The following discussion and analysis of our financial condition and results ofoperations should be read in conjunction with our financial statements and therelated notes to those statements included elsewhere in this Quarterly Report onForm 10-Q. Throughout this section, dollar amounts are expressed in thousands,except for per share amounts and MMBtu and RIN pricing amounts and unlessotherwise indicated.In addition to historical financial information, the following discussion andanalysis contains forward-looking statements that involve risks, uncertainties,and assumptions. Our actual results may differ materially from those anticipatedin these forward-looking statements as a result of many factors, including thosediscussed under "Cautionary Note Regarding Forward-Looking Statements," "Item1A.-Risk Factors" of our 2021 Annual Report and elsewhere in this report.

Overview

Recent Developments

Second Apex RNG Facility

Pico Digestion Capacity Increase

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Montauk Ag Renewables

Key Trends

Market Trends Affecting the Renewable Fuel Market

Key drivers for the long-term growth of RNG include the following factors:

Regulatory or policy initiatives, including the federal RFS program and

Efficiency, mobility and capital cost flexibility in RNG operations

operating

Demand for compressed natural gas ("CNG") from natural gas-fueled

Factors Affecting Our Future Operating Results:

Conversion of Electricity Projects to RNG Projects:

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Acquisition and Development Pipeline

The timing and extent of our development pipeline affects our operating resultsdue to:

Impact of Higher Selling, General and Administrative Expenses Prior to the

Commencement of a Project's Operation: We incur significant expenses in the

development of new RNG projects. Further, the receipt of RINs is delayed, and

typically does not commence for a period of four to six months after the

commencement of injecting RNG into a pipeline, pending final registration

approval of the project by the EPA and then the subsequent completion of a

third-party quality assurance plan certification. During such time, the RNG

is either physically or theoretically stored and later withdrawn from storage

Shifts in Revenue Composition for Projects from New Fuel Sources: As we

expand into livestock farm projects, our revenue composition from

Environmental Attributes will change. We believe that livestock farms offer

us a lucrative opportunity, as the value of LCFS credits for dairy farm

projects, for example, are a multiple of those realized from landfill

projects due to the significantly more attractive CI score of livestock

Incurrence of Expenses Associated with Pursuing Prospective Projects That Do

Not Come to Fruition: We incur expenses to pursue prospective projects with

the goal of a site host accepting our proposal or being awarded a project in

a competitive bidding process. Historically, we have evaluated opportunities

which we decided not to pursue further due to the prospective project not

meeting our internal investment thresholds or a lack of success in a

competitive bidding process. To the extent we seek to pursue a greater number

of projects or bidding for projects becomes more competitive, our expenses

Increased Construction Costs or Length Related to Material Cost Inflation or

Supply Chain Disruptions: Due to the variability of our development and

construction cycle of approximately 12 to 24 months, we believe that we could

incur increased raw material costs for development projects related to

inflation or supply chain disruptions. Although these factors have not had a

material impact on our business or results of operations to date for

development projects, these price increases and disruptions in construction

could lead to future material, design, or transportation delays, which could

increase the costs of our development.

Regulatory, Environmental and Social Trends

Factors Affecting Revenue

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Renewable Natural Gas Revenues: We record revenues from the production and

sale of RNG and the generation and sale of the Environmental Attributes

derived from RNG, such as RINs and LCFS credits. Our RNG revenues from

Environmental Attributes are recorded net of a portion of Environmental

Attributes shared with off-take counterparties as consideration for such

counterparties using the RNG as a transportation fuel. We monetize a portion

of our RNG production under fixed-price and counterparty sharing agreements,

which provide floor prices in excess of commodity indices and sharing

percentages of the monetization of Environmental Attributes. Under these

sharing arrangements, we receive a portion of the profits derived from

counterparty monetization of the Environmental Attributes in excess of the

Renewable Electricity Generation Revenues: We record revenues from the

production and sale of Renewable Electricity and the generation and sale of

the Environmental Attributes, such as RECs, derived from Renewable

Electricity. All of our Renewable Electricity production is monetized under

Corporate Revenues: Corporate reports realized and unrealized gains or losses

under our gas hedge programs. Based on current rates, we expect our gas

commodity hedge program to continue to be priced below actual index prices

through the end of this fiscal year at which time the hedge program will

expire. Corporate also relates to additional discrete financial information

for the corporate function; primarily used as a shared service center for

maintaining functions such as executive, accounting, treasury, legal, human

resources, tax, environmental, engineering and other operations functions not

otherwise allocated to a segment.

RNG Production

Our RNG production levels are subject to fluctuations based on numerous factors,including:

A 2021 cold weather event impacted our Atascocita, Galveston, McCarty, and

Coastal Plains facilities located in Texas. Production at these facilities

was temporarily idled due to the loss of power from February 14 through

February 20, 2021 and force majeure events were declared by certain of our

counterparties or by us for the period February 12 through February 22, 2021

The landfill host at our McCarty facility recently changed its wellfield

collection system which has contributed to elevated nitrogen in the feedstock

received by our facility. Additionally, the landfill host modified the

wellfield bifurcation approach which has impacted the quantity of feedstock

received at the facility. We are working with the landfill host but have

currently experienced lower volumes of feedstock available to be processed at

the McCarty facility. We currently expect lower than historical volumes

Our Pico facility has resumed operations and ramp up activities related to

the existing digester cleanout activities have been completed. Production

volume performance continues to meet our expectations during the post

cleanout period. Our improvement project has impacted the timeline related to

modeling the CI Score pathway model. We have begun releasing production from

storage while CARB completes its CI Score Pathway. We will not receive LCFS

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MONTAUK RENEWABLES, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q) - Marketscreener.com