Shares of Archaea Energy jumped as much as 9.2% on the largest U.S. renewable natural gas producer’s debut on the New York Stock Exchange on Sept. 16, a sign of rising investor support for alternative, cleaner sources of energy.
Archaea, which went public by merging with the blank-check firm Rice Acquisition Corp. in a $1.15 billion deal, closed at $19.95 on Sept. 16, up from the $18.27 price the SPAC’s shares traded at on Sept. 15.
Renewable natural gas (RNG), produced from animal farms and landfills, has seen a massive surge in demand this year as climate conscious investors push for cleaner energy sources. Due to the demand, RNG sells at a premium to natural gas and numerous companies like oil major Chevron Corp. and power provider NextEra Energy have announced projects focusing on this renewable gas.
RELATED:
Daniel Rice-led SPAC Forms Leading Renewable Natural Gas Platform in Billion-dollar Merger
Archaea is exploring partnerships with waste industry participants, like landfill owners, and with traditional oil and gas companies, CEO Nick Stork told Reuters in an interview.
“We’re also exploring partnerships with natural gas utilities in the U.S. and abroad, and I think generally what you're hearing or seeing is that our counterparties want to be part of the solution,” Stork said.
The company has laid out targets to keep 70% of its production locked in so-called ‘long-term fixed pay’ contracts that are safe from fluctuations in the spot markets, though the target level is just to keep the company's options open.
“We could put all of our volumes [in long-term contracts] today. We’ve got enough demand... It’s a matter of us wanting to retain a certain level of optionality around a percentage of our volumes,” said Eric Javidi, Archaea’s CFO.
Recommended Reading
Vital Energy's ‘Wildly Successful’ 2023 ‘Small Ball’ M&A Now in ‘Moneyball’ Mode
2024-02-23 - The operator added big runs in $1.6 billion of 2023 deals. Now Vital is looking to make more out of its hits via geology and geophysics, including steals “for free.” Still, it might pick up big consolidators’ cast-offs.
E&P Highlights: Feb. 12, 2024
2024-02-12 - Here’s a roundup of the latest E&P headlines, including more hydrocarbons found offshore Namibia near the Venus discovery and a host of new contract awards.
Permian Activity in ‘Low-to-no-growth’ Mode for First Half
2024-02-22 - After multiple M&A moves in 2023 and continued E&P adherence to capital discipline, Permian Basin service company ProPetro sees the play holding steady.
Sold in 66 Days: Inside the Diamondback-Endeavor Deal
2024-03-26 - Diamondback Chairman and CEO Travis Stice first offered “at least $25 billion” for Endeavor Energy Resources on Dec. 8. The deal closed just weeks later for $26 billion.
ChampionX to Acquire RMSpumptools, Expanding International Reach
2024-03-25 - ChampionX said it expects the deal to extend its reach in international markets including the Middle East, Latin America and other global offshore developments.