Goodwill and Intangible Assets
|6 Months Ended|
Jun. 30, 2022
|Goodwill and Intangible Assets Disclosure [Abstract]|
|Goodwill and Intangible Assets||
NOTE 8 – Goodwill and Intangible Assets
At June 30, 2022, the Company had $29.8 million of goodwill, all of which is allocated to the RNG segment. The goodwill is primarily associated with the acquisition of Aria in the Business Combinations, as discussed in “Note 4 - Business Combinations and Reverse Recapitalization.” The Company performs its annual impairment testing on October 1 of each year or as circumstances change or necessitate. There have been no material changes related to the RNG segment's goodwill or the Company’s impairment assessments since its fiscal year ended December 31, 2021.
Intangible assets consist of biogas rights agreements, off-take agreements, O&M contracts, an RNG purchase contract, customer relationships and trade names that were recognized as a result of the allocation of the purchase price under business acquisitions based on their future value to the Company, and such intangible assets will be amortized over their estimated useful lives. Biogas rights agreements also include the cost of agreements entered into with biogas site hosts. The biogas rights agreements have various renewal terms in their underlying contracts that are factored into the useful lives when amortizing the intangible asset.
Intangible assets consist of the following as of June 30, 2022 and December 31, 2021:
Total amortization expense was approximately $8.3 million and $16.5 million for the three and six months ended June 30, 2022, respectively, and $25 thousand and $50 thousand for the three and six months ended June 30, 2021, respectively, excluding the $1.7 million and $3.3 million of amortization of the RNG purchase contract for the three and six months ended June 30, 2022, respectively, that is amortized to cost of energy.
As a result of the Aria Merger, the Company assumed certain fixed-price sales contracts that were below current and future market prices at the Closing Date. The contracts were recorded at fair value and are classified as other long-term liabilities on the Company’s consolidated balance sheets as of June 30, 2022 and December 31, 2021:
The below-market contract amortization was $3.7 million and $7.4 million for the three and six months ended June 30, 2022, respectively, and was recognized as an increase to revenues since it relates to the sale of RNG and related Environmental Attributes.
The entire disclosure for goodwill and intangible assets.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef