Quarterly report pursuant to Section 13 or 15(d)

Equity Method Investments

v3.22.1
Equity Method Investments
3 Months Ended
Mar. 31, 2022
Equity Method Investments and Joint Ventures [Abstract]  
Equity Method Investments
NOTE 7 – Equity Method Investments
As a result of the Aria Merger, the Company holds 50% interest in two joint ventures, Mavrix and Sunshine Gas Producers, LLC (“SGP”), which are accounted for using the equity method due to the joint control by both the Company and unrelated parties with ownership interest in each entity.
Under the terms of the original Mavrix, LLC Contribution Agreement dated September 30, 2017, the Company is required to make an earn-out payment to its joint venture partner holding the other 50% membership in Mavrix in an amount up to $9.55 million. The earn-out payment represents additional consideration for the Company’s equity interest in Mavrix and will be based on the performance of certain projects owned by Mavrix through the earn-out period which ends September 30, 2022. No earn-out payment is due until the completion of the earn-out period. In February 2022, the Mavrix, LLC Contribution Agreement was amended to exclude certain upgrade and optimization capital expenditures incurred for one specific project from the earn-out calculation and to add a maintenance expenditure cap. Based on the amended terms, the Company has estimated the earn-out payment to be $8.1 million at March 31, 2022, and this amount is reflected in the accompanying balance sheet in accrued and other current liabilities.

The summarized financial information for the Mavrix and SGP equity method investments is as follows: 
(in thousands)
March 31,
2022
December 31,
2021
Assets
$ 237,199  $ 203,864 
Liabilities
53,880  15,477 
Net assets
$ 183,319  $ 188,387 
Company’s share of equity in net assets
$ 91,660  $ 94,194 
(in thousands)
Three Months Ended March 31, 2022
Total revenues
$ 25,229 
Net income
$ 8,018 
Company’s share of net income
$ 4,009 
The Company’s carrying values of the Mavrix and SGP investments also include basis differences totaling $154.4 million as of March 31, 2022 as a result of the fair value measurements recorded as part of the Aria Merger. Amortization of the basis differences reduced equity investment income by $2.6 million for the three months ended March 31, 2022.
On December 30, 2021, the Company entered into a new joint venture. The Company contributed $7.5 million in cash in 2021 into this newly created entity, Saturn Renewables LLC ("Saturn"), in exchange for a 50% interest, and the joint venture acquired gas rights at two landfill sites to develop RNG facilities. The Company is the operator of Saturn’s day to day operations and accounts for its investment in Saturn using the equity method. The Company has contributed an additional $4.0 million to the Saturn joint venture during the three months ended March 31, 2022, and the carrying value of Saturn was $11.5 million as of March 31, 2022.
In addition, the Company also owns several smaller investments accounted for using the equity method of accounting totaling $7.1 million as of March 31, 2022 and December 31, 2021