OPAL Fuels Enhances Liquidity with Tax Credit Sale to Apollo

OPAL Fuels Completes $11.1 Million Tax Credit Sale

Recently, OPAL Fuels Inc. (NASDAQ: OPAL), a leader in renewable natural gas (RNG) and renewable power solutions, made headlines with its successful sale of approximately $11.1 million in investment tax credits. This significant transaction was made to a subsidiary of Apollo Global Management (NYSE: APO), ushering in a new chapter for OPAL Fuels as it marks its inaugural venture into the sales of tax credits under the Inflation Reduction Act (IRA).

The Significance of the Sale

The tax credits stem from OPAL Fuels' participation in the Emerald RNG facility, one of the largest landfill RNG operations in North America. Jointly owned by OPAL Fuels, the facility boasts an impressive capacity of 10,000 standard cubic feet per minute (scfm), which allows it to capture substantial amounts of biogas, thereby contributing to climate change mitigation efforts.

Strategic Growth Initiatives

According to Jonathan Maurer, Co-Chief Executive Officer of OPAL Fuels, this sale adds much-needed liquidity, empowering the company to advance its strategic growth initiatives. He noted the IRA as a crucial element driving investment in renewable energy projects, which in turn fuels OPAL Fuels' project pipeline.

Investment in Renewable Energy Assets

The move not only enhances OPAL Fuels' financial position but also underscores the importance of renewable energy assets in combating climate change. The sale of tax credits is expected to stimulate further investments in projects that capture and convert biogas, reflecting the firm's commitment to low carbon intensity RNG and renewable electricity.

Recent Company Performance and Outlook

In addition to the favorable tax credit sale, OPAL Fuels has reported robust performance in recent quarters. The company’s growth has been bolstered by a thriving end market, along with strong sales of Renewable Identification Numbers (RINs). Although it adjusted its full-year Renewable Natural Gas (RNG) production outlook slightly downward due to ramp-up times at new facilities, its adjusted EBITDA guidance for 2024 remains intact. Currently, OPAL Fuels has $275 million to leverage from its credit facility, alongside $27 million in cash and short-term investments, providing it with the financial means to pursue its growth trajectory.

Future Projects

OPAL Fuels is actively constructing its 16th RNG project, aspiring to achieve at least 2 million MMBtu of new RNG production by 2024. The revised full-year RNG production forecast now sits between 4.0 million and 4.4 million MMBtu. In addition, the company is exploring opportunities beyond transportation markets, including the promising domain of marine fuel.

Commitment to Growth

These developments highlight OPAL Fuels’ ongoing commitment to sustainability and growth, as it continuously aligns its operations with the Environmental Protection Agency's (EPA) focus on regulating methane emissions. The firm is optimistic about its prospects, especially regarding its Sapphire and Polk RNG projects slated for advancement in the near future.

Financial Metrics and Market Valuation

Investors are closely observing OPAL Fuels as it navigates through the renewable energy landscape. The company currently trades at a high earnings multiple, illustrated by its P/E ratio of 46.79. Analysts express optimism regarding OPAL Fuels' profitability, anticipated to materialize within the current fiscal year, alongside a notable revenue growth of 27.13% in the last twelve months as of Q2 2024.

Operational Performance

OPAL Fuels also demonstrates a healthy operational profile, highlighted by an impressive EBITDA growth of 1099.8% over the past twelve months. While the market has perceived volatility, reflected by a year-to-date price total return of -33.88%, shorter time frames reveal a positive price recovery of 6.41% over the past week, further reaffirming investor interest and confidence in the company's long-term viability.

Frequently Asked Questions

What was the amount of the tax credits sold by OPAL Fuels?

OPAL Fuels sold approximately $11.1 million in investment tax credits.

Who acquired the tax credits from OPAL Fuels?

The tax credits were purchased by a subsidiary of Apollo Global Management, Inc.

What is the capacity of the Emerald RNG facility?

The Emerald RNG facility has a nameplate capacity of 10,000 standard cubic feet per minute (scfm).

How does the sale of tax credits impact OPAL Fuels?

The sale enhances OPAL Fuels' liquidity, aiding in the advancement of their strategic growth initiatives.

What is the future outlook for OPAL Fuels?

The company remains optimistic about its prospects, particularly for its Sapphire and Polk RNG projects.

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