And certainly, the third element is the feedstock itself that we make in India positions us just amazingly well due to the demand for waste feedstocks. And as you listen to California Air Resource Support and others, there is an increasing emphasis on waste feedstocks and the values of those feedstocks will, I believe, continue to increase.
John Annis: Makes sense. And for my follow-up, regarding the RNG fueling station that’s under construction at Keyes ethanol plant, can you provide some color on the potential margin uplift associated with selling your own RNG versus using a third party? And then secondly, just in terms of volume, what percentage of your RNG production could be sold through your owned fueling station there?
Eric McAfee: There are two elements of increased margin. First is that the molecule itself currently is sold into the pipeline as brown gas. So, we get approximately $4 per MMBtu for doing that. However, we’re selling the energy equivalent of 7.2 gallons of diesel, so 7.2 gallons times in MMBtu is somewhere in the $35 of value. So, if we were to sell it at the equivalent price of diesel instead of selling at $5 per MMBtu, we’d be selling at $35. As a part of incentivizing customers and attracting new adoption of RNG into truck fleets, we of course will be selling at a discount. So, we would expect an uplift somewhere from $5 to around the $15 or $20 range as we sell at essentially a 50% off price compared to running petroleum diesel.
The second benefit is that current discounts are in the 15% to 20% range for RNG sold through other third-party fueling stations. And so, we would not incur any of that and that’s 15% to 20% of revenues. The low carbon fuel standard revenues and the Federal D3 RIN revenues are both being hampered by the need to sell through other fueling stations. In answer to your last question, our goal would be that 100% of our product would go through our own fueling stations. We’re in the middle of probably one of the most active trucking environments in the world. Virtually all agricultural products at some point in time touch a truck. There aren’t a lot of railroad depots next to almond orchards or other crops in Central Valley, California. So trucking is very active and literally a quarter mile from our plant are probably tens of thousands of trucks that drive by every week.
So, the North American Adoption Center of Innovation for both PepsiCo as well as Frito-Lay are within 15 minutes of our facility. It’s absolutely a hotbed for innovation in trucking. So, we have a goal of setting up multiple fueling stations and arrangements to use our RNG not only with third parties, but moving our own products, animal feed, biofuels, carbon sequestration, CO2 for us as well as for people that seek to get the environmental benefits of low carbon fuels.
Operator: Our next question is coming from Jordan Levy with Truist. Your line is live.
Jordan Levy: Good afternoon, all. Maybe just to start, now that you’ve passed that important milestone with the authority to construct permits. Just curious, I know it’s very recent since that announcement was made, but if you could just help us landmark sort of the next steps in terms of financing at Riverbank and the options you’re pursuing there?
Eric McAfee: We are well into a process of project financing. Of course, that has been delayed waiting for the three key permits, all three of which we now or sets of permits essentially, all three of which we have now. So, we have been working on a preferred equity, what’s called as mezzanine financing structure as well as senior secured debt. We in the Riverbank project have already signed a USDA Biorefinery Assistance Program, it’s called Program #9003 for senior debt supportive 20-year financing. But we have multiple opportunities in senior secured debt and we’ve got a very active customer base among airlines, several of whom have already actually many of whom have already funded into funds that are dedicated to the growth of SAF production and airlines as well as manufacturers of the wide body jets have all joined in together to provide, let’s call it mezzanine or even equity financing to support SAF.
And we have active discussions with the largest of those investors. So now that we have a permit, we can actually have constructive closure on those discussions. Up to today, we’ve had uncertainty around when we’d actually get the permitting. And so now that’s in place, I would expect this year is going to show a lot of action in closing project financing.
Jordan Levy: Appreciate that. That’s super helpful. And then maybe just jumping over to the India Biodiesel side. You made a mention of the potential for an IPO process on the Indian Stock Exchange there. Maybe what are some of the — what’s the process in getting that through the wire? And then how are you thinking about that progressing through the year?
Eric McAfee: As with any IPO process, we see it as an evolving process. We’ve already gotten pretty well acquainted with many of the investment bankers. Certainly, we have some of the world’s leading lawyers for IPOs in India. We’ve set that kind of infrastructure in place, but we’re also expanding the senior management of our India subsidiary and are looking forward to just some very, very talented people joining our business there. And certainly, we have seen consistent success of IPOs in the India market. If that continues, I think we’re very well positioned for completing something this year, but we are subject to market conditions. We are doing everything we’re supposed to do to go through the process. And to a certain extent, I would say it’s a faster process in the U.S. There’s just a different way that you interact with regulators in the India market.
But I think that we’ll be learning over the next quarter about valuations and other terms, and we’ve already been approached by very large investors about a pre-IPO investment. So, I want to say that we are open to that discussion as it strengthens the valuation of our company. So, it’s a very active opportunity in India and we’re pursuing it.
Operator: Our next question is coming from Amit Dayal – H. C. Wainwright. Your line is live.
