OPAL 10-K & 10-Q changes, risk factors and insider trading
OPAL Fuels Inc. · Nasdaq · Gas & Other Services Combined · CIK 1842279 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Item 1A. Risk Factors”
New heading “Risk Factors Summary”
New heading “Risks Related to Our Business”
New heading “Risks Related to Regulations or Governmental Actions”
New heading “Risks Related to Our Indebtedness”
New heading “Risks Related to Ownership of Our Class A Common Stock”
Largest changes
“•Our operations are subject to numerous stringent EHS laws and regulations that may expose us to significant costs and liabilities. From time to time, we have been issued notices of violations from government entities that our operations have failed to comply with such laws and regulations. Failure to comply with such laws and regulations may result in the assessment of sanctions, including administrative, civil or criminal penalties, the imposition of investigatory or remedial obligations, and the issuance of orders limiting or prohibiting some or all of our operations.”see in full comparison
“Risks Related to Regulations or Governmental Actions”see in full comparison
“In addition, uncertainty surrounding potential tariff increases on imported products and possible retaliatory measures by other countries could negatively impact our business. On February 1, 2025, the U.S. government proposed tariffs of up to 25% on imports from certain countries, including Mexico and Canada, and implemented additional tariffs on imports from China. As of the date of this report, these tariffs are set to take effect on April 2, 2025. In response, countries such as Mexico have indicated they may impose retaliatory tariffs on U.S. exports.”see in full comparison
“•we may acquire goodwill and other intangible assets that are subject to amortization or impairment tests, which could result in future charges to earnings;”see in full comparison
Full comparison: every changed paragraph (44)
Item 1A. Risk Factors
There are many factors that affect our business and results of operations, some of which are beyond our control. The following is a description of some important factors that may cause the actual results of operations in future periods to differ materially from those currently expected or desired.
Risk Factors Summary
Risks Related to Our Business
•We are dependent on contractual arrangements with, and the cooperation of, owners and operators of biogas project sites where our Biogas Conversion Projects are located for the underlying biogas rights granted to us in connection with our Biogas Conversion Projects and for access to and operations on the biogas project sites where we utilize those underlying biogas rights.
•The owners and operators of biogas project sites generally make no warranties to us as to the quality or quantity of gas produced.
•Failure of third parties to manufacture quality products or provide reliable services in a timely manner could cause delays in developing, constructing, bringing online and operating our Biogas Conversion Projects and Fueling Stations, which could damage our reputation, adversely affect our partner relationships or adversely affect our growth.
•We rely on interconnection, transmission and pipeline facilities that we do not own or control and that are subject to constraints within a number of our regions. If these facilities fail to provide us with adequate capacity or have unplanned disruptions, we may be restricted in our ability to deliver Renewable Power and RNG to our counterparties and we may either incur additional costs or forego revenues.
•Our Biogas Conversion Projects face operational challenges, including among other things the breakdown or failure of equipment or processes or performance below expected levels of output or efficiency due to wear and tear of our equipment, latent defects, design or operator errors, force majeure events, or lack of transmission capacity or other problems with third party interconnection and transmission facilities.
•A reduction in the prices we can obtain for the Environmental Attributes generated from RNG, which include RINs, ISCC Carbon Credits, LCFS credits, and other incentives, could have a material adverse effect on our business prospects, financial condition and results of operations.
•Volatility in the price of oil, gasoline, diesel, natural gas, RNG, or Environmental Attribute prices could adversely affect our business.
•We face significant upward pricing pressure in the market with respect to our securing the biogas rights necessary for proposed new Biogas Conversion Projects and our conversion of existing Renewable Power rights to RNG rights on existing Biogas Conversion Projects that we plan to convert.
•Our ability to acquire, convert, develop and operate Biogas Conversion Projects, as well as expand production at current Biogas Conversion Projects, is subject to many risks.
•Our success is dependent on the willingness of commercial fleets and other counterparties to adopt, and continue use of RNG, which may not occur in a timely manner, at expected levels or at all. Our vehicle fleet counterparties may choose to invest in renewable vehicle fuels other than RNG.
•Our failure to dispense a specified quality or quantity of RNG could have a material adverse effect on our financial condition and results of operations, by subjecting us to, among other things, possible penalties or terminations under the various contractual arrangements under which we operate, including pursuant to a purchase and sale agreement related to the sale of our Environmental Attributes.
•Our increasing reliance on information technology and other systems subjects us to risks associated with cybersecurity. Cybersecurity incidents or our failure to maintain the security and integrity of Company, employee, associate, customer or third-party data could have a disruptive effect on our business and adversely affect our reputation and financial performance.
•Liabilities and costs associated with hazardous materials and contamination and other environmental conditions may require us to conduct investigations or remediation at the properties underlying our projects, may adversely impact the value of our projects or the underlying properties, and may expose us to liabilities to third parties.
Risks Related to Regulations or Governmental Actions
•Our operations are subject to numerous stringent EHS laws and regulations that may expose us to significant costs and liabilities. From time to time, we have been issued notices of violations from government entities that our operations have failed to comply with such laws and regulations. Failure to comply with such laws and regulations may result in the assessment of sanctions, including administrative, civil or criminal penalties, the imposition of investigatory or remedial obligations, and the issuance of orders limiting or prohibiting some or all of our operations.
•Existing and future changes to federal, state and local regulations and policies, including permitting requirements applicable to us, and enactment of new regulations and policies, may present technical, regulatory and economic barriers to the generation, purchase and use of Renewable Power and RNG, and may adversely affect the market for the associated Environmental Attributes. A failure on our part to comply with any laws, regulations or rules applicable to us may adversely affect our business, investments and results of operations.
•The financial performance of our business depends upon tax and other government incentives for the generation of RNG and Renewable Power, any of which could change at any time and such changes may negatively impact our growth strategy.
Risks Related to Our Indebtedness
•Our level of indebtedness and preferred stock redemption obligations could adversely affect our ability to raise additional capital to fund our operations and acquisitions. It could also expose us to the risk of increased interest rates and limit our ability to react to changes in the economy or our industry. We may be unable to obtain additional financing to fund our operations or growth.
Risks Related to Ownership of Our Class A Common Stock
•We are a controlled company, and thus not subject to all of the corporate governance rules of Nasdaq. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.
The volatilityVolatility in the price of oil, gasoline, diesel, natural gas, RNG, or Environmental Attribute prices could adversely affect our business.
Our business strategy includes (i) the conversion of LFG projects from Renewable Power to RNG production where we already controlscontrol biogas gas rights, (ii) growth through the procurement of LFG rights and manure rights to develop new RNG projects, (iii) the acquisition and expansion of existing Biogas Conversion Projects, and (iv) growth through the procurement of rights to other sources of biogas for production of additional transportation fuels and generation of associated Environmental Attributes. This strategy depends on our ability to successfully convert existing LFG projects and identify and evaluate acquisition opportunities and complete new Biogas Conversion Projects or acquisitions on favorable terms. However, we cannot guarantee that we will be able to successfully identify new opportunities, acquire additional biogas rights and develop new RNG projects or convert existing projects on favorable terms or at all. In addition, we may compete with other companies for these development and acquisition opportunities, which may increase our costs or cause us to refrain from making acquisitions at all.
•we may acquire goodwill and other intangible assets that are subject to amortization or impairment tests, which could result in future charges to earnings;
An unexpected reduction in RNG production by third-party producers of RNG with whom we maintain marketing agreements to purchase RNG and/or the associated Environmental Attributes, or their inability or refusal to deliver such RNG or Environmental Attributes as provided under such agreements, may have a material adverse effect on our results of operations and could adversely affect orour performance under associated dispensing agreements.
Under the agreement, we have committed to sell a minimum quarterly volume of Environmental Attributes to NextEra, which if not satisfied on a cumulative basis (giving credit for certain excess volume sold to NextEra during the contract term) as of the end of the contract term (or upon an early termination of the agreement) would result in our paying NextEra a shortfall payment calculated by (i) multiplying the amount of the volume shortfall by a fraction of the then-current index price of the Environmental Attribute and (ii) adding a specified premium (the “Shortfall Amount”). Similarly, if the agreement is terminated by NextEra due to an event of default (generally defined as a failure by us to pay any undisputed amounts under the agreement, a material uncured breach of our representations or warranties or other obligations under the agreement, or the dissolution, bankruptcy or insolvency of us or certain of our affiliates), NextEra would be entitled to receive, without any duplication, any then-current Shortfall Amount plus an accelerated payment calculated based off of the remaining minimum quarterly volume commitments for the balance of the initial term (or for the next four quarters of the next renewal term, if neither party had provided notice of non-renewal as described above prior to the commencement of such renewal term), which accelerated payment would be similarly calculated by (i) multiplying such remaining minimum quarterly volume commitments by a fraction of the then-current index price of the Environmental Attribute and (ii) adding a specified premium. The amount of such potential payments declines over the course of the contract term as we deliver Environmental Attribute volume under the contract. Were,If, however, the agreement was to be terminated as of the date of this report and we were not to deliver any further Environmental Attribute volume to NextEra under the agreement, the maximum potential payment to NextEra under these provisions would be approximately $9.9 million based on current market prices for such Environmental Attributes.
•perceptions about the benefits of natural gas vehicle fuels relative to gasoline, diesel and other alternative vehicle fuels, including with respect to factors such as supply, cost savings, environmental benefits and safety;
It is more likely than not that the deferred tax assets will not be realized in accordance with ASC Topic 740, ‘Income Taxes’.Taxes ("ASC 740"). As such, the Company has reduced the full carrying amount of the deferred tax assets with a valuation allowance under both scenarios. Management will continue to monitor and consider the available evidence from quarter to quarter, and year to year, to determine if more or less valuation allowance is required at that time.
Currently, we do not have a business relationship with any of the banking institutions mentioned above, and our cash,cash and cash equivalents and short term investments have been unaffected by the turmoil in the financial industry; however, we cannot guarantyguarantee that the banking institution with which we do business will not face similar circumstances in the future, or that the third parties with whom we do business will not be negatively affected by such circumstances.
There is also uncertainty if IRA incentives may be reduced or repealed in the future, especially in light of the 2024 election results. In addition, the timing of when assets are placed in service has in the past and could in the future impact our tax rate. If we experience unexpected delays in this timing, we may not be able to take advantage of ITCs as expected. If we are not able to utilize the ITCs as expected this could have an adverse effect ofon our financial results.
If we are unable to utilize various federal, state and local governmental incentives to acquire additional Biogas Conversion Projects or Fueling Stations in the future, or the terms of such incentives are revised in a manner that is less favorable to us, we may suffer a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, we face similar risks with respect to the RFS program. Any future changes to, federal, state and local regulations and policies, including permitting requirements applicable to us, and enactment of new regulations and policies, may present technical, regulatory and economic barriers to the generation, purchase and use of Renewable Power and RNG, and may adversely affect the market for the associated Environmental Attributes. A failure on our part to comply with any laws, regulations or rules,rules applicable to us may adversely affect our business, investments and results of operations.
The Company from time-to-time enters into arrangements with third parties that acquire tax credits, including ITCs, from,from the Company where tax credits and related tax benefits represent a material portion of the economic benefit of the arrangement to such other party. In certain circumstances, as is customary in the industry, the Company has guaranteed and may have to guarantee the economic benefit of such tax credits and other tax benefits to such party. A reduction in expected tax credits or tax benefits resulting from successful challenges by the IRS could result in an obligation under the Company’s contractual arrangements that could have a material impact on the Company’s financial condition, results of operations and liquidity.
We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations hashave resulted in increased general and administrative expenses.
•being required to accept then-prevailing market terms in connection with any required refinancing of such indebtedness or redemption obligations, which may be less favorable than existing terms;
Future sales and issuances of our Class A common stock could result in additional dilution of the percentage ownership of our shareholdersstockholders and could cause our share price to fall.
We expect that significant additional capital will be needed in the future to pursue our growth plan. To raise capital, we may sell shares of our Class A common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we or our subsidiaries issue additional equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to our existing shareholders,stockholders, and new investors could gain rights, preferences, and privileges senior to existing holders of our Class A common stock.
The dual-class structure of our common stock has the effect of concentrating voting control with Mr. Mark Comora who, through his control of OPAL Holdco and Hillman, beneficially owns in the aggregate a substantial majority of the voting power of our capital stock on most issues of corporate governance. Mr. Mark Comora beneficially owns 145,336,349148,336,349 shares of OPAL, comprising 83.7%84.1% of our outstanding common stock as of March 14,12, 2025.2026, assuming conversion of all shares of Class B and Class D common stock into shares of Class A common stock. All of these shares (with the exception of 880,600 shares of Class A common stock purchased by Fortistar in the PIPE InvestmentInvestment, 3,000,000 shares of Class A common stock underlying warrants beneficially owned by Fortistar, and 56,712 shares of Class A common stock held directly by Mr. Comora) are Class B common stock, or are Class D common stock which have no economic rights but are entitled to five votes per share, giving Mr. Mark Comora control over 93.9%89.5% of our voting power. OPAL Holdco and Hillman are controlled, indirectly, by Mr. Mark Comora through entities affiliated with Mr. Mark Comora, including Fortistar and certain of its other affiliates. Mr. Mark Comora is the Chairman of our board of directors.
We intend to retain future earnings, if any, for future operations, expansion and debt repayment and there are no current plans to pay any cash dividends for the foreseeable future. The declaration, amount and payment of any future dividends on shares of common stock will be at the sole discretion of our board, who may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our its stockholders or by our subsidiaries to us and such other factors our board may deem relevant. In addition, our ability to pay dividends is limited by covenants of any indebtedness we incur. As a result, you may not receive any return on an investment in the shares of Class A common stock unless you sell your shares of Class A common stock for a price greater than that which you paid for it.
In addition, uncertainty surrounding potential tariff increases on imported products and possible retaliatory measures by other countries could negatively impact our business. On February 1, 2025, the U.S. government proposed tariffs of up to 25% on imports from certain countries, including Mexico and Canada, and implemented additional tariffs on imports from China. As of the date of this report, these tariffs are set to take effect on April 2, 2025. In response, countries such as Mexico have indicated they may impose retaliatory tariffs on U.S. exports.
In addition, uncertainty surrounding potential tariff increases on imported products and possible retaliatory measures by other countries could negatively impact our business. At this time, it is unclear whetherthe theseextent to which any tariffs will apply to imports of equipment and machinery upon which our business is reliable.reliant. Any new or increased tariffs, trade sanctions, or changes in U.S. trade policy could lead to higher operational costs. If we are unable to pass these additional costs to our customers and/or effectively manage higher operational expenses, our financial performance could be adversely affected.
Management's Discussion & Analysis (MD&A)
New heading “RNG Fuel Production, Sales, and Delivery”
New heading “Interest income”
New heading “Income tax benefit”
New heading “Critical Accounting Estimates”
New heading “Construction Contracts”
Removed heading “Wasatch Resource Recovery Facility”
Removed heading “OPAL Term Loan Amendment”
Removed heading “Critical Accounting Policies and Estimates”
Removed heading “Revenue Recognition”
Removed heading “Fair Value Measurements”
Removed heading “Emerging Growth Company Status”
Removed heading “Use of Estimates”
Removed heading “Change in fair value of derivatives, net”
Removed heading “Loss on debt extinguishment”
Removed heading “Loss on warrant exchange”
Largest changes
“Our long-lived assets held and used with finite useful lives including plant equipment, buildings, patents, and PPAs are reviewed for impairment whenever events or changes in circumstances indicate that the asset group may not be recoverable. In determining the asset group, we assess the interdependency of revenues between assets, shared cost structures, the interchangeability of assets used in operations, and how assets are managed and utilized by the business. …”see in full comparison
“Our goodwill impairment assessment is performed during the fourth quarter as of December 31 of each year or at the time facts or circumstances indicate that a reporting unit’s goodwill may be impaired. In conformity with GAAP, we generally first perform a qualitative assessment over whether it is more likely than not that a reporting unit’s fair value is less than its carrying value to determine if a quantitative assessment is required. …”see in full comparison
“When a business is acquired, goodwill is recognized to reflect any future economic benefits that are not separately recognized, such as synergies. For the purposes of impairment testing, U.S. GAAP requires goodwill to be allocated to reporting unit(s) at the acquisition date and to be tested for impairment at least annually, and in between annual tests whenever events or changes in circumstances indicate that the respective reporting unit’s fair value is less than its carrying value. …”see in full comparison
“The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. …”see in full comparison
“The Credit Agreement Amendment makes certain changes to the applicability of certain financial covenants and modifies other covenants to clarify the use of loan proceeds. Additionally, the Credit Agreement Amendment permits the organizational restructuring of the Guarantors in a manner designed to facilitate the sale of federal investment tax credits and the ability to raise additional future capital.”see in full comparison
“Evaluating goodwill for potential impairment requires the use of estimates and assumptions that involve significant judgment and could materially affect our financial results. We assess goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate that the fair value of a reporting unit may be less than its carrying amount.”see in full comparison
Full comparison: every changed paragraph (171)
In this Management's Discussion and Analysis of Financial Condition and Results of Operations section, references to "OPAL," "we," "us," "our," and the "Company" refer to OPAL Fuels Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes set forth in Part II, Item 8 - "Financial Statements and Supplementary Data" and the risk factors identified in Part I, Item 1A - "Risk Factors" of this Annual Report. For further discussion regarding our results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022, refer to Part II, Item 7 - "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on March 15, 2024. In addition to historical information, this discussion and analysis includes certain forward-looking statements which reflect our current expectations. The Company's actual results may materially differ from these forward-looking statements.
Biogas is generated by microbes as they break down organic matter in the absence of oxygen, and comprised of non-fossil waste gas, with high concentrations of methane, which is the primary component of RNG and the source for combustion utilized by Renewable Power plants to generate electricity. Biogas can not only be collected and processed to remove impurities for use as RNG (a form of high-Btu fuel) and injected into existing natural gas pipelines as it is fully interchangeable with fossil natural gas, but partially treated biogas can be used directly in heating applications (as a form of medium-Btu fuel) or in the production of Renewable Power. Our principal sources of biogas are (i) landfill gas,LFG, which is produced by the decomposition of organic waste at landfills, and (ii) dairy manure, which is processed through anaerobic digesters to produce the biogas.
As of December 31, 2024, we owned and operated 26 projects, 11 of which are RNG projects and 15 of which are Renewable Power Projects. As of that date, our RNG projects in operation had a design capacity of 8.8 million MMBtus per year and our Renewable Power Projects in operation had a nameplate capacity of 105.8 MW per hour. In addition to these projects in operation, we are actively pursuing expansion of our RNG-generating capacity and, accordingly, have a portfolio of RNG projects in construction or in development, with six of our current Renewable Power Projects being considered candidates for conversion to RNG projects in the foreseeable future.
On March 6, 2026, OPAL Fuels LLC entered into a subscription agreement with Preferred Fuels LLC (“Preferred Fuels”), an affiliate of Fortistar, pursuant to which Preferred Fuels committed to purchase up to $180.0 million of Series A preferred units in multiple closings. At the initial closing on March 6, 2026, the investor purchased 1.2 million Series A preferred units for aggregate proceeds of $120.0 million. OPAL Fuels may, in its sole discretion, require the investor to fund up to an additional $60.0 million within one year of the initial closing, subject to the terms of the subscription agreement.
The Series A preferred units are entitled to preferred quarterly distributions at a rate of 12% per annum, compounding quarterly, and rank senior to all other classes of equity interests of OPAL Fuels LLC, except for certain existing preferred units to which they are pari passu. In connection with the initial closing, the Company also issued a warrant to the investor to purchase up to 3.0 million shares of the Company’s Class A common stock, subject to vesting, forfeiture, and other terms and conditions.
During the fourth quarter of 2025, Nextera provided notice of its right to require redemption of all outstanding Series A preferred units. The redemption period, originally scheduled to expire on March 3, 2026 was extended through March 31, 2026. On March 6, 2026, OPAL Fuels LLC redeemed all such preferred units for an aggregate redemption price of $100.0 million, funded with proceeds from the initial preferred unit issuance described above.
In addition, subsequent to December 31, 2025, the Company drew approximately $128.4 million under its term loan facility pursuant to its existing credit agreement. A portion of the proceeds from the borrowing was used to repay approximately $20.0 million outstanding under the revolving loan facility.
Wasatch Resource Recovery Facility
On March 17, 2025, Fortistar, through its subsidiary Wasatch RNG LLC (“Wasatch RNG”), acquired all of the limited liability company interests outstanding in Alpro SD, LLC (“Alpro” and such acquired interest, the “Alpro Interest”). Alpro owns a 50% limited liability company interest in Wasatch Resource Recovery, LLC (the “Project” or “Wasatch” and such ownership interest, the “Wasatch Interest”) and a 50% tenancy-in-common interest in certain real estate and operating assets used by Wasatch (the “Project Interest”). As a result of the acquisition, Wasatch RNG has the option to increase the Wasatch Interest and the Project Interest.
The Project captures and converts biogas generated from food waste to produce pipeline quality renewable natural gas (RNG). The Project generates revenue from long-term contracted gas sales, tipping fees, and digestate (fertilizer) sales. The conversion of food waste to RNG presents a potential growth and diversification opportunity for OPAL Fuels.
In connection with the acquisition, Fortistar Services 2 LLC and OPAL Fuels LLC entered into an amendment to its existing Administrative Services Agreement, pursuant to which OPAL Fuels will provide certain services to Wasatch RNG in exchange for certain agreed upon fees and expense reimbursements. These services include oversight of the plan to improve the operations and productivity of the Project.
Additionally, Wasatch RNG and OPAL Fuels entered into an Option Agreement, pursuant to which Wasatch RNG granted an option to OPAL Fuels to purchase the Alpro Interest. The exercise period of the option commenced upon closing of the acquisition and will terminate on the third anniversary of the closing of the acquisition, or ninety days following a change of control of OPAL Fuels. The exercise price of the option would be determined such that Wasatch RNG would earn an internal rate of return on its invested capital of 10% percent per year if the option is exercised in the first year, 15% per year if exercised in the second year, and 20% per year if exercised in the third year.
OPAL Term Loan Amendment
On March 3, 2025, OPAL Fuels Intermediate HoldCo LLC, as the borrower (the “Borrower”), certain subsidiaries of the Borrower, as guarantors (the “Guarantors”), the lenders and issuers of letters of credit party thereto and Bank of America, N.A. as the administrative agent (the “Administrative Agent”) entered into that certain Amendment No. 1 to Credit and Guarantee Agreement (the “Credit Agreement Amendment”), with respect to that certain Credit and Guarantee Agreement (the “Credit Agreement”) dated September 1, 2023, by and among the Borrower, the Administrative Agent, the financial institutions from time to time parties thereto as lenders and as issuers of letters of credit, and the other agents and persons from time to time party thereto (as amended, restated, amended and restated, supplemented or otherwise modified and in effect from time to time).
The Credit Agreement Amendment makes certain changes to the applicability of certain financial covenants and modifies other covenants to clarify the use of loan proceeds. Additionally, the Credit Agreement Amendment permits the organizational restructuring of the Guarantors in a manner designed to facilitate the sale of federal investment tax credits and the ability to raise additional future capital.
The Credit Agreement Amendment also eases the conditions precedent to making new Projects eligible for borrowing under the Credit Agreement, extends the availability period for delay draw term loans under the Credit Agreement through March 5, 2026, and extends the commencement of repayment of such term loans until March 31, 2026.
In connection with the Credit Agreement Amendment, the Borrower paid the Administrative Agent, for the account of each lender, a one-time nonrefundable fee of $1,250,000.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and the rules and regulations of the SEC, which apply to interim financial statements. The preparation of those financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues, expenses and warrants and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.
Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies, because they generally involve a comparatively higher degree of judgment in their application. For a detailed description of all our accounting policies, see Note 2. Summary of Significant Accounting Policies, to our consolidated financial statements included herein.
Revenue Recognition
We sell Renewable Power produced from LFG-fueled power plants to utility companies through our PPAs. Revenue is recognized based on contract specified rates per MWh when delivered to the customer, as this considered to be completion of the performance obligation. Certain PPAs contain a lease element which we account for as operating lease revenue on a straight-line basis over the lease term. The Company utilizes commodity swap contracts to hedge against the unfavorable price fluctuations in market prices of electricity. The Company does not apply hedge accounting to these contracts. As such, unrealized and realized gain (loss) is recognized as component of Renewable Power revenues in the consolidated statement of operations.
Transportation fuel — Fuel Purchase Agreements
We own Fueling Stations for use by customers under fuel sale agreements. We bill these customers at an agreed upon price for each gallon sold and recognize revenue based on the amounts invoiced in accordance with the “right to invoice” practical expedient. These contracts may contain an embedded lease of the equipment which we account for as operating lease revenue. For some public stations where there is no contract with the customer, we recognize revenue at the point in time that the customer takes control of the fuel.
Interstate Gas Pipeline Delivery
We have agreements with two natural gas producers whereby we are contracted to transport the producers’ gas to an agreed delivery point on an interstate gas pipeline via our RNG gathering system. Revenue is recognized over time using the output method which is based on quantity of natural gas transported.
Environmental Attributes
We generate RECs, RINs, ISCC Carbon Credits and LCFS credits. These Environmental Attributes are sold to third parties that utilize these credits in order to comply with federal and state requirements. Revenue is recognized at the point in time when the credits are transferred to and accepted by the third party buyer. We also provide Environmental Attributes generation and monetization services to customers that own renewable gas generation facilities and we recognize revenues from these services when the credits are minted on behalf of the customer.
Operation and Maintenance
We have operating and maintenance agreements pursuant to which we operate, maintain, and repair landfill site gas collection systems. Revenue is based on the volume per million British thermal units (“MMBtu”) of landfill gas collected and the MWhs produced at that site. This revenue is recognized as Renewable Power revenue when landfill gas is collected and Renewable Power is delivered. In addition, we have operations and maintenance agreements in which we are contracted to maintain and repair Fueling Stations. Revenue is based on the volumes of gas dispensed at the site. This revenue is recognized as Fuel Station Services revenue when the site dispenses gas.
Construction Type Contracts — Third Party
We have various fixed price contracts for the construction of fueling stations for customers. Revenue from these contracts, including change orders, are recognized over time, with progress measured by the percentage of cost incurred to date to estimated total cost for each contract.
The Company provides all third-party construction contracts with a warranty, typically for a period of one year after substantial completion of the construction project. Based on the guidance and indicative factors provided by ASC 606, the Company concluded that it offers assurance-type warranties as it does not provide a service to the customer beyond fixing defects that existed at the time of completion. Therefore, these warranties are accounted for under ASC Topic 460, Guarantees ("ASC 460"), and not as a separate performance obligation.
Generally, the company estimates warranty costs based on historical claims experience, and other factors. Actual warranty claims may differ from the estimates, and adjustments to the liability are made as necessary.
When a business is acquired, goodwill is recognized to reflect any future economic benefits that are not separately recognized, such as synergies. For the purposes of impairment testing, U.S. GAAP requires goodwill to be allocated to reporting unit(s) at the acquisition date and to be tested for impairment at least annually, and in between annual tests whenever events or changes in circumstances indicate that the respective reporting unit’s fair value is less than its carrying value. Significant judgment is required when identifying the reporting units for goodwill allocation, during our assessment of relevant events and circumstances for qualitative impairment indicators, and when estimating the undiscounted cash flows of reporting unit(s) for quantitative impairment assessments.
Our goodwill impairment assessment is performed during the fourth quarter as of December 31 of each year or at the time facts or circumstances indicate that a reporting unit’s goodwill may be impaired. In conformity with GAAP, we generally first perform a qualitative assessment over whether it is more likely than not that a reporting unit’s fair value is less than its carrying value to determine if a quantitative assessment is required. If, after performing the qualitative assessment, we conclude it is more likely than not that the fair value of the reporting unit is less than its carrying value, then a quantitative test is required. Our qualitative assessment includes evaluation of relevant events and circumstances, such as, macroeconomic conditions, industry and market considerations, cost factors, overall performance, and other relevant events.
When applying a quantitative assessment, we use a combination of income and market valuation methodologies. Specifically, we employ a discounted cash flow analysis (DCF) and the guideline public company method. This approach results in a fair value measurement based on significant inputs that are not observable in the market, categorizing it within Level 3 of the fair value hierarchy. Key assumptions in the DCF projection include growth in RIN prices, future sales volumes based on production capacities, and terminal value based on a range of terminal earnings before interest, taxes, depreciation, and amortization (EBITDA). The future cash flows are discounted to present value using the weighted average cost of capital (WACC) of the company and its closest competitors.
As of December 31, 2024, we performed a quantitative assessment for Goodwill in our RNG Fuel segment and determined that there is no impairment necessary on the goodwill recorded in the books as of December 31, 2024.
Our long-lived assets held and used with finite useful lives including plant equipment, buildings, patents, and PPAs are reviewed for impairment whenever events or changes in circumstances indicate that the asset group may not be recoverable. In determining the asset group, we assess the interdependency of revenues between assets, shared cost structures, the interchangeability of assets used in operations, and how assets are managed and utilized by the business. Events that may trigger a recoverability assessment include a significant adverse change in the extent or manner in which the long-lived asset group is being used or in its physical condition, and the expectation that, more likely than not, the long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset group to future net undiscounted cash flows expected to be generated by the asset group. Our cash flow estimates reflect conditions and assumptions that existed as of the measurement date which is the same as the triggering event date. The assets are considered recoverable and an impairment loss is not recognized when the undiscounted net cash flows exceed the net carrying value of the asset group. If the assets are not recoverable, then an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value. We base the fair value of our assets or asset groups off of the estimated discounted future cash flows using market participant assumptions. Alternatively, we use cost approach to measure fair value of our assets or asset groups. The cost approach is based on the premise that a prudent investor would pay no more for an asset of similar utility than its replacement or reproduction cost. The cost to replace the asset would include the cost of constructing a similar asset of equivalent utility at prices applicable at the time of the valuation date. To arrive at an estimate of the fair value using the cost approach, the replacement cost new is determined and reduced for depreciation of the asset. Replacement cost new is defined as the current cost of producing or constructing a similar new item having the nearest equivalent utility as the property being valued. Assets disposed of are reported at the lower of the carrying amount or fair value less selling costs. Significant judgment is required when determining asset group composition, during our assessment of relevant events and circumstances, when determining an appropriate discount rate, and when estimating the undiscounted and discounted future cash flows of the asset group.
Based on our assessment for the year ended December 31, 2024, the impairment recorded on our Plant, Property and Equipment amounted $2.0 million.
Fair Value Measurements
The objective of a fair value measurement is to estimate the exit price, which is the price that would be received to sell an asset or paid to transfer a liability that the Company holds, in an orderly market transaction at the measurement date. We follow GAAP guidance which establishes a three-tier hierarchy for inputs used in fair value measurements, as well as prioritizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs. In summary, level 1 inputs are considered the most observable inputs and are more specifically the unadjusted quoted price for identical assets or liabilities in an active market the Company has access to. Level 2 inputs are considered less observable inputs such as quoted prices for similar assets or liabilities in an active market the Company has access to. Lastly, level 3 inputs are unobservable inputs in which little to no market activity exists for the asset or liability at the measurement date. As such, level 3 estimates are subject to a more significant level of estimation uncertainty. Furthermore, when multiple inputs are used and are categorized in different levels of the input hierarchy, then the fair value measurement in its entirety is categorized in the same level as its lowest level input that is significant to the fair value measurement. Our assessment of the significance of an input to a fair value measurement requires judgment and may affect the fair value measurement’s placement in the fair value hierarchy.
Refer to Note 9. Derivative Financial Instruments and Fair Value Measurements, to our consolidated financial statements, for details on our assets and liabilities regularly recorded at fair value and the respective placements in the fair value hierarchy.
Income Taxes
The Company accounts for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes (“ASC Topic 740”), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s consolidated balance sheets as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.
Refer to Note 15. Income Taxes, to our consolidated financial statements, for additional information.
Emerging Growth Company Status
We are an emerging growth company as defined in the JOBS Act. The JOBS Act provides emerging growth companies with certain exemptions from public company reporting requirements for up to five fiscal years while a company remains an emerging growth company. As part of these exemptions, we need only provide two fiscal years of audited financial statements instead of three, we have reduced disclosure obligations such as for executive compensation, and we are not required to comply with auditor attestation requirements from Section 404(b) of the Sarbanes-Oxley Act regarding our internal control over financial reporting. Additionally, the JOBS Act has allowed us the option to delay adoption of new or revised financial accounting standards until private companies are required to comply with new or revised financial accounting standards.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The significant estimates and assumptions of the Company relate to the useful lives of property, plant and equipment, goodwill impairment, fair value of the deconsolidated VIEs, the value of stock-based compensation, asset retirement obligations and the fair value of derivatives including earnout liabilities and commodity swap contracts.
The principal factors affecting our results of operations and financial condition are the markets for RNG, Renewable Power, and associated Environmental Attributes, and access to suitable biogas production resources.resources, the regulatory environment of our industry, and the seasonality of demand and pricing for our products. Additional factors and trends affecting our business are discussed in "Risk Factors" elsewhere in this report.
Demand for our converted biogas and associated Environmental Attributes, including RINs and LCFS credits, is heavily influenced by United States federal and state energy regulations together with commercial interest in renewable energy products. Markets for RINs and LCFS credits arise from regulatory mandates that require refiners and blenders to incorporate renewable content into transportation fuels. The EPA annually sets proposed renewable volume obligations ("RVOs") for D3 RINs in accordance with the mandates established by the Energy Independence and Security Act of 2007. In June 2023, the EPA set RVOs for 2023 through 2025 via a new Set rule. This 3 year RVO is expected to reduce volatility in RIN pricing for the associated period. On the state level, the economics of RNG are enhanced by low-carbon fuel initiatives, particularly well-established programs in CaliforniaCalifornia, Washington and Oregon (with several other states also actively considering LCFS initiatives similar to those in California, Washington and Oregon). Federal and state regulatory developments could result in significant future changes to market demand for the RINs and LCFS credits we produce. This would have a corresponding impact to our revenue, net income, and cash flow.
We also generate revenues from sales of Renewable Power generated by our biogas-to-Renewable Power projects, and associated ISCC Carbon Credits and RECs. ISCC Carbon Credits and RECs exist because of legal and governmental regulatory requirements in Europe and the United States, respectively, and a change in law or in governmental policies concerning Renewable Power, LFG, or ISCC Carbon Credits or RECs could affect the market for, and the pricing of, such power and credits.
We periodically evaluate opportunities to convert existing Renewable Power projects to RNG production. We have been negotiating with several of our landfill and Renewable Power counterparties to enter into arrangements that would enable the LFG resource to produce RNG. Changes in the price we receive for Renewable Power,Power and associated ISCC Carbon Credits and RECs, together with the revenue opportunities and conversion costs associated with converting our LFG sites to RNG production, could have a significant impact on our future profitability.
We generate revenues from the sale of RNG fuel,Fuel, Renewable Power, and associated Environmental Attributes, as well as from the construction, fuel supply, and servicing of Fueling Stations for commercial transportation vehicles using natural gas to power their fleets. These revenue sources are presented in our statementconsolidated statements of operations under the following captions:
•RNG Fuel. The RNG Fuel segment includes RNG supply as well as the associated generation and sale of commodity natural gas and environmental credits, and consists of:
•Fuel Station Services. Through ourthe Fuel Station Services segment, we provide construction and maintenance services to third-party owners of vehicle Fueling Stations and perform fuel dispensing activities including generation and minting of environmental credits. This segment includes:
◦Design/Build contracts where wethe serveCompany serves as general contractor for construction of Fueling Stations, typically structured as Guarantee Maximum Price or fixed priced contracts for customers, generally lasting less than one year;
•Renewable Power Portfolio. The Renewable Power segment generates renewableRenewable powerPower and associated Environmental Attributes such as ISCC Carbon Credits and RECs through combustion of biogas from landfills which is then sold to public utilities throughout the United States. Please see Note 10. Reportable Segments and Geographic Information to our consolidated financial statements for additional information.
•RNG Fuel. Includes royalty payments to biogas site owners for the biogas we use; service provider costs; salaries and other indirect expenses related to the production process, utilities, transportation, storage, and insurance; and depreciation of production facilities.
What changed in the latest 10-Q
Risk Factors
There have been no material changes from the “Risk Factors” previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 16, 2026. The risks described in such reports are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
Full comparison: every changed paragraph (1)
Except as described below, thereThere have been no material changes from the “Risk Factors” previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 16, 2026. The risks described in such reports are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.
Management's Discussion & Analysis (MD&A)
New heading “Impairment loss”
New heading “Interest income”
Removed heading “Other (expense) income”
Largest changes
“On May 30, 2026, OPAL Fuels Inc. exercised its right pursuant to that certain Credit and Guarantee Agreement dated as of September 1, 2023 among Opal Fuels Intermediate HoldCo LLC as borrower (the "Borrower"), direct and indirect subsidiaries of the Borrower as guarantors, the lenders party thereto as lenders, and Bank of America, N.A., as administrative agent, to contribute approximately $8.0 million to the Borrower in order for the Borrower to maintain compliance with certain financial covenants under its credit facility.”see in full comparison
“Impairment loss increased by $4.1 million, or 100%, for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. This was primarily attributable to impairment charges recorded on certain renewable energy facilities following strategic decisions to convert those facilities to RNG production operations.”see in full comparison
“Cost of sales from Fuel Station Services increased by 1.6 million, or 4%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily attributable to a $5.1 million increase in dispensing fees and a $0.8 million increase in service-related labor and compensation costs, partially offset by a $3.1 million decrease in construction equipment, parts, and oil expense due to delays in project activity and a $1.1 million decrease in FPA tolling expense, reflecting a large FPA cost recognized in the prior-year period.”see in full comparison
Full comparison: every changed paragraph (83)
In this Management's Discussion and Analysis of Financial Condition and Results of Operations section, references to "OPAL," "we," "us," "our," and the "Company" refer to OPAL Fuels Inc. and its consolidated subsidiaries. The following discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements as of MarchJune 31,30, 2026 and for the three and six months ended MarchJune 31,30, 2026 and 2025, and the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC on March 16, 2026. In addition to historical information, this discussion and analysis includes certain forward-looking statements which reflect our current expectations. The Company's actual results may materially differ from these forward-looking statements.
Demand for our converted biogas and associated Environmental Attributes, including RINs and LCFS credits, is heavily influenced by United States federal and state energy regulations together with commercial interest in renewable energy products. Markets for RINs and LCFS credits arise from regulatory mandates that require refiners and blenders to incorporate renewable content into transportation fuels. The EPA annually sets proposed renewable volume obligations ("RVOs") for D3 RINs in accordance with the mandates established by the Energy Independence and Security Act of 2007. In JuneMarch 2023,2026, the EPA set RVOs for 20232026 through 2025 via a new Set rule. This three year RVO is expected to reduce volatility in RIN pricing for the associated period.2027. On the state level, the economics of RNG are enhanced by low-carbon fuel initiatives, particularly well-established programs in California, Washington and Oregon (with several other states also actively considering LCFS initiatives similar to those in California, Washington and Oregon). Federal and state regulatory developments could result in significant future changes to market demand for the RINs and LCFS credits we produce. This would have a corresponding impact to our revenue, net income, and cash flow.
The following table summarizes the percentage of consolidated accounts receivable, net by customers that equal or exceed 10% of the consolidated accounts receivable, net as of MarchJune 31,30, 2026 and December 31, 2025. No other single customer accounted for 10% or greater of our consolidated accounts receivables in these periods:
Results of Operationsoperations for the three and six months ended MarchJune 31,30, 2026 and 2025:
The following table summarizes the operational data achieved for the three and six months ended MarchJune 31,30, 2026 and 2025:
(1) Nameplate Capacity for Renewable Power facilities is the manufacturer’s expected capacity at ISOInternational Organization for Standardization conditions for each facility and may not reflect actual production from the projects, which depends on many variables including, but not limited to, (i) quantity and quality of the biogas, (ii) operational up-time of the facility, including dispatch and maintenance downtime and (iii) actual efficiency of the facility.
Below is a table setting forth the RNG projects in operation and construction in our portfolio as of MarchJune 31,30, 2026:
(1) Reflects the Company’s ownership share of design capacity for projects that are not 100% owned by the Company (i.e., net of joint venture partners’ ownership). Design capacity is measured as the volume of feedstock biogas that the plant is capable of accepting at the inlet and processing and may not reflect actual production of RNG from the projects, which will depend on many variables including, but not limited to, (i) quantity and quality of the biogas, (ii) operational up-time of the facility and (iii) actual efficiency of the facility.
(2) We record our ownership interests in these projects as equity method investments in our consolidated financial statements.
(3) This project has provisions that will adjust or “flip” the percentage of distributions to be made to us over time, typically triggered by achievement of hurdle rates that are calculated as internal rates of return on capital invested in the project.
(4) Please see Part II, Item 1: Legal Proceedings and Note 12. Commitments and Contingencies.
(5) The construction of the Cottonwood, Burlington and Kirby Canyon projects began in the second, third and fourth quarters of 2024, respectively.
(6) Expected Commercial Operation Date (“COD”) for commencement of the RNG projects in construction is based on the Company’s estimate as of the date of this report. CODs are estimates and are subject to change as a result of, among other factors out of the Company’s control: (i) regulatory/permitting approval timing, (ii) disruption in supply chains and (iii) construction timing.
Comparison of the three and six months ended MarchJune 31,30, 2026 and 2025
The following table presents the period-over-period change for each line item in our condensed consolidated statements of operations for the three and six months ended MarchJune 31,30, 2026 and 2025.
(2) Fuel Station Services lease revenue relates to revenue from fuel purchasing agreements where we determined that we transferred the right to control the use of the station to the purchaser. Includes sales-type lease revenues of $2.2$—, million$—, $2,246, and $— respectively, for the three months ended MarchJune 31,30, 2026 and 2025, and the six months ended June 30, 2026 and 2025, respectively, from customers domiciled outside of the United States. All remaining lease revenue relates to operating leases.
(3) Includes revenues of $— and $3.6 million respectively, for the three months ended March 31, 2026 and 2025, from customers domiciled outside of the United States.
(4) Includes management fee revenues earned from management of operations of equity method entities.
Revenue from RNG Fuel decreased by $1.3 million or 5% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. This decrease was primarily due to a reduction in unrealized mark-to-market gains associated with brown gas marketing and trading activities of $1.8 million, offset by increase in environmental attributes of $0.5 million.
(5) Includes management fee revenues earned from management of operations of equity method entities Revenue from RNG Fuel decreased by $6.0$7.3 millionmillion, or 22%14%, for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025. This decrease was primarily arelated to $7.3 million decrease in the sale of environmental attributes. The decrease in environmental attributes was primarily related to a $4.8$4.5 million decrease in RIN volume, $1.6 million decrease in green gas sales and a $2.9$1.2 million decrease due to RINlower priceLCFS reduction. Partially offset by $1.4 million increase in brown gas sale due to increase in prices.sales.
Revenue from Fuel Station Services decreasedincreased by $6.1$6.0 million or 12%,13%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. ThisThe isincrease was primarily relatedattributable to an $6.5 million increase in LCFS credit sales, a decrease of $1.6 million inincrease resulting from higher RIN andvolumes, LCFSa minting services, $0.5$0.1 million increase due to lowerhigher RIN priceprices, a $0.9 million increase in lease revenue, $0.4 million increase from higher tolling GGEs and a $0.6 million increase in third-party service revenue due to higher service rates. These increases were partially offset by highera LCFS$2.9 price,million decrease of $5.2 million attributedattributable to lowerdelays dispensing and $3.1 million driven byin construction projects delays.and Offseta by sales type leases increase of $3.5$1.2 million isdecrease dueresulting tofrom increase in lease revenues of $2.2 million due to the commencement of a sales-type outside the United States as well as increase in operating leases $1.3 million in United States and $1.0 million due to increase in GGEs in OPAL owned stations.eliminations.
Revenue from Fuel Station Services decreased by $0.1 million, or —%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This change was primarily attributable to a $5.9 million decrease in construction revenue due to project timing, a $0.5 million decrease resulting from lower RIN volumes, and a $0.4 million decrease due to lower RIN prices. These decreases were partially offset by a $4.4 million increase in lease revenue, a $1.7 million increase in RIN and LCFS minting revenue, a $0.3 million increase in service revenue driven by higher GGE volumes and service rates, and a $0.2 million increase attributable to higher GGE volumes at OPAL-owned stations.
Revenue from Renewable Power wasdecreased flatby $1.8 million, or 22%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 20252025. asThe increasedecrease was primarily driven by a $1.7 million decline in revenues from higher generation was offset by lower environmental attributes.attribute revenue, primarily at the West Covina facility.
Revenue from Renewable Power decreased by $1.7 million, or 11%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to a $1.7 million decline in environmental attribute revenue, primarily at the West Covina facility.
Cost of sales from RNG Fuel increased by $0.7$0.9 million, or 6%,8%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. ThisThe increase iswas primarily relatedattributable to higher royalty expense of $0.5 million, primarily resulting from a $1.3first-quarter millioncatch-up increaseadjustment, inhigher non-labor and major maintenance costs of $0.5 million, and higher gas expense,expense $1.0of million$0.2 increasemillion. inThese maintenanceincreases and $0.3 million higher utilities. This waswere partially offset by $2.0a $0.4 million decrease in royaltiesutility dueand tolabor lower environmental credit revenues.costs.
Cost of sales from Fuel Station Services decreased by $4.3 million, or 11%, for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. This is primarily related to a $5.8 million decrease in dispensing fees driven by lower RIN pricing, offset by a $1.5 million increase in FPA tolling expense driven by higher volumes.
Cost of sales from RenewableRNG PowerFuel decreasedincreased by $1.1$1.5 million, or 17%,7%, for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 2025. ThisThe isincrease was primarily relatedattributable to ana $0.7$2.6 million increase in transportation and gas expense, a $0.3 million increase in utilities expense, and a $0.2 million increase in labor costs, partially offset by a $1.6 million decrease in majorroyalty maintenance and a $0.4 million decrease primarily driven by the timing of non-labor and other expenses.expense.
Cost of sales from Fuel Station Services increased by 1.6 million, or 4%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily attributable to a $5.1 million increase in dispensing fees and a $0.8 million increase in service-related labor and compensation costs, partially offset by a $3.1 million decrease in construction equipment, parts, and oil expense due to delays in project activity and a $1.1 million decrease in FPA tolling expense, reflecting a large FPA cost recognized in the prior-year period.
Cost of sales from Fuel Station Services decreased by $2.7 million, or 3%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to a $3.3 million decrease in construction costs resulting from project delays, and by a $0.5 million decrease in dispensing fees this is partially offset by a $1.1 million increase in service-related labor and compensation costs.
Cost of sales from Renewable Power decreased by $0.6 million, or 9%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily attributable to a $0.7 million reduction in major maintenance expense and a $0.2 million decrease in labor costs. These decreases were partially offset by a $0.3 million increase in non-labor and other operating expenses due to the timing of expenditures.
Cost of sales from Renewable Power decreased by $1.7 million, or 13% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to lower major maintenance expense of $1.5 million, primarily at two facilities, as well as a $0.2 million decrease in labor costs.
Project development and startup costs decreased by $4.3$0.2 million, or 70%,5%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. ThisThe isdecrease was primarily relatedattributable to lower virtual pipeline costscosts, relatedpartially tooffset Princeby Williamhigher project development and Polkstartup facilities.activities.
Project development and startup costs decreased by $4.4 million, or 46%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to lower virtual pipeline costs.
Selling, general, and administrative expenses decreased by a total of $0.8$3.2 million, or 5%,18%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. ThisThe isdecrease was primarily relatedattributable to decreases inlower compensation costs,costs of $1.8 million, information technology expenses of $0.5 million, directors' and officers' ("D&O") insurance expense of $0.5 million, and advocacy expensescosts offsetof by$0.2 IT and marketing.million.
Selling, general, and administrative expenses decreased by a total of $4.0 million, or 12%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to lower compensation costs of $1.1 million, legal expenses of $1.1 million, D&O insurance expense of $0.5 million, professional fees of $0.5 million, lower travel and entertainment of $0.3 million and other expenses of $0.5 million.
Depreciation, amortization, and accretion decreased by a total of $0.3$0.1 million, or 6%,2%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. This is primarily related to lower depreciation expense in Renewable Power.
Depreciation, amortization, and accretion decreased by a total of $0.4 million, or 4%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to lower depreciation expense resulting from the prior-year recognition of the remaining asset retirement obligation ("ARO") balance.
Impairment loss
Impairment loss increased by $4.1 million, or 100%, for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. This was primarily attributable to impairment charges recorded on certain renewable energy facilities following strategic decisions to convert those facilities to RNG production operations.
Loss (income) from equity method investments
Net loss attributable to equity method investments increased by $1.0$2.6 million, or 143%,130%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. This is primarily related to a decrease in the realized price of RINs sold on operating facilities and lower production primarily at Pine Bend and Emerald.
Net loss attributable to equity method investments increased by $3.6 million, or 290% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This is primarily related to a decrease in the realized price of RINs sold on operating facilities.
Interest and financing expenses, net decreasedincreased by $0.2$2.0 million, or 3%,30%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. This is primarily related to an increase in interest income from sales-type lease, decrease in interest rates, partially offset by an increase in the average outstanding loan balance.
Other (expense) income
OtherInterest incomeand decreasedfinancing expenses, net increased by $1.8$2.2 millionmillion, or 146%17%, for the threesix months ended MarchJune 31,30, 2026 compared to the threesix months ended MarchJune 31,30, 20252025. This is primarily related to changean increase in fairthe valueaverage ofoutstanding warrants.loan balance.
Interest income
Interest income increased by $1.8 million or 678%, for the three months ended June 30, 2026 compared to the year ended June 30, 2025 primarily due to interest income from sales-type-lease.
Interest income increased by $2.2 million or 337%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 primarily due to interest income from sales-type-lease.
Other income
Other income decreased by $0.4 million or 37% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily related to change in fair value of warrants.
Other income decreased by $2.2 million, or 96%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The decrease was primarily attributable to a gain on a note receivable and a gain from the write-off of a lease liability recognized during the 2025 period, with no comparable gains recognized in 2026.
Income tax benefit decreased by $2.3$8.9 million or 29%65% for three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. This is primarily driven by lower generation of transferable tax credits in 2026 compared to 2025.
Income tax benefit decreased by $11.3 million or 52% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This is primarily driven by lower generation of transferable tax credits in 2026 compared to 2025.
Net (loss) income attributable to redeemable non-controlling interest increaseddecreased by $11.4$11.1 million, or 970%,279%, for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The net (loss) income for the three months ended MarchJune 31,30, 2026 and 2025 reflects the portion of earnings belonging to OPAL Fuels equity holders. The increasedecrease is primarily attributable to higher net loss in the current period compared to the same prior-year period.
Net (loss) income attributable to redeemable non-controlling interest for the six months ended June 30, 2026 decreased by $22.5 million, or 802%, compared to the six months ended June 30, 2025. The decrease is primarily attributable to higher loss on the portion of earnings belonging to OPAL Fuels equity holders in the current period compared to the same prior-year period.
Net income attributable to non-redeemable non-controlling interest remained flat for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.
Net income attributable to non-redeemable non-controlling interest remained flat for the six months ended June 30, 2026, compared to six months ended June 30, 2025.
Accretion of the redeemable preferred non-controlling interest to its redemption amount increased by $6.9$1.7 million or 264%66% for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. This is primarily driven by accretion to redemption value following the issuance of redeemable preferred non-controlling interests in March 2026.
Accretion of the redeemable preferred non-controlling interest to its redemption amount increased by $8.7 million or 165% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. This is primarily driven by accretion to redemption value following the issuance of redeemable preferred non-controlling interests in March 2026.
As of MarchJune 31,30, 2026, our liquidity was $232.5$162.3 million, consisting of $39.3$19.3 million of unused capacity under the revolver, $60.0$51.6 million of undrawn preferred stock facility commitments and $133.2$91.4 million of cash and cash equivalents. Refer to Note 3. Loans.
OPAL insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 9 Form 4 filings (4 insiders, 12 trade dates, 230,000 shares, about $460.7K) and open-market sales in 0 filings. Net open-market shares: 230,000 (purchases minus sales); net value about $460.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-03 | Comora Adam |
Open-market purchase | 20,000 | $2.08 | $41.6K |
| 2026-09-01 | Comora Adam |
Open-market purchase | 50,000 | $1.93 | $96.5K |
| 2026-09-01 | Nisar Nadeem |
Open-market purchase | 10,000 | $1.91 | $19.1K |
| 2026-08-31 | Nisar Nadeem |
Open-market purchase | 10,000 | $1.98 | $19.8K |
| 2026-06-11 | Sutton Scott Mcdougald |
Open-market purchase | 50,000 | $1.95 | $97.5K |
| 2026-06-03 | Nisar Nadeem |
Open-market purchase | 5,000 | $2.25 | $11.2K |
| 2026-06-02 | Nisar Nadeem |
Open-market purchase | 10,000 | $2.32 | $23.2K |
| 2026-05-21 | Dols Scott V. |
Open-market purchase | 7,946 | $2.00 | $15.9K |
| 2026-05-20 | Dols Scott V. |
Open-market purchase | 4,346 | $2.06 | $9.0K |
| 2026-05-19 | Dols Scott V. |
Open-market purchase | 25,105 | $2.05 | $51.5K |
| 2026-05-18 | Dols Scott V. |
Open-market purchase | 12,603 | $2.02 | $25.5K |
| 2026-05-18 | Nisar Nadeem |
Open-market purchase | 5,000 | $2.02 | $10.1K |
| 2026-05-15 | Nisar Nadeem |
Open-market purchase | 10,000 | $1.94 | $19.4K |
| 2026-05-14 | Nisar Nadeem |
Open-market purchase | 10,000 | $2.05 | $20.5K |
Well-known investors holding OPAL (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 193,801 | $426.4K | 0.0% | Added 202% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 164,067 | $413.4K | — | Sold out |
| Renaissance Technologies | 2026-06-30 | 11,700 | $29.5K | — | Sold out |