Montauk Renewables' Q2 2025: Key Contradictions on Royalty Revenue, RVO Changes, and Operational Expenses

Revenue share from royalty fees, EPA's Renewable Volume Obligations (RVO) for RNG, RVO and RIN pricing strategy, RNG operating expenses and royalty share, RNG operational expenses are the key contradictions discussed in Montauk Renewables' latest 2025Q2 earnings call.



Revenue and RIN Market Conditions:
- Montauk Renewables reported total revenues of $45.1 million for the second quarter of 2025, an increase of 4.1% compared to the previous year.
- The increase was primarily due to the timing of revenues recognized under a short-term fixed-price contract, offset by a decrease in realized RIN pricing and reduced RIN availability due to EPA regulatory changes.
- The decline in RIN pricing, from $3.12 in Q2 2024 to $2.42 in Q2 2025, was due to regulatory reforms affecting RIN availability.

Operating Expenses and Maintenance:
- Operating and maintenance expenses for RNG facilities were $17.0 million in Q2 2025, a 22% increase from the previous year.
- The increase was driven by timing of preventative maintenance, media change-outs, and operational enhancements at multiple facilities.
- One-time expenses totaling $1.8 million are not expected to recur in the second half of the year.

North Carolina Project Expansion:
- The capital investment estimate for the first phase of the North Carolina project was increased to $180 million to $220 million.
- This expansion follows a legislative change in the state, allowing for exclusive swine waste utilization and increased electricity generation.
- The project aims to reduce non-caloric liquid waste and optimize pelletized feedstock collection.

Second Apex RNG Facility:
- The construction and commissioning of a second RNG processing facility at the Apex landfill were completed.
- This facility adds an additional 2,100 MMBtu per day of production capacity and is expected to have excess capacity as landfill waste intake increases.
- The expansion was driven by landfill host projections of biogas feedstock volumes exceeding the original facility's capacity.