after completing our maintenance activities.

We are undertaking weatherization initiatives to minimize any future cold weather related disturbances and as Nick mentioned performance has been very strong at assai after completing our maintenance activities.

Electricity production for the first quarter was positively impacted by efficiency improvements across the asset portfolio and incremental production from our PEI power facility and negatively impacted by winter-related seasonality.

Electricity production for the first quarter was positively impacted by efficiency improvements across the asset portfolio and incremental production from our <unk> power facility.

Negatively impacted by winter related seasonality.

We generated a net loss of $33.2 million for the quarter, primarily driven by a loss from the change and fair value of our private warrants, as well as increased GNA expenses, partially offset by strong market pricing of environmental attributes, natural gas, and electricity.

We generated a net loss of $33 2 million for the quarter, primarily driven by a loss from the change in fair value of our private warrants as well as increased G&A expenses, partially offset by strong market pricing of environmental attributes natural gas and electricity.

G&A costs for the first quarter total $26.4 million and included increased costs related to headcount, professional services, and other costs related to scaling our business for our next phase of growth, as well as $8.3 million related to acquisition and other transaction costs, including costs related to certain joint ventures in our recent secondary offering and severance payments related to our leadership transition.

G&A costs for the first quarter totaled $26 4 million and included increased costs related to head count professional services and other costs related to scaling our business for our next phase of growth as well as $8 $3 million related to acquisition and other transaction costs, including costs related to certain joint ventures and our <unk>.

Recent secondary offering and severance payments related to our leadership transition.

As we develop projects with enlightening renewables and complete the acquisition of Ingenco and onboard its employees, in addition to developing our prior backlog, we are now scaling up for a larger company than before and one with substantially higher earnings power.

As we develop projects within lightning renewables and complete the acquisition of Genco and onboard its employees and.

In addition to developing our prior backlog.

We are now scaling up for a larger company than before and one was substantially higher earnings power.

As a result, we have increased our expected 2022 GNA to approximately 55 million, which we believe will support our ability to execute on our expanded back long and obtain operating leverage to efficiently scale even further.

As a result, we have increased our expected 2022, G&A to approximately 55 million, which we believe will support our ability to execute on our expanded backlog and obtain a operating leverage to officially scale even further.

We reported adjusted EBITDA of 20.6 million for the first quarter, which was positively impacted by strong market pricing of environmental attributes, natural gas, and electricity, and to a lesser extent, negatively impacted by increased genes.

We reported adjusted EBITDA of $20 6 million for the first quarter.

Which was positively impacted by strong market pricing of environmental attributes natural gas and electricity.

And to a lesser extent negatively impacted by increased G&A.

Net loss and adjusted evadav were also impacted this quarter by the timing of the ramp up at a PSI and associated timing of monetization of environmental action.

Net loss and adjusted EBITDA were also impacted this quarter by the timing of the ramp up at assai and associated timing of monetization of environmental attributes.

We began monetizing RINs in March, related to SI-RNG production in prior months.

We began monetizing rins in March related to Assai R&D production in prior months.

RINs are typically monetized one month in a rears compared to production, and we will achieve steady state related to RIN monetization from ASI in the second quarter.

<unk> are typically monetize one month in arrears comparative production that we will achieve steady state related to sprint monetization from assai in the second quarter.

As we've mentioned before, there is typically a lag between a facility coming online and the facility receiving certification to monetize RINs and LCFS credits.

As we've mentioned before there is typically a lag between the facility coming online and the facility receiving certification to monetize <unk> and <unk> credits.

We estimate approximately three months on average for RINs and nine months on average for LCFS credits.

We estimate approximately three months on average for rens and nine months on average for <unk> credits.

As we complete facilities, place them into service and ramp up production.

As we complete facilities placed them into service and ramp up production.

The timing lag to monetize environmental attributes also impacts the revenue and EBITDA profile associated with these projects.

Timing lag to monetize environmental attributes also impacts the revenue and EBITDA profile associated with these projects.

There is a lag in revenue in adjusted EBITDA when a project is started up because expenses are being incurred and recorded for production in the early months, but a portion of revenue corresponding to that production, which can be a material amount, will lag due to the timing of RIN and or LCFS credit sales.

There is a lag in revenue and adjusted EBITDA. When a project that started up because expenses are being incurred and recorded for production in the early months, but a portion of revenue corresponding to that production, which could be a material amount will lag due to the timing of RIN <unk> L. CFS credit sales.

Once the projects are ramped up and certifications are received, cash flows from the sale of environmental attributes, excluding the impact of price fluctuations, are expected to generally stabilize on an annual basis, with some projects showing entry-year variations due to seasonality and production.

Once the projects are ramped up and certifications are received cash flows from the sale of environmental attributes excluding the impact of price fluctuations are expected to generally stabilized on an annual basis with some projects showing intra year variations due to seasonality in production.

As of March 31st, we had 349.2 million of outstanding borrowings.

As of March 31, we had $349 2 million of outstanding borrowings, including $217 2 million of outstanding borrowings under our term loan and $132 million of outstanding borrowings related to our Si project financing.

including $217.2 million of outstanding borrowings under our term loan, and $132 million of outstanding borrowings related to our side project financing.

Under our Revolving Credit Facility, we had no borrowings outstanding and had issued letters of credit totaling $19.9 million.

Under our revolving credit facility, we had no borrowings outstanding and issued letters of credit totaling $19 9 million.

As of March 31st, our liquidity position was $269.8 million, including $30.8 million of cash and cash equivalents, $8.9 million of restricted cash, and $230.1 million of undrawn capacity under our revolver.

As of March 31, our liquidity position was $269 8 million, including $38 million of cash and cash equivalents $8 9 million of restricted cash and $230 1 million of undrawn capacity under our revolver.

During the first quarter, cash used in investing activities totaled $66.5 million.

During the first quarter cash used in investing activities totaled $66 5 million.

We spent $61.4 million on development activities related to construction and optimization across our various plants and projects and development.

We spent $61 4 million on development activities related to construction and optimization across our various plants and projects in development at.

and $7 million primarily related to the acquisition of landfill gas right there.

At $7 million, primarily related to the acquisition of landfill gas rights assets.

We also made contributions of $4 million and received return of investment of $4.1 million related to our equity method investment.

We also made contributions of $4 million and receive return of investment of $4 1 million related to our equity method investments.

In March 2022, ARCHI has supported an underwritten public offering in which ARIA Renewable Energy Systems LLC sold approximately 14.9 million shares of our Class A common stock at a price to the public of $17.75 per share.

In March 2022, archaea supported an underwritten public offering in which ARIA renewable energy systems LLC sold approximately $14 9 million shares of our class a common stock at a price to the public of $17 75 per share.

A transaction resulted in no proceeds to archaea, a decrease of 14.9 million shares of our Class B common stock, and a corresponding increase of 14.9 million shares of our Class A common stock.

The transaction resulted in no proceeds to archaea.

A decrease of $14 9 million shares of our class B common stock and a corresponding increase of $14 9 million shares of our class a common stock.

At the closing of the offering, ARIA Renewable Energy Systems LLC fully exited their position in the company.

At the closing of the offering ARIA renewable energy systems LLC fully exited their position in the company.

They had received shares at the close of our initial business combination in September 2021 related to their ownership of Aria Energy LLC.

They had received shares at the close of our initial business combination in September 2021 related to their ownership of ARIA Energy LLC.

Before turning the call over for Q&A, I'd like to quickly discuss our updated 2022 guidance.

Before turning the call over for Q&A.

Like to quickly discuss our updated 2022 guidance.

Today we are pleased to reconfirm our full year 2022 R&G production sold guidance of 11.1 to 11.7 million MMBTU.

Today, we are pleased to reconfirm, our full year 2022, Orange production sold guidance of 11, one to $11 7 million Btu electric.

Electricity production sold guidance of 850 to 950,000 megawatt hours.

Electricity production sold guidance of 850 to 950000 megawatt hours and.

and adjusted EBITDA guidance of 125 to 145 million.

And adjusted EBITDA guidance of $125 million to $145 million.

This slide shows the assumptions underpinning our 2022 guidance ranges. Some assumptions, such as volumes expected to be sold under our long-term fixed-price contracts and rent pricing on unsold volumes, are unchanged from our original guidance provided in March.

This slide shows the assumptions underpinning our 2022 guidance ranges some assumptions such as volumes expected to be sold under our long term fixed price contracts and RIN pricing on unsold volumes are unchanged from our original guidance provided in March.

Additionally, our 2022 development plan expected capital expenditures related to projects with expected completion in 2022 and those projects estimated earnings power remain unchanged.

Additionally, our 2022 development plan expected capital expenditures related to projects with expected completion in 2022 and those projects estimated earnings power remained unchanged.

Currently, taking into account volumes expected to be sold under our existing long-term fixed price contracts and forward rent sales this year, we estimate approximately 4.7 to 5.3 million MMBtU of our expected 2022 R&G production will be subject to market prices.

Currently taking into account volumes expected to be sold under our existing long term fixed price contracts and forward RIN sales. This year, we estimate approximately four seven to $5 3 million Btu of our expected 2022, RMG production will be subject to market pricing.

Additionally, we have increased expected G&A to approximately 55 million due to additional scaling of our business and expected head count additions from the acquisition of injectors.

Additionally, we have increased expected G&A to approximately $55 million due to additional scaling of our business and expected head count additions from the acquisition of Genco.

As Nick mentioned earlier, due to the pending and GENCO acquisition and Lightning Renewables JV, we expect additional near-term capital expenditures, including both acquisition and development capital.

As Nick mentioned earlier due to the pending and Genco acquisition and Lightning renewables JV, we expect additional near term capital expenditures, including both acquisition and development capital.

As a result, prior guidance providing regarded 2022 capital expenditures should no longer be reliable.

As a result prior guidance, providing regarding 2022 capital expenditures should no longer be relied upon.

We are actively optimizing the pace and timing of our long-term development plan and we expect to provide guidance for expected capital expenditures at a later date.

We are actively optimizing the pace and timing of our long term development plan and we expect to provide guidance for expected capital expenditures at a later date.

As a result of recent transactions announced and their impacts to our project development backlog, we expect to enter into one or more capital markets or private financing transactions to fund the acquisition of Ingenco and certain additional capital expenditures related to incremental R&G development projects

As a result of recent transactions announced and their impact to our project development backlog, we expect to enter into one or more capital markets or private financing transaction to fund the acquisition of <unk> and certain additional capital expenditures related to incremental R&D development projects.

and potentially to fund a portion of our base development plan.

And potentially to fund a portion of our base development plan.

to provide additional capital for acquisitions or incremental development projects.

To provide additional capital for acquisitions or incremental development projects.

Or for general corporate purposes.

As Nick mentioned, we are committed to securing funding for our near-term capital needs as soon as practical.

As <expletive> mentioned, we are committed to securing funding for our near term capital needs as soon as practical.

and at the best terms available for ARCIA and our stakeholders. To conclude,

And at the best terms available for archaea and our stakeholders.

To conclude today's prepared remarks, I would like to reiterate how excited we are about where <unk> is today and about the unified passion our teams shares for advancing meaningful de carbonization across industries, while delivering strong risk adjusted returns to our shareholders and improving the quality of life within.

I would like to reiterate how excited we are about where ARCHI is today and about the unified passion our team shares for advancing meaningful decarbonization across industries while delivering strong risk-adjusted returns to our shareholders and improving the quality of life within communities where we operate.

Communities, where we operate.

And with that, I'll turn the call over to the operator for Q&A. Thank you all for your interest in RQ. Thank you.

And with that I'll turn the call over to the operator for Q&A. Thank you all for your interest in archaea.

Thank you.

Ladies and gentlemen, we will now.

Taking the question and answer session.

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One moment, please while before it for questions.

As a reminder, we request you to limit to one question and one follow-up.

As a reminder, we request you to limit to one question and one follow up.

We have a first question from the line up Hamza Mazzari with Jeffries please go ahead.

We have our first question from the line of Hamzah <unk> with Jefferies. Please go ahead.

Yes, hi. Good morning. My first question is just on on the Republic JV specifically, you know, what does your bandwidth look like internally to execute on this just from a, you know, headcount perspective management wise. And do you see other ventures like this in the solid waste industry. I mean, waste management has talked about.

Yes, hi, good morning.

My first question is just gone on the Republic JV specifically.

Where does it go bandwidth look like internally to execute on this just from a.

Head Count perspective managed Bert wise and do you see other ventures like this.

Solid waste industrial waste span as you were just talking about.

potentially doing a lot of RNG themselves, but they've also left it open to developers. So curious to see who you're bidding against on these type of large projects, JVs, I guess. Any thoughts there? Yeah, Hamza, this is Nick.

Potentially.

A lot of RMG themselves, but they are also left it open to developers so curious to see.

Who you're bidding against on these type of <unk>.

Large projects JV is I guess.

Any thoughts there.

Yes, Hamzah this is Nick great questions.

So on the first one I think.

you know when when republic was picking its partner for this and it was a very competitive process.

When Republic was picking its partner for this and it was a very competitive process.

You know, the first thing that they cared about was execution, I think, who's really going to be committed to developing all these projects and more, you know, in a sustainable way. And I mean, sustainable in a very kind of comprehensive way.

Yes.

First thing that they cared about was execution I think who is really going to be committed to developing all of these projects and more.

In a sustainable way and I think it's sustainable.

Kind of comprehensive way.

So, that was a key focus for ours, and I think their ability to see how we could execute so many projects so quickly is, should speak to kind of our internal confidence and our ability to.

So that was a that was a key focus for ours and I think I think their ability to see how we could execute so many projects. So quickly is should speak to kind of our internal confidence in our ability to.

You know, build a company that can do 20 projects per year in a very repeatable and standardized fashion and that the industry really hasn't seen before.

Build a company that can do 20 projects per year, and a very repeatable and standardized fashion and that the industry really hasn't seen before so part of it as they looked at kind of our historical ability has been getting assai online. They looked at they looked at our supply chain I think they've confirmed I think a lot of the.

So, you know, part of it is that they looked at kind of our historical abilities for getting a sigh online. They looked at they looked at our supply chain. I think they confirmed, you know, I think a lot of the things that we've been building for and building the company to be able to execute in the future, something like this. So, yeah, we think about execution going forward is as.

Things that we've been building for in building the company to be able to execute in the future something like this so yes, we think about execution going forward is.

It's getting easier as really de-risk with increasing standardization, increasing stand-up of our supply chain, and really have a lot of confidence in our ability to do 20 R&G projects a year across a number of different sizes and across the country, and that lends itself to achieve some of the

Is getting easier.

Is really de risks with increasing standardization, increasing standup of our of our supply chain and really have a lot of confidence in our ability to do 20, R&D projects year across a number of different sizes and across the country and that lends itself to to achieve some of that.

pretty aggressive development targets that both us and the Republic have put out related to this JV. And the second question is,

Pretty aggressive development targets.

US and Republic had put out related to this JV.

And the second question as it is.

We think that the Republic JV is probably unique and unlikely to be repeated at this, at this scale. If you think about the other waste companies, they, they, there are additional, the market is, is probably kind of 50% consolidated across landfill and earth.

We think that the Republic JV is probably unique.

And unlikely to be repeated at this at this scale. If you think about the other waste companies.

There are additional.

And the market is probably kind of 50% consolidated across landfill owners.

You know the big public company Lantel owners and and republic has

The Big public company landfill owners and and Republic has.

You know, a really significant amount of, of, of developable opportunities and then future developable opportunities. So I think that you'll see, you know, we are, we are interested in doing other kind of.

A really significant amount of.

Developable opportunities and future development opportunities. So I think youll see we're interested in doing other kind of.

No.

Joint ventures at smaller scale or joint ventures with municipal landfill owners or private landfill owners that also want to participate in our kind of development plan and our economics.

Joint ventures at smaller scale or joint ventures, with municipal landfill owners or private landfill owners that also want to participate.

In our kind of development plan and our economics.

But I think we're not going to see anything like this in terms of Scott, in terms of initial size of 39 projects, 13 million MBT annually, and then also sort of growth potential, not just from additional projects, which would go get added to the JV, which we're very excited about.

But I think we're not going to see anything like this in terms of Scott in terms of initial size of 39 projects $13 million in Btu annually, and then also sort of growth potential not just from additional projects, which would get added to the JV, which we're very excited about.

but also to sort of embed it upside from the core projects that we have. And these are really long-term assets and with a world-class partner that's committed to putting in.

But also just sort of embedded upside from our core projects that we have and these are really long term assets and with a world class partner, that's committed to putting in.

a municipal solid waste in a very sustainable way to keep feeding underlying landfill gas growth in the future through the permit of life of the land.

Solid waste in a very sustainable way to keep feeding underlying landfill gas growth in the future for the permanent lifestyle and cells.

That's very helpful, and just my follow-up question, you know, I'll turn it over is just, you know, in terms of the development costs and funding, do you have a sense of, you know, order of magnitude, what type of capital you need to raise and kind of the timing of that, or is it too early to sort of talk about equity versus debt component? Just any thoughts there? Thank you.

That's very helpful. And then just my follow up question.

Turn it over is just.

In terms of the development costs.

And funding.

Do you have a sense of order of magnitude what type of capital you need to raise them.

And kind of the timing of that or.

Is it too early to sort of talk about equity versus debt component just any thoughts there. Thank you.

Okay.

Yeah, let me I'll I'll try to answer that briefly and then let Brian chime in. I think, you know, these are these are opportunities that and I've included in Janko in that as well. These are opportunities that we've been working towards for a while. And then simultaneously, we've been, you know, as we've said publicly for the last couple quarters, we've been looking at ways to.

Yes.

Ill.

I'll try to answer that briefly and then let Brian chime in I think these are these are opportunities that include in genco in that as well. These are opportunities that we've been working towards for a while and then simultaneously we have been.

As we've said publicly.

For the last couple of quarters, we've been looking at ways to go.

You know, maximize our balance sheet and really take advantage of the predictable free cash flows that we have in the strong contracted cash flows that are that are underpinning, you know, that potential balance sheet maximization. So we have, we've been working towards, you know, some exciting options there that we're, we're, we're excited about. And, you know, from my perspective, it's.

<unk>, our balance sheet and really take advantage of the predictable free cash flows that we have and a strong contracted cash flows that are that are underpinning that potential balance sheet maximization. So.

We have we've been working towards some exciting options there that we're excited about it and from my perspective.

too early to discuss, you know, debt versus equity, but, you know, we were...

It's too early to discuss debt versus equity, but we were.

We've been working towards this balance sheet maximization process for some time and, you know, have a lot of confidence in our ability to develop, you know, all of our core assets in addition to, you know, new assets even beyond, you know, the Republic JV and the IngenQRAC.

We we.

We've been working towards this balance sheet maximization process for some time.

You have a lot of confidence in our ability to.

To develop all of our core assets. In addition to new assets, even beyond the Republic, JV and the Genco acquisition.

And how this is this is Brian , I would just add that the.

And Hamzah. This is Brian I would just add that fee.

The thing that gives us a lot of confidence is this supply and demand mismatch in the long-term fixed price offtake with investor and trade counterparties. And when we look at one of the benefits with our partnership with Republic is that we're very aligned in a commercial strategy there to go and to serve this market.

The thing that gives us a lot of confidence that the supply and demand mismatch in the long term fixed price offtake with investment grade Counterparties and when we look at one of the benefits with the.

Partnership with Republic is that we're very aligned in our commercial strategy there to go.

To serve this market and also one other piece that is exciting is just thinking about the customers that are already bringing.

One other piece that is exciting is just thinking about the customers that are already bringing waste into Republic landfills. Thinking about that is now these landfills becoming renewable energy centers that then also we could work together to create new long-term offtake with corporate customers to help decarbonize. Taking their scope three emissions is what they put into landfills and then thinking about lowering their scope one emissions with renewable

Bringing waste into Republic landfill is thinking about that is now these landfills, becoming renewable energy centers. But then also we can work together to create new long term offtake with corporate customers to help decarbonize, taking their scope three emissions is what they put into landfills and then thinking about lowering their scope one emissions with renewable natural gas and so.

And so, with the commercial strategy alignment, it gives us a lot of confidence in terms of how we think about, you know, our approach to financing in the future.

With the commercial strategy alignment that gives us a lot of confidence in terms of how we think about.

Our approach to financing in the future.

Yes.

Got it thank you so much.

Thank you. We have next question from the line of Jarek Wittfeldt with default. Please go ahead.

Thank you we have next question from the line of Gerrick Whitfield with Stifel. Please go ahead.

Good morning all and congrats on your recent JV and acquisition announcement.

Good morning on congrats on your recent JV in acquisition announcements.

Thank you. With regard to your long-term earnings power projection on page nine, could you comment on the embedded efficiency and base organic volume growth assumption?

Thank you with you with regard to your long terms long term earnings power projection on page nine could you comment on the embedded efficiency in base organic volume growth assumptions.

And also, given the conservatism of your D3 rent assumption, could you offer a high-level sensitivity for your earnings power improvement for every 50 cents increase in D3 rent?

And also given the conservatism of your D. Three rent assumption could you offer a high level sensitivity for your earnings power improvement for every 50 increase in D. Three rooms.

Sure, um, no, this is neck. I think on the, um,

Sure.

This is Nick I think on the.

That when we're looking at earnings power, we're trying to really do it in a very consistent and conservative way. So there's not a lot of underlying, if I understand your question correctly, there's not a lot of underlying landfill gas growth.

When we're looking at earnings power, we are trying to really do it in a very consistent.

Conservative way, so there's not a lot of underlying if I understand your question correctly theres not a lot of underlying landfill gas growth that's going into that earnings power number it's a relatively near term ramp of R&D production.

that's going into that earnings power number. It's a relatively near-term ramp of R&G production.

And, you know, any future benefits of landfill gas growth or collection efficiency at the landfill itself, you know, would translate to to numbers above that. So there's, I think, compelling kind of embedded upside in that number on a long term basis. If you think about where we are on.

And any future benefits of landfill gas growth or a collection efficiency at the landfill itself.

Would translate to two numbers above that so theres I think compelling kind of embedded upside in that number on a long term basis. If you think about where we are on.

the overall, the cumulative lintel gas curve.

The overall, the accumulative landfill gas curve.

given that we're underpinned by really long-term assets that continue to take an increasing amount or stable amount of trustable waste that produces gas in the future.

Given that were underpinned by really a long term assets that continue to take an increasing amount or stable amount of the trustful waste that produces gas in the future.

And then, if you look at the earnings power number, again, you know, we use the existing contracts that we have, right, and then we also use $1.50 rent and $140 metric ton.

If you look at the earnings power number again, we use we use the existing contracts that we have right and then we also used $1 50 ran at $140 a metric ton.

Hi.

LCFS credit pricing number and then a $3.00 and a BQ, a Brown Gas number.

L CFS credit pricing number and then a $3 Btu Brown gas number so.

It would be pretty easy, I think, to back into, you know, the percentage of volumes in that number that would be uncontracted, given the fact that we're only using the existing contracts that we have, we're not using our long-term target contracted number. And then so we think there's sort of positive exposure, you know, significantly.

It would be pretty easy I think to back into.

The percentage of volumes in that number that would be on contracted given the fact that we're only using the existing contracts that we have we're not using our long term target contracted number.

And then so we think there is sort of positive exposure significantly.

It's an easy math equation to do, but on every 50 cents per gallon. And we can make that more clear in the future.

It's easy math equation to do but.

On every 50.

Per gallon.

And and we could make that more clear in the future but.

What we like about that $1.50 RIN and why we don't really talk about higher numbers or sensitivity around RIN pricing in the future is because a $1.50 RIN could be pretty easily underpinned by

What we like about that 50 ran and why we don't really talk about.

Higher numbers or sensitivity around RIN pricing and the future is because $1 50, RIN could be pretty easily underpinned by.

by our existing contracts and contracts that we expect to sign in the future.

By our existing contracts and contracts that we expect to sign in the future. So we think about that number is really de risks, particularly when you add inflation escalators, which we have across a number of our contracts.

So we think about the number is really de-risk, particularly when you add inflation escalators, which we have across a number of our contracts.

on the fixed price contract side. So $1.50 per RIN, $11.727, MMBQ RIN, you know, it translates to a sort of outer year, you know, mid...

On the fixed price contract side, so $1 50 per in the $11 77.

And then Btu ran it translates to a sort of outer outer year.

you know, three to seven year price that's easily underpinned by existing contracts and future contracts.

Three to seven year.

Price that is easily underpinned by existing contracts and future contract demand.

Thanks, Nick. And that's precisely what I was targeting. And we're getting about a 15% sensitivity to the earnings power at 30% of your volumes having market exposure. That's the kind of math that we were backing into. And I agree, it seems simple and it seems like there's quite a bit of upside there.

Thanks, Nick and that's precisely what I was targeting and we're getting about a 15% sensitivity to the earnings power at <unk>.

30% of your volumes I'm, sorry, 30% of your volumes heavy market exposure. That's the kind of math that we were back into and I agree. It seems simple and it seems like there's quite a bit of upside there.

With regard to the Republic JV, we noted in your disclosure today that you will receive fees for engineering procurement and destruction management services during development and destruction and fees for O&M services after completion. With the understanding that that's an ideal arrangement in the base case, could you just help us understand the materiality of these fees in this arrangement and if it adds to your earnings power or simply reduces your contributed capital requirement?

And with regard to the Republic JV, we noted in your disclosure to date.

That you will receive fees for engineering procurement and construction management services during development and construction and fees for O&M services after completion.

With the understanding that Thats, an ideal arrangement in the base case could you just help us understand the materiality of these fees and this arrangement as it adds to your earnings power or simply reduces your contributed capital requirement.

Yeah, I don't think it's a – it's not – I wouldn't think about it as sort of material contributor to earnings power. I would really more think of it as a way for archaea to control and build plants according to our specifications and costs and future costs.

Yes.

I don't think it's a it's not I wouldn't think about it as sort of a material contributor to earnings power.

I would really more think of it as a way for Arcadia controlled.

And build plants according to our specifications.

Costs in future cost targets.

And I think that's really what we're trying to create with EPC management and or the construction management agreement and the O&M agreement that we have for public is that we're going to treat.

And I think that's really what we're trying to create with EPC management and or the construction management agreement. The O&M agreement that we have public is that we're going to treat.

you know, these projects like additional archaeoprojects and they're going to follow the same

These projects like additional RK projects and Theyre going to fall at the sand.

the same processes and standards that we're deploying across our portfolio that will lend itself the benefits

The same processes and standards that we're deploying across our portfolio that will lend itself to benefits in terms of ethane recovery in terms of uptime in terms of cost.

in terms of methane recovery, in terms of uptime, in terms of cost, to the JV in a very aligned way. And so it's not a significant contributor, I think, either way. It's not a significant quantum, but it's really, for us, an important point of clarification that we're not reinventing the wheel in terms of developing a new archaea plant for this particular JV that is going to follow the same path.

<unk> to the JV and a very aligned way and so it's.

It's not a it's not a significant contributor I think either either way on a significant quantum but it's really for us it's important point of.

Clarification that we're not reinventing the wheel in terms of developing.

New arcade plant for this particular JV that it's going to fall at the same <unk>.

design goals and targets, you know, with a partner that's very aligned and with those design goals and targets and potential costs will be.

Design goals and targets.

With a partner that's very aligned with those design goals and targets and potential cost will be.

And this is, this is Brian , I would just echo also what Nick said is prepared remarks around a four and a half times bill multiple. I think that's when you think about what that earnings power is over time. That's really one of these products are in place. That's across an average of the portfolio. And as we think longer term with what.

And this is this is Brian I would just echo also what Nick said in his prepared remarks around a four five times build multiple I think that's when you think about what the earnings power of our time, that's really when these products are in place that's across an average of the portfolio and as we think longer term with earnings.

Earnings power, ultimately, what we're going to care about is we're going to be completely aligned with Republic to make these plants as high as methane recovery as possible, and also the highest uptime as possible. And that's really, really unique about when you're actually, you know, solving for you're, you're working with the landfill owner themselves, and that's just really, really special. So I would say that's.

Earnings power ultimately, what we're going to care about is we're going to be completely aligned with Republic to makes these plants as highest methane recovery as possible, but also the highest uptime as possible and Thats really really unique about when you are actually solving for youre working with the landfill owner themselves and that's just really really special so I would say that.

That's really important, and I think second is just as we think about that four and a half times, we think about opportunity going forward, you know, Republic search far and wide in the industry to figure out who they wanted their partner to be. And as they think about, you know, the ability to put more projects to work here, potentially ones that are current electric projects or ones that archaea has in our own portfolio. And we're both really, really excited and incentivized about this 39 projects is the start and we're going to be growing it over time. That's all.

That's really important and I think second is just as we think about that four five times, we think about opportunity going forward.

Public search far and wide and the industry to figure out who they wanted a partner to be as they think about.

The ability to put more projects to work here potentially ones that are currently electric projects are ones that <unk> has in our own portfolio and we're both really really excited and incentivize about this 39 projects as a start and we're going to be growing it over time.

That's helpful. Thanks for your time and responses.

Thank you.

We have an next question from the line up Matthew Blair with TPH please go ahead.

Your next question from the line of Matthew Blair with Tpa, which please go ahead.

Good morning, Nick and Brian . You reiterated the adjusted EBITDA guidance of $125 to $145 million for 2022, despite raising your SGNA by $10 million. Could you talk about the offsets there? Are you assuming a higher brown gas price to offset that increased SGNA?

Hey, good morning, Nick and Brian you reiterated the.

Adjusted EBITDA guidance of $125 million to $145 million for 2022.

Despite raising your SG&A by $10 million.

Could you talk about the offsets there.

Are you, assuming a higher brown gas price to offset that the increased SG&A.

I don't think that there's probably some upside still to continued ground gas pricing in the model yet to what we have. I mean, you can tell by our numbers even continuing at the 250 rent despite, you know, much higher rent prices today for the remainder of the year that we're pretty conservative about things we can't control, even in near-term models. So there's probably a little bit of upside there. You know, I think it reflects some.

I don't think so.

There's probably some upside still to continued brown gas pricing in the model yet to what we have.

You can tell by our numbers, even continuing into 250 ran despite much higher than prices today for the remainder of the year that we're pretty conservative about things, we can't control even in near term models. So.

There is probably a little bit of upside there I think it reflects some.

you know, or reaffirming those targets, despite slightly higher SG&A, and that SG&A is very pointed towards the future, and we still think there's considerable operating leverage there, but those hires are really, you know, and that expansion is really pointed towards, you know, the Republic, JVAD, and JECO acquisition, those kinds of things.

Yes.

Reaffirming those targets despite slightly higher SG&A in that SG&A is very pointed towards the future and we still think there's considerable operating leverage there, but those hires are really and that expansion is really pointed towards the Republic JV, the genco acquisition and those kinds of things so.

Yeah, I think it's more of, it's more just, you know, overall improvement in the, in the business and then continuing to invest in growth. And, you know, we still, we have upside, you know, to this numbers based on continued higher environmental attribute pricing as well as, you know, continued high natural gas pricing. But I personally have no ability to predict natural gas pricing in the near term or the long term. So, and I feel the same way about rinse. So I'm comfortable with this, with this approach.

Yes, I think its more its more just.

Overall improvement in the business and then continuing to invest in growth and.

We still we have upside to those numbers based on continued higher environmental attribute pricing as well as continued high natural gas pricing.

I personally have no ability to predict natural gas pricing in the near term or the long term, so and I feel the same way that rents so I'm comfortable with this with this approach.

Okay, and then the winter downtime in Q1, is that a pretty typical seasonal impact that we should model in going forward, or would you call that unusual? And then as far as quarter date operations, did you say that you're running at 99%?

Okay, and then the winter downtime.

Downtime in Q1 is that pretty typical.

Seasonal impact that we should model in going forward or where would you called out unusual then.

First quarter to date operations did you say that youre running at 99%.

Yeah, so you should not model winterization effects or seasonality going forward.

Yes, so you should not model winter <unk> effects for seasonality going forward.

and we did not adequately winterize or have a winterization program going into the winter, which is really painful to watch, but we've corrected it. It's not going to happen in the future. And there's lots of little things that need to be weatherized, and weatherization can degrade over time and small disconnections and

And we do.

Did not adequately winterize or an Abbott winter innovation program going into the winter, which is really which is really painful to watch, but we've corrected it.

It's not going to happen in the future.

<unk>.

There's lots of little things that need to be weatherized, and weatherization can degrade over time and small.

Disconnections in.

Either electrical mechanical.

As it related to winter winter effects can can shut down a plant and can be difficult to troubleshoot. It but this is a totally preventable issue that I think we.

We got our hands around very quickly after integrating the <unk> assets, but we're much better prepared for for that in the future.

And specifically on the 99%.

Specifically to the point that 99% that was related to assai uptime. So the beginning of March after we did the optimization and some adjustments since that that point running on the Keystone landfill gas, it's been a 99% uptime and it's also been much higher methane recovery than we modeled in.

The good news also is we've recently, we're able to introduce the flows from the alliance landfill as well at the beginning earlier. This earlier this month. So it's exciting to see not only is the.

Uptime.

That trend and higher than trend, but also met the recovery and then the ability then now we have both sets of landfill gas flows.

Got it thank you.

Thanks.

Yes.

Thank you. We have next question from the line of page graph with U S Capital Advisors. Please go ahead.

Good morning, guys, just wanted to get a little bit more color on the lightning renewables JV and kind of how the deal is structured.

For the $13 million of production is that all going to arcadia or that be split between them.

<unk> and <unk>.

Your JV partner.

And will they be receiving the standard.

Royalties as landfill owner.

Hi pages. This is Brian I can speak to that so I would think about the the JV is the entity that has entered into a landfill gas development agreement with Republic and that entity has also entered into an EPC agreement and a future O&M agreement when the plants are running with Archea operating.

So when you think about the JV itself of which as we've described in our prepared remarks is 60% of archaea 40, Percents Republic. That's a gross MMP to you that that JV will produce over time, and then that JV will also for.

The ability to have the landfill gas to process will the JV itself will send a royalty.

To Republic, just as the JV itself will send an EPC fee to arc year on O&M fee as we're operating going forward.

Okay, great. Thank you.

Thank you we take last question from the line of Craig Shere with <unk>.

So we brought those please go ahead.

Good morning.

So those you're ever expanding.

Six to eight year growth project opportunities.

<unk> to the sidelines carbon sequestration and solar power opportunities to drive down Ci scores and in your prepared remarks, you mentioned increasingly operating off internally generated power does that help reduce your Ci scores in addition to cutting costs.

Yes, great question.

So I think generally we are taking.

NPV prioritization approach to project development, all things being equal and.

And we have that flexibility in our portfolio given that we have sort of held by production assets without.

With very little sort of exploration risk on across CDA projects, we have signed under long term development agreement.

So generally.

Sure.

That being said carbon sequestration.

Low Ci initiatives.

Other opportunities may would.

Would be on the lower end of the net present value of prioritization list.

But there are some compelling.

Compelling opportunities the challenge.

Core landfill gas projects in terms of rates of return and so we are.

So excited about those those seem to be de risk from a permitting standpoint.

But there may be a way to do both.

This partnership structures and Andrew you certainly to do both that at some level, but I think the priority of capital will go towards highest NPV, one all things being equal.

Gotcha.

Just imagining for a moment to magical world orders funding is not a concern.

What is an optimal annual growth capex spend over the next two to three years in other words said another way. If you really are progressing on 20 projects a year.

Is that average run rate, you'll see over time.

Yes.

I think it's really.

If we have a portfolio of really high NPV opportunities in.

And without exploration risk we should be.

As aggressive as possible assuming.

And assuming that we have no scarcity of capital right and so what is occurring now is a optimization problem.

We have balance sheet maximization.

As we have.

Sources and uses and we have a highly attractive portfolio of opportunities that wed like to aggressively develop.

As quickly as possible.

I mean, I think generally we talked about I mean, thats, how we approach the world right. So it's not as simple as.

$300 million, a year $400 million a year whatever it is it's the the opportunity set.

And it's it's.

<unk> ability to self finance that as much as possible.

Balanced with kind of scarcity of capital in the attractiveness of capital outside of outside of kind of free cash flow in order to do it as quickly as possible.

And then the second part of that is your question around.

Kind of what that looks like on 20 projects a year I mean, if you take sort of an average project right that our competitor might be doing at $40 million a year like a 4000 CFM project that we're doing.

At $20 million year $23 million a year that gives you. Some rough example of total capex. If we're again 20 projects that youre, assuming sort of an average flow side, a 4000 CFM.

And we.

We've also shown that debt because of our commercials.

Approach towards long term fixed price investment great contracts.

Because of the high predictability of our of our projects in our in our plants.

We have the ability to really.

We do that in a very efficient way not just from free cash flow, but also just balance sheet maximization and and in a world of debt investors that are looking for green yield.

Where we kind of uniquely offer something something in a market, that's very attractive and very predictable.

Great last clarification on that it sounds like what Youre, saying is some of the newer opportunities may be treated a lot more like assai.

Which was much higher.

Hedged position and much lower equity capital requirement than perhaps the rest of your portfolio at this point.

Is it fair to say that you want to model. The Assai example, as you go forward.

I think with.

We see as <unk> is an example of what's possible.

And the example, what's possible given that we had world class debt investors.

Nuveen bearings Pac life.

Believe in this kind of investment great credit on a project basis and belief in the predictability of the cashless going forward, so that that sort of business model of the percentage going to those investment grade contracts and the way that we designed that project is sort of core to who we are and how we deploy capital and I think what that says is that just opens up the opportunity.

Or for that kind of financing structure, it's a more complicated problem that it's a more holistic problems on that debt.

That involves other areas of growth so, but I would just point to that is one way to to achieve very attractive.

No.

Balance sheet maximization strategies.

Thank you very much.

Thank you ladies and gentlemen, we have reached the end of the question and answer session I would like to turn the call back to Nick Stork CEO for closing remarks over to you Sir.

Thank you.

This time last year. Many of you heard about Archea for the first time you probably also heard the company's name pronounced four different ways. We are launching a pipe trying to explain or unique cash flows competitive differentiation and favorable market dynamics to world growing increasingly skeptical stacks lofty profitability aspirations and difficult to procurement and greenhouse gas reduction.

<unk> 12.

12 months ago, our combined business with ARIA had approximately $40 million of EBITDA in the prior year 2020, with 21 operating plants and $300 million earnings power on an apples to apples basis.

Archie version, one was technically sound, but not proven in the field. We had some strong commercial agreements from legacy area, but much should do to show that we could secure target volume percentages under long term investment grade contracts.

Assai was mid construction, we talked about a compelling addressable market the finite and express confidence in our ability to secure a $1 billion of predictable annual free cash flow or earnings power.

But the market.

Competition was accelerating with new entrants SaaS.

Fast forward 12 months, we've accomplished the following.

Ported EBITDA, 90% higher than our previous year and appointing to 70% approximately 70% growth. This year, we're projecting more than two X R&D production and two X electricity production versus the base business from the pipe materials.

Within Genco, we will more than doubled our number of operating plants across the country. We.

We signed landmark offtake agreements with Fortis, BC and northwest natural and we've also confirm the market dynamics, we discussed a year ago that demand exceeds supply and Archie is increasingly well positioned to achieve appreciating pricing and terms with the best Counterparties.

We completed aside the largest LNG plant in the world in less than two years from signing a development agreement with a construction timeline closer to 12 months.

We signed a transformative <unk> with a world class environmental services partner and Republic and embarked on an initial platform 39 projects that I expect to grow considerably in terms of number of projects and project economics over a short period of time, we have field deployed and seen extremely positive results throughout or optimization projects. This year today of each major processing CIS.

Some that will go into archived version one significantly derisking at success.

We built a dedicated supply chain to support future growth and off the shelf R&D development.

Our own earnings power to 600 million with a realistic near term path to secure the runway toward $1 billion.

Long term target. This figure is truly predictable and long term with attractive underlying growth and positive exposure to inflation.

It also excludes new projects, we expect to sign carbon sequestration hydrogen in many next generation projects. We are quietly excited about.

We've integrated several ex acquisitions with new people and build a strong culture around supporting plant operations and the best guessing pressed against the best gas processing nerds in the world.

We've done these things without deviating deviating from our capital deployment approach of don't lose money and we've secured uniquely attractive free upside while also ensuring downside case returns above our target thresholds how.

How do we do this all so quickly and short ownership.

As one of our gas processing leader said recently when we worked at other companies. We are building equipment for other people, we wanted to drop the equipment off of the customer and get out of there as quickly as possible, but now we are building the systems that we're going to own for a long time. It changes, how we designed something and how we execute that design.

Archie as like that.

Management are significant owners of the company nearly every employee a shareholder across this group we love what we do and believe that this is the best business out there from returns on capital to predictability of cash flows to supply demand dynamics to real easy to understand environmental and societal benefits.

As owners when you say youre going to do something you're much more likely to do it and it's supported after you build it you.

You have to live with the results you care. It's part of you it's core to your reputation and its important to everyone around you Youre design goals become long term. This is a significant competitive advantage and if we can maintain this strategically and operationally the execution risk on the $1 billion of predictable cash flow goes to nil.

I am proud of how many people have bought into this vision and I'm very grateful for it.

The results of the consequences of buying at scale and we are determined to continue operating this way with pride integrity and ownership.

Okay.

Thank you.

Should we now conclude.

Yes.

Thank you very much.

Ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

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