Goodwill and Intangible Assets
|9 Months Ended|
Sep. 30, 2022
|Goodwill and Intangible Assets Disclosure [Abstract]|
|Goodwill and Intangible Assets||
NOTE 8 – Goodwill and Intangible Assets
At September 30, 2022 and December 31, 2021, the Company had goodwill of $47.8 million and $29.2 million, respectively, all of which is allocated to the RNG segment. The goodwill is primarily associated with the acquisitions of Aria and INGENCO. As discussed in “Note 4 - Business Combinations and Reverse Recapitalization,” changes in goodwill during the nine months ended September 30, 2022 include an increase of $18.0 million related to the INGENCO acquisition and an increase of $0.6 million related to finalizing the Aria Merger allocation. 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 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 September 30, 2022 and December 31, 2021:
Total amortization expense was approximately $9.6 million and $26.1 million for the three and nine months ended September 30, 2022, respectively, and $1.7 million and $1.8 million for the three and nine months ended September 30, 2021, respectively, excluding the $1.7 million and $5.0 million for the three and nine months ended September 30, 2022, respectively, and $0.2 million for both the three and nine months ended September 30, 2021, of amortization of the RNG purchase contract that is amortized to cost of energy.
As a result of the Aria Merger and INGENCO acquisition, the Company assumed certain fixed-price sales contracts that were below current and future market prices at the respective closing dates. The contracts were recorded at fair value and are classified as other long-term liabilities on the Company’s consolidated balance sheets as of September 30, 2022 and December 31, 2021:
The below-market contract amortization was $3.7 million and $11.1 million for the three and nine months ended September 30, 2022, respectively, and $0.5 million for both the three and nine months ended September 30, 2021, and was recognized as an increase to revenues since it relates to the sale of RNG, Power and related Environmental Attributes.
No definition available.
The entire disclosure for goodwill and intangible assets.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef