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Archaea Energy Inc. Acquires NextGen Power Holdings LLC
April 29, 2022
4 Min Read
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HOUSTON- -- Archaea Energy Inc. (“Archaea,” “the Company,” or “we”) (NYSE: LFG), an industry-leading renewable natural gas (“RNG”) company, today announced that its wholly owned subsidiary, Archaea Infrastructure, LLC, has entered into a definitive purchase and sale agreement with Riverview Investment Holdings LLC, an affiliate of Castleton Commodities International LLC, to purchase NextGen Power Holdings LLC (together with its subsidiaries, “INGENCO”) for $215 million in cash, subject to customary adjustments at closing. The transaction is expected to close on or after July 1, 2022.
Transaction Highlights
Significant addition to Archaea’s backlog of attractive RNG development opportunities via acquisition of existing electricity generation assets
INGENCO asset platform includes 14 operating landfill gas to electric (LFGTE) plants at sites which had combined gas flows into the facilities of 7 million MMBtu in 2021
Acquisition includes gas rights for these sites, which have a number of existing long-term agreements in place
Asset base located on landfills with strong growth potential and permitted waste acceptance for over 40 years on average across sites
Archaea expects to build RNG facilities on the majority of these LFGTE sites over time, materially expanding the earnings power of the asset base and of the Company
Adding approximately 70 INGENCO employees, who will add valuable expertise to Archaea’s highly skilled and experienced team
Estimated pro forma multiple of approximately 6X total capital expenditures, including acquisition and RNG development costs, to estimated long-term annual Adjusted EBITDA1 associated with the INGENCO assets
Estimated pro forma long-term annual RNG production of approximately 6 million MMBtu and estimated net annual electricity generated of over 500 thousand MWh once development projects associated with the INGENCO assets are completed and ramped to full flows
Opportunities for additional upside to estimated long-term annual Adjusted EBITDA through initiatives such as improving heat rates and increasing landfill gas flows into facilities
“Today’s announcement marks a significant achievement in executing on our strategy of securing as many economically attractive RNG development opportunities as possible, building the biggest and highest quality RNG development backlog in the industry, and growing the long-term earnings power of our business,” said Nick Stork, Archaea’s Co-Founder and Chief Executive Officer. “The INGENCO platform provides an opportunity set of high-quality projects for our in-house technical and project development professionals to develop and generate compelling returns by building high margin RNG facilities using our Archaea V1 plant design while also exploring opportunities to optimize the existing electricity generation infrastructure.”
Archaea expects to finance the acquisition of INGENCO, subject to market conditions and other factors, via one or more capital markets transactions or private financing transactions.
1. Estimated long-term annual Adjusted EBITDA is a non-GAAP measure. Estimated long-term annual Adjusted EBITDA reflects potential annual Adjusted EBITDA associated with the INGENCO assets once all associated development projects have been completed and ramped to full flows and assumes current market rates associated with long-term fixed-price contracts for all volumes. In addition, operating costs reflect management expectations based on experience operating existing assets and with adjustments for plant size, location, and royalty constructs per gas rights agreements, and does not include any impact from carbon capture and sequestration or carbon intensity reduction initiatives. Assumes renewable electricity production facilities remain in operation following construction of RNG plants on electric sites, with natural gas fuel cost of $3.00/MMBtu. A reconciliation of estimated long-term annual Adjusted EBITDA to Net Income (Loss), the closest U.S. GAAP financial measure, cannot be provided without unreasonable efforts due to the inherent difficulty in quantifying certain amounts, due to a variety of factors. Actual long-term annual Adjusted EBITDA associated with the INGENCO assets may be different from this estimate, and such differences may be material.
ABOUT ARCHAEA
Archaea Energy Inc. is one of the largest RNG producers in the U.S., with an industry-leading platform and expertise in developing, constructing, and operating RNG facilities to capture waste emissions and convert them into low carbon fuel. Archaea’s innovative, technology-driven approach is backed by significant gas processing expertise, enabling Archaea to deliver RNG projects that are expected to have higher uptime and efficiency, faster project timelines, and lower development costs. Archaea partners with landfill and farm owners to help them transform potential sources of emissions into RNG, transforming their facilities into renewable energy centers. Archaea’s differentiated commercial strategy is focused on long-term contracts that provide commercial partners a reliable, non-intermittent, sustainable decarbonizing solution to displace fossil fuels.
Additional information is available at www.archaeaenergy.com.
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