Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangible Assets

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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
Goodwill
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
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:
(in thousands)
 June 30, 2022
Gross Carrying
Amount
Accumulated
Amortization
Net
Biogas rights agreements
 $ 612,461  $ 22,814  $ 589,647 
Electricity off-take agreements 26,511  2,344  24,167 
O&M contracts
 8,620  460  8,160 
RNG purchase contract 10,290  5,291  4,999 
Trade names and customer relationships
 500  250  250 
Total
 $ 658,382  $ 31,159  $ 627,223 
(in thousands)
 December 31, 2021
Gross Carrying
Amount
Accumulated
Amortization
Net
Biogas rights agreements
 $ 603,868  $ 8,237  $ 595,631 
Electricity off-take agreements 26,511  749  25,762 
O&M contracts
 8,620  173  8,447 
RNG purchase contract 10,290  1,959  8,331 
Trade names and customer relationships
 500  200  300 
Total
 $ 649,789  $ 11,318  $ 638,471 
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.
Below-Market Contracts
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:
June 30, 2022
Gross Liability
Accumulated
Amortization
Net
Gas off-take agreements
 $ 146,990  $ 11,780  $ 135,210 
December 31, 2021
Gross Liability
Accumulated
Amortization
Net
Gas off-take agreements
 $ 146,990  $ 4,360  $ 142,630 
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.