Q4 2023 OPAL Fuels Inc Earnings Call

March 14, 2024

Good morning, and welcome to the Opel fuels fourth quarter 2023 earnings call and webcast. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question.

You will need to press star one one on your telephone you will then hear an automated message advising our hand dish raised to withdraw your question. Please press star one again.

As a reminder, this event is being recorded.

I would now like to turn the call over to Todd Firestone Vice President of Investor Relations to begin. Please go ahead.

Thank you and good morning, everyone welcome to the <unk> fuels fourth quarter and full year 2023 earnings conference call.

With me today are co Ceos at acquiring job tomorrow.

Scott <unk> Chief Financial Officer.

Okay fuels released financial and operating results for the fourth quarter and full year 2023 yesterday afternoon, and those results are available on the Investor Relations section of our website at <unk> Dot com.

The patient and access to the webcast for this call are also available on our website. After completion of today's call a replay will be available for 90 days.

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

We're looking statements are not a guarantee of performance.

Actual results could differ materially from what is contained in such statements.

Factors that could cause or contribute to such differences are described on slide two and three of our presentation.

Forward looking statements reflect our views as of the date of this call <unk> does not undertake any obligation to update forward looking statements to reflect events or circumstances. After the date of this call.

Additionally, the call will contain discussion of certain non-GAAP measures a definition of non-GAAP measures used in the reconciliation of these measures to the nearest GAAP measure is included in the appendix of the release and presentation.

Adam will give me todays call by providing an overview of the quarters results and recent highlights an update on our strategic and operational priorities.

John will then give a commercial and business development update after which Scott will review financial results.

We will then open the call for questions and now I'll turn the call over to out of Guara co CEO of <unk>.

Thank you Todd good morning, everyone and thank you for participating in <unk> fourth quarter and full year 2023 earnings call.

Europe continues to execute on its business plan and is well positioned to grow in our industry, which is experiencing strong market fundamentals and expanding tailwind.

I'd like to highlight several points from this quarter's results and recent developments.

First as expected fourth quarter results benefited from stronger RIN prices adjusted.

Adjusted EBITDA for the quarter was $32 million, an increase of 57% from 2022 from its strongest quarter in <unk> history and $52 million for the full year 2023 meeting our most recent guidance.

Our positive results in the fourth quarter were driven by continued improvement in our fuel station service segment and the monetization of all environmental credits held for sale, including a portion from the third quarter.

Second Emerald, our 50 50 joint venture project with Tfl and one of the largest R&D projects in North America is showing production growth in line with expectations.

We began generating and selling from the project in December.

Third we continue to make good progress on our projects that are in construction expecting to end the year with $8 8 million Btu of R&D design capacity in operation.

The end of 2023, we began construction of a new two megawatt renewable electricity facility at the fall River landfill that will utilize approximately zero point $2 million annual M. M Btu a biomethane.

Fourth we are encouraged by recent treasury commentary on the ITC, which although not finalized we believe that the ITC will include biogas conditioning and cleaning equipment as eligible for sale tax credits and the final rule.

It should be noted that support for this inclusion came not only from industry through comment letters, but also from a letter offered by IRI Bill sponsor Senator Brown, which was co signed by numerous senators and members of the house.

Clearly the incentive including this property in the section 48 ITC per visit.

We expect final rules to be published sometime after March 25, which will hopefully clean up a couple of remaining technical structural issues.

Although not included in our adjusted EBITDA guidance for 2024, we have outlined our current thinking of how successful resolution of these rules would impact cash flow and resulting net income.

<unk> <unk> 40 million in 2024.

I'd also like to add that our downstream fuel station service segment is set to have strong adjusted EBITDA growth in 2024, and we are encouraged by the increasing interest from major fleets testing the new common 15 liter natural gas engine, which should lead to continued its upward trajectory over the next several years.

Yes.

John and Scott will go into greater detail regarding our outlook for 2024, but needless to say, we're very excited about our opportunities.

LNG production is expected to grow between $60 to 80%.

Adjusted EBITDA is forecasted to range from $90 million to $100 million up from $52 million in 2023, and we see continued growth in 2025 and beyond from Annualizing. The plants coming online. This year continued growth in fuel station services and our significant opportunity set of new potential projects.

Into construction.

2024 also has the potential to be a powerful year in education, and advocacy, which can broaden bipartisan support for industry capture.

Capturing and converting bio methane emissions into low carbon intensity usable energy products as numerous societal and strategic benefit for all Americans, including fighting climate change improving air quality and socio economically challenged communities supporting the agricultural sector driving investment in providing.

Economic value for countless municipalities that own landfills and wastewater treatment facilities, while also providing greater energy security for all Americans.

With that I'll turn it over to John.

John.

Thank you Adam and good morning, everyone.

We're proud of our accomplishments in the fourth quarter of 2023, and the 2023 year end results importantly, the Emerald R&D project is online and we now have eight R&D projects in operation.

An annual design capacity of $5 2 million Btu.

Btu.

Up from $2 3 million Btu at year end 2021.

Production was in line with expectations.

<unk> production was $2 7 million F&B to use for the 12 months ended December 31 2023.

23% increase year over year.

That number is expected to increase significantly this year.

Scott will give more detail on this year's guidance, but we're expecting roughly $4 6 million Btu of RMG production this year.

In addition to our operating projects. We currently have six RMG projects in construction, representing an additional $4 4 million Btu.

Btu of annual design capacity.

And one to four megawatt landfill gas to electric projects.

Which is <unk> $2 million annual <unk> Biomethane equivalents.

Construction of new projects is proceeding well.

Prince William.

One, which we own 100% and represents $1 7 million Btu of design capacity.

As reached mechanical completion <unk>.

<unk> of the plant will continue over the coming weeks as we approach commencement of operations.

Sapphire, which we operate in a 50 50 joint venture with Tfl and.

And representing over $8 million <unk> share of design capacity is on track to begin operations in the third quarter of 2024.

Our Polk County, Florida project, where we also own 100% and which represents $1 1 million Btu of annual designed capacity is also on track to begin operations in the fourth quarter of this year.

Atlantic Our first SJI joint venture R&D project, which we put into construction in the third quarter of 2023 is progressing and we continue to expect it to begin commercial operations in mid 2025.

Atlantic will contribute over 3 million <unk> of annual design capacity net to <unk>.

As I mentioned, we also began construction of our fall river to four megawatt renewable electricity project in the fourth quarter of 2023, which will utilize approximately <unk> 2 million Btu, a biomethane equivalent and is slated to begin operations by year end.

Our two central Valley dairy projects are delayed due to a contract dispute. We expect this dispute which is proceeding through an arbitration process to impact the timing of these two projects and we plan to give further updates on timing as we move forward this year.

Together, our operating a construction RMG projects represent almost $9 6 million Btu.

Btu of design capacity.

We expect to place at least 2.1 million MMR Btu of RMG projects into construction this year.

As the Opel executes on existing opportunities.

Growth in our relationships across our landfill sector is resulting in additional project opportunities that we believe will mature into continued growth in construction and operating projects in the foreseeable future.

Last quarter, we started providing additional detail on how we measure the production output at our RMG in renewable power projects, we added two new metrics.

Inlet designed capacity utilization measures the percentage quantity.

<unk> gas available the inlet of our facilities compared with a design capacity of these facilities for the relevant period.

We said, we generally expect our R&D facilities to begin somewhere in the 70% to 80% range of enlist design capacity utilization.

And expect increasing utilization rates as all of our R&D facilities aren't open and growing landfills and we along with our landfill partners continue to make improvements in gas collection of the well fields.

Utilization of inlet gas.

New metric.

Measures the productivity of converting the biogas coming into the R&D facility.

Into product RMG is simply the volume of the actual production for a given period.

<unk> by the volume of inlet gas.

This metric should be relatively stable between 80% to 90% with fluctuations based on the efficiency and availability of the system.

And the quality of the biogas.

Both inland design capacity utilization and the utilization of inlet gas where within their expected ranges and we expect that to continue this year.

With that I'll turn it over to Scott to discuss the quarter's financial performance.

And provide additional detail regarding guidance.

Scott.

Thank you John and good morning to all the participants on today's call.

Last night, we filed our earnings press release, which details our quarterly results for the quarter and year ending December 31.

2023, our 10-K will be filed tomorrow.

Looking at the fourth quarter results compared to the third quarter of 2023, R&D production increased to 0.8 million F&B to use from 0.7 million F&B to use.

The increase is largely due to emerald production coming online.

Compared to fourth quarter 2022 production grew 0.2 million Btu's due to a combination of same store sales growth in Emerald coming online.

RMG production was $2 7 million F&B to use for the 12 months ended December 31, 2023, compared to $2 2 million maybe to use for the comparable period last year.

Revenue in the fourth quarter was $87 million as compared to $67 million and.

In the fourth quarter of 2022.

The main driver for the increase in revenues was the timing and pricing of environmental credit sales, including both R&D fuel and fuel station services, where we dispense all of the RMG for our projects as well as 100% for our joint venture projects and <unk>.

There are third party RMG supplies.

Net income for the fourth quarter was $20 1 million as compared to zero point $3 million in the third quarter. The difference was primarily driven by the increase in revenues from the timing of environmental credit sales, but also recognition of Emerald coming online in <unk>.

<unk> method investments.

Adjusted EBITDA was $32 million in the fourth quarter as mentioned, partially driven by the timing of environmental credit sales as well as improving margins and our fuel station services segment.

A reconciliation to GAAP results is provided in our earnings release from yesterday and in our Investor presentation updated this morning on our website.

The fuel station services segment revenues increased to $46 $9 million for the fourth quarter as.

As compared to $37 3 million in the third quarter.

The increase in revenues was primarily the result of increased R&D marketing fees concurrent RIN and <unk> sales and improved margins.

Adjusted EBITDA for this segment grew to $12 million in the fourth quarter versus $6 4 million in the third quarter.

Renewable power revenues decreased to $11 $3 million for the quarter from $13 7 million in the third quarter.

This was primarily due to reduced operations at Arbor Hills as the biogas was diverted to the new Emerald RMG project.

Last September we entered into a $500 million senior secured credit facility.

The credit agreement provides up to $450 million of term loans over an 18 month draw period and $50 million of revolving credit.

As of December 31, 2023, approximately $187 million was drawn down on the facility.

As of December 31, 2023 liquidity was $348 million consisting.

Consisting of $300 million of availability under the credit facility and.

And $48 million of cash cash equivalents and short term investments.

As a result, we feel our liquidity and capital resources and access to other sources of capital are sufficient for our growth plans.

Now I'll turn to this year's guidance.

For full year 2024 guidance, assuming $3 <unk>.

$2, Permian Btu, Brown gas and $65 per metric ton else CFS, we expect our full year 2024, adjusted EBITDA to be 90 million to $100 million and RMG production to be four four to $4 8 million F&B to use.

Our adjusted EBITDA guidance does not include several items of note.

One the potential of $40 million of cash proceeds in income in 2024 that would result from favorable.

While ITC resolution.

To RMG pending monetization increase of approximately $15 million.

And three.

Project development and startup costs of approximately $12 million, which do not get capitalized.

As we disclosed last quarter, we are no longer recognizing RMG pending monetization in our calculation of adjusted EBITDA. Although we continue to provide detail on our inventory and credit sold each quarter as well as a period ending balance.

A reminder, that this represents the value of our December 2020 for RMG production, where the costs have been recognized in our 2024 adjusted EBITDA results, but we have not yet sold and transferred the rents or else CFS credits associated with that arent Jake.

Actively having our 2024 results include revenues associated with December 2023 production.

While recording our December 2024 production costs.

This impact can be significant if a company has a large growth trajectory such as opal and obviously would not be as impactful if we werent growing our production so significantly.

One other item worth noting is that we are now breaking out our development and plant startup costs as a separate line item on the income statement.

We thought this disclosure was important to give investors a sense of steady state from our operating facilities for.

For 2024 development and plant startup costs include a $12 million operating expense not added back to adjusted EBITDA from a virtual pipeline for Prince William that will be used until the permanent pipeline is operational.

We also want to provide some color on the fuel station services segment, where we anticipate adjusted EBITDA to grow by 75% to 90% compared to 2023.

Results, driven primarily by increasing R&D marketing revenues through our dispensing network, new Opel fueling stations coming online and continued improving trends in margins.

We expect full year 2020 for capital expenditures at wholly owned and joint venture projects to total approximately $230 million, which includes approximately $41 million relating to equity method investments and approximately $28 million associated with downstream.

<unk>.

Before I turn it back to John I would just like to mention our press release earlier this week announcing that our controlling shareholder for Istar as exchanged 71 5 million shares of <unk> stock.

The class B shares that are entitled to a single vote.

As our press release noted with Ford to start reducing a significant portion of its voting control, we anticipate that our publicly traded class a common stock will become eligible for inclusion in certain stock market indices.

Of course, there are no assurances that <unk> will be included in any indices.

With that I'll turn it back to John for concluding remarks.

Thank you Scott.

In closing we are pleased with the continuing success in the execution of our business plan, we remain committed to furthering <unk> vertically integrated mission.

To build and operate best in class Biomethane, capturing conversion projects that deliver industry, leading reliable and cost effective low carbon intensity energy products that displace fossil fuel and mitigate climate change.

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

Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

One on that will be compile the Q&A roster.

Yes.

Our first question.

Comes from John <unk> with Stifel. Please proceed with your questions.

Hey, good morning, and thanks for taking my questions.

For my first one how should we think about the timing of RIN sales. This year with current D. Three prices more favorable to start this year should we think about it being more equally weighted than last year.

Yes, hi, Thanks, This is Adam here and.

Thanks for the question.

We are anticipating to be selling in transferring our rents.

Pretty uniformly as they are generated and minted.

Throughout the year.

And.

I would also add that thus far.

We've hedged or sold forward approximately half of our production.

Makes sense.

Follow up.

The EBITDA guidance for the fuel station service implies strong growth. This year could you offer some additional color on the drivers of this great then maybe related to that what's the latest feedback.

Youre hearing on the Cummins 15 liter.

Yeah. Thanks again. This is this is still Adam.

As Scott was mentioning in the in the earlier prepared comments.

We're excited about the fuel station service segment, and 2024 is set up to be a really strong growth year for it.

The primary drivers this year are really utilizing the dispensing network that we've set up and.

Really generating a lot more profitability at that segment as we're delivering more R&D fuel through that.

That dispensing network and it's not only from our production, it's 100% from the JV projects and then also numerous third party suppliers and then we're also benefiting from.

A number of Opel fuel, one fueling stations coming online and Annualizing those that came online.

Sort of mid year last year and then we're also seeing the continued improving trends in in the construction and service side of that business. So 2024 really looks to be a good year for it and.

The results this year are not being driven by what we are hearing is good feedback on that 15 liter engine.

That 15 liter engine is still going through its testing periods.

But the feedback has been really strong and that will show up as new business development activity This year and drive growth in 'twenty five and beyond.

Great color, thanks for taking my questions.

One moment for our next question.

Our next question comes from Matthew Blair with Tpa. Each. Please proceed with your question.

Thank you and good morning, I had a question on Capex. So I think at one point, which might have been a few years ago, you were guiding to capex account to call. It roughly $40 per <unk> for a landfill project, maybe about 160 <unk> for a dairy project.

Could you give us a sense of where those numbers are today.

Hi, This is Scott casino.

Thank you Matthew for your question.

I think we're going to have to get back to you on the dollars per M and btu.

For Capex.

Okay.

Safe to say that that there is there has been some significantly.

And just the unit cost.

This is Adam Camorra here and I was just trying to do the math on the last two projects that.

That we are.

Looking at putting into construction here there is no doubt that there had been some cost inflation over the last several years, we have seen that level out quite a bit over the last three to four months or so as we're putting together some some project cost estimations.

I see John working to calculate that there will come back on what ballpark rule of thumb is.

But.

One of the things that we've also been doing here internally is looking at ways to perhaps do things a little bit differently from a construction standpoint, and seeing where there are some opportunities to reduce some of those initial.

Reduce some of those capex for <unk>. So it is up from the $40 I don't want to give you an exact number right now we have seen that level out and we still see extraordinarily good.

Turn on capital projects.

And still see very good paybacks on these projects and I know theres going to be a question coming up on ITC.

But certainly.

That that also helps as we're looking at projects that we put into construction here.

Yeah, Matthew John Moore.

Costs that youre signing of 140 to 160 is significantly higher than what we're experiencing for landfill projects.

While that may be more appropriate for dairy where the cost might be.

Similar but the output dairy projects being substantially lower than landfill projects. Obviously, our focus is on landfill projects and we're seeing.

Costs better.

Well below $100 per Btu.

Okay.

Thanks, Good. Thank you and then regarding the LNG production guide of four four to four eight so I think that implies growth of 107 to Q1 in 2024.

It looks like at least part of this 2020 for growth is actually coming from higher utilization at your existing plants, rather than just bringing on the new projects that you cited is that what youre seeing as well and if so what would be driving the higher utilization.

Yeah. Thanks, Thanks for that question and.

It is.

It goes to how we were thinking about our guidance for the whole year. So there may be some follow ups there.

But when we've got our production guidance in the midpoint there for sex.

About $3 six of that is from projects that are operating today. So if you look at that $3 six over the $5 two design capacity Youre looking at about 70% product output on the design capacity and I think as we've noted in our disclosures. We do expect same store sales growth.

At our projects as well.

They're at opening growing landfills.

We're always looking at ways to continue to improve gas collection.

With our with our landfill partners so.

We do expect these facilities to continue to grow as they mature.

So when you look at our guidance this year.

About $1 million of it comes from Prince William SaaS.

SaaS fire and pork are the bulk of it really from Prince William.

Which we're happy.

It's mechanical completion and has entered the commissioning phase.

Sounds good thank you.

One moment for our next question.

Our next question comes from Ryan <unk> with B Riley. Please proceed with your question.

Hey, good morning.

Adam you mentioned, you hedged or or sold forward about half of your production can you share what the associated and buyer mental attribute and gas prices are there.

So we have not yet sold forward the Nat gas piece, which we are.

Looking at.

And on the environmental piece of it.

We feel.

You can look at the industry averages or something like that.

To try and get a feel for it.

Yeah.

Okay.

That leads into my follow up could you just provide us with a refresher on.

How we should think about <unk> average realized sales price compared to what we might see in the index prices is there a general rule of thumb for how much of the RIN price youre able to realize.

Yes, I think we've got some disclosure in there in terms of what typical brokerage or commission fees are for <unk>.

So.

So I believe we've got that in our disclosure.

And.

We don't necessarily sell added at the index price, we do pick pricing and transact on pricing.

So we don't have index based pricing, but you can assume that our average sales price is just over where we may have given.

Or is there any reason for excluding that here.

Yeah, you know this.

This is John so thanks for that question Ryan.

The concept was somewhat associated with our go public.

When we were a smaller company and the conversion of our pipeline.

Projects with more meaningful we're now $5 2 million of nameplate and looking to exit 2024 with $8 8 million.

After the current RMG projects.

Or that are scheduled to be completed this year are in fact completed so the pipeline of projects is now less meaningful.

We've also shown that our excellence in bringing projects online and that are.

Ramp up period and high availability operating factors.

Really.

Attract us to other partners in the development of those partnerships really adds more of an opportunity set.

That combined with our vertical integration.

Really.

Gives us a front row seat at a lot of the opportunities that are out there in the marketplace. So so we do see that we're guiding to greater than two point or $1 million of MMP to use into construction we.

We believe that the tailwind that we're seeing in the industry will assist us in achieving those goals.

But.

Really nothing has changed the cadence that we've been.

Doing over the last couple of years will continue.

With the guidance that we're giving.

Here today, yes, the only thing I would add to that is that.

The delineation between prospective opportunities in ADP.

It really doesn't.

Capture the full opportunity set a start that we're looking at.

And if we've got perspective opportunities that are.

Much greater than what we are doing what we would call a <unk>. We just didnt feel like it was a meaningful metric and thought that delineation was a little unique to Opel fuels on how we were describing that.

Got it makes sense. Thank you guys I'll turn it back.

One moment for our next question.

Our next question comes from Martin Malloy with Johnson Rice <unk> Company. Please proceed with your question.

Good morning, I wanted to ask about slide 17, and you mentioned also I think.

Using biomethane for power generation in your prepared remarks could you maybe spend some time talking about that market.

Right.

Economics of that market.

How <unk> might play a role and I realized early history of the company that the power generation was was fairly important.

Okay.

Yes.

We really think that there is a lot of potential here for for bipartisan support for our industry and we're starting to see it show up in a lot of different places and.

Whether or not we're going to talk about <unk> and <unk>.

Other types of things that can support.

Cellulosic electricity.

We think that this industry is starting to.

No.

Get behind this good better best strategy.

We have countless thousands of landfill thousands of small farms.

A wastewater treatment.

<unk> facilities that are owned by municipalities, where we're just not capturing biomethane and.

Theres I think theres a lot of room to have this good better best where the first thing we should be doing is capturing this biomethane.

And not every biomethane source is going to be big enough or have access to a pipeline and there is this proven technology to turn it into renewable electricity, which is base load not dependent on some intermittent either sun or wind.

And which is really good where you won't need battery storage, we think cellulosic electricity.

A lot of sense and is the right public policy.

So.

Ear into the one.

That already our existing.

In the in the EPA regulations, and there is a really great.

Legal argument that was put forward by Arnold <unk>.

Porter.

On a partnership for the electric pathway website that I would encourage folks to read.

And.

We think we think that he rins are one potential for it perhaps it can show up in 45 Z.

Renewable electricity potentially could qualify for those those credits.

We just think it's the right public policy to support the capture of Biomethane and.

Renewable electricity or certain certainly one product that can come from it.

Thank you.

And for my second question wanted to ask about slide 20 and.

Transportation fuel LNG demand.

Could you maybe talk about.

About.

How you see that market developing and could we ever see opal.

Look into selling into that market under longer term contracts.

Sure John Moore here so.

We see substantial demand outside of the transportation fuel.

Sector.

Right now the transportation fuel sector is the highest value offtake, but certainly when you think about <unk>.

<unk> pipeline utility use.

For one having.

Many of them promise, there public utility commissions and regulatory commissions to put.

Decarbonize gas into their pipelines.

We see this with like Enbridge for example.

We see that with Nextera, we see that with SJI.

They are all trying to find.

Decarbonize gas to put into their pipeline and expand that capability. In addition, so so that's going to be a very substantial amount of demand over the next couple of years currently the prices substantially below the transportation fuel markets beyond.

About theres certainly.

Industry looking to Decarbonize in the U S and then overseas markets we see.

European carbon markets.

Being potentially.

Potentially very attractive for this.

We've been participating in a small way into those European markets, and we see those European markets growing as a potential end use offtake in.

In addition.

There is.

<unk> time uses there's probably a bunch more.

I haven't talked about but when you add all those up theres substantial demand for.

This low carbon product.

We will see more of that coming in the coming years, maybe Adam you'd like to elaborate on that somewhat yeah I just wanted to.

Jump back into the into the policy tailwind because I just want I just wanted to maybe elaborate on on why these are tail winds and we had one other thing on that slide talking about 70% of Americans.

Wanting wanting to do something about climate change and when you break that down by party or each group, that's where we're really talking about these tail ends where if there is over 90% of Democrats and 74% of independent maybe somewhere in the 40% of Republicans that believe we should be doing some.

And there were some really interesting testimony from Republican Senators asking for inclusion of R&D projects in that section 48.

Only gets more interesting when you're looking at the age demographics. Every time, you move down 10, or 15 years, the percentages keep moving up higher and higher so those are the tailwind that we're talking about in and it's not only.

Whether or not it's say elastic electricity policies. It's also coming from the SEC now talking about greenhouse gas disclosure requirements and our product is zero scope, one and zero scope two emissions versus diesel.

These are the kinds of sort of trends that are really supportive and we think that cellulosic electricity as part of it and.

Voluntary markets continue to grow as well and obviously something that we're always keeping our eye on.

Thank you for taking my questions I will turn it back.

One moment our next question.

Our next question comes from Paul Cheng with Scotiabank. Your line is open.

Hey, guys good morning.

The first question is that just curious.

The arbitration that into to kind of fund their projects disappear.

What's the nature of those views and what's the risk that you're in.

Your other projects you will face similar issue potentially face similar issue. That's the first question.

Hi, Paul John more thank you for your question this morning.

Just kind of.

Discussing it in somewhat here.

The situation, we have is where we have a fixed price EPC contract for both the hilltop and the vendor scoff projects.

The contractor has presented us with a series of change orders seeking to increase the price.

We think the change orders are not warranted.

And substantially dispute the change orders that have been presented to us.

We commenced as you said an arbitration proceeding.

Okay.

While the arbitration proceeding is continuing in the dispute is.

Being resolved.

Contractors required to continue work during the course of this resolution.

Resolution period.

The contract.

So for both projects.

For each of the two projects is fully bonded by license sureties.

Notice of our claim.

We believe that our claims have substantial mirror.

But of course.

It's in an early stage and we can't really predict the outcome, but I can say this.

It is limited to these two projects it is not affecting other projects and we don't see that.

It would affect future projects Paul.

John.

This the first time you went with this contractor or that you have worked with them before and also whether this contract to have any other projects other than those two that they are working on with you.

The contractor. This is the first time, we're working on it with them.

Our.

The contractor was developed.

Sourced by our co developer in the project.

And.

As a reputable counterparty.

And has some other projects in the industry, but just not with us.

And.

We think it's really very narrowly focused on these two projects in a more broader than that.

Okay.

Yes.

And then maybe this is for both anthem and John just curious.

Not just <unk>, but the industry has been having a tough year over the past 12 15 months.

And all potent knockdown very expensive and very.

Got it.

When you talk to investors when you thing yes.

This connection.

People do not understand about your business rich part.

So.

It's interesting that you say that the industry has had a tough year I suppose that you mean.

As exhibited by the stock price because we.

We see gathering <unk> and the industry as Adam was alluding to before.

We're particularly well poised.

Two.

Really benefit from those <unk>.

And we see a lot of optimism as we look forward.

But in terms of the stock price of us and our competitors.

And address hours.

Right off the bat, it's strictly a matter of a low float stock.

Trying to address matters for improving that flowed.

Really take care of that.

Before I get to a float section I will say that we think that the.

Cadence of increasing projects into construction, increasing projects into operation and increasing the overall output will have a significant benefit to us not just from.

Cash flow from really.

Expanding.

Company's size so so.

That is.

Our what we're going to do is keep our head down execute on the plan in front of us, but from a flow perspective.

You saw last year that we started.

The money.

Equity program that we disclosed.

And then <unk>.

Most recently this week with the disclosure of the voting change.

That we disclosed where we expect that that voting change.

<unk>.

Is aimed having us picked up by some low cap small cap stock.

Index.

So that would hopefully add some attraction to our stock, but I really think that at the end of the day, it's really executing on what's in front of us and the growth that that will bring about that will result in stronger stock price one last point on that obviously, we've seen some precedent.

Actions going on in the market and those private transactions give us a lot of optimism about the value of our company relative to the stock price.

The value of our company when you market to transactions such as the Enbridge Morro transaction at $1 2 billion, where they had a similar amount of gas in operation, but no real development pipeline and no downstream dispensing really gives us a lot of comfort.

As to the overall value that we're sitting on today and that we're creating in the very near future.

Great. Thank you.

Thanks, Paul.

As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad and wait for your name to be announced one moment. Our next question.

Our next question comes from Adam <unk> with Goldman Sachs. Please proceed with your question.

Hi, Thanks for taking my question.

And fuel station services margin stepped up by over 800 basis points sequentially.

That seasonality or what's going on under the Hood to drive that strong performance sequentially.

And as we think about the moving pieces, where our growth marketing for dispensing third party construction and O&M tracking respectively.

Yes, thanks for the question Adam.

The fourth quarter did benefit from some additional RIN monetization and <unk> credit sales.

As we had mentioned.

Fourth quarter General benefited from it and certainly a portion of that flows through on fuel station services.

That being said, we see gross margins.

Improving quite a bit in 24 versus 23.

Both from utilizing.

Our.

More R&D flowing through our dispensing network and seeing improving margins both in the construction and the service piece as well.

In 2003, we still had a little bit of a lag effect.

And fuel station services from inflation rolling through some of our construction revenues on that side.

And we've moved to move through that piece of it.

Yeah.

I think that was all your question did I Miss one there Adam that that Delta.

That's helpful and then.

Separately.

The U S Treasury and IRS still need to finalize 45, we got in so.

How and when do you see regulations, playing out and then at the same time of 45 B comes online I believe Neal.

Alternative.

Fuel excise tax credit would be rolling off what's the magnitude of tailwind that you receive from the alternative fuel tax credit or does that flow mostly to your partners.

No Adam I appreciate that because that was also one other thing I wanted to hit upon.

I just wanted to remind everybody in our fuel station service segment, we have zero.

Nat gas commodity price risk that flows all the way through is a variable cost to our to our fleet customers. So we do not have any impact from a relationship between Nat gas and oil and those sorts of things.

So all the margin improvement that we're talking about is from that increasing R&D moving through our network and those other items that I mentioned.

Also on the FTC side, we have negligible impact from FTC, where that was also a pass through benefit to our fleet customers. So it's under $1 million in terms of how much <unk>.

Tc.

Profitability, we have received in terms of timing on the 45 Z.

Yes.

I do not want to set any timelines out of treasury because each time, we do they seem to be a little bit later or.

That sort of thing we've been waiting for how they're going to do the carbon intensity, scoring on 45 Z.

I'm hopeful we're going to see it pretty soon.

That's one of the biggest pieces to see how they're going to score landfill in dairy.

And certainly we do benefit.

No.

More so from dairy and even some of the gas were going to be dispensing on the dairy side, but we don't know yet how they're going to treat the really negative ultra low Ci stuff and we don't know yet on the landfill side, a how theyre going to bucket that feedstock and whether or not they're going to allow for individual improvements to those ci score.

<unk>.

We're hopeful we're going to see it pretty soon.

And.

As I had mentioned earlier too there could be a potential where.

Cellulosic of renewable electricity.

It could be seen as a transportation fuel and that 45 day.

We think the way we read it it certainly could.

And it'll.

It'll be interesting to see how we what kind of Ci scores could get associated with that.

And then maybe if I could just fit one more in here can you expand on the potential for greater than $10 million in <unk> going into construction. This year just any color on specific project details in cadence would be great. Thank you.

Well we've discussed.

What about our relationships.

You're obviously aware of our relationships with.

GSL with Wm.

SJI.

And a couple of the projects that we've been discussing associated with those while we're not prepared to talk about specific additional projects we.

We do believe that.

Theres been a little bit of let's say a backlog.

And as that backlog gets relieved youll see additional projects coming into construction, we've discussed a little bit about what.

Some of those projects might look like.

But.

Principally.

Looking at road Emily Hill area.

That's our principal focus.

Talks about some of those counterparties.

We are growing and so we do have a great deal of confidence that those improving relationships combined with really our.

Delivering consistently projects work right out of the box.

Operate with high.

Degrees of availability.

Yeah.

We will really in our downstream vertically integrated model of delivering into the highest value offtake market will continue to.

Increase our opportunity set there so yes, the only the only thing I would say there out of these projects are big.

It can be sizable or chunky.

And sometimes.

They can come in bunches. So if you do see a quarter, where we're successful putting mulch.

Multiple projects into construction.

And maybe get.

Two or whatever it is and in a single quarter doesn't mean that we're also on an $8 million <unk>.

<unk> into construction run rate. So I just want I just want to caution that as well if we see one of these quarters coming up where they get bunched up.

Great I appreciate the color.

That concludes the question and answer session. At this time I would like to turn the call back to Adam Kumar for closing remarks.

Alright, well. Thank you very much for your participation and interest in Opal fuels. We look forward to continued engagement and dialogue and hope everybody has a great day.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Yes.

[music].

Okay.

[music].

Okay.

<unk> advises me our hand is raised to withdraw your question. Please press star one again.

As a reminder, this event is being recorded.

I would now like to turn the call over to Todd Firestone Vice President of Investor Relations to begin. Please go ahead.

Thank you and good morning, everyone welcome to <unk> fourth quarter and full year 2023 earnings Conference call with me today are co Ceos out of Klara Jonsson, Moore, and Scott <unk> Chief Financial Officer.

<unk> fuels released financial and operating results for the fourth quarter and full year 2023 yesterday afternoon, and those results are available on the Investor Relations section of our website at <unk> Dot com.

Patient and access to the webcast for this call are also available on our website. After completion of today's call a replay will be available for 90 days.

Before we begin I would like to remind you that our remarks, including answers to your questions contain forward looking statements, which involve risks uncertainties and assumptions forward looking statements are not a guarantee of performance.

And actual results could differ materially from what is contained in such statements.

Factors that could cause or contribute to such differences are described on slide two and three of our presentation. These forward looking statements reflect our views as of the date of this call <unk> does not undertake any obligation to update forward looking statements to reflect events or circumstances. After the date of this call.

Adam will begin today's call by providing an overview of the quarters results and recent highlights an update on our strategic and operational priorities.

Jon will then give a commercial and business development update after which Scott will review financial results.

We will then open the call for questions and now I'll turn the call over to out of Guara co CEO of Opal field.

Thank you Todd good morning, everyone and thank you for participating in <unk> fourth quarter and full year 2023 earnings call.

Europe continues to execute on its business plan and is well positioned to grow in our industry, which is experiencing strong market fundamentals and expanding tailwind.

I'd like to highlight several points from this quarter's results and recent developments.

First as expected fourth quarter results benefited from stronger RIN prices.

Adjusted EBITDA for the quarter was $32 million, an increase of 57% from 2022, and the strongest quarter in <unk> history and $52 million for the full year 2023 meeting our most recent guidance.

Our positive results in the fourth quarter were driven by continued improvement in our fuel station service segment and the monetization of our environmental credits held for sale, including a portion from the third quarter.

Second Emerald, our 50 50 joint venture project with Tfl and one of the largest R&D projects in North America is showing production growth in line with expectations.

We began generating and selling from the project in December.

Third we continue to make good progress on our projects that are in construction expecting to end the year with $8 8 million <unk> of R&D design capacity in operation.

The end of 2023, we began construction of a new $2 four.

Megawatt renewable electricity facility at the fall River landfill that will utilize approximately 0.2 million annual MN Btu a biomethane.

We expect final rules to be published sometime after March 25, which will hopefully clean up a couple of remaining technical structural issues.

Although not included in our adjusted EBITDA guidance for 2024, we have outlined our current thinking of how successful resolution of these rules would impact cash flows and resulting net income approximately $40 million in 2024.

John and Scott will go into greater detail regarding our outlook for 2024, but needless to say, we're very excited about our opportunities.

<unk> production is expected to grow between $60 to 80%.

Put into construction.

2024 also has the potential to be a powerful year in education, and advocacy, which can broaden bipartisan support for our industry tax.

Economic value for countless municipalities that own landfills and wastewater treatment facilities, while also providing greater energy security for all Americans.

With that I'll turn it over to John.

John.

Thank you Adam and good morning, everyone.

We're proud of our accomplishments in the fourth quarter of 2023, and the 2023 year end results importantly, the Emerald LNG project is online we now have eight R&D projects in operation with an annual design capacity of $5 2 million <unk>.

Btu.

Up from $2 3 million Btu at year end 2021.

Production was in line with expectations.

<unk> production was $2 7 million F&B to use for the 12 months ended December 31 2023.

23% increase year over year.

That number is expected to increase significantly this year.

Scott will give more detail on this year's guidance, but we're expecting roughly $4 6 million Btu of RMG production this year.

In addition to our operating projects. We currently have six RMG projects in construction, representing an additional $4 4 million Btu.

<unk> annual designed capacity.

And one to four megawatt landfill gas to electric projects.

Is <unk> 2 million annual <unk> Biomethane equivalents.

Construction of new projects is proceeding well.

Prince William.

One, which we own 100% and represents $1 7 million Btu of design capacity.

As reached mechanical completion commit.

Commissioning of the plant will continue over the coming weeks as we approach commencement of operations.

Sapphire, which we operate in a 50 50 joint venture with GSL and.

And representing over $8 million <unk> share of design capacity is on track to begin operations in the third quarter of 2024.

Our pulp County, Florida project, where we also own 100% and which represents $1 1 million Btu of annual design capacity is also on track to begin operations in the fourth quarter of this year.

Atlantic Our first SJI joint venture R&D project, which we put into construction in the third quarter of 2023 is progressing and we continue to expect it to begin commercial operations in mid 2025.

Atlantic will contribute over 3 million <unk> of annual design capacity net to April.

Together, our operating and construction RMG projects represent almost $9 6 million Btu.

<unk> of design capacity.

We expect to place at least 2.1 million Btu of RMG projects into construction this year.

As the Opel executes on existing operating.

Continued growth in construction and operating projects in the foreseeable future.

Last quarter, we started providing additional detail on how we measure the production output at our RMG in renewable power projects.

We added two new metrics.

Inlet design capacity utilization measures the vintage quantity of.

A biogas available at the inlet of our facilities compared with a design capacity of these facilities for the relevant period.

We said, we generally expect our R&D.

Starting guidance.

Scott.

Thank you John and good morning to all the participants on today's call.

Last night, we filed our earnings press release, which details our quarterly results for the quarter and year ending December 31.

2023, our 10-K will be filed tomorrow.

Looking at the fourth quarter results compared to the third quarter of 2023, R&D production increased to zero point $8 million in Btu's from zero point $7 million in Btu's.

The increase is largely due to emerald production coming online.

Compared to fourth quarter 2022 production grew 0.2 million Btu's due to a combination of same store sales growth in Emerald coming online.

RMG production was $2 7 million F&B to use for the 12 months ended December 31, 2023, compared to $2 2 million F&B to use for the comparable period last year.

Revenue in the fourth quarter was $87 million as compared to $67 million in the fourth quarter of 2020 to.

The main driver for the increase in revenues was the timing and pricing of environmental credit sales, including both RMG fuel and fuel station services, where we dispense all of the R&D for our projects as well as 100% for our joint venture projects and other third party RMG supplies.

Net income for the fourth quarter was $20 $1 million as compared to zero point $3 million in the third quarter. The difference was primarily driven by the increase in revenues from the timing of environmental credit sales.

But also recognition of Emerald coming online and equity method investments.

Adjusted EBITDA was $32 million in the fourth quarter as mentioned, partially driven by the timing of environmental credit sales as well as improving margins and our fuel station services segment.

A reconciliation to GAAP results is provided in our earnings release from yesterday.

And in our Investor presentation updated this morning on our website.

The fuel station services segment revenues increased to $46 $9 million for the fourth quarter.

As compared to $37 3 million in the third quarter.

The increase in revenues was primarily the result of increased R&D marketing fees concurrent RIN and <unk> sales and improved margins.

Adjusted EBITDA for this segment grew to $12 million in the fourth quarter versus $6 4 million in the third quarter.

Renewable power revenues decreased to $11 $3 million for the quarter from $13 7 million in the third quarter.

This was primarily due to reduced operations at Arbor Hills as the biogas was diverted to the new Emerald R&D project.

Last September we entered into a $500 million senior secured credit facility.

The credit agreement provides up to $450 million of term loans over an 18 month draw period and $50 million of revolving credit.

As of December 31, 2023, approximately $187 million was drawn down on the facility.

As of December 31, 2023 liquidity was $348 million consisting.

Consisting of $300 million of availability under the credit facility and.

$48 million of cash cash equivalents and short term investments.

As a result, we feel our liquidity and capital resources and access to other sources of capital are sufficient for our growth plans.

Now I'll turn to this year's guidance.

For full year 2024 guidance, assuming $3 <unk>.

$2 per <unk>, Btu, brown gas and $65 per metric ton Lcs we.

We expect our full year 2024, adjusted EBITDA to be $90 million to $100 million.

And RMG production to be four four to $4 8 million F&B to use.

Our adjusted EBITDA guidance does not include several items of note one the potential of $40 million of cash proceeds in income in 2024 that would result from favorable ITC resolution.

To RMG pending monetization increase of approximately $15 million.

And three <unk>.

Project development and startup costs of approximately $12 million, which do not get capitalized.

As we disclosed last quarter, we are no longer recognizing RMG pending monetization in our calculation of adjusted EBITDA. Although we continue to provide detail on our inventory and credits sold each quarter as well as the period ending balance.

A reminder, that this represents the value of our December 2020 for RMG production, where the costs have been recognized in our 2024 adjusted EBITDA results, but we have not yet sold and transferred the rins or else TFS credits associated with that RMG Ifs.

Effectively having our 2024 results include revenues associated with December 2023 production, while recording our December 2024 production costs.

This impact can be significant if a company has a large growth trajectory such as <unk>, and obviously would not be as impactful if we werent growing our production so significantly.

One other item worth noting is that we are now breaking out our development and plant startup costs as a separate line item on the income statement.

We thought this disclosure was important to give investors a sense of steady state from our operating facilities for.

We also want to provide some color on the fuel station services segment, where we anticipate adjusted EBITDA to grow by 75% to 90% compared to 2023.

Results, driven primarily by increasing R&D marketing revenues through our dispensing network, new Opel fueling stations coming online and continued improving trends in margins.

<unk>.

Before I turn it back to John I would just like to mention our press release earlier this week announcing that our controlling shareholder for Istar as exchanged 71 5 million shares of high volt stock.

Class B shares that are entitled to a single vote.

Of course, there are no assurances that <unk> will be included in any indices.

With that I'll turn it back to John for concluding remarks.

Thank you Scott.

In closing we are pleased with the continuing success in the execution of our business plan, we remain committed to furthering <unk> vertically integrated mission.

To build and operate best in class Biomethane capturing conversion projects.

Deliver industry, leading reliable and cost effective low carbon intensity energy products that displace fossil fuel and mitigate climate change.

And with that I'll turn the call back over to the operator for Q&A. Thank you all for your interest in <unk> fuels.

One on that will be compile the Q&A roster.

Okay.

Our first question.

Comes from John <unk> with Stifel. Please proceed with your questions.

Hey, good morning, and thanks for taking my questions.

For my first one how should we think about the timing of rent sales. This year with current D. Three prices more favorable to start this year should we think about it being more equally weighted than last year.

Yes, hi, Thanks, This is Adam here and.

Thanks for the question.

We are anticipating to be selling in transferring our returns.

It's been really strong and that will show up as new business development activity this year and drive growth in 'twenty five and beyond.

Great color, thanks for taking my questions.

One moment for our next question.

Our next question comes from Matthew Blair with T. P. H. Please proceed with your question.

Thank you and good morning, I had a question on Capex. So I think at one point, which might have been a few years ago, you were guiding to capex that came out too.

All at roughly $40 per M. M. Btu for a landfill project, maybe about 160 per M. Btu for a dairy project could you give us a sense of where those numbers are today.

Hi, This is Scott casino.

Thank you Matthew for your question.

I think we're going to have to get back to you on the dollars per M and btu.

For Capex.

Okay is it safe to say that that there is there has been some had some anomalies in there.

The unit cost.

Yeah, Hey, this is Adam Camorra here and I was just trying to do the math on the last two are projects that.

That we are looking.

I see John working to calculate profit there will come back on.

What ballpark rule of thumb is but one.

One of the things that we've also been doing a hearing.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question you will need to press star one one on your telephone you will then inherent automated message advising our hand dish raised to withdraw your question. Please press star one again.

As a reminder, this event is being recorded.

I would now like to turn the call over to Todd Firestone Vice President of Investor Relations to begin. Please go ahead.

Thank you and good morning, everyone welcome to <unk> fourth quarter and full year 2023 earnings conference call.

With me today are co Ceos, Klara Jonsson, Moore, and Scott <unk> Chief Financial Officer.

<unk> released financial and operating results for the fourth quarter and full year 2023 yesterday afternoon, and those results are available on the Investor Relations section of our website at <unk> Dot com.

The patient and access to the webcast for this call are also available on our website. After completion of today's call a replay will be available for 90 days.

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

Looking statements are not a guarantee of performance.

Results could differ materially from what is contained in such statements.

Factors that could cause or contribute to such differences are described on slide two and three of our presentation.

Adam will gain today's call by providing an overview of the quarters results and recent highlights an update on our strategic and operational priorities.

Jon will then give a commercial and business development update after which Scott will review financial results.

We will then open the call for questions and now I'll turn the call over to out of Guara co CEO of <unk>.

Thank you Todd good morning, everyone and thank you for participating in <unk> fourth quarter and full year 2023 earnings call.

<unk> continues to execute on its business plan and is well positioned to grow in our industry, which is experiencing strong market fundamentals and expanding tailwind.

I'd like to highlight several points from this quarter's results and recent developments.

First as expected fourth quarter results benefited from stronger RIN prices.

Adjusted EBITDA for the quarter was $32 million, an increase of 57% from 2022, and the strongest quarter in <unk> history and $52 million for the full year 2023 meeting our most recent guidance.

The positive results in the fourth quarter were driven by continued improvement in our fuel station service segment and the monetization of all environmental credits held for sale, including a portion from the third quarter.

Second Emerald, our 50 50 joint venture project with Tfl and one of the largest R&D projects in North America is showing production growth in line with expectations.

We began generating and selling from the project in December.

Third we continue to make good progress on our projects that are in construction expecting to end the year with $8 8 million <unk> of R&D design capacity in operation.

The end of 2023, we began construction of a new $2 four.

Megawatt renewable electricity facility at the fall River landfill that will utilize approximately 0.2 million annual MN Btu a biomethane.

We expect final rules to be published sometime after March 25, which will hopefully clean up a couple of remaining technical structural issues.

Although not included in our adjusted EBITDA guidance for 2024, we've outlined our current thinking of how successful resolution of these rules would impact cash flows and resulting net income approximately $40 million in 2024.

I'd also like to add that our downstream fuel station service segment is set to have strong adjusted EBITDA growth in 2024, and we are encouraged by the increasing interest from major fleets testing the new common 15 liter natural gas engine, which should lead to continue this upward trajectory over the next several years.

John and Scott will go into greater detail regarding our outlook for 2024, but needless to say, we're very excited about our opportunities.

<unk> production is expected to grow between $60 to 80%.

Put into construction.

2024 also has the potential to be a powerful year in education, and advocacy, which can broadened bipartisan support for our industry tax.

Economic value for countless municipalities that own landfills and wastewater treatment facilities, while also providing greater energy security for all Americans.

With that I'll turn it over to John.

John.

Thank you Adam and good morning, everyone.

We're proud of our accomplishments in the fourth quarter of 2023, and 2023 year end results importantly, the Emerald LNG project is online and we now have eight R&D projects in operation.

An annual design capacity of $5 2 million Btu.

Up from $2 3 million Btu at year end 2021.

Production was in line with expectations.

<unk> production was $2 7 million F&B to use for the 12 months ended December 31 2023.

23% increase year over year.

That number is expected to increase significantly this year.

Scott will give more detail on this year's guidance, but we're expecting roughly $4 6 million btu of our LNG production this year.

In addition to our operating projects.

Currently have six RMG projects in construction, representing an additional $4 4 million.

Btu of annual designed capacity.

And one to four megawatt landfill gas to electric projects, which is <unk> $2 million annual <unk> Biomethane equivalents.

Construction of new projects is proceeding well.

Prince William one, which we own 100% and represents $1 7 million Btu of design capacity.

As reached mechanical completion commit.

Commissioning of the plant will continue over the coming weeks as we approach commencement of operations.

Sapphire, which we operate in a 50 50 joint venture with GSO and.

And representing over $8 million <unk> share of design capacity is on track to begin operations in the third quarter of 2024.

Our pulp County, Florida project, where we also own 100% and which represents $1 1 million Btu of annual design capacity is also on track to begin operations in the fourth quarter of this year.

Atlantic Our first SJI joint venture RMG project, which we put into construction in the third quarter of 2023 is progressing and we continue to expect it to begin commercial operations in mid 2025.

Atlantic will contribute over 3 million <unk> of annual design capacity net to Opel.

Together, our operating and construction RMG projects represent almost $9 6 million Btu.

Btu of design capacity.

We expect to place at least 2.1 million <unk> of RMG projects into construction this year.

As the Opel executes on existing opportunities.

Last quarter, we started providing additional detail on how we measure the production output at our RMG in renewable power projects, we added two new metrics.

Inlet design capacity utilization measures the percentage quantity.

<unk> gas available the inlet of our facilities compared with a design capacity of these facilities for the relevant period.

We said, we generally expect our R&D facilities to begin somewhere in the 70% to 80% range of enlist design capacity utilization.

Utilization of inlet gas.

Second new metric.

Measures the productivity of converting the biogas coming into the R&D facility.

Into product RMG is simply the volume of the actual production for a given period.

Divided by the volume of inlet gas.

This metric should be relatively stable between 80% to 90% with fluctuations based on the efficiency and availability of the system and the quality of the biogas.

Both inland design capacity utilization and the utilization of inlet gas or within their expected ranges and we expect that to continue this year.

With that I'll turn it over to Scott to discuss the quarter's financial performance and provide.

Additional detail regarding guidance.

Scott.

Thank you John and good morning to all the participants on today's call.

Last night, we filed our earnings press release, which details our quarterly results for the quarter and year ending December 31.

2023, our 10-K will be filed tomorrow.

Looking at the fourth quarter results compared to the third quarter of 2023, RMG production increased to zero point $8 million in Btu's from zero point $7 million in Btu's.

The increase is largely due to emerald production coming online.

Compared to fourth quarter 2022 production grew 0.2 million Btu's due to a combination of same store sales growth in Emerald coming online.

RMG production was $2 7 million F&B to use for the 12 months ended December 31, 2023, compared to $2 2 million F&B to use for the comparable period last year.

Revenue in the fourth quarter was $87 million as compared to $67 million in the fourth quarter of 2020 to the.

The main driver for the increase in revenues was the timing and pricing of environmental credit sales, including both R&D fuel and fuel station services, where we dispense all of the R&D for our projects as well as 100% for our joint venture projects and other third party R&D supplies.

Method investments.

Adjusted EBITDA was $32 million in the fourth quarter as mentioned, partially driven by the timing of environmental credit sales as well as improving margins and our fuel station services segments.

A reconciliation to GAAP results is provided in our earnings release from yesterday.

And in our Investor presentation updated this morning on our website.

The fuel station services segment revenues increased to $46 9 million for the fourth quarter.