EverGen's 20-Year Deal: A Scalable Bet on a Booming RNG Market

This 20-year offtake agreement is a foundational de-risking event that unlocks EverGen's ability to scale within a rapidly expanding market. By securing a long-term, contracted revenue stream for RNG from its Fraser Valley Biogas facility, the deal provides a stable cash flow foundation for the project. This is critical for a capital-intensive infrastructure play, allowing EverGen to focus on execution rather than revenue uncertainty.

The agreement also solidifies EverGen's strategic position as one of FortisBC's earliest RNG suppliers. This strengthens a key commercial relationship at a time when utilities are aggressively building renewable gas portfolios. FortisBC's own goal of having around 75% of its gas system be renewable and low-carbon by 2050 creates a clear, long-term demand signal that EverGen is now aligned with.

The facility's recent mechanical completion of a major expansion project has doubled its capacity to approximately 160,000 GJ/year, creating a scalable production base.

With both offtake and feedstock agreements now secured on a long-term basis, EverGen has significantly de-risked the project's core inputs and outputs. This setup is a classic growth investor's blueprint: a contracted revenue stream paired with a scalable asset in a booming sector.

The bottom line is that this deal provides the stability needed to capture market share. It transforms the Fraser Valley facility from a promising project into a predictable revenue generator, freeing up capital and management focus to pursue further growth within Canada's expanding RNG landscape.

Market TAM and Scalability Math

The deal's real power lies in EverGen's positioning within a market that is not just growing, but accelerating. The North American RNG sector has demonstrated remarkable momentum, expanding 35% since 2023 and adding a record 139 million cubic feet per day (mmcfd) in 2024. The trajectory remains strong, with analysts projecting another 70 mmcfd of capacity to come online in 2025. This isn't a niche play; it's a foundational shift in the gas value chain, driven by policy mandates and corporate decarbonization goals.

Canada's domestic market is a key engine for this growth. The number of operating RNG projects is expected to more than double between 2021 and 2025, a clear signal of a supportive regulatory and investment environment. This expansion is underpinned by provincial mandates, like British Columbia's commitment to a minimum requirement of 15% renewable content by 2030, which create sustained, long-term demand for suppliers.

Viewed through a growth investor's lens, the total addressable market is vast and still largely untapped. While current North American capacity is projected to reach 604 mmcfd by 2025, the resource potential is estimated to exceed 7.8 billion cubic feet per day (bcfd) by 2050. This represents a massive scalability runway, with the current market being just a fraction of its ultimate potential.

EverGen's Fraser Valley facility, with its doubled capacity to approximately 160,000 GJ/year, is a strategic entry point into this opportunity. In terms of the North American market, its output is a small fraction of the total. Yet, for a company focused on capturing market share within a high-growth sector, it is the perfect scale: large enough to be a meaningful revenue generator and a proven operator, but small enough to be a scalable building block. The secured offtake agreement with FortisBC provides the stability to execute this plan, turning a promising project into a predictable engine for growth within a booming industry.

Financial Reality vs. Growth Potential

The numbers tell a clear story of a company in the midst of a scaling transition. On one side, there is the promise of its asset: the Fraser Valley facility recently hit a record monthly production of 10,758 GJs, demonstrating its operational capability. On the other, the financials reflect the turbulence of ramping up a major expansion, with quarterly revenues of $1.9 million in Q1 2025 down 41% year-over-year due to operational disturbances. This gap between record output and weak top-line performance is the core tension for investors.

For a growth investor, this is a familiar setup. The current financials are weak not because of market failure, but because of execution risk during a capital-intensive build-out. The facility's recent record production shows it can hit high volumes, but sustaining those levels is critical to translating its long-term offtake agreement into reliable revenue. The 41% revenue drop is a stark reminder that scaling infrastructure is messy, and operational hiccups can quickly impact the bottom line.

Yet the market is looking past this noise. The stock trades at a current price of $1.05, but the consensus analyst price target sits at CA$2.50. That implies significant upside if EverGen can successfully navigate its scaling phase. The valuation gap reflects a bet on the future, not the present. It assumes the company will overcome its near-term operational hurdles, stabilize production, and begin to fully monetize its contracted capacity.

The catalysts are there. Management expects to exceed the facility's nameplate capacity in 2025, and further projects are in the pipeline. As production stabilizes and insurance costs normalize, the path to improved margins and earnings becomes clearer. This is a classic growth investment: the near-term financials are a lagging indicator of a scaling operation, while the long-term market capture is what justifies the risk. The current price offers a cheap entry for those willing to wait for the operational story to catch up with the contract story.

Catalysts and Execution Risks for Growth Investors

The path from a secured contract to a scaled, profitable business is paved with specific milestones. For EverGen, the primary catalyst is the successful commissioning and sustained operation of its expanded Fraser Valley facility at full capacity. The project has already reached a critical checkpoint: mechanical completion of the expansion, which doubled its capacity to approximately 160,000 GJ/year. The next phase-installing the new control system and commissioning the facility-must now translate that engineering completion into consistent, high-volume production. Management expects to exceed the facility's nameplate capacity in 2025, a key operational target that will directly validate the scalability of the asset.

Beyond the facility itself, investors should monitor FortisBC's progress toward its 2050 target of having around 75% of its gas system be renewable and low-carbon. The utility's continued investment in RNG is the bedrock of EverGen's contracted revenue. Any new provincial mandates, like British Columbia's 15% renewable content requirement by 2030, could further expand the total addressable market and create new opportunities for EverGen's portfolio.

Yet this high-growth path is fraught with execution risks. The company's recent financials show the cost of scaling: quarterly revenues of $1.9 million in Q1 2025 plunged 41% year-over-year due to operational disturbances. This volatility underscores the operational hurdles that must be cleared. Project delays, even minor ones, can disrupt cash flow and strain capital. Financial uncertainties, including the need to manage a total expected cost of ~$12 million for the expansion, add another layer of risk.

Perhaps the most critical operational dependency is securing additional feedstock. While EverGen has a long-term feedstock supply agreement that covers over 50% of required off-farm waste, maintaining operations at nameplate capacity will likely require further agreements. Any disruption in this supply chain could cap production and undermine the revenue promise of the 20-year offtake deal.

The bottom line for growth investors is a high-risk, high-reward bet on execution. The catalysts are clear-the facility's commissioning, FortisBC's mandate, and the company's own project pipeline. But the risks are equally tangible: operational hiccups, financial strain, and feedstock constraints. Success hinges on the company's ability to smoothly transition from a construction project to a reliable, high-output producer. For those betting on EverGen's growth, the coming quarters will be a decisive test of its operational mettle.