So we haven’t accessed the equity markets in a long time. I’m not saying I’m not telegraphing that we are. I’m just suggesting that if you look back at history, we typically fund acquisitions of this kind of size with half debt and half equity just to continue to manage the balance sheet. So it’s a long way of saying CapEx can be funded with the excess cash flow that we see in the business right now, the balance sheet is still well positioned from a leverage perspective and will continue to get better naturally as the earnings potential of this acquisition start to come to fruition.
Operator: The next question is from Ned Baramov with Wells Fargo. Please go ahead.
Ned Baramov: Just to go back on the Equilibrium transaction. Could you maybe provide additional details on the contract structure of some of the assets, more specifically what percentage of RNG production volumes from the currently operating facilities is contracted under fixed price arrangements?
Mike Stivala: So, Ned, we do not have any fixed price off-take at this point. We do have the one major off-take player for the Stanfield operations, but that’s market-based pricing, and they’re taking all of the off-take from that facility. The Columbus facility in Ohio is currently going through an upgrade, as I said, from biogas to…
Operator: Pardon me, this is the operator. Apparently, our hosting site has inadvertently disconnected. We please ask that you be hold on the line until we get them reconnected. Thank you very much. Gentleman, please stand by while we reconnect our presenters. Thank you very much.
Mike Stivala: Chad, I think we’re good now. So I apologize for — to everybody for technical difficulties there. Apparently, somebody didn’t like my answer. So I just was answering your question there, Ned, on off-take. Hopefully, you got the first part of it relative to the Arizona facility being fully contracted as to a single off-taker. The Columbus facility is going through an upgrade that’s going to take the next 18 months or so to finish and we’ll be producing pipeline quality R&D, and we are currently working with a number of potential off-take opportunities. And I would expect those opportunities to also be market based, and there may be multiple off-takers that will manage or perhaps one off-taker that takes all the gas and handles it on our behalf.
So we have plenty of optionality I think the market for RNG is developing in lots of different ways. Obviously, a lot of RNG players are seeking to get RNG out to the California transportation market to take advantage of LCFS credits, but there are other markets developing throughout the country for different applications. And so, I think we’re going to continue to be somewhat patient in how we set up the off-take for not only the Columbus facility, but also we have the Adirondack Facility in New York, which we own outright, and we’re currently building out and are also working on potential customers to take that RNG.
Ned Baramov: Appreciate the response. Can you maybe just review some of the IRA benefits related to RNG from which you expect to benefit?
Mike Stivala: Well, as you know, Ned, a lot of the regulations now that will ultimately carry out the legislation are still to be developed. So I think the only thing that I would say at this point is that we’ve evaluated the potential credit opportunities under the IRA. It would seem safe to say that RNG and particularly the production that we’re doing at all of our facilities should be eligible for 45 credits, and those will kick in 2025 and currently for 45z credits. They will last through 2027 unless extended. And given the feedstock for these facilities primarily being certainly the Arizona Facility and the New York Facility are both dairy biogas. So it’s got a pretty significant reduction in carbon intensity score, which should be eligible for a higher portion of those available credits than, say, other feedstock for RNG production.
