Montauk Renewables, Inc. (NASDAQ:MNTK) Q2 2023 Earnings Call Transcript

Operator: Thank you. We have one more follow-up from Manav Gupta with UBS. Your line is open.

Manav Gupta: Quickly on this carbon dioxide agreement with the European Energy. This is somewhat a newer concept for us. Help us understand some of the benefits of this. I understand the deliveries are starting in ’26, but help us understand where this can take you and what are the real benefits of delivering this to this European Energy company? Thank you.

Sean McClain: Sure, Manav. The opportunity for us to take a natural consequence of our operational facilities in the form of biogenic CO2 that is being destroyed in our thermal oxidizer has routinely only been available for the generation of tax credits requiring you to be able to utilize those tax credits coming out of the Inflation Reduction Act and the evolution of those credits that are also tradable, alongside of that has been the opportunity to actually monetize the CO2. And in this opportunity, partnering with an exemplary business that has been able to utilize that for the creation of E-methanol. The opportunity to look beyond this initial arrangement definitively exists across our entire portfolio and exists in the form of actual CO2 that is destroyed in our thermal oxidation process, but also exists in the form of CO2e, an avoidance that happens at projects similar to what we are doing in North Carolina, where the CO2e would be primarily focused on the generation of tax credits because the equivalent obviously cannot be sold as a commodity.

All of our operating facilities are capturing and destroying carbon dioxide, which can be used as a commodity as we start to look across the portfolio. So we’re very excited for this first opportunity. And again, the benefits to us, similar to the Duke arrangement that we have done in North Carolina, is bolstering the business with fixed price revenue streams and the ability to allow for a stronger, more patient ability to monetize our environmental attributes in the hands of the obligated parties and allow for that timing to unfold throughout the year.

Operator: Thank you. And I’m showing no other questions in the queue. I’d like to turn the call back over to Sean McClain for any closing remarks.

Sean McClain: Well, thank you, and thank you all for taking the time to join us on the conference call today. We look forward to speaking with you on our 2023 third quarter conference call.

Operator: Thank you. This concludes today’s conference call. You may now disconnect.