Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of ~~“large~~"large accelerated filer,~~” “accelerated~~" "accelerated filer,~~” “smaller~~" "smaller reporting company,”" and ~~“emerging~~"emerging growth ~~company”~~company" in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☒☐ No ☐

As of August ~~13, 2021, 23,727,500~~1, 2022, there were 80,717,757 shares of Class A ~~common stock, par value $0.0001,~~Common Stock and ~~5,931,350~~39,060,418 shares of Class B ~~common stock, par value $0.0001, were~~Common Stock issued and outstanding.

References throughout this Amendment No. 1 to the Quarterly Report on Form 10-Q to “we,” “us,” the “Company” or “our company” are to Archaea Energy Inc., formerly known as Rice Acquisition Corp., unless the context otherwise indicates.

This Amendment No. 1 (this “Amendment No. 1”) to the Quarterly Report on Form 10-Q/A amends and restates the Quarterly Report on Form 10-Q of Archaea Energy Inc., formerly known as Rice Acquisition Corp., for the quarterly period ended June 30, 2021, as filed with the Securities and Exchange Commission (“SEC”) on August 13, 2021.

On August 13, 2021, the Company filed its Form 10-Q for the quarterly period ended June 30, 2021 (the “Q2 Form 10-Q”). The Company classified a portion of the redeemable shares of Class A common stock of the Company (the “Public Shares”) issued as part of the units sold in the Company’s initial public offering as permanent equity to maintain net tangible assets greater than $5,000,000 on the basis that the Company will consummate its initial business combination only if the Company has net tangible assets of at least $5,000,001. Previously, the Company did not consider redeemable stock classified as temporary equity as part of net tangible assets. Effective with these financial statements, the Company revised this interpretation to include temporary equity in net tangible assets. As a result, management corrected the error by restating all Public Shares as temporary equity. This resulted in an adjustment to the initial carrying value of the Class A common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A common stock.

In connection with the change in presentation for the Class A common stock subject to possible redemption, the Company revised its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation differs from the previously presented method of earnings per share, which was similar to the two-class method. The Company determined the change in classification of the Class A common stock and change to its presentation of earnings per share is quantitatively material and it should restate its previously issued financial statements.

Therefore, on December 28, 2021, the Company’s management and the audit committee of the Company’s board of directors (the “Audit Committee”) concluded that the Company’s previously issued (i) audited balance sheet as of October 26, 2020 (the “Post-IPO Balance Sheet”), as previously revised in the Company’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, filed with the SEC on May 13, 2021 (“2020 Form 10-K/A No. 1”), (ii) audited financial statements included in the 2020 Form 10-K/A No. 1, (iii) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with the SEC on May 26, 2021, and (iv) unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021 (collectively, the “Affected Periods”), should be restated to report all Public Shares as temporary equity and should no longer be relied upon.

~~As such, the Company has restated or will restate in this Amendment No. 1 its financial statements for the Affected Periods.~~

~~The above changes did not have any impact on its cash position or the cash held in the trust account established in connection with the IPO.~~

After re-evaluation, the Company’s management has concluded that in light of the errors described above, a material weakness existed in the Company’s internal control over financial reporting during the Affected Periods and that the Company’s disclosure controls and procedures were not effective. The Company’s remediation plan with respect to such material weakness is described in more detail in Item 4 to Part 1 of this Amendment No. 1.

For the convenience of the reader, this Amendment No. 1 amends and restates the Q2 Form 10-Q in its entirety. As a result, this Amendment No. 1 includes both items that have been changed as a result of the restatement described above as well as items that are unchanged from the Q2 Form 10-Q. The following items have been amended in this Amendment No. 1 to reflect the restatement described above:

~~This~~Unless the context otherwise requires, the terms “Archaea” and the “Company” refer to Archaea Energy Inc. and its consolidated subsidiaries. In addition, the following company or industry-specific terms and abbreviations are used throughout this Quarterly Report on Form 10-Q (this “Report”):

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees


(in thousands, except shares and per share data)	June 30, 2022		December 31, 2021
ASSETS
Current Assets
Cash and cash equivalents	$	213,315	$	77,860
Restricted cash	21,864		15,206
Accounts receivable, net	29,841		37,010
Inventory	11,050		9,164
Prepaid expenses and other current assets	33,952		21,225
Total Current Assets	310,022		160,465
Property, plant and equipment, net	460,340		350,583
Intangible assets, net	627,223		638,471
Goodwill	29,835		29,211
Equity method investments	263,336		262,738
Operating lease right-of-use assets	4,654		—
Other non-current assets	17,113		9,721
Total Assets	$	1,712,523	$	1,451,189
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable - trade	$	38,272	$	11,096
Current portion of long-term debt, net	21,568		11,378
Current portion of operating lease liabilities	923		—
Accrued and other current liabilities	63,607		46,279
Total Current Liabilities	124,370		68,753
Long-term debt, net	548,900		331,396
Derivative liabilities	52,730		67,424
Below-market contracts	135,210		142,630
Asset retirement obligations	4,830		4,677
Long-term operating lease liabilities	3,952		—
Other long-term liabilities	2,590		5,316
Total Liabilities	872,582		620,196
Commitments and Contingencies	0		0
Redeemable Noncontrolling Interests	606,608		993,301
Stockholders’ Equity
Preferred stock, $0.0001 par value; 10,000,000 authorized; none issued and outstanding	—		—
Class A Common Stock, $0.0001 par value; 900,000,000 shares authorized; 80,717,757 shares issued and outstanding as of June 30, 2022 and 65,122,200 shares issued and outstanding as of December 31, 2021	8		7
Class B Common Stock, $0.0001 par value; 190,000,000 shares authorized; 39,060,418 shares issued and outstanding as of June 30, 2022 and 54,338,114 shares issued and outstanding as of December 31, 2021	4		5
Additional paid in capital	392,118		—
Accumulated deficit	(158,797)		(162,320)
Total Stockholders’ Equity	233,333		(162,308)


Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity	$	1,712,523	$	1,451,189

~~Item 1. Condensed Consolidated Financial Statements~~

The accompanying notes are an integral part of these ~~unaudited condensed~~ consolidated financial statements.

~~Note 1—~~NOTE 1 - Organization and Description of ~~Organization,~~ Business ~~Operations and Basis of Presentation~~

Archaea Energy Inc. (“Archaea” or the "Company"), a Delaware corporation (formerly named Rice Acquisition Corp.), is a blank check company incorporated in Delaware on September 1, 2020. As used herein, the “Company” or “Rice” refer to Rice Acquisition Corp. and its majority-owned and controlled operating subsidiary, Rice Acquisition Holdings LLC (“RAC OpCo”), unless the context indicates otherwise. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one ~~or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all~~ of the ~~risks associated~~largest RNG producers in the U.S., with ~~emerging growth companies.~~

an industry-leading RNG platform primarily focused on capturing and converting waste emissions from landfills and livestock farms into low-carbon RNG and electricity. As of June 30, ~~2021, the Company had not commenced any operations. All activity for the three~~2022, Archaea owns, through wholly-owned entities or joint ventures, a diversified portfolio of 32 LFG recovery and ~~six months ended June 30, 2021 relates~~processing facilities across 18 states, including 13 operated facilities that produce pipeline-quality RNG and 19 LFG to ~~the search for a prospective initial Business Combination,~~renewable electricity production facilities, including ~~activities in connection with the proposed acquisitions of Aria Energy LLC, a Delaware limited liability company,~~one non-operated facility and Archaea Energy LLC, a Delaware limited liability company. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash, cash equivalents and investments from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end.

The Company’s sponsor is Rice Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on October 21, 2020. On October 26, 2020, the Company consummated its Initial Public Offering of 23,725,000 units (each, a “Unit” and collectively, the “Units”), including 2,225,000 additional Units1 facility that were issued pursuant to the underwriters’ partial exercise of their over-allotment option (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million in deferred underwriting commissions (Note 5).

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 6,771,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to the Sponsor and Atlas Point Energy Infrastructure Fund, LLC (“Atlas Point Fund”), at a price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of approximately $6.8 million (Note 4). Each Private Placement Warrant is exercisable to purchase one share of Rice’s Class A common stock or, in certain circumstances, one Class A Unit of RAC OpCo together with a corresponding number of shares of Rice’s non-economic Class B common stock.

Following the Initial Public Offering, the Public Stockholders (as defined below) hold a direct economic equity ownership interest in Rice in the form of shares of Class A common stock, and an indirect ownership interest in RAC OpCo through Rice’s ownership of Class A Units of RAC OpCo. By contrast, the Initial Stockholders (as defined below) own direct economic interests in RAC OpCo in the form of Class B Units and a corresponding non-economic voting equity interest in Rice in the form of shares of Class B common stock, as well as a small direct interest through the Sponsor Shares (as defined in Note 4). Sponsor Shares were purchased for $10.00 each and, in the absence of an initial Business Combination, will generally participate in liquidation or other payments on a pari passu basis with the Public Shares (as defined below). However, given the relatively de minimis number of Sponsor Shares relative to Public Shares, in many cases the economic, governance or other effects of the Sponsor Shares are not material to the holders of Class A common stock or warrants, and for simplicity, portions of this disclosure may not fully describe or reflect these immaterial effects.

Upon the closing of the Initial Public Offering and the Private Placement, approximately $237.3 million of the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act (as defined below) having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (excluding the amount of any deferred underwriting discount held in Trust) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-business combination company controls 50% or more of the voting securities of the target or is otherwise not required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company will provide the holders of the Company’s Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. Unless otherwise stated herein, the term “Public Shares” includes the 2,500 shares of Class A common stock, par value $0.0001 per share, of the Company held by the Sponsor and forming part of the Sponsor Shares. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per Public Share). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares will be recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not ~~required by law~~operational.

Holders of Class A Opco Units of RAC OpCo, (B) the number of shares of Class B Common Stock and (C) the amount of cash as set forth in, and in accordance with, the Aria Merger Agreement, and (iii) all Class C Units of Aria shall be cancelled and extinguished without any conversion thereof.

~~Pursuant to the terms of the~~other than Archaea Merger Agreement and at the Effective Time (as defined therein), all equity interests of Archaea will be cancelled and converted into the right to receive (x) the number of Class A Units of RAC OpCo and (y) the number of shares of Class B Common Stock as set forth in, and in accordance with, the Archaea Merger Agreement.

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

~~Following the Business Combinations, holders of Class A Units of RAC OpCo (other than the Company) will~~ have the right ~~(an “exchange~~(a “redemption right”), subject to certain limitations, to ~~exchange~~redeem Class A Opco Units ~~of RAC OpCo (and~~and a corresponding number of shares of Class B Common ~~Stock)~~Stock for, at ~~the Company’s~~Opco’s option, (i) shares of Class A Common Stock on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, or (ii) a corresponding amount of cash. the Company’s decision to make a cash payment or issue shares upon an exercise of an exchange right will be made by the Company’s independent directors, and such decision will be based on facts in existence at the time of the decision, which the Company expects would include the relative value of the Class A Common Stock (including trading prices for the Class A Common Stock at the time), the cash purchase price, the availability of other sources of liquidity (such as an issuance of preferred stock) to acquire the Class A Units of RAC OpCo and alternative uses for such cash.

Holders of Class A Units of RAC OpCo (other than the Company) will generally be permitted to exercise the exchange right on a quarterly basis, subject to certain de minimis allowances. In addition, additional exchanges may occur in connection with certain specified events, and any exchanges involving more than a specified number of Class A Units of RAC OpCo (subject to the Company’s discretion to permit exchanges of a lower number of units) may occur at any time upon ten business days’ advanced notice. The exchange rights will be subject to certain limitations and restrictions intended to reduce the administrative burden of exchanges upon the Company and ensure that RAC OpCo will continue to be treated as a partnership for U.S. federal income tax purposes.

Following any exchange of Class A Units of RAC OpCo (and a corresponding number of shares of Class B Common Stock), RAC will retain the Class A Units of RAC OpCo and cancel the shares of Class B Common Stock. As the holders of Class A Units of RAC OpCo (other than the Company) exchange their Class A Units of RAC OpCo, the Company’s membership interest in RAC OpCo will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced.

~~Conditions to Consummation of the Business Combinations~~

Consummation of the Business Combinations is generally subject to customary conditions of the respective parties, and conditions customary to special purpose acquisition companies, including (i) expiration or termination of all applicable waiting periods under HSR, (ii) the absence of any law or governmental order, threatened or pending, preventing the consummation of the Business Combinations, (iii) completion of the Company Share Redemptions (as defined in the Business Combination Agreements), (iv) receipt of requisite stockholder approval for consummation of the Business Combinations, (v) the consummation of the LES Sale (as defined in the Aria Merger Agreement) by Aria and (vi) the issuance by the Federal Energy Regulatory Commission of an order granting authorization for the Business Combinations pursuant to Section 203 of the Federal Power Act of 1935. In addition, the parties also have the right to not consummate the Business Combinations in the event that the cash on the balance sheet of the combined company following the closing of the Business Combinations (the “Combined Company”) would be less than $150,000,000, subject to the terms of the Business Combination Agreements. Furthermore, the closing of the transactions contemplated by the Aria Merger Agreement is expressly conditioned on the closing of the transactions contemplated by the Archaea Merger Agreement and vice versa.

~~Termination~~

Each of the Business Combination Agreements may be terminated by the parties thereto under certain customary and limited circumstances at any time prior to the closing of the Business Combinations, including, without limitation, by mutual written consent or if the Business Combinations have not been consummated within 150 days from the date of the Business Combination Agreements (subject to certain extensions for up to 30 days for delays as set forth in the Business Combination Agreements).

~~Stockholders Agreement~~

In connection with the closing of the Business Combinations, the Company, RAC Buyer, RAC OpCo, Sponsor, and certain other individuals affiliated with the Companies (the “Company Holders”) will enter into a stockholders agreement (the “Stockholders Agreement”) pursuant to which, among other things, (i) the board of directors of the Combined Company (the “Board”) will consist of seven members, (ii) the holders of a majority of the Company Interests (as defined in the Stockholders Agreement) held by the RAC Sponsor Holders (as defined in the Stockholders Agreement) will have the right to designate two directors (the “RAC Sponsor Directors”) for appointment or election to the Board during the term of the Stockholders Agreement, (iii) the Ares Investors (as defined in the Stockholders Agreement) will have the right to designate one director (the “Ares Director”) for appointment or election to the Board for so long as the Ares Investors hold at least 50% of the Registrable Securities (as defined in the Stockholders Agreement) held by them on the date that the Business Combinations are consummated (the “Ares Fall-Away Date”), (iv) the Board shall take all necessary action to designate the person then serving as the Chief Executive Officer of the Combined Company (the “CEO Director”) for appointment or election to the Board during the term of the Stockholders Agreement and (v) the Board shall designate three independent directors (the “Independent Directors”) to serve on the Board during the term of the Stockholders Agreement. The Ares Investors shall have the right to consult on the persons to be designated as Independent Directors prior to the Ares Fall-Away Date.

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

~~PIPE Financing~~

On April 7, 2021, the Company entered into subscription agreements (each, a “Subscription Agreement”) with certain investors (the “PIPE Investors”) pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and Rice has agreed to issue and sell to the PIPE Investors, an aggregate of 30,000,000 shares of Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), of the Company for an aggregate purchase price of $300,000,000 on the date of Closing (as defined in each Subscription Agreement), on the terms and subject to the conditions set forth therein (the “PIPE Financing”). Each Subscription Agreement contains customary representations and warranties of the Company, on the one hand, and the PIPE Investor, on the other hand, and customary conditions to closing, including the consummation of the Business Combinations.

Additionally, on April 7, 2021, the Company, RAC OpCo, Sponsor and Atlas Point Energy Infrastructure Fund, LLC, a Delaware limited liability company (“Atlas”), entered into an Amendment to Forward Purchase Agreement (the “FPA Amendment”) pursuant to which the Forward Purchase Agreement, dated as of September 30, 2020 (the “Original Agreement”), by and among such parties was amended to provide that Atlas shall purchase a total of $20,000,000 of Forward Purchase Securities (as defined in the Original Agreement) and the Forward Purchase Warrants (as defined in the Original Agreement) will consist of one-eighth of one redeemable warrant (where each whole redeemable warrant is exercisable to purchase one share of Class A Common Stock at an exercise price of $11.50 per share).

NOTE 2 - Basis of Presentation

and Summary of Significant Accounting Policies

Basis of Presentation

~~The accompanying~~

These unaudited, ~~condensed~~interim, consolidated financial statements ~~of the Company have been~~and notes are prepared in accordance with ~~United States generally accepted accounting principles (“GAAP”)~~GAAP for interim ~~financial information~~reporting and ~~Article 8 of Regulation S-X. Accordingly, they do not include all~~in accordance with the rules and regulations of the ~~information and footnotes required by GAAP. In~~SEC. These unaudited interim financial statements reflect all adjustments that are, in the opinion of management, ~~all adjustments (consisting of normal accruals) considered~~necessary to present fairly the results for ~~a fair presentation~~the interim periods presented. The Company’s accounting policies conform to GAAP and have been ~~included.~~consistently applied in the presentation of financial statements. The ~~interim operating~~Company’s consolidated financial statements include all wholly-owned subsidiaries and all VIEs with respect to which the Company determined it is the primary beneficiary. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these unaudited consolidated financial statements should be read in conjunction with the Company’s audited financial statements included in the 2021 Annual Report.

The Archaea Merger with RAC was accounted for as a reverse recapitalization with Legacy Archaea deemed the accounting acquirer, and therefore, there was no step-up to fair value of any RAC assets or liabilities and no goodwill or other intangible assets were recorded. The Aria Merger was accounted for using the acquisition method of accounting with Aria deemed to be the acquiree for accounting purposes. The Company also determined that Aria is the Company’s predecessor and therefore has included the historical financial statements of Aria as predecessor beginning on page 32.

Principles of Consolidation

As the Company completed its Business Combinations on September 15, 2021, these unaudited consolidated financial statements for the three and six months ended June 30, 2022 and as of December 31, 2021 include the assets, liabilities and results of operations of the combined results of the businesses of Legacy Archaea and Aria as operated by the Company after the Business Combinations; whereas, the unaudited results of operations for the three and six months ended June 30, 2021 are those of Legacy Archaea, the accounting acquirer.

The Company has determined that Opco is a VIE and the Company is the primary beneficiary. Therefore, the Company consolidates Opco, and ownership interests of Opco not ~~necessarily indicative~~owned by the Company are reflected as redeemable noncontrolling interests due to certain features of the ~~results~~redemption right. See “Note 15 - Nonredeemable and Redeemable Noncontrolling Interest and Stockholders’ Equity.” Entities that ~~may be expected~~are majority-owned by Opco are consolidated. Certain investments in entities are accounted for ~~the year ending December 31, 2021 or any future periods.~~

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Amendment No. 2 to Annual Report on Form 10-K/A for the period ended December 31, 2020 as ~~filed with the SEC on December 28, 2021, which contains the audited financial statements~~equity method investments and ~~notes thereto. The financial information as of December 31, 2020 is derived from the audited financial statements presented~~included separately in the Company’s ~~Amendment No. 2 to Annual Report on Form 10-K/A for the period ended December 31, 2020.~~

consolidated balance sheets.

~~Emerging Growth Company~~

All intercompany balances and transactions have been eliminated.

~~The Company is an “emerging growth company,” as defined in Section 2(a)~~Table of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.Contents

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s condensed consolidated financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

ARCHAEA ENERGY INC.

~~RICE ACQUISITION CORP.~~
NOTES TO UNAUDITED ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

~~Risk and Uncertainties~~

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position and cash flows may be materially adversely affected. Additionally, the Company’s ability to complete an initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a timely manner. The Company’s ability to consummate an initial Business Combination may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.

~~Liquidity and Capital Resources~~

~~As of June 30, 2021, we had approximately $5,000 in our operating bank account and a working capital deficit of approximately $7.6 million.~~

The Company’s liquidity needs to date had been satisfied through the payment of $26,000 from the Sponsor to purchase the Founder Shares and Sponsor Shares (see Note 4), the loan under the Note of approximately $290,000 (see Note 4), and the net proceeds from the consummation of the Private Placement not held in the Trust Account. The Company repaid the Note in full on November 10, 2020. In addition, in order to finance transaction costs in connection with a Business Combination, the Company’s officers, directors and initial stockholders may, but are not obligated to, provide the Company Working Capital Loans (see Note 4). As of June 30, 2021, there were no amounts outstanding under any Working Capital Loans.

Based on the foregoing, management believes that the Company will have sufficient borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing, and management has the intent and ability to support the Company through such time period. Over this time period, the Company will be using the funds held outside of the Trust Account for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.

~~Note 2—Summary of Significant Accounting Policies~~

~~Principles of Consolidation and Financial Statement Presentation~~

The unaudited condensed consolidated financial statements include the accounts of the Company and its majority-owned and controlled operating subsidiary after elimination of all intercompany transactions and balances as of June 30, 2021 and December 31, 2020. The ownership interest of noncontrolling participants in the operating subsidiary is included as a separate component of stockholders’ equity. The noncontrolling participants’ share of the net loss is included as “Net loss attributable to noncontrolling interest in subsidiary” on the accompanying unaudited condensed consolidated statement of operations.

~~Restatement of Previously Issued Financial Statements~~

In connection with the change in presentation of Class A common stock subject to possible redemption, the Company concluded it should restate its previously issued financial statements to classify all Class A common stock subject to redemption in temporary equity. In accordance with ASC 480-10-S99, redemption provisions not solely within the control of the Company require shares subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A common stock in permanent equity. Although the Company did not specify a maximum redemption threshold, its charter currently provides that the Company will not redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. The Company revised this interpretation to include temporary equity in net tangible assets.

In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021. Therefore, the Company, in consultation with its Audit Committee, concluded that the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021, should be restated to present all Class A common stock subject to possible redemption as temporary equity, restate earnings per share and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering. The previously presented unaudited interim financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 13, 2021, should no longer be relied upon. The restatement does not have an impact on the Company’s cash position and cash held in the Trust Account.

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

The change in the carrying value of the redeemable Class A common stock at June 30, 2021 resulted in a reclassification of approximately 15.9 million Class A common stock from permanent equity to temporary equity. The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited balance sheet as of June 30, 2021:

As of June 30, 2021 As Previously Reported Adjustment As Restated
Total assets $ 237,826,416 $ - $ 237,826,416
Total liabilities $ 154,884,971 $ - $ 154,884,971
Class A common stock subject to possible redemption 77,941,440 159,308,560 237,250,000
Preferred stock - - -
Class A common stock 1,594 (1,594 ) -
Class B common stock 593 - 593
Additional paid-in capital 133,067,223 (133,067,223 ) -
Accumulated deficit (123,144,622 ) (26,239,743 ) (149,384,365 )
Total Rice Acquisition Corp equity (deficit) 9,924,788 (159,308,560 ) (149,383,772 )
Non-controlling interest in subsidiary (4,924,783 ) - (4,924,783 )
Total stockholders’ equity (deficit) $ 5,000,005 $ (159,308,560 ) $ (154,308,555 )
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit) $ 237,826,416 $ - $ 237,826,416

~~The Company’s unaudited statement of stockholders’ equity has been restated to reflect the changes to the impacted stockholders’ equity accounts described above.~~

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited statement of cash flows for the period from January 21, 2021 (inception) through June 30, 2021:

~~For the three months ended June 30, 2021~~

As Previously Reported Adjustment As Restated
Supplemental Disclosure of Noncash Financing Activities:
Change in value of Class A common stock subject to possible redemption $ 105,576,180 $ (105,576,180 ) $ -

In connection with the change in presentation for the Class A common stock subject to possible redemption, the Company has revised its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares participate pro rata in the income and losses of the Company. The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per common share is presented below for the Affected Quarterly Periods:

Earnings Per Share for Class A common stock
As Previously Reported Adjustment As Restated
For the three months ended June 30, 2021
Net loss $ (114,348,270 ) $ - $ (114,348,270 )
Weighted average shares outstanding 23,725,000 2,500 23,727,500
Basic and diluted earnings per share $ - $ (3.86 ) $ (3.86 )
For the six months ended June 30, 2021
Net loss $ (105,576,176 ) $ - $ (105,576,176 )
Weighted average shares outstanding 23,725,000 2,500 23,727,500
Basic and diluted earnings per share $ - $ (3.56 ) $ (3.56 )

Earnings Per Share for Class B common stock
As Previously Reported Adjustment As Restated
For the three months ended June 30, 2021
Net loss $ (114,348,270 ) $ - $ (114,348,270 )
Weighted average shares outstanding 5,933,850 (2,500 ) 5,931,350
Basic and diluted earnings per share $ (0.47 ) $ (3.39 ) $ (3.86 )
For the six months ended June 30, 2021
Net loss $ (105,576,176 ) $ - $ (105,576,176 )
Weighted average shares outstanding 5,933,850 (2,500 ) 5,931,350
Basic and diluted earnings per share $ (0.05 ) $ (3.51 ) $ (3.56 )

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires ~~the Company’s~~ management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and ~~liabilities and disclosure of~~expenses, as well as contingent assets and ~~liabilities at~~liabilities. The estimates and assumptions used in the accompanying financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. ~~Making~~Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements.

Revenue Recognition

The Company generates revenues from the production and sales of RNG, Power, and associated Environmental Attributes, as well as from the performance of other landfill energy operations and maintenance (“O&M”) services. The Company also manufactures and sells customized pollution control equipment and performs associated maintenance agreement services. Prior to the January 1, 2022 adoption of ASC 842 - Leases as discussed in “Note 3 - Recently Issued and Adopted Accounting Standards,” a portion of the Company’s revenue was accounted for under ASC 840 - Leases and a portion under ASC 606 - Revenue from Contracts with Customers based on requirements of GAAP. Under ASC 840, lease revenue is recognized generally upon delivery of RNG and electricity. Under ASC 606, revenue is recognized when (or as) the Company satisfies its performance obligation(s) under the contract by transferring the promised product or service either when (or as) its customer obtains control of the product or service, including RNG, electricity and their related Environmental Attributes. A performance obligation is a promise in a contract to transfer a distinct product or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring its products or services. Based on the terms of the related sales agreements, the amounts recorded under ASC 840 as lease revenue are generally consistent with revenue recognized under ASC 606. After the January 1, 2022 adoption of ASC 842, revenue is accounted for solely under ASC 606 as our facilities no longer meet the definition of leased assets under ASC 842.

Business Combinations

For business combinations that meet the accounting definition of a business, the Company determines and allocates the purchase price of an acquired company to the tangible and intangible assets acquired, the liabilities assumed, and noncontrolling interest, if applicable, as of the date of acquisition at fair value. Fair value may be estimated using comparable market data, a discounted cash flow method, or a combination of the two. In the discounted cash flow method, estimated future cash flows are based on management’s expectations for the future and can include estimates of future biogas production, commodity prices, operating and development costs, and a risk-adjusted discount rate. Revenues and costs of the acquired companies are included in the Company’s operating results from the date of acquisition.

The Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed at the acquisition date, and these estimates and assumptions are inherently uncertain and subject to refinement during the measurement period not to exceed one year from the acquisition date. As a result, any adjustment identified subsequent to the measurement period is included in operating results in the period in which the amount is determined. The Company’s acquisitions are discussed in “Note 4 - Business Combinations and Reverse Recapitalization.”

NOTE 3 – Recently Issued and Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous generally accepted accounting principles and the new requirements under Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases with a term greater than 12 months classified as operating leases under previous GAAP.

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Upon adoption of Topic 842 as of January 1, 2022, the Company recognized $5.1 million of right-of-use (“ROU”) assets and lease liabilities on its consolidated balance sheet related to operating leases existing on the adoption date. Prior period financial statements were not adjusted. The adoption of Topic 842 did not have a material impact on the Company’s consolidated statement of operations or consolidated statement of cash flows. See “Note 11 - Leases” for additional information.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides optional guidance for a limited period of time to ease the transition from the London Inter-Bank Offered Rate (“LIBOR”) to an alternative reference rate. The guidance intends to address certain concerns relating to accounting for contract modifications and hedge accounting. These optional expedients and exceptions to applying GAAP, assuming certain criteria are met, are allowed through December 31, 2022. The Company is currently evaluating the provisions of this update and has not yet determined whether it will elect the optional expedients. The Company does not expect the transition to an alternative rate to have a material impact on its business, operations or liquidity.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires all entities to recognize and measure contract assets and liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The guidance aims to improve comparability for revenue contracts with customers by providing consistent recognition and measurement guidance for all revenue contracts with customers. ASU 2021-08 is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company will adopt this ASU as of January 1, 2023 and does not expect the adoption to have a material impact on its financial condition, results of operations, or cash flows.

NOTE 4 – Business Combinations and Reverse Recapitalization

Formation of the Lightning JV

On May 5, 2022, the Company and Republic Services, Inc. (“Republic”) announced the formation of the Lightning JV to develop 39 RNG projects across the U.S. that will be located at various landfill sites owned or operated by Republic. The joint venture will develop and construct RNG facilities that will convert LFG into pipeline-quality RNG that can be used for a variety of applications. The Company holds a 60% ownership interest in the Lightning JV, and the Company’s initial capital funding of $222.5 million was paid into the Lightning JV on July 5, 2022. Concurrent with the initial funding, the Lightning JV completed the acquisition of landfill gas rights and underlying assets at an additional Republic-owned landfill for $37.9 million, bringing the total number of RNG development projects within the Lightning JV to 40. The Lightning JV did not conduct any activities impacting the financial results of the Company for the three and six months ended June 30, 2022.

Reverse Recapitalization

Legacy Archaea is considered the accounting acquirer of the Business Combinations because the Legacy Archaea Holders have the largest portion of the voting power of the Company and Legacy Archaea’s senior management comprise the majority of the executive management of the Company. Additionally, the Legacy Archaea Holders appointed the majority of board members exclusive of the independent board members. The Archaea Merger represents a reverse merger and is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, RAC is treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Archaea Merger is treated as the equivalent of Legacy Archaea issuing shares for the net assets of RAC, accompanied by a recapitalization. The net assets of RAC were stated at historical cost, no goodwill or other intangible assets were recorded.

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Aria Merger

As discussed in “Note 1 - Organization and Description of Business,” Aria was acquired as part of the Business Combinations consummated on September 15, 2021 to ~~exercise significant judgment. It is~~complement the Company’s existing RNG assets and for its operational expertise in the renewable gas industry. The Aria Merger represented an acquisition of a business and was accounted for using the acquisition method, whereby all of the assets acquired and liabilities assumed were recognized at ~~least reasonably possible that~~their fair value on the ~~estimate~~acquisition date, with any excess of the purchase price over the estimated fair value recorded as goodwill.

As of June 30, 2022, the Company has completed the allocation of the consideration. During the six months ended June 30, 2022, the final consideration adjustment of $1.9 million was determined and received from the Aria Holders which had the effect of ~~a condition, situation or set~~reducing goodwill. In addition, other purchase price adjustments of ~~circumstances that existed at~~$2.5 million in the ~~date~~aggregate were recorded for the six months ended June 30, 2022 which had the effect of increasing goodwill.

NOTE 5 – Revenues

The following table disaggregates revenue by significant product type and operating segment for the three and six months ended June 30, 2022 and 2021:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Revenue by Product Type
RNG, including RINs and LCFS credits	$	55,086	$	821	$	89,883	$	821
RNG O&M service (1)	242		—		532		—
Power, including RECs	14,893		2,238		31,759		2,238
Power O&M service (1)	953		—		1,851		—
Equipment and associated services	2,808		2,068		4,022		3,722
Other (1)	468		—		533		—
Total	$	74,450	$	5,127	$	128,580	$	6,781


Revenue by Operating Segment
RNG	$	55,328	$	821	$	90,415	$	821
Power	15,846		2,238		33,610		2,238
Corporate and Other	3,276		2,068		4,555		3,722
Total	$	74,450	$	5,127	$	128,580	$	6,781

_____________________________________________

(1) Includes revenues earned from the Company’s joint ventures, see “Note 20 - Related Party Transactions.”

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Contract Assets and Contract Liabilities

The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from equipment sales projects when revenues recognized under the cost-to-cost measure of progress exceed the amounts invoiced to customers, as the amounts cannot be billed under the terms of the condensed consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.

~~Cash and Cash Equivalents~~

~~The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.~~contracts. There ~~are~~were no ~~cash equivalents~~credit allowances for contract assets as of June 30, ~~2021~~2022 or December 31, 2021. Contract liabilities from contracts arise when amounts invoiced to customers exceed revenues from equipment sales recognized under the cost-to-cost measure of progress. Contract liabilities additionally include advanced payments from customers on certain equipment contracts. Contract liabilities decrease as revenue is recognized from the satisfaction of the related performance obligation and are recorded as either current or long-term, depending upon when such revenue is expected to be recognized.

Contract assets and liabilities consisted of the following as of June 30, 2022 and December 31, ~~2020.~~

2021:


(in thousands)	June 30, 2022		December 31, 2021
Contract assets (included in Prepaid expenses and other current assets)	$	168	$	87
Contract liabilities (included in Accrued and other current liabilities)	$	(270)	$	(505)

~~Investments Held~~

The decrease in ~~Trust Account~~

contract liabilities during the six months ended June 30, 2022 was primarily due to the timing of milestone billings along with revenues recognized that were included in December 31, 2021 contract liabilities.

Costs to Obtain Customer Contracts

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer when the economic benefit and amortization period exceeds one year. Only those costs that are directly related to the acquisition of customer contracts and that would not have been incurred if the customer contract had not been obtained are deferred as assets. As of June 30, 2022, $2.5 million was recorded for costs to obtain customer contracts and included in other non-current assets on the Company’s ~~portfolio~~consolidated balance sheet. Amortization will begin when the related contract commences.

Transaction Price Allocated to Remaining Unsatisfied Performance Obligations

Remaining unsatisfied performance obligations as of ~~investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16)~~June 30, 2022 relate to certain of the ~~Investment~~Company’s RNG and Environmental Attributes contracts. The Company ~~Act,~~applies the optional exemptions in ASC 606 and does not disclose consideration for remaining performance obligations with ~~a maturity~~an original expected duration of ~~185 days~~one year or less or for variable consideration related to unsatisfied performance obligations. Firm contracts for fixed-price, fixed-quantity sales of RNG and Environmental Attributes based on minimum contractual volumes are reflected in the table below when their original expected term is in excess of one year. The following table summarizes the revenue the Company expects to recognize over next 21 years on these firm sales contracts as of June 30, 2022:


(in thousands)
Remainder of 2022	$	42,026
2023-2024	262,001
2025-2026	429,996
2027-2028	441,067
2029-2030	434,641
2031-2032	418,453
Thereafter	1,871,603
Total	$	3,899,787

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6 – Property, Plant and Equipment

Property, plant and equipment consist of the following as of June 30, 2022 and December 31, 2021:


(in thousands)	June 30, 2022		December 31, 2021
Machinery and equipment	$	307,808	$	285,718
Buildings and improvements	17,517		16,039
Furniture and fixtures	2,326		1,176
Construction in progress (1)	151,496		55,039
Land	266		246
Total cost	479,413		358,218
Less accumulated depreciation	(19,073)		(7,635)
Property, plant and equipment, net	$	460,340	$	350,583

(1) Includes both acquired long-lead equipment and projects in progress.

NOTE 7 – Equity Method Investments

As a result of the Aria Merger, the Company holds 50% interest in two joint ventures, Mavrix, LLC (“Mavrix”) and Sunshine Gas Producers, LLC (“SGP”), which are accounted for using the equity method due to the joint control by both the Company and unrelated parties with ownership interest in each entity.

Under the terms of the original Mavrix, LLC Contribution Agreement dated September 30, 2017, the Company is required to make an earn-out payment to its joint venture partner holding the other 50% membership in Mavrix in an amount up to $9.55 million. The earn-out payment represents additional consideration for the Company’s equity interest in Mavrix and will be based on the performance of certain projects owned by Mavrix through the earn-out period which ends September 30, 2022. No earn-out payment is due until the completion of the earn-out period. In February 2022, the Mavrix, LLC Contribution Agreement was amended to exclude certain upgrade and optimization capital expenditures incurred for one specific project from the earn-out calculation and to add a maintenance expenditure cap. Based on the amended terms, the Company has estimated the earn-out payment to be $8.3 million at June 30, 2022, and this amount is reflected in the accompanying balance sheet in accrued and other current liabilities.

The summarized financial information for the Mavrix and SGP equity method investments ~~in money market funds that invest in U.S. government securities~~is as follows:


(in thousands)	June 30, 2022		December 31, 2021
Assets	$	225,978	$	203,864
Liabilities	51,873		15,477
Net assets	$	174,105	$	188,387
Company’s share of equity in net assets	$	87,052	$	94,194


(in thousands)	Three Months Ended June 30, 2022		Six Months Ended June 30, 2022
Total revenues	$	26,797	$	52,025
Net income	$	10,419	$	18,436
Company’s share of net income	$	5,209	$	9,218

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s carrying values of the Mavrix and ~~generally have~~SGP investments also include basis differences totaling $154.5 million as of June 30, 2022 as a ~~readily determinable~~result of the fair value measurements recorded as part of the Aria Merger. Amortization of the basis differences reduced equity investment income by $2.6 million and $5.1 million for the three and six months ended June 30, 2022, respectively.

On December 30, 2021, the Company entered into a new joint venture. The Company contributed $7.5 million in cash in 2021 into this newly created entity, Saturn Renewables LLC ("Saturn"), in exchange for a 50% interest, and the joint venture acquired gas rights at two landfill sites to develop RNG facilities. The Company is the operator of Saturn’s day-to-day operations and accounts for its investment in Saturn using the equity method. The Company has contributed an additional $8.0 million to the Saturn joint venture during the six months ended June 30, 2022, and the carrying value of Saturn was $15.5 million as of June 30, 2022.

In addition, the Company also owns several smaller investments accounted for using the equity method of accounting totaling $7.1 million as of both June 30, 2022 and December 31, 2021.

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 ~~a combination thereof. When~~as circumstances change or necessitate. There have been no material changes related to the RNG segment's goodwill or the Company’s ~~investments held~~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 ~~Trust Account are comprised~~useful lives when amortizing the intangible asset.

Intangible assets consist of ~~U.S. government securities,~~ the ~~investments~~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

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(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 ~~trading securities. When~~other long-term liabilities on the Company’s ~~investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the~~consolidated balance sheets ~~at fair value at~~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 ~~end~~three and six months ended June 30, 2022, respectively, and was recognized as an increase to revenues since it relates to the sale of ~~each reporting period. Gains~~RNG and ~~losses resulting~~related Environmental Attributes.

NOTE 9 – Accrued and Other Current Liabilities

Accrued and other current liabilities consist of the following as of June 30, 2022 and December 31, 2021:


(in thousands)	June 30, 2022		December 31, 2021
Accrued expenses	$	30,377	$	16,638
Accrued capital expenditures	22,760		16,609
Derivative liabilities	55		771
Payroll and related costs	6,875		7,683
Accrued interest	70		738
Contract liabilities	270		505
Other current liabilities	3,200		3,335
Total	$	63,607	$	46,279

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 – Debt

Credit Agreement Amendment

On June 30, 2022, the Company amended its Revolving Credit and Term Loan Agreement which included a senior secured revolving credit facility (the “Revolver”) with an initial commitment of $250 million and a senior secured term loan credit facility (the “Term Loan”) with an initial commitment of $220 million. The amendment, among other things, increased the aggregate total commitment from the ~~change~~original syndicate of lenders plus two additional lenders by approximately $630 million to a total of $1.1 billion, and provides for a $400 million Term Loan and a $700 million Revolver (together, the “Credit Facilities”). In addition, on June 1, 2022, the benchmark interest rate was revised to the secured overnight financing rate (“SOFR”) plus 2.75% for the Revolver and SOFR plus 3.25% for the Term Loan. The maturity date of the Credit Facilities remains unchanged at September 15, 2026.

The Company had outstanding borrowings under the Term Loan of $400.0 million at an interest rate of 4.89% and under the Revolver of $50.0 million at an interest rate of 4.39% as of June 30, 2022. The Company had issued letters of credit under the Credit Facilities of $23.8 million, resulting in available borrowing capacity of $626.2 million under the Revolver as of June 30, 2022.

The Company’s outstanding debt consists of the following as of June 30, 2022 and December 31, 2021:


(in thousands)	June 30, 2022		December 31, 2021
Credit Agreement, as amended - Term Loan	$	400,000	$	218,625
Credit Agreement, as amended - Revolver	50,000		—
Wilmington Trust – 4.47% Term Note	60,828		60,828
Wilmington Trust – 3.75% Term Note	69,667		72,542
	580,495		351,995
Less unamortized debt issuance costs	(10,027)		(9,221)
Long-term debt less debt issuance costs	570,468		342,774
Less current maturities, net	(21,568)		(11,378)
Total long-term debt, net	$	548,900	$	331,396

Scheduled future maturities of long-term debt principal amounts are as follows:


(in thousands)
Remainder of 2022	$	10,502
2023	26,108
2024	26,371
2025	26,598
2026 and thereafter	490,916
Total	$	580,495

Fair Value of Debt

The Company estimates the fair value of ~~these securities is included~~fixed-rate term loans based on quoted market yields for similarly rated debt instruments in ~~income on investments held~~an active market, which are considered a Level 2 input in the ~~Trust Account in~~fair value hierarchy. As of June 30, 2022 and December 31, 2021, the ~~accompanying unaudited condensed consolidated statements of operations. The~~ estimated ~~fair values of investments held in the Trust Account are determined using available market information.~~

~~Fair Value of Financial Instruments~~

~~The~~ fair value of the Company’s outstanding debt was approximately $523.0 million and $353.1 million, respectively.

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11 – Leases

The Company has entered into warehouse, facility, and various office leases with third parties for periods ranging from one to eleven years. As discussed in “Note 3 - Recently Issued and Adopted Accounting Standards,” the Company adopted ASC 842 - Leases on January 1, 2022 utilizing the modified retrospective approach. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain leases, (2) lease classification for any expired or existing leases as of the adoption date, and (3) initial direct costs for any existing leases as of the adoption date. The Company has elected not to recognize ROU assets and lease liabilities for leases with terms of 12 months or less.

The Company determines at the inception of a lease whether an arrangement that provides the Company control over the use of an asset is a lease. ROU assets and lease liabilities are initially measured at the lease commencement date based on the present value of the future lease payments over the lease term, discounted using an estimate of the Company’s incremental borrowing rate which ~~qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” equal or approximate~~approximates the ~~carrying amounts represented~~rate to borrow funds on collateralized loans over a similar term of the lease. Renewal options are included in the ~~condensed consolidated balance sheets.~~

calculation of ROU assets and lease liabilities when the Company determines that the option is reasonably certain of exercise based on an analysis of the relevant facts and circumstances. When operating leases contain provisions for maintenance services, which are considered non-lease components for accounting purposes, those non-lease components are excluded from the calculation of the ROU assets and lease liabilities.

~~Offering Costs Associated with~~Operating lease expense is generally recognized on a straight-line basis over the ~~Initial Public Offering~~

lease term unless another method better represents the pattern that benefit is expected to be derived from the right to use the underlying asset. For the three and six months ended June 30, 2022, the Company recognized total lease costs of $0.8 million and $1.6 million, respectively, which was comprised of $0.3 million and $0.7 million, respectively, in operating lease costs for ROU assets, and $0.4 million and $0.9 million, respectively, of short-term operating lease expense. For the three and six months ended June 30, 2021, the Company recognized rent expense of $0.3 million and $0.4 million, respectively.

~~Offering costs consisted~~The Company also entered into a related-party office lease as a result of ~~legal, accounting, underwriting fees~~its acquisition of an interest in Gulf Coast Environmental Services, LLC in 2020. During the three and ~~other costs incurred through~~six months ended June 30, 2022, the ~~Initial Public Offering that were directly~~Company recognized rent expense of zero and $70 thousand, respectively, under this related-party lease which expired on May 1, 2022. For the three and six months ended June 30, 2021, the Company recognized rent expense of $53 thousand and $105 thousand, respectively, under this related-party lease.

Supplemental information related to the ~~Initial Public Offering. Offering costs~~Company’s ROU assets and related operating lease liabilities were ~~allocated~~as follows:


(in thousands)	Six Months Ended June 30, 2022
Operating cash outflows for operating leases	$	1,346

Weighted average remaining lease term (in years)	8.9
Weighted average discount rate	5.0		%

In 2021, the Company entered into a new corporate office lease with a commitment of approximately $8.3 million that has not commenced as of June 30, 2022 and, therefore, has not been recognized on the Company’s consolidated balance sheet. This operating lease is expected to ~~the separable financial instruments issued~~commence in the ~~Initial Public Offering based on~~first half of 2023 with a ~~relative fair value basis, compared~~lease term of 11 years.

Table of Contents

ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2022, future lease payments under the Company’s operating leases that have commenced are as follows:


(in thousands)
Remainder of 2022	$	602
2023	625
2024	609
2025	589
2026	533
2027	546
Thereafter	2,576
Total future lease payments	6,080
Less portion representing imputed interest	(1,205)
Total operating lease liabilities	$	4,875

NOTE 12 – Commitments and Contingencies

Commitments

The Company has various long-term contractual commitments pertaining to ~~total proceeds received. Offering costs associated with derivative warrant liabilities were expensed as incurred~~its biogas rights agreements. Excluding the evergreen contracts, these agreements expire at various dates through 2045.

Contingencies

The Company is subject to certain claims, charges and ~~presented as non-operating expenses~~litigation concerning matters arising in the ~~condensed statements~~ordinary course of operations. Offering costs associated with the Class A common stock issued were charged against the carrying value of the Class A common stock subject to possible redemption upon the completion of the Initial Public Offering. The Company classifies deferred underwriting commissions as non-current liabilities as their liquidation isbusiness and that have not ~~reasonably expected to require the use of current assets or require the creation of current liabilities.~~

~~Derivative Warrant Liabilities~~

been fully resolved. The Company does not ~~use derivative instruments~~believe the ultimate outcome of any currently pending lawsuit will have a material adverse effect upon the Company’s financial statements, and the potential liability is believed to ~~hedge exposures~~be only reasonably possible or remote.

NOTE 13 – Derivative Instruments

Warrant Liabilities

In June 2022, 234,399 Private Placement Warrants were exercised on cashless basis at an exercise price of $11.50 per share in exchange for a total of 100,009 shares of Class A Common Stock. As of June 30, 2022, 6,536,601 Private Placement Warrants remain outstanding, and each is exercisable to ~~cash flow, market,~~purchase 1 share of Class A Common Stock or, ~~foreign currency risks.~~in certain circumstances, 1 Class A Opco Unit and corresponding share of Class B Common Stock. The ~~Company evaluates all of its financial instruments, including issued stock purchase warrants, to determine if such instruments are derivatives~~Private Placement Warrants expire on September 15, 2026, or contain features that qualify as embedded derivatives, pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The classification of derivative instruments, including whether such instruments should be recorded as liabilitiesearlier upon redemption or ~~as equity, is re-assessed at the end of each reporting period.~~

~~The Public Warrants and the~~liquidation. Private Placement Warrants are nonredeemable so long as they are held by the initial purchasers or their permitted transferees. The outstanding Private Placement Warrants continue to be held by the initial purchasers or their permitted transferees as of June 30, 2022.

The Private Placement Warrants contain exercise and settlement features that preclude them from being classified within stockholders’ equity, and therefore are recognized as derivative ~~liabilities in accordance with ASC 815. Accordingly, the~~liabilities. The Company recognizes the warrant instruments as liabilities at fair value ~~and adjusts the carrying value of the instruments to~~with changes in fair value ~~at each reporting period until they are exercised. The initial fair value~~included within gain (loss) on warrants and derivative contracts in the Company’s consolidated statements of the Public Warrants issued in connection with the Initial Public Offering were estimated using a Monte Carlo simulation model. The fair value of the Public Warrants as of June 30, 2021 is based on observable listed prices for such warrants. The fair value of the Private Placement Warrants as of June 30, 2021 is determined using Black-Scholes option pricing model. The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and accordingly the actual results could differ significantly.operations. Derivative warrant liabilities are classified as non-current liabilities as their liquidation is not reasonably expected to require the use of current assets or require the creation of current liabilities.

The fair value of the Private Placement Warrants is estimated using the Black-Scholes option pricing model (a Level 3 measurement).

Table of Contents

ARCHAEA ENERGY INC.

~~RICE ACQUISITION CORP.~~
NOTES TO UNAUDITED ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

~~Class A Common Stock Subject to Possible Redemption~~

The Company ~~accounts~~used the following assumptions to estimate the fair value of the Private Placement Warrants:


	June 30, 2022			December 31, 2021
Stock price	$	15.53		$	18.28
Exercise price	$	11.50		$	11.50
Volatility	49.5		%	46.0		%
Expected term (years)	4.2			4.7
Risk-free interest rate	3.0		%	1.2		%

The change in the fair value of the warrant liabilities is recognized in gain (loss) on warrants and derivative contracts in the consolidated statement of operations. The changes in the warrant liabilities for ~~its Class A common stock subject to possible redemption in accordance~~the six months ended June 30, 2022 are as follows:


(in thousands)
Warrant liabilities as of December 31, 2021	$	67,290
Change in fair value	(13,004)
Less fair value of warrants exercised	(1,556)
Warrant liabilities as of June 30, 2022	$	52,730

Natural Gas Swap

In conjunction with the ~~guidance~~Business Combinations, the Company assumed a natural gas variable to fixed priced swap agreement entered into by Aria. The Company is the fixed price payer under the swap agreement that provides for monthly net settlements through the termination date of June 30, 2023. The agreement was intended to manage the risk associated with changing commodity prices. The agreement has a remaining notional of 219,000 MMBtu as of June 30, 2022.

Changes in ~~ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as liability instruments~~the fair values and realized gains (losses) for the natural gas swap are ~~measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within~~recognized in gain (loss) on warrants and derivative contracts in the ~~control~~consolidated statement of operations. Valuation of the ~~holder or subject~~natural gas swap was calculated by discounting future net cash flows that were based on a forward price curve for natural gas over the remaining life of the contract (a Level 2 measurement), with an adjustment for each counterparty’s credit rate risk.

Interest Rate Swap

In December 2021, the Company entered into an interest rate swap that locks in payments of a fixed interest rate of 1.094% in exchange for a floating interest rate that resets monthly based on LIBOR. The interest rate swap was not designated as a hedging instrument, and net gains and losses are recognized currently in gain (loss) on warrants and derivative contracts. The interest rate swap notional was $107.9 million as of June 30, 2022 and declines over the term of the swap to ~~redemption upon~~$94.9 million at the ~~occurrence~~December 2024 contract termination date.

Table of ~~uncertain events not solely within~~Contents

ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following summarizes the Company’s control) is classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. The Company issued 2,500 shares of Class A common stock to the Sponsor. These Sponsor Shares will not be transferablebalance sheet classification and will only be exchangeable into Class A common stock after the initial business combination, as such are considered non-redeemable and presented as permanent equity in the Company’s condensed balance sheet. Excluding the Sponsor Shares, the Company’s Class A common stock feature certain redemption rights that are considered to be outsidefair value of the Company’s ~~control and subject to the occurrence of uncertain future events. Accordingly,~~derivative instruments as of June 30, 2022 and December 31, 2021:


(in thousands)	June 30, 2022		December 31, 2021
Prepaid expenses and other current assets
Natural gas swap asset	$	245	$	—
Interest rate swap asset	1,906		—
Other non-current assets
Interest rate swap asset	2,814		439
Total derivative assets	$	4,965	$	439
Accrued and other current liabilities
Natural gas swap liability	$	55	$	44
Interest rate swap liability	—		727
Derivative liabilities
Natural gas swap liability	—		134

Warrant liabilities	52,730		67,290
Total derivative liabilities	$	52,785	$	68,195

The following table summarizes the ~~Initial Public Offering, 23,725,000 shares~~income statement effect of ~~Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheets.~~

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of the Class A common stock subject to possible redemption to equal the redemption value at the end of each reporting period. Effective with the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount, which resulted in charges against additional paid-in capital (to the extent available) and accumulated deficit.

~~Net Income Per Share of Common Stock~~

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock. Incomegains and losses are shared pro rata between the two classes of shares. Net income (loss) per common share is calculated by dividing the net income (loss) by the weighted average shares of common stock outstanding for the respective period.

~~The calculation of diluted net income (loss) per share does not consider the effect of the~~related to warrants ~~underlying the Units sold in the Initial Public Offering (including the consummation of the over-allotment)~~ and the private placement warrants to purchase an aggregate of 18,633,500 shares of Class A common stock, because their exercise is contingent upon future events and their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted net income (loss) per share is the same as basic net income (loss) per sharederivative instruments for the three and six months ended June 30, ~~2021. Accretion associated with~~2022 and 2021:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021

Gain (loss) on natural gas swap contract	$	116	$	—	$	570	$	—
Gain (loss) on interest rate swap contract	963		—		4,606		—
Gain (loss) on warrant liabilities	37,016		—		13,004		—
Total	$	38,095	$	—	$	18,180	$	—

NOTE 14 – Fair Value Measurements

Fair Values - Recurring

The following table summarizes the ~~redeemable Class A common stock is excluded from earnings per share as~~outstanding derivative instruments and the ~~redemption~~fair value ~~approximates fair value.~~

~~The table below presents a reconciliation of~~hierarchy for the ~~numerator and denominator used to compute basic and diluted net loss per share for each class of common stock:~~

For the Three Months Ended
June 30, 2021 For the Six Months Ended
June 30, 2021
Class A Class B Class A Class B
Basic and diluted net income per common share:
Numerator:
Allocation of net loss $ (91,480,235 ) $ (22,868,035 ) $ (84,462,436 ) $ (21,113,740 )

Denominator:
Basic and diluted weighted average common shares outstanding 23,727,500 5,931,350 23,727,500 5,931,350
Basic and diluted net income per common share $ (3.86 ) $ (3.86 ) $ (3.56 ) $ (3.56 )

~~Income Taxes~~

~~The Company follows the asset and liability method of accounting for income taxes under ASC Topic 740, “Income Taxes.” Deferred tax~~Company’s derivative assets and liabilities that are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expectedrequired to be ~~recovered or settled. The effect~~measured at fair value on ~~deferred tax assets and liabilities~~a recurring basis:


(in thousands)	Level 1		Level 2		Level 3		Total Fair Value
June 30, 2022
Assets
Natural gas swap	$	—	$	245	$	—	$	245
Interest rate swap	—		4,720		—		4,720
Liabilities
Natural gas swap	$	—	$	55	$	—	$	55
Warrant liabilities	—		—		52,730		52,730

Table of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Contents

ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(in thousands)	Level 1		Level 2		Level 3		Total Fair Value
December 31, 2021
Assets
Interest rate swap	$	—	$	439	$	—	$	439
Liabilities
Natural gas swap	$	—	$	178	$	—	$	178
Interest rate swap	—		727		—		727
Warrant liabilities	—		—		67,290		67,290

Financial Instruments Fair Value

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the ~~Company had~~fair value of other financial instruments including cash and cash equivalents, prepaid expenses, accounts payable, and accrued and deferred ~~tax assets~~expenses approximate the carrying values because of ~~approximately $1,932,000 and $618,000, respectively, with a full valuation allowance against them.~~

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

~~FASB ASC Topic 740 prescribes a recognition threshold and a measurement attribute~~the short-term maturity of those items. See “Note 10 - Debt” for the ~~financial statement recognition~~fair value of the Company’s debt.

Fair Values - Nonrecurring

The fair value measurements of goodwill, assets acquired and ~~measurement of tax positions taken or expected to be taken~~liabilities assumed, including below-market contracts assumed, in the business combinations are measured on a ~~tax return. For those benefits to be recognized, a tax position must be more likely than~~nonrecurring basis on the acquisition date based on inputs that are not ~~to be sustained upon examination by taxing authorities.~~ observable in the market, and therefore, represent Level 3 inputs and measurements. See “Note 8 - Goodwill and Intangible Assets” and “Note 4 - Business Combinations and Reverse Recapitalization.”

There were no ~~unrecognized tax benefits as of June 30, 2021. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued~~transfers between fair value hierarchy levels for the payment of interest and penalties as of June 30, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

~~The provision for income taxes was de minimis for the three and~~ six months ended June 30, 2022 and the year ended December 31, 2021.

~~Recent Accounting Pronouncements~~

NOTE 15 – Nonredeemable and Redeemable Noncontrolling Interest and Stockholders’ Equity

Redeemable Noncontrolling Interest

~~In August 2020,~~

The redeemable noncontrolling interest relates to Class A Opco Units, including units issued in connection with the ~~FASB issued Accounting Standard Update (the “ASU”) No. 2020-06, Debt—Debt with Conversion~~Business Combinations and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instrumentsunits owned by ~~removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for~~ the ~~derivative scope exception and it also simplifies~~Sponsor (or their transferees), Atlas or the ~~diluted earnings per share calculation in certain areas. The~~Company’s directors. As of June 30, 2022, the Company ~~early adopted the ASU on January 1, 2021. Adoption~~directly owned approximately 67.4% of the ~~ASU did not impact~~interest in Opco and the ~~Company’s financial position, results~~redeemable noncontrolling interest was 32.6%. As of ~~operations or cash flows.~~

Management does not believe that any other recently issued, but not yet effective, accounting pronouncement if currently adopted would have a material effect on the Company’s condensed consolidated financial statements.

~~Note 3—Initial Public Offering~~

~~On October 26, 2020,~~December 31, 2021, the Company consummated its Initial Public Offering of 23,725,000 Units, including 2,225,000 Over-Allotment Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option, at $10.00 per Unit, generating gross proceeds ofowned approximately ~~$237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 million in deferred underwriting commissions. Of the 23,725,000 Units sold, affiliates~~54.5% of the ~~Sponsor~~interest in Opco and ~~Atlas Point Fund had purchased 1,980,000 Units (the “Affiliated Units”) and 2,128,500 Units (the “Atlas Units”), respectively, at~~ the ~~Initial Public Offering price. The underwriters did not receive any underwriting discounts or commissions on the 1,980,000 Affiliated Units.~~

~~Each Unit consists of one share~~redeemable noncontrolling interest was 45.5%. Holders of Class A common stock and one-half of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Rice’s Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).

~~Note 4—Related Party Transactions~~

~~Founder Shares and Sponsor Shares~~

In September 2020, the Sponsor paid $25,000 to cover for certain of expenses of the Company in exchange for issuance of (i) 5,750,100 shares of Rice’s Class B common stock, par value $0.0001 per share, and (ii) 2,500 shares of Rice’s Class A common stock, par value $0.0001 per share. In September 2020, the Sponsor received 5,750,000 Class BOpco Units of RAC OpCo (which are profits interest units only). In October 2020, the Sponsor forfeited 90,000 Class B Units of RAC OpCo, and 30,000 Class B Units of RAC OpCo were issued to each of the independent director nominees. The Sponsor transferred a correspondingother than Archaea own an equal number of shares of Class B ~~common stock to the independent director nominees. In October 2020, the Company effected~~Common Stock and have a dividend, resulting in an aggregate of (i) 6,181,350 shares of Rice’s Class B common stock, and (ii) 2,500 shares of Rice’s Class A common stock outstanding. All shares and associated amounts have been retroactively restated to reflect the dividend. Upon a liquidation of RAC OpCo, distributions generally will be made to the holders of RAC OpCo Units on a pro rata basis,redemption right, subject to certain limitations, ~~with respect~~ to ~~the Class B Units of RAC OpCo, including that, prior to the completion of the initial Business Combination, such Class B Units will not be entitled to participate in a liquidating distribution.~~

~~Also, in September 2020, Rice paid $25,000 to RAC OpCo in exchange for issuance of 2,500~~redeem Class A Opco Units ~~of RAC OpCo. In September 2020, the Sponsor received 100 Class A Units of RAC OpCo in exchange for $1,000.~~

The Company refers to the 6,181,250 shares of Class B common stock and corresponding number of Class B Units of RAC OpCo (or the Class A Units of RAC OpCo into which such Class B Units will convert) collectively as the “Founder Shares”. The Founder Shares consist of Class B Units of RAC OpCo (and any Class A Units of RAC OpCo into which such Class B Units are converted) and a corresponding number of shares of Class B ~~common stock, which together will be exchangeable~~Common Stock for, shares of Rice’s Class A common stock after the time of the initial Business Combination on a one-for-one basis, subject to adjustment as provided herein. The Company refers to the 2,500 shares of Rice’s Class A common stock and the 100 Class A Units of RAC OpCo and a corresponding number of shares of Rice’s non-economic Class B common stock (which together will be exchangeable intoat Opco’s option, (i) shares of Class A ~~common stock after the initial Business Combination on a one-for-one basis) collectively as the “Sponsor Shares”.~~

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

Upon the closing of the Initial Public Offering, the Sponsor forfeited 309,063 Class B Units of RAC OpCo, and 309,063 Class B Units of RAC OpCo were issued to Atlas Point Fund. The Sponsor transferred a corresponding number of shares of Class B common stock to Atlas Point Fund.

The Initial Stockholders agreed to forfeit up to 806,250 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters, so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering (excluding the Sponsor Shares). On October 26, 2020, the underwriters partially exercised the over-allotment option to purchase as additional 2,225,000 Units; thus, only 250,000 Founder Shares remained subject to forfeiture. On December 5, 2020, the remaining unexercised over-allotment expired unused and therefore the remaining 250,000 shares of Class B common stock were forfeited.

~~The Class B Units of RAC OpCo will convert into Class A Units of RAC OpCo in connection with the initial Business Combination~~Common Stock on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, ~~and subject~~or (ii) a corresponding amount of cash. Due to ~~further adjustment~~the cash redemption provisions of the redemption right, the Company has accounted for the redeemable noncontrolling interest as ~~provided herein. The Founder Shares consist~~temporary equity.

Stockholders’ Equity

In March 2022, the Company supported an underwritten public offering in which Aria Renewable Energy Systems LLC sold 14,942,643 shares of ~~Class B Units of RAC OpCo (and any~~our Class A Units of RAC OpCo into which such Class B Units are converted) and a corresponding number of shares of Class B common stock, which together will be exchangeable for shares of Class A common stock after the time of the initial Business Combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issuedCommon Stock (the “Ares Secondary Offering”). The Ares Secondary Offering resulted in excess of the amounts sold in the Initial Public Offering and related to the closing of the Business Combination (other than the forward purchase securities), the number of Class A Units of RAC OpCo into which the Class B Units of RAC OpCo will convert may be adjusted (unless the holders of a majority of the outstanding Founder Shares agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon exchange of all Founder Shares will equal, in the aggregate, on an as-exchanged basis, 20% of the sum of the total outstanding shares of Rice’s common stock upon completion of the Initial Public Offering, plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the Business Combination (excluding the forward purchase securities and any shares or equity-linked securities issued, or to be issued, to any seller in the Business Combination and excluding the Sponsor Shares). In addition, the number of outstanding shares of Class B common stock will be adjusted through a stock split or stock dividend so that the total number of outstanding shares of Class B common stock corresponds to the total number of Class A Units of RAC OpCo outstanding (other than those held by Rice) plus the total number of Class A Units RAC OpCo into which the Class B Units of RAC OpCo are entitled to convert.

The Initial Stockholders agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares held by them (and any shares of Class A common stock acquired upon exchange of Founder Shares) until one year after the date of the consummation of the initial Business Combination or earlier if, subsequent to the initial Business Combination, (i) the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (ii) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash, securities or other property.

~~Private Placement Warrants~~

Simultaneously with the closing of the Initial Public Offering, the Company consummated the Private Placement of 6,771,000 Private Placement Warrants to the Sponsor and Atlas Point Fund, at a price of $1.00 per Private Placement Warrant, generating grossno proceeds to the Company and a decrease of ~~approximately $6.8 million.~~

~~Each whole Private Placement Warrant is exercisable for~~14,942,643 shares of outstanding Class B Common Stock and a ~~price~~corresponding increase of ~~$11.50 to purchase one share~~14,942,643 shares of ~~Rice’s~~outstanding Class A ~~common stock or, in certain circumstances, one Class A Unit~~Common Stock.

Table of RAC OpCo together with a corresponding number of shares of Rice’s non-economic Class B common stock. A portion of the proceeds from the sale of the Private Placement Warrants was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Sponsor, Atlas Point Fund or their permitted transferees.Contents

With certain limited exceptions, the Private Placement Warrants and the securities underlying such warrants will not be transferable, assignable or saleable until 30 days after the completion of the initial Business Combination.

ARCHAEA ENERGY INC.

~~RICE ACQUISITION CORP.~~
NOTES TO UNAUDITED ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

The following is a summary of Class A Common Stock and Class B Common Stock activity for the six months ended June 30, 2022:

~~(AS RESTATED)~~


(in shares)	Class A Common Stock	Class B Common Stock
Balance at December 31, 2021	65,122,200	54,338,114


Issued for warrant exercises	100,009	—
Exchange of Class B Common Stock for Class A Common Stock	15,277,696	(15,277,696)

Issued for vested RSUs	217,852	—
Outstanding at June 30, 2022	80,717,757	39,060,418

~~Related Party Loans~~

NOTE 16 – Share-Based Compensation

~~On September 1, 2020, the Sponsor agreed to loan~~

In connection with Business Combinations, the Company ~~an aggregate of up to $300,000 pursuant to a promissory note~~adopted the 2021 Omnibus Incentive Plan (the ~~“Note”~~“Plan”). ~~This loan was non-interest bearing and payable upon the completion of the Initial Public Offering.~~ The Company ~~borrowed an aggregate of approximately $290,000~~may grant restricted stock, RSUs, incentive and non-qualified stock options, stock appreciation rights, performance awards, stock awards and other stock-based awards to officers, directors, employees and consultants under ~~the Note. The outstanding balance of the Note was paid in full as of November 10, 2020. Subsequent to the repayment, the facility was no longer available to the Company.~~

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company will repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. Except for the foregoing, the terms of ~~such Working Capital Loans, if any, have~~the Plan. There are 11.3 million shares authorized under the plan and approximately 9.6 million shares remain available for future issuance as of June 30, 2022. The Company determines the grant-date fair value of its RSUs using the fair market value of its stock on the grant date, unless the awards are subject to market-based vesting conditions, in which case the Company utilizes a Monte Carlo simulation model to determine the grant-date fair value. The Company recognizes compensation expense equal to the grant-date fair value for all equity awards that are expected to vest. This expense is recognized as compensation expense on a straight-line basis over the requisite service period, which is the vesting period. The Company has elected to account for forfeitures of awards granted under the Plan as they occur in determining compensation expense.

Restricted Stock Units

In January 2022, the Company granted a total of 41,028 RSUs to non-employee directors with a one-year vesting period. These RSUs will be subject to forfeiture restrictions and cannot be sold, transferred, or disposed of during the restriction period.

In February 2022, the Company modified and accelerated the vesting of 158,583 unvested RSUs for certain employees and recognized $2.9 million of incremental share-based compensation expense related to these modifications.

During the three months ended June 30, 2022, the Company granted a total of 666,677 RSUs to its executives and other employees, and these RSUs generally vest over a three-year period. These RSUs will be subject to forfeiture restrictions and cannot be sold, transferred, or disposed of during the restriction period.

The table below summarizes RSU activity for the six months ended June 30, 2022:


	RSUs	Weighted- Average Grant Date Fair Value (per unit)
Outstanding at December 31, 2021	851,020	$	17.23
Granted	707,705	$	22.22
Vested (1)	(316,903)	$	17.23
Forfeited	(164,004)	$	18.29
Outstanding at June 30, 2022	1,077,818	$	20.35

(1) Vested RSUs include 85,922 units that were not ~~been determined~~converted into Class A Common Stock due to net share settlements to cover employee withholding taxes.

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the three and six months ended June 30, 2022, the Company recognized a total of $2.4 million and $8.2 million, respectively, of share-based compensation expense related to RSUs, including $2.9 million of incremental share-based compensation expense for the February 2022 modifications. There was no ~~written agreements exist with respect~~share-based compensation expense recognized related to ~~such loans. As of~~RSUs for the three and six months ended June 30, 2021 and no unrecognized share-based compensation expense related to unvested RSUs as of June 30, 2021. At June 30, 2022, there was $19.1 million of unrecognized share-based compensation expense related to unvested RSUs, which is expected to be recognized over a weighted average period of approximately 1.6 years.

Performance-Based RSUs

In April and May 2022, the Company granted a total of 364,117 performance-based RSUs (“PSUs”) to its senior executives and certain other high-level employees. Each grant award reflects a target number of PSUs that may be issued to the award recipient. These PSUs vest on March 1, 2025 following the completion of a three-year performance period ending December 31, ~~2020,~~2024. The performance criteria consist of the market-based Absolute Total Shareholders Return (“ATSR”) and the performance-based Average Cash Return on Investment (“ACRI”). Depending on the results achieved during the three-year performance period, the actual number of PSUs that an award recipient receives at the end of the vesting period may range from 0% to 200% of the target PSUs granted.

Estimates of grant-date fair value of these PSUs may not accurately predict the value ultimately realized by the employees who received the awards, and the ultimate value may not be indicative of the reasonableness of the original estimates of fair value made by the Company.

The fair value of the ATSR market-based performance objective was determined using Monte Carlo simulations with the following weighted-average assumptions:


Stock price	$	22.67
Volatility	49.0		%
Risk-free interest rate	2.6		%
Grant date fair value per target ATSR PSU	$	28.53

Separately, based on a subjective assessment of our future financial performance over the performance period, the Company ~~had no borrowings under~~determines quarterly the ~~Working Capital Loans.~~

probable level of performance for the ACRI criteria. The ~~Sponsor, officers and directors, or any~~Company starts recording compensation expense when the ACRI become probable of ~~their respective affiliates will be reimbursed for any out-of-pocket expenses incurred in connection with activities~~achievement. Based on the Company’s ~~behalf such~~subjective assessment as ~~identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments that were made to~~of June 30, 2022, the ~~Sponsor, officers or directors, or their affiliates.~~

~~Administrative Support Agreement~~

~~Commencing~~100% payout rate of ACRI performance is probable of being achieved; accordingly, the Company recognized expense based on the ~~date~~target level.

The table below summarizes PSU activity for the ~~Company’s securities are first listed on NYSE,~~six months ended June 30, 2022:


	PSUs	Weighted- Average Grant Date Fair Value (per unit)
Outstanding at December 31, 2021	—	$	—
Granted	364,117	$	26.75
Forfeited	(12,580)	$	26.84
Outstanding at June 30, 2022	351,537	$	26.75

For the three and six months ended June 30, 2022, the Company ~~agreed to pay the Sponsor~~recognized a total of ~~$10,000 per month for office space, utilities, secretarial support~~$0.8 million share-based compensation expense related to these PSUs. At June 30, 2022, there was $8.6 million of unrecognized compensation expense related to unvested PSUs, which is expected to be recognized over a weighted-average period of approximately 2.7 years.

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Series A Incentive Plan

Legacy Archaea adopted a Series A Incentive Plan in 2018 to provide economic incentives to select employees and ~~administrative services provided~~other service providers in order to ~~members~~align their interests with equity holders of Legacy Archaea. Under the original terms of the ~~management team. Upon completion~~awards, all unvested Series A units outstanding were vested upon Closing of ~~the initial~~ Business ~~Combination or the Company’s liquidation, the Company will cease paying these monthly fees.~~ Combinations.

For the three and six months ended June 30, 2021, Legacy Archaea recognized compensation expense of $0.1 million and $0.2 million, respectively, related to Series A units awards. As a result of the Business Combinations, the Series A Incentive Plan is no longer applicable to the Company.

NOTE 17 – Provision for Income Tax

Archaea Energy Inc. is organized as a Subchapter C corporation and, as of June 30, 2022, is a 67.4% owner of LFG Acquisition Holdings LLC. LFG Acquisition Holdings LLC is organized as a limited liability company and treated as a partnership for U.S. federal and most applicable state and local income tax purposes and, as such, is generally not subject to any U.S. federal and state entity-level income taxes with the exception of two subsidiary Subchapter C corporations and certain limited state jurisdictions.

The Company recognized federal and state income tax expense of $0.1 million for both the three and six months ended June 30, 2022. The Company did not record a tax provision for the three and six months ended June 30, 2021 primarily due to Archaea Energy LLC's status as a pass-through entity for U.S. federal income tax purposes.

The effective tax rates were 0% and (23.6)% for the three and six months ended June 30, 2022, respectively, and 0% for both the three and six months ended June 30, 2021. The difference between the Company’s effective tax rate for the three and six months ended June 30, 2022, and the U.S. statutory tax rate of 21% was primarily due to a full valuation allowance recorded on the Company’s net U.S. and state deferred tax assets, income (loss) from pass-through entities not attributable to Class A Common Stock, and state and local taxes. The Company evaluates the realizability of the deferred tax assets on a quarterly basis and establishes a valuation allowance when it is more likely than not that all or a portion of a deferred tax asset may not be realized.

As of June 30, 2022, the Company ~~incurred expenses~~determined it is not more likely than not the Company’s net deferred tax assets will be realized due to significant negative evidence such as cumulative losses and continues to maintain a full valuation allowance. There are no unrecognized tax benefits recorded as of ~~$30,000~~June 30, 2022 and ~~$60,000 under~~December 31, 2021.

Archaea is analyzing the relevant sections of the recently passed Inflation Reduction Act to determine what, if any, impact it may have on the 2022 financial statements. The Company does not anticipate a material impact on year-to-date activity as of June 30, 2022.

NOTE 18 – Net Earnings (Loss) Per Share

The Archaea Merger was accounted for as a reverse recapitalization and is treated as the equivalent of Legacy Archaea receiving proceeds for the issuance of the outstanding shares of Class A Common Stock and Class B Common Stock, as well as the warrants, of Rice Acquisition Corp. accompanied by a recapitalization. Therefore, Class A Common Stock is deemed to be outstanding beginning at the Closing due to the reverse recapitalization.

The Company’s basic earnings per share (“EPS”) of Class A Common Stock is computed based on the average number of shares of Class A Common Stock outstanding for the period. Diluted EPS includes the effects of the Company’s outstanding RSUs, PSUs and Private Placement Warrants, unless the effects are anti-dilutive to EPS.

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following provides a reconciliation between basic and diluted EPS attributable to Class A Common Stock for the three and six months ended June 30, 2022 and 2021.


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2022		2021		2022		2021
Net income (loss) attributable to Class A Common shares - basic	$	21,950	$	—	$	3,523	$	—
Less gain in fair value of Private Placement Warrants	(37,016)		—		(13,004)		—
Net income (loss) attributable to Class A Common shares - diluted	$	(15,066)	$	—	$	(9,481)	$	—

Weighted average number of Class A Common shares outstanding - basic	80,523		—		73,489		—
Effect of dilutive Private Placement Warrants	2,922		—		2,715		—
Effect of dilutive equity awards	—		—		—		—
Weighted average number of Class A Common shares outstanding - diluted	83,445		—		76,204		—
Net income (loss) per share of Class A Common Stock
Basic	$	0.27	$	—	$	0.05	$	—
Diluted	$	(0.18)	$	—	$	(0.12)	$	—

For the three and six months ended June 30, 2022, weighted-average total RSUs and PSUs of 1,403,593 and 1,113,242, respectively, were excluded from the diluted Class A Common Stock shares as their effect would have been anti-dilutive.

NOTE 19 – Segment Information

The Company’s 2 reporting segments for the three and six months ended June 30, 2022 and 2021 are RNG and Power. The Company’s chief operating decision maker evaluates the performance of its segments based on operational measures including revenues, net income and EBITDA.

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The following summarizes selected financial information for the Company’s reporting segments:


(in thousands)	RNG		Power		Corporate and Other		Total
Three months ended June 30, 2022
Revenue and other income	$	58,781	$	15,092	$	3,346	$	77,219
Intersegment revenue	—		1,366		(1,366)		—
Total revenue and other income	58,781		16,458		1,980		77,219
Equity investment income, net	2,506		187		—		2,693
Net income (loss)	11,050		1,629		19,945		32,624
Interest expense	1,468		—		2,244		3,712
Depreciation, amortization and accretion	10,966		2,573		191		13,730
Income tax expense	—		—		129		129
EBITDA	$	23,484	$	4,202	$	22,509	$	50,195
Six months ended June 30, 2022
Revenue and other income	$	97,620	$	31,941	$	4,555	$	134,116
Intersegment revenue	—		2,777		(2,777)		—
Total revenue and other income	97,620		34,718		1,778		134,116
Equity investment income, net	3,544		578		—		4,122
Net income (loss)	24,426		3,274		(28,248)		(548)
Interest expense	1,995		—		4,371		6,366
Depreciation, amortization and accretion	20,073		5,731		415		26,219
Income tax expense	—		—		129		129
EBITDA	$	46,494	$	9,005	$	(23,333)	$	32,166



June 30, 2022
Goodwill	$	29,835	$	—	$	—	$	29,835

Three months ended June 30, 2021
Revenue and other income	$	822	$	2,237	$	2,068	$	5,127
Intersegment revenue	—		—		—		—
Total revenue and other income	822		2,237		2,068		5,127
Net income (loss)	(476)		(1,830)		(5,624)		(7,930)
Interest expense	13		—		—		13
Depreciation, amortization and accretion	202		630		54		886
EBITDA	$	(261)	$	(1,200)	$	(5,570)	$	(7,031)
Six months ended June 30, 2021
Revenue and other income	$	822	$	2,237	$	3,722	$	6,781
Intersegment revenue	—		—		—		—
Total revenue and other income	822		2,237		3,722		6,781

Net income (loss)	(1,566)		(1,830)		(7,033)		(10,429)
Interest expense	19		—		—		19
Depreciation, amortization and accretion	215		630		90		935
EBITDA	$	(1,332)	$	(1,200)	$	(6,943)	$	(9,475)

December 31, 2021
Goodwill	$	29,211	$	—	$	—	$	29,211

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ARCHAEA ENERGY INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 20 – Related Party Transactions

Assai Energy, LLC (“Assai”) (a wholly owned subsidiary of the Company) entered into a construction service and project guarantee agreement with Noble Environmental Specialty Services, LLC (“NESS”) (a wholly owned subsidiary of Noble). NESS was responsible for constructing an RNG plant located at the Keystone Landfill, near Scranton, PA. The total contract price for the engineering, procurement and construction (“EPC”) contract is $19.9 million, which has been fully paid. The Company also reimbursed NESS $4.6 million for costs outside the EPC contract related to additional capital costs for the Assai project. This agreement is considered to be a related party transaction due to the owners of NESS also being certain officers of the Company. NESS billed an additional $6.1 million in capital project change orders and associated labor costs, and this ~~agreement,~~amount has been capitalized to property, plant and equipment and is included in accounts payable - trade as of June 30, 2022.

The Company provides O&M and construction services for facilities owned by certain of its joint ventures and recognized associated revenues of $0.7 million and $1.0 million for the three and six months ended June 30, 2022, respectively. As of June 30, ~~2021 and December 31,~~2022, the Company had related party balances with certain of its joint ventures including a receivable of $0.5 million.

In 2020, the Company entered into Master Services Agreement and Development and Marketing Agreement with Lutum Technologies LLC (“Lutum”), a joint venture with 20% ownership by the Company. The Company has paid a total of $0.7 million to Lutum for the three and six months ended June 30, 2022.

NOTE 21 – Subsequent Events

On July 15, 2022, the Company paid $230.5 million to acquire 100% of the ownership interest of INGENCO pursuant to the Purchase and Sale Agreement dated April 26, 2022 and to retire INGENCO’s outstanding debt. At the acquisition date, INGENCO owned 14 LFG to renewable electricity facilities. INGENCO was purchased to increase the Company’s backlog of RNG development opportunities. The Company is currently compiling information to determine the initial accounting impacts and related purchase price allocation. Legal and other costs related to the acquisition of $1.6 million and $2.3 million were included in general and administrative expenses for the three and six months ended June 30, 2022, respectively.

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Predecessor - Aria Energy LLC Financial Statements

Archaea determined that Aria is the predecessor to the Company due to the relative fair values of the Company and legacy operations Aria had ~~$20,000~~compared to Archaea. As such, we have included Aria’s consolidated statements of operations and ~~$30,000 outstanding~~consolidated statements of comprehensive income for ~~services~~the three and six months ended June 30, 2021 and consolidated statement of cash flows for the six months ended June 30, 2021. See Archaea Energy Inc.’s “Note 4 - Business Combinations and Reverse Recapitalization” in ~~connection with such~~the 2021 Annual Report for additional information.

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ARIA ENERGY LLC AND SUBSIDIARIES (Predecessor)

Consolidated Statements of Operations

(Unaudited)


(in thousands)	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Revenues and Other Income
Energy revenue	$	42,017	$	84,484
Construction revenue	—		24
Amortization of intangibles and below-market contracts	(954)		(1,908)
Total Revenues and Other Income	41,063		82,600
Equity Investment Income, net	7,469		13,325
Cost of Sales
Cost of energy	20,016		41,116
Cost of other revenues	—		23
Depreciation, amortization and accretion	5,621		11,314
Total Cost of Sales	25,637		52,453
Gain on disposal of assets	(1,347)		(1,347)
Impairment of assets	(542)		—
General and administrative expenses	5,957		13,063
Operating Income	18,827		31,756
Other Income (Expense)
Interest expense, net	(4,355)		(8,676)
Gain (loss) on derivative contracts	446		556
Gain on extinguishment of debt	61,411		61,411
Other income	2		2
Total Other Income (Expense)	57,504		53,293
Net Income	76,331		85,049
Net income attributable to noncontrolling interest	281		289
Net Income Attributable to Controlling Interest	$	76,050	$	84,760

The accompanying notes are an integral part of these consolidated financial statements.

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ARIA ENERGY LLC AND SUBSIDIARIES (Predecessor)

Consolidated Statements of Comprehensive Income

(Unaudited)


(in thousands)	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Net Income	$	76,331	$	85,049
Other Comprehensive Income
Net actuarial income	167		194
Other Comprehensive Income	76,498		85,243
Comprehensive income attributable to noncontrolling interest	281		289
Comprehensive Income Attributable to Controlling Interest	$	76,217	$	84,954

The accompanying notes are an integral part of these consolidated financial statements.

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ARIA ENERGY LLC AND SUBSIDIARIES (Predecessor)

Consolidated Statement of Cash Flows

(Unaudited)


(in thousands)	Six Months Ended June 30, 2021
Cash flows from operating activities
Net income	$	85,049
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depreciation, amortization and accretion	11,314

Gain on disposal of assets	(1,572)
Amortization of debt origination costs	492
Amortization of intangibles and below-market contracts	685
Return on investment in equity method investments	12,166
Equity in earnings of equity method investments	(13,325)
Change in fair value of derivatives	(1,015)
Gain on extinguishment of debt	(61,411)
Net periodic postretirement benefit cost	61
Changes in operating assets and liabilities:
Accounts receivable	(6,143)
Inventory	(720)
Prepaid expenses and other assets	115
Other non-current assets	106
Trade accounts payable	269
Accrued and other current liabilities	6,021
Net cash provided by operating activities	32,092
Cash flows from investing activities
Purchase of property and equipment	(1,331)
Contributions to equity method investments	(6,630)
Net cash used in investing activities	(7,961)
Cash flows from financing activities
Payments on note payable and revolving credit agreement	(2,689)



Net cash used in financing activities	(2,689)
Net increase in cash and cash equivalents	21,442
Cash and cash equivalents – beginning of period	14,257
Cash and cash equivalents – end of period	$	35,699
Supplemental cash flow information
Cash paid for interest	$	4,403
Noncash investing activities
Accruals of property and equipment incurred but not yet paid	$	52

The accompanying notes are an integral part of these consolidated financial statements.

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ARIA ENERGY LLC AND SUBSIDIARIES (Predecessor)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - Description of Business - Predecessor

Aria Energy LLC and its subsidiaries (“Aria”) design, install, own, and operate long-lived energy projects. Aria was originally formed on September 6, 2007, as EIF Renewable Energy Holdings LLC, a Delaware LLC, headquartered in Novi, Michigan. Aria generates its revenue from customers located throughout the United States from the production and sale of electrical energy from LFG fuel engines and related Environmental Attributes, production and sale of RNG and related Environmental Attributes, operating and maintaining LFG projects owned by third parties, and constructing energy projects. Environmental Attributes include RECs in the power market and RINs and LCFS credits in the RNG market. Aria benefits from federal and state renewable fuel standards and federal compliance requirements for landfill owners and operators.

Funds managed by Ares EIF Management LLC held 94.35% of the ownership interests in Aria before the Closing of the Business Combinations.

The accompanying consolidated financial statements present the consolidated financial position and results of operations of Aria Energy LLC and its wholly owned subsidiaries.

NOTE 2 - Summary of Significant Accounting Policies - Predecessor

Basis of Presentation

The consolidated financial statements of Aria have been prepared on the ~~accompanying condensed consolidated balance sheets, respectively.~~

~~Note 5—Commitments and Contingencies~~

basis of United States generally accepted accounting principles (“GAAP”). Certain amounts have been reclassified to conform to the current presentation.

~~Forward Purchase Agreement~~

Use of Estimates

The Company entered into an amended and restated forward purchase agreement (the “Forward Purchase Agreement”) with Atlas Point Fund, pursuant to which Atlas Point Fund, which is a fund managed by CIBC National Trust but is not affiliated with the Company or sponsor, agreed to purchase up to $75,000,000 of either (i) a number of units (the “forward purchase units”), consisting of one share of Class A common stock (the “forward purchase shares”) and one-third of one warrant (the “forward purchase warrants”), for $10.00 per unit or (ii) a number of forward purchase shares for $9.67 per share (such forward purchase shares valued at $9.67 per share or the forward purchase units, as the case may be, the “forward purchase securities”), in a private placement that will close simultaneously with the closingpreparation of the ~~Initial Business Combination. The forward purchase warrants will have~~consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the ~~same terms as~~consolidated financial statements. Actual results could differ from those estimates.

Revenue Recognition

Aria generates revenue from the ~~public warrants~~production and sale of electricity, gas, and their related Environmental Attributes, and performance of other landfill energy services. Based on requirements of GAAP, a portion of revenue is accounted for under ASC 840, Leases, and a portion under ASC 606, Revenue from Contracts with Customers. Under ASC 840, revenue is recognized generally upon delivery of electricity, gas, and their related Environmental Attributes. Under ASC 606, revenue is recognized upon the ~~forward purchase shares will be identical~~transfer of control of promised goods or services to the ~~shares of Class A common stock included~~customer in the units being sold in this offering, except the forward purchase shares and the forward purchase warrants will be subject to transfer restrictions and certain registration rights and the forward purchase units will consist of only one-third of one forward purchase warrant. The funds from the sale of the forward purchase securities may be used as part ofan amount that reflects the consideration to ~~the sellers in the Initial Business Combination, and any excess funds may be used for the working capital needs of the post-transaction company. This agreement~~which is ~~independent of the percentage of stockholders electing~~expected to redeem their public shares and may provide the Company with an increased minimum funding level for the Initial Business Combination. The forward purchase agreement is subject to conditions, including Atlas Point Fund giving the Company its irrevocable written consent to purchase the forward purchase securities no later than five days after the Company notifies it of the Company’s intention to meet to consider entering into a definitive agreement for a proposed Business Combination. Atlas Point Fund may grant or withhold its consent to the purchase entirely within its sole discretion. Accordingly, if Atlas Point Fund does not consent to the purchase, it will not be obligated to purchase the forward purchase securities.

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

~~Registration Rights~~

The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights pursuant to a registration rights agreement. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination. Additionally, pursuant to the Forward Purchase Agreement, the Company agreed to grant certain registration rights to Atlas Point Fund in connection with the issuance of any forward purchase units upon the completion of the Company’s Business Combination. The Company will bear the expenses incurred in connection with the registration of such securities.

~~Underwriting Agreement~~

The Company granted the underwriters a 45-day option from the date of Initial Public Offering to purchase up to 3,225,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On October 26, 2020, the underwriters partially exercised the over-allotment option to purchase an additional 2,225,000 Units.

The underwriters were entitled to an underwriting discount of $0.20 per Unit (excluding the Affiliated Units purchased). As a result of affiliates of the Sponsor purchasing 1,980,000 Units, the Company paid an underwriting discount of approximately $4.3 million in the aggregate upon the closing of the Initial Public Offering. In addition, the underwriters will be entitled ~~to a deferred fee of $0.35 per Unit (excluding the Affiliated Units),~~in exchange for those goods or approximately $7.6 million in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject toservices. Based on the terms of the ~~underwriting agreement.~~

~~Risks and Uncertainties~~

~~Management continues to evaluate~~Power Purchase Agreements, the ~~impact of~~amounts recorded under ASC 840 are generally consistent with revenue recognized under ASC 606. For the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Note 6—Stockholders’ Deficit~~

~~Class A Common Stock~~ ~~— The Company is authorized to issue 250,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of~~six months ended June 30, 2021, approximately 36% of revenue was accounted for under ASC 606 and ~~December 31, 2020, there were 23,727,500 shares of Class A common stock issued~~64% under ASC 840.

The following tables display Aria’s revenue by major source and ~~outstanding, of which 23,725,000 shares of Class A common stock are subject to possible redemption~~by operating segment for the three and ~~therefore classified outside of permanent equity in the accompanying condensed consolidated balance sheets.~~

~~Class B Common Stock~~ ~~— The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. As of~~six months ended June 30, 2021 ~~and December 31, 2020, there were 5,931,350 shares~~:

Table of ~~Class B common stock issued and outstanding.~~Contents

Holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of the stockholders, except as required by law. Each share of common stock will have one vote on all such matters. Prior to the initial Business Combination, only holders of Class B common stock will have the right to vote on the election of directors.

~~Preferred Stock~~ — The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of June 30, 2021 and December 31, 2020, there were no shares of preferred stock issued or outstanding.

ARIA ENERGY LLC AND SUBSIDIARIES (Predecessor)

~~RICE ACQUISITION CORP.~~
NOTES TO UNAUDITED ~~CONDENSED~~ CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

~~Note 7—Warrants~~


(in thousands)	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
RNG, including RINs and LCFS credits	$	29,241	$	55,722
RNG O&M service	367		706
Power, including RECs	10,809		24,626
Power O&M service	1,600		3,430

Other	—		24
Total	$	42,017	$	84,508

Operating segments
RNG	$	29,608	$	56,452
Power	12,409		28,056
Total	$	42,017	$	84,508

~~As of June 30, 2021~~

Held for Sale

During 2020, Aria enacted a plan to sell LES Project Holdings LLC (“LESPH”), and ~~December 31, 2020,~~accordingly, the ~~Company had 11,862,500 Public Warrants and 6,771,000 Private Placement Warrants outstanding, respectively.~~

~~Public Warrants may only be exercised~~business was classified as held for ~~a whole number of shares. No fractional Public Warrants will be issued upon separation~~sale. An agreement to sell the membership interests of the ~~Units and only whole Public Warrants will trade.~~business subsequently was executed on March 1, 2021. The ~~Public Warrants will become exercisable~~sale of LESPH was completed on ~~the later of (a) 30 days after the completion of a Business Combination or (b) 12 months~~June 10, 2021. Proceeds from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrantssale were $58.5 million and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business Combination, it will use its best efforts to file with the SEC and have an effective registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of the Class A common stock until the warrants expire or are redeemed. If a registration statement covering the shares of the Class A common stock issuable upon exercise of the warrants is not effective by the 60^th business day after the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption.

The warrants have an exercise price of $11.50 per share, subject to adjustments, and will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the board and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Newly Issued Price.

~~Redemption of warrants when our Class A common stock equals or exceeds $18.00 per share:~~

~~Once the warrants become exercisable, the Company may redeem the outstanding warrants for cash (except as described herein with respect to the Private Placement Warrants):~~

●

~~in whole and not in part;~~

●

~~at a price of $0.01 per warrant;~~

●

~~upon a minimum of 30 days’ prior written notice of redemption; and~~

●

if, and only if, the last sale price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

The Company will not redeem the warrants for cash unless a registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If the Company calls the warrants for redemption for cash as described above, the management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.”

~~Redemption of warrants when our Class A common stock equals or exceeds $10.00 per share:~~

~~Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described herein with respect to the Private Placement Warrants):~~

●

~~in whole and not in part;~~

●

at $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares of Class A common stock determined by reference to an agreed table based on the redemption date and the “fair market value” of Class A common stock;

	●	if and only if, the last sale price of Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; and

	●	if, and only if, there is an effective registration statement covering the issuance of shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30- day period after written notice of redemption is given.

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

The “fair market value” of the Class A common stock shall mean the volume weighted average price of the Class A common stock as reported during the 10 trading days ending on the third trading day prior to the date on which the notice of redemption iswere sent to the ~~holders of warrants.~~

~~None~~lenders of the ~~Private Placement Warrants will be redeemable by~~LESPH debt, and Aria was released from its obligations under the ~~Company so long as they are held by~~LESPH debt. A gain on the ~~initial purchasers~~extinguishment of ~~the Private Placement Warrants or their permitted transferees.~~

In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds helddebt in the ~~Trust Account, holders~~amount of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.

~~Note 8—Fair Value Measurements~~

~~The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received~~$61.4 million was recorded in ~~connection~~conjunction with the sale, which accounts for the proceeds received, the debt and interest payable relieved and settlement of LESPH intercompany balances, and Aria recorded an ordinary gain on sale of assets in the ~~assets or paid in connection with the transfer~~amount of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

	~~Level 1:~~	Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

	~~Level 2:~~	Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

	~~Level 3:~~	~~Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.~~

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020, and indicates the fair value hierarchy of the valuation techniques that the Company utilized to determine such fair value:

~~June 30, 2021~~

Description Quoted Prices in Active Markets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Other Unobservable Inputs
(Level 3)
Assets:
Investments held in Trust Account - U.S. Treasury securities $ 237,351,433 $ - $ -

Liabilities:
Derivative warrant liabilities - Public warrants $ 67,616,251 $ - $ -
Derivative warrant liabilities - Private placement warrants $ - $ - $ 71,349,396

~~December 31, 2020~~

Description Quoted Prices in Active Markets
(Level 1) Significant Other Observable Inputs
(Level 2) Significant Other Unobservable Inputs
(Level 3)
Assets:
Investments held in Trust Account - U.S. Treasury securities $ 237,308,171 $ - $ -

Liabilities:
Derivative warrant liabilities - Public warrants $ 27,046,500 $ - $ -
Derivative warrant liabilities - Private placement warrants $ - $ - $ 15,541,987

RICE ACQUISITION CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(AS RESTATED)~~

~~Transfers to/from Levels 1, 2, and 3 are recognized at the beginning of the reporting period. There were no transfers to/from Levels 1, 2, and 3~~$1.3 million during the three and six months ended June 30, 2021.

~~Level 1 assets include investments~~The pre-tax net earnings associated with LESPH included in ~~U.S. treasury securities. The Company uses inputs such as actual trade data, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.~~

~~The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within derivative warrant liabilities on the Company’s condensed~~Aria’s consolidated ~~balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the~~ statement of ~~operations.~~

For periods where no observable traded price is available, the fair value of the Public Warrants was estimated using a Monte Carlo simulation model. For periods subsequent to the detachment of the Public Warrants from the Units, the fair value of the Public Warrants is based on the observable listed price for such warrants. The estimated fair value of the Private Placement Warrants,operations were $69.0 million and the Public Warrants prior to being separately listed and traded, is determined using Level 3 inputs. Inherent in a Monte Carlo simulation are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.

The Warrants are measured at fair value on a recurring basis. The measurement of the Public Warrants as of June 30, 2021 and December 31, 2020 is classified as Level 1 due to the use of an observable market quote in an active market.

~~The key Level 3 fair value measurement inputs into the Black-Scholes model for the Private Placement Warrants as of June 30, 2021 and December 31, 2020 are as follows:~~

June 30,
2021
December 31,
2020

Exercise price $ 11.50 $ 11.50
Stock price $ 18.05 $ 10.83
Volatility 52.0 % 22.7 %
Term (in years) 5.25 5.82
Risk-free rate 0.91 % 0.48 %

~~The change in the fair value of the derivative warrant liabilities, measured using Level 3 inputs,~~$67.1 million for the three and six months ended June 30, 2021, respectively.

NOTE 3 - Equity Method Investments - Predecessor

Aria holds 50% interests in two joint ventures accounted for using the equity method – Mavrix and Sunshine Gas Producers, LLC. Prior to the sale of LESPH in June 2021, Aria also held 50% interests in the following four joint ventures: Riverview Energy Systems, LLC, Adrian Energy Systems, LLC, Salem Energy Systems, LLC, and Salt Lake Energy Systems LLC.

Under the terms of the Mavrix, LLC Contribution Agreement dated September 30, 2017, Aria is ~~summarized~~required to make an earn-out payment to its joint venture partner holding the other 50% membership (in Mavrix) in an amount up to $9.55 million. As defined in the Contribution Agreement, the payment represents additional consideration for Aria’s equity interest in Mavrix, and the earn-out payment will be based on the performance of certain projects owned by Mavrix through the earn-out period which ends September 30, 2022. No earn-out payment is made until after the end of the earn-out period. Aria has estimated the earn-out payment to be $1.7 million at June 30, 2021 and has recorded these amounts in other long-term liabilities in the period.

Summary information on the equity method investments is as follows:


(in thousands)	June 30, 2021
Assets	$	186,521
Liabilities	14,862
Net assets	$	171,659
Aria’s share of equity in net assets	$	85,299

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ARIA ENERGY LLC AND SUBSIDIARIES (Predecessor)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


(in thousands)	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Revenue	$	29,303	$	52,902
Net income	$	13,907	$	25,275
Aria’s share of net income	$	7,469	$	13,325

Derivative warrant liabilities at January 1, 2021 $ 15,541,987
Change in fair value of derivative warrant liabilities (2,284,001 )
Derivative warrant liabilities at March 31, 2021 13,257,986
Change in fair value of derivative warrant liabilities 58,091,410
Derivative warrant liabilities at June 30, 2021 $ 71,349,396

NOTE 4 - Derivative Instruments - Predecessor

~~Level 3~~Aria was exposed to certain risks in the normal course of its business operations. The main risks are those relating to the variability of future earnings and cash flows – e.g., market risks, which are managed through the use of derivative instruments. All derivative financial ~~liabilities consist~~instruments are reported in the consolidated balance sheets at fair value, unless they meet the normal purchase normal sale criteria and are designated and documented as such.

Aria has a natural gas variable to fixed-priced swap agreement which provides for a fixed to variable rate swap calculated monthly, until the termination date of the ~~Private Placement Warrant liability for which there is no current market such that~~contract, June 30, 2023. The agreement was intended to manage the ~~determination of fair value requires significant judgment or estimation.~~risk associated with changing commodity prices. Changes in the fair ~~value measurements categorized within Level 3~~values of natural gas swap are recognized in gain (loss) on derivative contracts and realized losses are recognized as a component of cost of energy expense as summarized in the table below.

Valuation of the ~~fair value hierarchy are analyzed each period~~natural gas swap was calculated by discounting future net cash flows that were based on ~~changes~~a forward price curve for natural gas over the life of the contract (a Level 2 measurement), with an adjustment for each counterparty's credit rate risk.

On April 6, 2020, Aria entered into an interest rate cap with a total notional amount of $110 million and an effective date of April 30, 2020. The cap agreement provides a fixed cap rate of 1.00% per annum related to the one-month LIBOR and has a termination date of May 31, 2022. The market value at June 30, 2021 was valued at zero and all associated fees with this transaction were recorded.


(in thousands)	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Natural gas swap - unrealized gain (loss)	$	446	$	556

NOTE 5 - Benefit Plans - Predecessor

401(k) Plan

Aria maintains a qualified tax deferred 401(k) retirement plan (the “Aria Plan”). Under the provisions of the Aria Plan, substantially all employees meeting minimum age and service requirements are entitled to contribute on a before and after-tax basis a certain percentage of their compensation. Aria matches up to 100% of employees’ first 3% contribution and 50% of the employees’ next 2% contribution. Employees vest immediately in ~~estimates or assumptions~~their contributions and ~~recorded as appropriate.~~

~~Note 9—Subsequent Events~~

Aria’s contribution.

Postretirement Obligations

~~Management has evaluated subsequent events~~

Aria sponsors an unfunded defined benefit health care plan that provides postretirement medical benefits to ~~determine if events or transactions occurring through the date the condensed consolidated financial statements were issued, require potential adjustment to or disclosure~~certain full-time employees who meet minimum age and service requirements.

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ARIA ENERGY LLC AND SUBSIDIARIES (Predecessor)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Net periodic benefit cost recognized in the ~~condensed~~ consolidated ~~financial~~ statements ~~and has concluded that all such events, except~~of comprehensive income was as ~~noted above and as noted in Notes 1, 2, 3, 4 and 5, that would require recognition or disclosure have been recognized or disclosed.~~

follows:


(in thousands)	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Service cost	$	9	$	19
Interest cost	25		45
Amortization of prior service cost	3		6
Recognition of net actuarial loss	16		40
Net periodic benefit cost	$	53	$	110

NOTE 6 - Related Party Transactions - Predecessor

Sales are made to and services are purchased from entities and individuals affiliated through common ownership. Aria provides O&M services and administration and accounting services to their 50% owned joint ventures.

The following is a summary of transactions with these related parties:


(in thousands)	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Sales of construction services	$	—	$	24
Sales of operations and maintenance services	$	351	$	746
Sales of administrative and other services	$	97	$	195

NOTE 7 - Segment Reporting - Predecessor


(in thousands)	RNG		Power		Corporate and Other		Total
Three months ended June 30, 2021
Total revenue	$	28,716	$	12,347	$	—	$	41,063
Net income (loss)	21,823		63,422		(9,195)		76,050
Depreciation, amortization and accretion	2,284		3,325		12		5,621
Interest expense	—		—		4,355		4,355
EBITDA	$	24,107	$	66,747	$	(4,828)	$	86,026

Six Months Ended June 30, 2021
Total Revenue	$	54,669	$	27,931	$	—	$	82,600
Net income (loss)	38,773		64,925		(18,938)		84,760
Depreciation, amortization and accretion	4,559		6,728		27		11,314
Interest expense	—		—		8,676		8,676
EBITDA	$	43,332	$	71,653	$	(10,235)	$	104,750

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~~Item~~

ITEM 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References to the “Company,” “our,” “us” or “we” refer to Rice Acquisition Corp. and its majority-owned and controlled operating subsidiary, Rice Acquisition Holdings LLC (“RAC OpCo”), unless the context indicates otherwise. The following discussion and analysis ~~of the Company’s financial condition and results of operations~~ should be read in conjunction with the ~~unaudited condensed consolidated~~ financial statements and ~~the~~related notes ~~thereto contained~~included elsewhere in this ~~report. Certain information~~Report. This discussion contains forward-looking statements reflecting our current expectations, estimates, and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the ~~discussion~~section entitled “Risk Factors” in Part I, Item 1A in the 2021 Annual Report and ~~analysis~~the sections entitled “Risk Factors” in Part II, Item 1A and “Forward-Looking Statements” appearing elsewhere in this Report.

Overview

Archaea is one of the largest RNG producers in the U.S., with an industry-leading RNG platform primarily focused on capturing and converting waste emissions from landfills and livestock farms into low-carbon RNG and electricity. As of June 30, 2022, the Company owns, through wholly-owned entities or joint ventures, a diversified portfolio of 32 LFG recovery and processing projects across 18 states, including 13 operated projects that produce pipeline-quality RNG and 19 LFG to renewable electricity production facilities.

Archaea develops, designs, constructs, and operates RNG facilities. Archaea, through wholly-owned entities or joint ventures, has entered into long-term agreements with biogas site hosts which give us the rights to utilize gas produced at their sites and to construct and operate facilities on their sites to produce RNG and renewable electricity. Archaea’s development backlog includes 38 cumulative projects as of June 30, 2022 and increased to 88 cumulative projects as of July 31, 2022 primarily due to the Lightning JV and INGENCO transaction, with the total backlog including planned optimizations of certain operating RNG facilities over time and opportunities to build new RNG facilities on sites with existing renewable electricity facilities and on greenfield sites.

Our differentiated commercial strategy is focused on selling the majority of our RNG volumes under long-term, fixed-price contracts to creditworthy partners, including utilities, corporations, and universities, helping these entities reduce greenhouse gas emissions and achieve decarbonization goals while utilizing their existing gas infrastructure. We seek to mitigate our exposure to commodity and Environmental Attribute pricing volatility by selling a majority of our RNG and related Environmental Attributes under long-term fixed price contracts with creditworthy counterparties, which are designed to provide revenue certainty.

Certain long-term off-take contracts were accounted for as operating leases prior to January 1, 2022 and have no minimum lease payments. The rental income under these leases was recorded as revenue when the RNG was delivered to the customer. RNG not covered by off-take contracts is sold under short-term market-based contracts. When the performance obligation is satisfied through the delivery of RNG to the customer, revenue is recognized. We usually receive payments from the sale of RNG production within one month after delivery.

We also earn revenue by selling RINs, which are generated when producing and selling RNG as transportation fuel. These RINs are able to be separated and sold independently from the RNG produced. When the RNG and RIN are sold on a bundled basis under the same contract, revenue is recognized when the RNG is produced and the RNG and associated RINs are transferred to a third party. The remaining RIN sales are under a combination of short-term spot price contracts and forward sold fixed-price contracts independent from RNG sales, and revenue is recognized upon transfer of control to a third-party customer. We also generate and sell LCFS credits at some of our RNG projects through off-take contracts similar to RINs. LCFS is state level program administered by the CARB. LCFS credits are generated as the RNG is sold as vehicle fuel in California.

There is a general lag in the generation and sale of RINs and LCFS credits subsequent to a facility being placed into operation. While each new facility is eligible to register under the federal Renewable Fuel Standard (“RFS”) upon initial production and pipeline injection, Archaea has external parties certify its plants under the EPA’s voluntary Quality Assurance Plan (“QAP”) in order to maximize the value of its D3 RINs. The initial QAP review generally requires evaluation of up to 90 days of operational data prior to achieving Q-RIN status. Once registration is obtained from the EPA and Q-RIN status achieved, Archaea can generate qualified RINs. RINs are generated monthly for the previous month’s production. Quarterly and annual reports are required to maintain RFS registration and Q-RIN status for each facility.

LCFS registration requires a minimum of 90 days operational data for a provisional fuel pathway application. Following

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the application submission, there is a mandatory third-party validation period ranging from three to six months. During this time, LCFS credits can be generated for the facility using a temporary carbon intensity (“CI”) score, which is typically higher than the expected certified CI for our facilities. Following successful fuel pathway validation, the facility is eligible to generate LCFS credits using the new provisional CI score. LCFS credits are generated on a quarterly basis for the previous quarter of production. Credits are then available to be sold. Quarterly and annual reports are required to maintain LCFS registration and certified CI for each facility.

Our Segments

The Company reports segment information in two segments: RNG and Power. Prior to the Business Combinations, the Company managed RNG as its primary business operations, which is to construct and develop biogas facilities on landfill sites for production of RNG. Our Power segment generates revenue by selling renewable electricity and associated Environmental Attributes. We expect our future long-term growth to be driven primarily by additional projects within the RNG segment, and we expect to build new RNG facilities on the majority of our sites with existing LFG to renewable electricity projects over time.

In addition, we hold interests in other entities that are accounted for using the equity method of accounting, including Mavrix, LLC, which owns and operates five separate RNG facilities, and Saturn Renewables, LLC, which owns gas rights at two landfills, both of which are included in the RNG segment, as well as the Sunshine electric project included in the Power segment.

The Business Combinations

On September 15, 2021, RAC completed the Business Combinations to acquire Legacy Archaea and Aria. Following the Closing, RAC changed its name from “Rice Acquisition Corp.” to “Archaea Energy Inc.,” and Rice Acquisitions Holdings LLC was renamed “LFG Acquisition Holdings LLC” (also referred to herein as “Opco”).

The Company and Opco issued 33.4 million Class A Opco Units and 33.4 million shares of Class B Common Stock on the Closing Date to Legacy Archaea Holders to acquire Legacy Archaea. Aria was acquired for total initial consideration of $863.1 million, which was reduced by $1.9 million in March 2022 for the final adjustment under the terms set forth ~~below includes forward-looking statements that involve risks~~in the Aria Merger Agreement. The initial Aria Merger consideration consisted of cash consideration of $377.1 million paid to Aria Holders and ~~uncertainties.~~

~~Overview~~

~~We are a blank check company incorporated~~equity consideration in ~~Delaware on September 1, 2020 for~~ the ~~purpose~~form of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Our sponsor is Rice Acquisition Sponsor LLC, a Delaware limited liability company (“Sponsor”).

~~The registration statement for our initial public offering (“Initial Public Offering”)~~23.0 million Class A Opco Units and 23.0 million shares of Class B Common Stock. In addition, $91.1 million of Aria debt was declared effective on October 21, 2020. On October 26, 2020, we consummated the Initial Public Offering of 23,725,000 units (each, a “Unit” and collectively, the “Units”), including 2,225,000 additional Units that were issued pursuant to the underwriters’ partial exercise of their over-allotment option (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of approximately $237.3 million, and incurring offering costs of approximately $12.5 million, inclusive of $7.6 millionrepaid in ~~deferred underwriting commissions.~~

~~Simultaneously~~connection with the ~~closing~~Aria Merger.

Archaea has retained its “up-C” structure, whereby all of the ~~Initial Public Offering, we consummated~~equity interests in Aria and Legacy Archaea are indirectly held by Opco and Archaea Energy Inc.’s only assets are its equity interests in Opco. Opco is considered a VIE for accounting purposes, and the ~~private placement (“Private Placement”)~~Company, as the sole managing member of ~~6,771,000 warrants (each, a “Private Placement Warrant”~~Opco, is considered the primary beneficiary. As such, the Company consolidates Opco and ~~collectively,~~ the ~~“Private Placement Warrants”) to our Sponsor and Atlas Point Energy Infrastructure Fund, LLC (“Atlas Point Fund”),~~unitholders that hold economic interests directly at ~~a price~~Opco are presented as redeemable noncontrolling interests in the Company’s financial statements.

Holders of ~~$1.00 per Private Placement Warrant, generating gross proceeds of approximately $6.8 million. Each Private Placement Warrant is exercisable to purchase one share of Rice’s~~ Class A ~~common stock or, in~~Opco Units (other than Archaea) have a redemption right, subject to certain ~~circumstances, one~~limitations, to redeem Class A ~~Unit of RAC OpCo together with~~Opco Units (and a corresponding number of shares of ~~Rice’s non-economic~~ Class B ~~common stock.~~

~~Following the Initial Public Offering, our public stockholders hold a direct economic equity ownership interest in Rice in the form of~~Common Stock) for, at Opco’s option, (i) shares of Class A ~~common~~Common Stock on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and ~~an indirect ownership interest~~the like, or (ii) a corresponding amount of cash.

Predecessor and Successor Reporting

Legacy Archaea is considered the accounting acquirer of the Business Combinations for accounting purposes, and the Archaea Merger represents a reverse merger and is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, RAC ~~OpCo through Rice’s ownership~~is treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Archaea Merger is treated as the equivalent of ~~Class A Units~~Legacy Archaea issuing shares for the net assets of RAC, ~~OpCo. By contrast,~~accompanied by a recapitalization.

Legacy Archaea is considered the ~~Initial Stockholders (our Sponsor, Atlas Point Fund~~“Successor.” As such, the consolidated assets, liabilities and ~~our officers and directors) own direct economic interests in RAC OpCo in the form~~results of Class B Units and a corresponding non-economic voting equity interest in Rice in the form of shares of Class B common stock, as well as a small direct interest through the Sponsor Shares (as defined below). Sponsor Shares were purchased for $10.00 each and, in the absence of an initial Business Combination, will generally participate in liquidation or other payments on a pari passu basis with the Public Shares (as defined below). However, given the relatively de minimis number of Sponsor Shares relative to Public Shares, in many cases the economic, governance or other effects of the sponsor shares are not materialoperations prior to the ~~holders~~September 15, 2021 reverse recapitalization are those of ~~Class A common stock or warrants, and for simplicity, portions of this disclosure may not fully describe or reflect these immaterial effects.~~

Upon the closing of the Initial Public Offering and the Private Placement, approximately $237.3 million of the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants in the Private Placement were placed in a trust account (“Trust Account”) located in the United States with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account.

If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or October 26, 2022, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares and Class A Units of RAC OpCo (other than those held by Rice), which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

~~Proposed Business Combination~~

On April 7, 2021, the Company entered into (i) the Business Combination Agreement (as amended, supplemented or otherwise modified from time to time, the “Aria Merger Agreement”), by and among the Company, RAC OpCo, LFG Intermediate Co, LLC, a Delaware limited liability company and direct subsidiary of RAC OpCo (“RAC Intermediate”), LFG Buyer Co, LLC, a Delaware limited liability company and a direct subsidiary of RAC Intermediate (“RAC Buyer”), Inigo Merger Sub, LLC, a Delaware limited liability company and a direct subsidiary of RAC Buyer (“Aria Merger Sub”), Aria Energy LLC, a Delaware limited liability company (“Aria”)Legacy Archaea (the accounting acquirer), and the Equityholder Representative (as defined therein), pursuant to which, among other things, Aria Merger Sub will merge with and into Aria, with Aria surviving the merger and becoming a direct subsidiary of RAC Buyer, and (ii) the Business Combination Agreement, dated as of April 7, 2021 (as amended, supplemented or otherwise modified from time to time, the “Archaea Merger Agreement” and, together with the Aria Merger Agreement, the “Business Combination Agreements”), by and among the Company, RAC OpCo, RAC Intermediate, RAC Buyer, Fezzik Merger Sub, LLC, a Delaware limited liability company and direct subsidiary of RAC Buyer (“Archaea Merger Sub”), Archaea Energy, LLC (“Archaea Seller”), a Delaware limited liability company, and Archaea Energy II, LLC, a Delaware limited liability company (“Archaea” and, together with Archaea Seller and Aria, the “Companies”), pursuant to which, among other things, Archaea Merger Sub will merge with and into Archaea, with Archaea surviving the merger and becoming a direct subsidiary of RAC Buyer, in each case, on the terms and subject to the conditions therein, and certain related agreements, as further described in Note 1 to the condensedCompany’s consolidated financial statements ~~included~~include the assets, liabilities and results of operations of Aria beginning on September 15, 2021.

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The Aria Merger represents a business combination in ~~Item 1~~which Aria was determined to be the acquired company. Due to Aria’s historical operations compared to Legacy Archaea and the relative fair values, Aria was determined to be the “Predecessor.” Aria’s consolidated statements of ~~this Quarterly Report on Form 10-Q.~~

~~Results~~operations and consolidated statements of ~~Operations~~

~~Our entire activity~~comprehensive income for the three and six months ended June 30, 2021 ~~has been related to identifying a target company~~and Aria’s consolidated statement of cash flows for our initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our initial Business Combination. We will generate non-operating income in the form of interest income from the proceeds from the IPO. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the three months ended June 30, 2021, we had a loss of approximately $131.8 million, which consisted of approximately $125.6 million of change in fair value of warrant liabilities, approximately $6.2 million of general and administrative expenses, approximately $34,000 of franchise tax expense, partially offset by approximately $6,000 in interest earned on investments held in Trust Account.

~~For~~ the six months ended June 30, 2021 have been included in “Financial Statements” in Part 1, Item 1 of this Report to enhance comparability for readers.

Factors Affecting the Comparability of Our Financial Results

Our results of operations will not be comparable to our Successor or our Predecessor’s historical results of operations for the reasons described below:

•The Company’s results of operations and financial position may not be comparable to Legacy Archaea’s or Aria’s historical results as a result of the Business Combinations and the Company’s ongoing development activities. Our results prior to the closing of the Business Combinations on September 15, 2021 only include Legacy Archaea, the accounting acquirer, whereas our results beginning on September 15, 2021 include the combined operations of Legacy Archaea and Aria as managed by the Company. In addition, both Legacy Archaea and Aria have experienced significant growth and expansion over the last two years, and the Company expects to continue to grow significantly through organic growth projects and acquisitions, including the INGENCO acquisition and the Lightning JV. In addition to significant growth and expansion in operations, the Company has raised a significant amount of capital through financing transactions to fund a portion of that growth, which may also impact the comparability of our historical results to our future results.

•As a result of the Business Combinations, and subsequent acquisitions, joint ventures and other transactions, the Company has hired and will need to hire additional personnel and implement procedures and processes to address expanded facilities, as well as public company regulatory requirements and customary practices. The Company expects to incur additional annual expenses as a public company that Legacy Archaea and Aria did not historically incur for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.

•As a corporation, the Company is subject to U.S. federal income and applicable state taxes to the extent it generates positive taxable income. Legacy Archaea and Aria and their subsidiaries (with the exception of one partially-owned subsidiary which filed income tax returns as a C corporation) are and were generally not subject to U.S. federal income tax at an entity level. Accordingly, the net income in Legacy Archaea and Aria’s historical financial statements does not reflect the full tax expense the Company would have incurred if it were subject to U.S. federal income tax at an entity level during such periods.

Recent Events

Operational Highlights

Below are key recent development and operational events:

▪Formed the landmark Lightning JV with Republic to jointly invest approximately $1.1 billion to develop a total of 40 RNG projects across the U.S. that will be located at various landfill sites owned or operated by Republic. Initial funding occurred in July 2022 as discussed in “Note 4 - Business Combinations and Reverse Recapitalization” in this Report.

▪During the second quarter of 2022, the Company signed several new bundled RNG sales contracts for RNG and its associated Environmental Attributes, including a long-term fixed-price RNG agreement with Energir L.P (“Energir”) and a medium-term fixed-price RNG agreement with UGI Utilities, Inc. (“UGI”). The agreement with Energir is for the sale of 2.15 gigajoules (approximately 2.04 million MMBtus) annually for a period of 20 years beginning approximately October 2023 and is subject to Quebec regulatory approval. The agreement with UGI is for the sale of 331,785 MMBtus annually for a period of 5 years beginning July 1, 2022.

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▪Completed initial optimization work at five legacy Aria facilities, with a focus on CO2 separation systems and nitrogen rejection unit upgrades, which are essential components of the Company’s V1 plant design, translating into improved operational performance at these existing RNG facilities. On average, methane recovery increased almost 10% upon completion of the initial optimization projects and is expected to further increase after completing the remaining optimization work at these and other legacy sites within the Company’s portfolio.

▪Produced first pipeline-quality RNG and achieved commercial operations at the Costa View dairy digester facility in May 2022, successfully completing the second of four dairy projects within the Company’s 50%-owned Mavrix joint venture with BP Products North America Inc.

Term Loan and Revolver Amendment

On June 30, 2022, the Company amended its Revolving Credit and Term Loan Agreement to, among other things, increase its total commitment by approximately $630 million to a total of $1.1 billion and provide for a $400 million Term Loan and a $700 million Revolver. See “Note 10 - Debt” in this Report for additional information on the Revolver and the Term Loan.

INGENCO Acquisition

On April 26, 2022, a wholly owned subsidiary of the Company, Archaea Infrastructure, LLC, entered into a definitive purchase and sale agreement (the “INGENCO Purchase Agreement”) to purchase INGENCO, which owned 14 LFG to renewable electricity facilities. The consideration paid upon the July 2022 closing of the transaction was $230.5 million and was funded with cash on hand and borrowings under the Term Loan and Revolver. The acquisition includes gas rights for the 14 LFG to energy sites, which have a number of existing long-term agreements in place.

Lightning JV Formation

On May 5, 2022, the Company and Republic announced the formation of the Lightning JV to develop 39 RNG projects across the U.S. that will be located at various landfill sites owned or operated by Republic. The joint venture will develop and construct RNG facilities that will convert LFG into pipeline-quality RNG that can be used for a variety of applications.

Pursuant to the terms of the contribution agreement, dated May 4, 2022, a wholly owned subsidiary of the Company, Zeus Renewables LLC (“Zeus”), and a wholly owned subsidiary of Republic, Republic Services Renewable Energy, LLC (“Investco”), will contribute approximately $780 million and $300 million, respectively, over approximately five years to six years in exchange for newly issued limited liability company interests of the Lightning JV (the “Lightning JV Membership Interests”), with Zeus and Investco holding 60% and 40%, respectively, of the outstanding Lightning JV Membership Interests. In July 2022, the Company made its initial capital contribution of $222.5 million to the Lightning JV, which was funded with borrowings under the Revolver. Concurrent with the funding, the Lightning JV paid $37.9 million to acquire an additional site (“Fort Wayne”) located in Fort Wayne, Indiana. The purchase of Fort Wayne includes the landfill gas rights to a Republic-owned landfill site and a medium-BTU facility.

Cash on hand from operations of the Lightning JV (less certain customary reserves) will be distributed quarterly to Zeus and Investco, as the members, in accordance with their membership percentages, and no later than 10 days following the final commercial operations date of all approved LFG projects (excluding any subsequently abandoned), the Lightning JV will distribute all unused capital contributions to Zeus and Investco in proportion to their capital contributions.

The Lightning JV, Investco and Archaea Operating LLC, a wholly owned subsidiary of the Company, have entered into certain other arrangements relating to the Lightning JV that govern, among other things, the grant by Republic of landfill gas rights and real property rights at 40 of Republic’s landfills to the Lightning JV, the process and timeline for development at those landfills by the Lightning JV, the production and sale of RNG and related Environmental Attributes by the Lightning JV, the payment of royalties to Republic and, in exchange for a fee to be paid to Archaea Operating LLC, engineering, procurement, construction management services and O&M services to be provided to the Lightning JV.

Key Factors Affecting Operating Results

The Company’s business strategy includes growth primarily through the upgrade and expansion of existing RNG production facilities, building new RNG production facilities at sites of our existing LFG to renewable electricity production facilities, development and construction of greenfield RNG development projects for which we ~~had~~already have

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gas development agreements in place, and the procurement of LFG rights and LFG to renewable electricity production facilities to develop additional RNG projects. We are also evaluating other potential sources of biogas and exploring the development of wells for carbon sequestration, the use of on-site solar-generated electricity to meet energy needs for RNG production, and the use of RNG as a ~~loss~~feedstock for low-carbon hydrogen.

The Company’s performance and future success depend on several factors that present significant opportunities but also pose risks and challenges. For information regarding the key factors affecting our performance and future success, see “Key Factors Affecting Operating Performance” within “Management’s Discussion and Analysis of ~~approximately $123.0 million,~~Financial Condition and Results of Operations” in Part II, Item 7 of the 2021 Annual Report. In addition to those discussed in Part I, Item 1A. “Risk Factors” of the 2021 Annual Report, these factors include: the demand for RNG, renewable electricity and Environmental Attributes;electricity prices and the costs of raw materials and labor; the regulatory landscape, which ~~consisted~~affects demand for our products by providing market participants with incentives to purchase RNG, renewable electricity and Environmental Attributes and which may also affect our development or operating costs; and seasonality.

Results of ~~approximately $113.8 million~~Operations

Key Metrics

Management regularly reviews a number of ~~change~~operating metrics and financial measurements to evaluate our performance, measure our growth and make strategic decisions. In addition to traditional GAAP performance and liquidity measures, such as revenue, cost of sales, net income and cash provided by operating activities, we also consider MMBtu of RNG and MWh of electricity sold and Adjusted EBITDA in ~~fair value~~evaluating our operating performance. Each of ~~warrant liabilities, approximately $9.2 million~~these metrics is discussed below under “Comparison of the Three and Six Months Ended June 30, 2022 and 2021.”

Key Components of Results of Operations

See “Key Components of Results of Operations” within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the 2021 Annual Report for information regarding the key components of our results of operations, which are revenue, cost of sales, general and administrative expenses ~~approximately $74,000~~and equity earnings.

Comparison of ~~franchise tax expense, partially~~the Three and Six Months Ended June 30, 2022 and 2021

The following discussion pertains to the results of operations, financial condition, and changes in financial condition of the Successor. Legacy Archaea (the Successor) did not have operational RNG and Power assets until commercial RNG and Power operations commenced in the fiscal quarter ended June 30, 2021 and did not have significant revenues from operations until the acquisition of Aria. A majority of the Company’s revenues prior to March 31, 2021 were comprised of sales of customized pollution control equipment and maintenance agreement services. As such, to provide more meaningful comparisons, the following discussion also compares certain of the Company’s operating results for the three and six months ended June 30, 2022 to the combined operating results of Legacy Archaea and Aria for the three and six months ended June 30, 2021.Such combined information (which is referred to in this Report as “on a combined basis”) is the sum of the historical financial results of Legacy Archaea and Aria and does not include the impact of purchase accounting.

In this section, any increases or decreases “for the three and six months ended June 30, 2022” refer to the comparison of the three and six months ended June 30, 2022, to the three and six months ended June 30, 2021.

As noted above, Legacy Archaea did not have significant revenues from operations until the the acquisition of Aria. As such, any segment comparison would not be informative and has not been included for comparison purposes.

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Volumes Sold


	Three Months Ended June 30,			Six Months Ended June 30,
	2022	2021	Change	2022	2021	Change
RNG Sold (MMBtu)(1)(2)	1,755,145	47,592	1,707,553	3,016,500	47,667	2,968,833
Electricity Sold (MWh)(1)(2)	142,977	47,847	95,130	290,404	47,847	242,557

(1) Volumes sold represent the consolidated Successor volumes only (excluding volumes sold by the Company’s equity method investments). On a combined basis, during the three and six months ended June 30, 2021, the Company sold 1,137,988 MMBtu and 2,152,379 MMBtu of RNG, respectively, and 146,772 MWh and 251,296 MWh of electricity, respectively.

(2) Volumes sold exclude the Company’s equity method investments’ net volumes sold during the three and six months ended June 30, 2022 of 282,620 MMBtu and 561,297 MMBtu of RNG, respectively, and 15,826 MWh and 33,979 MWh of electricity, respectively.

Volumes increased for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021 on consolidated basis due to the acquisition of Aria, commencement of commercial operations in April 2021 at our Boyd County RNG facility, the purchase of the PEI Power assets in April 2021, the acquisition of additional LFG to renewable electricity facilities, and the commencement of commercial operations at our Assai facility, offset by ~~approximately $43,000~~downtime at certain facilities related to winter weather in ~~interest earned~~the first quarter of 2022. The increase on ~~investments held in Trust Account.~~

a combined basis occurred due to the same factors discussed above, excluding the acquisition of Aria.

~~Liquidity and Capital Resources~~

As of June 30, ~~2021,~~2022, we had 3.0 million RINs generated by June production that were committed and settled in July 2022 under short-term forward RIN sales contracts at a weighted-average price of $3.15. The related revenues and associated royalty expenses will be recognized in the third quarter of 2022.

Set forth below is a summary of selected financial information for the three and six months ended June 30, 2022 and 2021:


	Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2022		2021		$ Change		2022		2021		$ Change
Revenues and other income	$	77,219	$	5,127	$	72,092	$	134,116	$	6,781	$	127,335
Costs of sales	62,746		5,233		57,513		105,437		6,443		98,994
Equity investment income (loss)	2,693		—		2,693		4,122		—		4,122
General and administrative expenses	18,883		7,884		10,999		45,236		11,042		34,194
Operating income (loss)	(1,717)		(7,990)		6,273		(12,435)		(10,704)		(1,731)
Other income (expense), net	34,470		60		34,410		12,016		275		11,741
Net income (loss)	$	32,624	$	(7,930)	$	40,554	$	(548)	$	(10,429)	$	9,881

Revenues and Other Income

Revenues and other income were approximately ~~$5,000~~$77.2 million and $134.1 million for the three and six months ended June 30, 2022, respectively, as compared to $5.1 million and $6.8 million for the three and six months ended June 30, 2021, respectively, an increase of $72.1 million and $127.3 million, respectively. The increased revenues are primarily attributable to the acquisition of Aria resulting in a $48.1 million and $91.7 million increase for the three and six months ended June 30, 2022, respectively, the strong market pricing of Environmental Attributes, natural gas and electricity, and the commencement of commercial operations at our ~~operating bank account~~Assai RNG facility, and other acquisitions made in late 2021, partially offset by downtime at certain facilities related to winter weather in the first quarter of 2022.

Revenues and other income increased on a ~~working capital deficiency~~combined basis for the three and six months ended June 30, 2022 as compared to revenue and other income for the three and six months ended June 30, 2021 primarily due to the strong market pricing of ~~approximately $7.6 million.~~

~~Our liquidity needs~~Environmental Attributes natural gas and electricity, the commencement of commercial operations at our Assai RNG facility, and other acquisitions made in late 2021, partially offset by downtime at certain facilities related to ~~date had been satisfied through~~winter weather in the ~~payment~~first quarter of ~~$26,000 from~~2022.

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Cost of Sales

Costs of sales increased by $57.5 million and $99.0 million for the three and six months ended June 30, 2022, respectively, as compared to $5.2 million and $6.4 million for the three and six months ended June 30, 2021, respectively, primarily due to the acquisition of Aria resulting in increases of $36.3 million and $70.0 million for the three and six months ended June 30, 2022, respectively, the commencement of commercial operations at our ~~Sponsor~~Assai RNG facility, additional royalty and marketing expenses, and increased utility and gas costs.

Costs of sales on a combined basis increased for three and six months ended June 30, 2022 as compared to the three and six months ended June 30, 2021 primarily due to operational costs at our Assai RNG facility following the commencement of operations, higher utility prices, as well as increased depreciation and amortization expense as a result of those operations and the step-up in value of the Aria assets due to purchase accounting.

General and Administrative Expenses

General and administrative expenses were $18.9 million and $45.2 million for the ~~Founder Shares~~three and ~~Sponsor Shares,~~six months ended June 30, 2022, respectively, an increase of $11.0 million and $34.2 million compared to the three and six months ended June 30, 2021, respectively. The increase is primarily due to higher employee costs, including share-based compensation expenses, associated with higher headcount and contractors and consultants costs as our business has expanded and we became a ~~loan under a note agreement~~public company. Additionally, expenses for the three months ended June 30, 2022 include $3.6 million for non-recurring legal and professional fees and other non-recurring costs primarily associated with ~~our Sponsor~~the formation of ~~approximately $290,000 (the “Note”),~~the Lightning JV and the ~~net proceeds from~~acquisition of INGENCO, and expenses for the ~~consummation~~six months ended June 30, 2022 include $8.9 million in severance related costs, including accelerated share-based compensation expense, and $6.0 million related to non-recurring legal and professional fees associated with the executive transition, the Ares Secondary Offering, the formation of the Lightning JV, and the acquisition of INGENCO.

Other Income (Expense)

Other income was $34.5 million and $12.0 million for the three and six months ended June 30, 2022, respectively, as compared to other income of $0.1 million and $0.3 million for the three and six months ended June 30, 2021, respectively, primarily due to the decrease in fair value on the Private Placement Warrant liabilities resulting in gains of $37.0 million and $13.0 million for the three and six months ended June 30, 2022, respectively, compared with no Private Placement Warrants outstanding during the three and six months ended June 30, 2021, and gains in fair value on the interest rate swap of $1.0 million and $4.6 million for the three and six months ended June 30, 2022, respectively, offset in part by the increase in interest expense of $3.7 million and $6.3 million for the three and six months ended June 30, 2022, respectively.

Adjusted EBITDA

Adjusted EBITDA is calculated by taking net income (loss) before taxes, interest expense, and depreciation, amortization and accretion, and adjusting for the effects of certain non-cash items, other non-operating income or expense items, and other items not ~~held~~otherwise predictive or indicative of ongoing operating performance, including net derivatives activity, certain acquisition and other transaction expenses, severance expenses, non-cash share-based compensation expense and Settled RIN adjustment (as defined below). We believe the exclusion of these items enables investors and other users of our financial information to assess our sequential and quarter-over-quarter performance and operating trends on a more comparable basis and is consistent with management’s own evaluation of performance.

Under GAAP, the timing of revenue recognition for stand-alone RIN sales contracts is tied to the delivery of the RINs to our counterparty and not the production of the RINs. The Company had approximately 3.0 million RINs generated by June 2022 RNG production that were delivered under forward RIN sale agreements in July 2022 at a weighted-average price of $3.15. To reflect this and match the RIN revenue to the month of production, Adjusted EBITDA for both the three and six months ended June 30, 2022 includes a $7.0 million add-back (“Settled RIN adjustment”), which represents the net cash value (proceeds minus expenses) of this settled, forward sold RIN transaction. The related revenues and associated royalty expenses will be recognized in the ~~Trust Account.~~third quarter of 2022. The ~~Note was paid~~Company anticipates the quarterly financial impact of these monetization timing delays to be mitigated over time as it continues to bring additional RNG facilities online and enter into new contracts.

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Adjusted EBITDA also includes adjustments for equity method investment basis difference amortization and the depreciation and amortization expense included in ~~full~~our equity earnings from our equity method investments. These adjustments should not be understood to imply that we have control over the related operations and resulting revenues and expenses of our equity method investments. We do not control our equity method investments; therefore, we do not control the earnings or cash flows of such equity method investments. The use of Adjusted EBITDA, including adjustments related to equity method investments, as an analytical tool should be limited accordingly.

Adjusted EBITDA is commonly used as a supplemental financial measure by our management and external users of ~~November 10, 2020. In addition,~~our consolidated financial statements to assess the financial performance of our assets without regard to financing methods, capital structures, or historical cost basis. Adjusted EBITDA is not intended to represent cash flows from operations or net income (loss) as defined by GAAP and is not necessarily comparable to similarly titled measures reported by other companies.

We believe Adjusted EBITDA provides relevant and useful information to management, investors, and other users of our financial information in ~~order~~evaluating the effectiveness of our operating performance in a manner that is consistent with management’s evaluation of financial and operating performance.

The table below sets forth the reconciliation of Net income (loss) to ~~finance~~Adjusted EBITDA:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Net income (loss)	$	32,624	$	(7,930)	$	(548)	$	(10,429)
Adjustments
Interest expense	3,712		13		6,366		19
Depreciation, amortization and accretion	13,730		886		26,219		935
Income tax expense	129		—		129		—
EBITDA	$	50,195	$	(7,031)	$	32,166	$	(9,475)
Net derivative activity	(38,095)		—		(18,180)		—
Amortization of intangibles and below-market contracts	(1,103)		—		(2,206)		—
Amortization of equity method investments basis difference	2,571		—		5,141		—
Depreciation and amortization adjustments for equity method investments	1,579		—		3,173		—
Income tax expense for equity method investments	151		—		1,693		—
Share-based compensation expense	3,170		146		8,923		178
Acquisition and other transaction costs and severance costs (1)	4,621		—		12,956		—

Settled RIN adjustment (2)	7,006		—		7,006		—
Adjusted EBITDA	$	30,095	$	(6,885)	$	50,672	$	(9,297)

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(1) Other transaction costs include expenses related to certain joint ventures, R&D expenses, and the Ares Secondary Offering.

(2) Adjustment for gross profit on RINs generated from June gas production which will be recognized in ~~connection~~the Company’s third quarter 2022 consolidated statement of operations.

Liquidity and Capital Resources

Sources and Uses of Funds

The Company’s primary uses of cash have been to fund construction of RNG facilities and acquisitions of complementary businesses and assets and LFG rights. The Company is expected to primarily finance its project development activities with cash on hand, cash expected to be generated from operations and available funding under the Revolver. The amount and timing of the future funding requirements will depend on many factors, including the pace and results of our acquisitions and project development efforts. As discussed in “Recent Events,” the Company has significantly expanded and accelerated the pace of developing its project backlog. The Company is in the process of optimizing the pace and timing of its long-term project development backlog as a ~~Business Combination, our officers, directors~~result of recent additions to its backlog related to the Lightning JV and ~~Sponsor may, but are not obligated~~the

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acquisition of INGENCO. Capital expenditures guidance for 2022 (excluding acquisition costs) has increased to a range of $325 million to $365 million, to begin development on recent additions to the Company’s development backlog.

During the three months ended June 30, 2022, we borrowed a total of $50.0 million under the Revolver to provide ~~us working~~funding for ongoing operations and capital ~~loans.~~expenditures. As of June 30, 2022, we had the cash balance described in the paragraph below and approximately $580.5 million of outstanding indebtedness, including $400.0 million of outstanding borrowings under the Term Loan and $130.5 million outstanding on our Assai Notes (as defined below). We also had $626.2 million of available borrowing capacity under the Revolver as of June 30, 2022. On July 5, 2022 and July 14, 2022, we borrowed $220.0 million and $75.0 million, respectively, under the Revolver. Following these borrowings, available borrowing capacity under the Revolver was approximately $331.2 million. We expect the Revolver along with the Company’s other existing sources of liquidity will be sufficient to fund the Company’s development capital needs for the foreseeable future, including capital expenditures related to the Lightning JV, projects related to INGENCO, and core development projects, thereby eliminating the need for additional external capital in the near-term based on the Company’s current development plans and backlog.

Further accelerating our growth plans may require additional cash requirements, which would likely be funded with additional debt or equity issuances. We may, to the extent market conditions are favorable, incur additional debt or issue equity securities to, among other things, finance future acquisitions of businesses, assets, or biogas rights, fund development of projects in our backlog, respond to competition, or for general corporate purposes. The Company cannot predict with certainty the timing, amount and terms of any future issuances of any such securities or whether they occur at all.

Cash

As of June 30, 2022, the Company had $213.3 million of unrestricted cash and cash equivalents, which is expected to provide ample liquidity to fund our current operations and a portion of our near-term development projects. As of June 30, 2022, we also had $21.9 million of restricted cash for permitted payments and required reserves related to the Assai RNG facility, including future principal and interest payments for the Assai Notes. During the three months ended June 30, 2022, the Company received a total of $9.3 million in distributions from restricted cash.

Term Loan and Revolver

On June 30, 2022, the Company amended its Revolving Credit and Term Loan Agreement which included a Revolver with an initial commitment of $250 million and a Term Loan with an initial commitment of $220 million. The amendment, among other things, increased the aggregate total commitment from the original syndicate of lenders plus two additional lenders by approximately $630 million to a total of $1.1 billion and provides for a $400 million Term Loan and a $700 million Revolver. In addition, on June 1, 2022, the benchmark interest rate was revised to SOFR plus 2.75% for the Revolver and SOFR plus 3.25% for the Term Loan. The maturity date of the Revolver and Term Loan remains unchanged at September 15, 2026.

As of June 30, 2022, the Company has outstanding borrowings under the Term Loan of $400.0 million at an effective interest rate of 4.89% and has drawn down a total of $50.0 million under the Revolver. As of June 30, 2022, the Company had issued letters of credit under the Credit Facilities of $23.8 million, and thus reducing the borrowing capacity of the Revolver to $626.2 million. Under the Company’s updated 2022 capital expenditure budget, we expect to utilize a portion of available capacity under the Revolver to fund our near-term development projects.

In July 2022, the Company drew an additional $295.0 million under the Revolver and used these proceeds along with incremental Term Loan proceeds from the June 30, 2022 amendment to fund its initial capital contribution in the Lightning JV and the acquisition of INGENCO.

See “Note 10 - Debt” in this Report for additional information on the Revolver and the Term Loan.

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Assai Energy 3.75% and 4.47% Senior Secured Notes

On January 15, 2021, ~~there were no amounts outstanding under any~~Assai entered into a senior secured note purchase agreement with certain investors for the purchase of $72.5 million in principal amount of 3.75% Senior Secured Notes (the “3.75% Notes”). Interest on the 3.75% Notes is payable quarterly in arrears on each payment date and the 3.75% Notes mature on September 30, 2031. On April 5, 2021, Assai entered into an additional senior secured note purchase agreement with certain investors for the purchase of $60.8 million in principal amount of its 4.47% Senior Secured Notes (the “4.47% Notes” and, together with the 3.75% Notes, the “Assai Notes”). Interest is payable quarterly in arrears on each payment date, and the 4.47% Notes mature on September 30, 2041.

Summarized Cash Flows for the Six Months Ended June 30, 2022 and 2021:


	Six Months Ended June 30,
(in thousands)	2022		2021
Cash provided by (used in) operating activities	$	56,692	$	(7,510)
Cash used in investing activities	$	(133,631)	$	(88,136)
Cash provided by financing activities	$	219,052	$	130,453
Net increase in cash, cash equivalents and restricted cash	$	142,113	$	34,807

Cash Provided by (Used in) Operating Activities

The Company generates cash from revenues and uses cash in its operating activities and for general and administrative expenses.

Total cash provided by operating activities increased by $64.2 million for the six months ended June 30, 2022, which was primarily related to higher revenues, offset in part by higher cost of energy associated with the increased level of operations and higher general and administrative expenses due to increases in employee costs as we continue to build our business. Changes in other working capital ~~loans.~~

~~Based on~~accounts were approximately $36.4 million and related to the ~~foregoing, management believes that we will have sufficient working capital~~timing of revenue receipts and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds held outside of the Trust Account for paying existingincreases in accounts payable and ~~structuring, negotiating~~accrued liability balances.

Cash Used in Investing Activities

We continue to have significant cash outflows for investing activities as we expand our business, make acquisitions, and ~~consummating~~develop projects. Total cash used in investing activities was $133.6 million for the ~~Business Combination.~~

~~Contractual Obligations~~

six months ended June 30, 2022. We ~~do not have any~~spent $127.9 million on development activities and $7.0 million, net of cash acquired, primarily related to the acquisition of landfill gas right assets. Development activities in the six months ended June 30, 2022 are related to supply chain purchases, deposits on long-lead items, and construction and optimization at our various plants, including additional costs at Assai. We also made contributions to equity method investments totaling $8.0 million and received return of investment in equity method investments of $7.4 million.

Cash used in investing activities of $88.1 million for the six months ended June 30, 2021 was primarily attributable to the acquisition of PEI Power LLC, acquiring biogas rights, and construction at the Assai and Boyd County production facilities.

Cash Provided by Financing Activities

Cash used provided by financing activities for the six months ended June 30, 2022 is primarily attributable additional funding under the Term Loan and Revolver of $225.3 million, net of issuance costs, offset by scheduled repayments of long-term debt ~~obligations, capital lease obligations, operating lease obligations,~~and payment of contingent consideration related to the Boyd County acquisition resulting in net cash payments of $4.5 million.

Cash provided by financing activities of $130.5 million for the six months ended June 30, 2021 was comprised primarily of proceeds from issuance of the Assai Notes and borrowings under the Company’s line of credit agreement.

Material Cash Requirements

The Company has various long-term contractual commitments pertaining to certain of its biogas rights agreements that

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include annual minimum royalty and landfill gas rights payments. Annual minimum royalty and landfill gas rights payments generally begin when production commences and continue through the period of operations. As of June 30, 2022, the expected annual minimum royalty and landfill gas rights payments are approximately $8.0 million, and the annual commitment will increase as production commences from new facilities under development with biogas rights agreements that include minimum payment terms.

The Company has purchase ~~obligations or long-term liabilities.~~

commitments related to construction services and equipment purchases for the development and upgrade of facilities of $274.1 million as of June 30, 2022, with expected cash payments of $161.9 million in the remainder of 2022 and $112.2 million in 2023 and beyond.

On ~~October 21, 2020, we entered into an Administrative Services Agreement pursuant to which we~~May 5, 2022, the Company and Republic announced the formation of the Lightning JV. The Company and Republic have agreed to ~~cause RAC OpCo~~contribute to ~~pay~~ the ~~Sponsor a total~~Lightning JV approximately $780 million and $300 million, respectively, over approximately five to six years. The Company made its initial capital contribution of ~~$10,000 per month for office space, utilities~~$222.5 million on July 5, 2022. Contributions to the Lightning JV are subject to annual budget approval by the Lightning JV’s board of directors and ~~administrative support. Upon~~are further subject to adjustment based on actual amounts spent by the Lightning JV through the completion of ~~the Initial Business Combination or our liquidation, the agreement will terminate.~~

development of RNG projects.

Critical Accounting Policies and Estimates

The ~~underwriters~~preparation of the Initial Public Offering were entitled to underwriting discounts and commissions of 5.5%, of which 2.0% (approximately $4.3 million) was paid at the closing of the Initial Public Offering and 3.5% (approximately $7.6 million) was deferred. The deferred underwriting discounts and commissions will become payable to the underwriters upon the consummation of the Initial Business Combination and will be paid from the amounts held in the Trust Account. The underwriters are not entitled to any interest accrued on the deferred underwriting discounts and commissions.

~~Critical Accounting Policies~~

~~This management’s discussion and analysis of our~~Company’s financial ~~condition and results of operations is based on our unaudited condensed consolidated financial~~ statements ~~which have been prepared~~ in accordance with ~~United States generally accepted accounting principles. The preparation of these condensed consolidated financial statements~~GAAP requires us to make estimates and judgments that affect the reported ~~amounts~~amount of assets, liabilities, revenues and expenses and ~~the~~related disclosure of contingent assets and ~~liabilities~~liabilities. The estimates and assumptions used in our ~~condensed consolidated~~financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. ~~On an ongoing basis, we~~We evaluate our estimates ~~and judgments, including those related to fair value of financial instruments and accrued expenses. We base our~~on an ongoing basis. Because these estimates can vary depending on ~~historical experience, known trends and events and various other factors that we believe to be reasonable under~~ the ~~circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual~~situation, actual results may differ from ~~these~~the estimates ~~under different~~and assumptions used in preparing the financial statements.

The Company considers critical accounting estimates to be those that involve a significant level of estimation uncertainty and have had or ~~conditions. There~~are reasonably likely to have a material impact on the Company’s financial condition or results of operations. See “Significant Accounting Policies - Critical Accounting Policies and Estimates” included within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the 2021 Annual Report for a discussion of our critical accounting estimates; there have been no ~~significant~~material changes ~~in our~~to the Company’s critical accounting ~~policies~~estimates as ~~discussed in~~disclosed therein.

Recent Accounting Pronouncements

For a description of the Company’s ~~Amendment No. 1 to Annual Report on Form 10-K/A for the year ended December 31, 2020 as filed with the SEC on May 13, 2021.~~

recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see “Note 3 - Recently Issued and Adopted Accounting Standards” in this Report.

Inflation

~~Recent Accounting Pronouncements~~

In August 2020, the FASB issued Accounting Standard Update (the “ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. The Company ~~early adopted the ASU on January 1, 2021. Adoption of the ASU did~~does not ~~impact the Company’s financial position, results of operations or cash flows.~~

~~Off-Balance Sheet Arrangements~~

~~As of June 30, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

~~JOBS Act~~

~~The Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) contains provisions~~believe that among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and asinflation had a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, the condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company,” we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation reportmaterial impact on our ~~system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of~~business, revenues or operating results during the ~~compensation disclosure that may~~periods presented. If inflationary trends continue, our business and operating results could be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.

adversely affected.

~~Item~~

ITEM 3. ~~Quantitative and Qualitative Disclosures About Market Risk~~

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~We are~~As a smaller reporting company, ~~as defined by Rule 12b-2 of the Exchange Act and~~we are not required to provide the information ~~otherwise~~ required ~~under~~by this ~~item.~~

Item. However, we note that we are exposed to market risks in the ordinary course of our business. Market risk is the potential loss that may result from market changes associated with our power generation or with an existing or forecasted financial or commodity transaction. These risks primarily consist of commodity price risk, specifically electricity and RNG, counterparty credit risk and interest rate risk. See “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A in the 2021 Annual Report on Form 10-K for more information. Our exposure to market risk has not materially changed since December 31, 2021.

~~Item~~

ITEM 4. ~~Controls and Procedures~~

CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our management, including our ~~principal executive officer~~Chief Executive Officer and ~~principal financial officer,~~Chief

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Financial Officer, we ~~conducted an evaluation of~~evaluated the effectiveness of our disclosure controls and procedures ~~as of the end of the fiscal quarter ended June 30, 2021, as such term is~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ~~Act.~~Act) as of June 30, 2022. Based ~~on this~~upon that evaluation, our ~~principal executive officer~~Chief Executive Officer and ~~principal financial officer have~~Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of ~~June 30, 2021, because~~the end of athe period covered by this Report based on the material weakness in our internal control over financial ~~reporting.~~reporting described below.

Previously Reported Material Weakness

The material weakness resulted from an ineffective risk assessment process, which led to improperly designed controls over the Company’s financial statement close process. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. ~~Specifically, the Company’s management has~~Management concluded that ~~our~~this deficiency in internal control ~~around~~over financial reporting related to an inadequate understanding of the ~~interpretation and accounting for~~impact of consolidation entries by certain ~~complex equity and equity-linked instruments issued by~~individuals. This failure led to a duplicate entry that constituted a material weakness as defined in the ~~Company, and presentation of earnings per share was not effectively designed or maintained.~~SEC regulations. This material weakness resulted in the misstatement of general and administrative expenses and accounts payable - trade and in the restatement of the ~~Company’s balance sheet as of October 26, 2020, its annual~~unaudited consolidated financial statements for the interim period ended ~~December 31, 2020 and its interim financial statements for the quarters ended March 31, 2021 and June~~September 30, 2021. Additionally, this material weakness could result in a misstatement of the carrying value of equity, equity-linked instruments and related accounts and disclosures, and presentation of earnings per share that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis. As a result, our management

We performed additional analysis ~~as deemed necessary~~and procedures with respect to ~~ensure~~accounts impacted by the material weakness in order to conclude that our consolidated financial statements ~~were prepared in accordance with accounting principles generally accepted in the United States of America. Accordingly, management believes that the financial statements included~~ in this ~~Amendment No. 1 on Form 10-Q/A present~~Report, and for the three and six months ended June 30, 2022 and 2021, are fairly presented, in all material respects, in accordance with GAAP.

Under “Changes to Internal Controls” below, we describe our remediation plan to address the identified material weakness.

Changes to Internal Controls

The design and implementation of internal controls over financial ~~position, results of operations and cash flows~~reporting for the ~~periods presented. Management understands that the accounting standards applicable to our financial statements are complex~~Company’s post-Business Combinations has required and has since the inception of the Company benefited from the support of experienced third-party professionals with whom management has regularly consulted with respect to accounting issues. Management intends towill continue to ~~further consult with such professionals in connection with accounting matters.~~

~~Changes in Internal Control over Financial Reporting~~

~~There was no change in~~require significant time and resources from management and other personnel. The changes to our internal control over financial reporting ~~that occurred~~commenced during the ~~fiscal quarter ended June 30, 2021 that has~~period covered by this Report and after will materially ~~affected,~~affect, or isare reasonably likely to materially affect, our internal control over financial reporting ~~except as described below.~~

~~Our principal executive officer~~by establishing new controls and ~~principal financial officer performed additional accounting and financial analyses and other post-closing~~ procedures ~~including consulting with subject matter experts related~~appropriate to the ~~accounting for~~operating business we have become as a result of the Business Combinations.

The Company is remediating the previously reported material weakness by enhancing training of our staff, following stricter journal entry approval workflows, and requiring certain ~~complex equity~~account reconciliations to be completed and ~~equity-linked instruments issued by~~approved prior to the issuance of financial statements. In addition, the Company will improve its analytical review procedures and ~~presentation of earnings per share. The Company’s management has expended,~~perform such procedures and ~~will continue to expend,~~related variance explanations at a substantial amount of effort and resources for the remediation and improvement of our internal control over financial reporting. While we have processes to properly identify and evaluate the appropriate accounting technical pronouncements and other literature for all significant or unusual transactions, we have expanded and will continue to improve these processes to ensure that the nuances of such transactions are effectively evaluated in the context of the increasingly complex accounting standards.

more detailed level.

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PART ~~II –~~II. OTHER INFORMATION

~~Item~~

ITEM 1. ~~Legal Proceedings~~

LEGAL PROCEEDINGS

From time to time, the Company is party to certain legal actions and claims arising in the ordinary course of business. While the outcome of these events cannot be predicted with certainty, management does not currently expect these matters to have a materially adverse effect on the financial position or results of operations of the Company.

~~None.~~

ITEM 1A. RISK FACTORS

Other than the risk factors set forth below, there have been no material changes or updates to our risk factors that were previously disclosed in “Risk Factors” in Part I, Item ~~1A. Risk Factors.~~

1A of the 2021 Annual Report.

A key component of our growth strategy is expanding our backlog of high-quality development projects, including through acquisitions, joint ventures and other strategic transactions, which present certain risks and uncertainties. We have limited operating experience at our current scale of operations and have plans to implement significant future growth, including through the INGENCO acquisition and the Lightning JV, which are expected to significantly expand our growth trajectory and our capital requirements in the near term and longer term. If we are unable to manage or finance our growth effectively, our financial performance may suffer.

In July 2022, we acquired INGENCO, and in May 2022, we and Republic formed the Lightning JV. We expect to continue considering acquisitions and other strategic transactions in the future and expect that such transactions will continue to be a key component of our near-term growth strategy. Some of our projections and expectations and, in part, our success are based on our ability to complete and integrate such transactions and recognize the anticipated financial, strategic and operational benefits thereof.

Pending, recent or future acquisitions, joint ventures and other strategic transactions may negatively impact our business, financial condition, results of operations, cash flows and prospects because (i) we may have difficulty managing our growth; (ii) we may assume liabilities of an acquired business (e.g., environmental, litigation or tax), including liabilities that were unknown at the time of the acquisition, that pose future risks to our working capital needs, cash flows and profitability, and we may be subject to risks beyond our estimates or what was disclosed to us; (iii) such acquisitions and transactions could divert management’s attention and other resources from our existing business; and (iv) substantial transaction costs to complete such acquisitions and transactions may be incurred and such costs may exceed the estimated financial and operational benefits. Further, the businesses or assets that we acquire, or our joint ventures or other strategic transactions, may not achieve anticipated revenue, production, earnings or cash flows, and we may be unable to fully realize all of the anticipated benefits and synergies from recent, pending and future strategic transactions. See “Risk Factors—Risks Related to the Business and Industry of the Company—Acquiring existing projects involves numerous risks.” in Part I, Item 1A in the 2021 Annual Report for additional risks relating to acquisitions.

In addition, such acquisitions and transactions may require increases in working capital and capital expenditure investments to fund their growth, and to facilitate or fund such acquisitions and transactions, we may incur or assume substantial additional indebtedness or issue equity securities. In July 2022, the Company paid $230.5 million for the acquisition of INGENCO and made an initial capital contribution of $222.5 million to the Lightning JV, both of which were funded with borrowings under the Credit Facilities. The development of the projects in accordance with the terms of the Lightning JV agreement will require significant additional capital, with the Lightning JV requiring cash capital contributions from us of approximately $780 million over approximately five to six years (including the initial capital contribution of $222.5 million which was funded in July 2022). We may fund certain incremental development costs associated with the Lightning JV and INGENCO RNG development projects through one or more capital markets transactions or private financing transactions. However, such financing may not be available in amounts or on terms acceptable to us, if at all. If we are unable to obtain financing needed for future acquisitions or other strategic transactions, we may not be able to consummate such transactions and may be required to delay, reduce the scope of, or eliminate such activities or growth initiatives. In addition, if either member of the Lightning JV fails to make its annual capital contribution to the Lightning JV on a timely basis, the other member may elect to loan such amount and may also elect to treat such loan as a capital contribution to the Lightning JV in an amount equal to twice the amount loaned, thereby decreasing the failing member’s membership interest in the Lightning JV.

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The Lightning JV is a joint venture and our investment could be adversely affected by our lack of sole decision-making authority and restrictions on transfer relating to the Lightning JV. The Lightning JV may also impair our operating flexibility and subject us to risks not present in investments that do not involve co-ownership.

Although we have the right to appoint three of the five persons to serve on the board of directors of the Lightning JV, the limited liability company agreement of the Lightning JV (the “Lightning JV LLC Agreement”) contains certain protective provisions requiring the approval of a supermajority vote of at least 80% of the directors to take certain actions, including, among other items, the incurrence of debt by the Lightning JV, amending the terms of the Lightning JV LLC Agreement, and approving or amending the annual budget of the Lightning JV. In addition, certain fundamental decisions involving the Lightning JV, such as approving any liquidation, dissolution, windup, commencement of bankruptcy or insolvency proceedings, sale, merger or disposition of all of the assets of the Lightning JV, initial public offering or application for listing on a stock exchange of the Lightning JV, require a vote of at least 90% of the directors. Thus, our investment in the Lightning JV involves risks that are not present when we are able to exercise sole control over an asset, including certain major decisions requiring supermajority decision-making beyond our sole control and are subject to agreement with Republic. Differences in views between us and Republic may result in delayed decisions or failures to agree on major matters, such as large expenditures or the construction or acquisition of assets, and delayed decisions and disagreements could adversely affect the business and operations of the Lightning JV, and, in turn, our business, operations and financial results.

In addition, the members of the Lightning JV are subject to transfer restrictions with respect to their membership interests in the Lightning JV, including consent rights of the other member of the Lightning JV and a right of first offer for the other (non-transferring) member, which may make it more difficult to sell such interests in the future. In addition, Republic has a right of first refusal with respect to sales of certain assets from the Lightning JV. The terms of the Lightning JV also allow Republic to require us to take certain actions in the event we undergo certain changes of control, which could result in the termination of certain contractual agreements with Archaea Operating LLC or could result in us being forced to sell all of our membership interests in the Lightning JV to Republic at fair market value or at an otherwise specified value in the Lightning JV LLC Agreement or spin off the entity through which we participate in the Lightning JV.

Moreover, the Lightning JV, like joint ventures generally, could impair our operating flexibility and subject us to risks not present in investments that do not involve co-ownership. The Lightning JV LLC Agreement allows Republic, in certain circumstances, to terminate its master landfill gas development agreement with the Lightning JV, which, among other things, governs the grant by Republic of landfill gas and real property rights at its landfills to the Lightning JV. The Lightning JV LLC Agreement also allows Republic to terminate an individual LFG project of the Lightning JV in certain circumstances, including the failure of the LFG project to complete project milestones or commence commercial operations within the agreed-upon timeframe or satisfy certain other commercial obligations. We may also be liable for liquidated damages under the master engineering, procurement and construction agreement between the Lightning JV and Archaea Operating LLC for failure to meet specified commercial operations dates or operating metrics. Furthermore, the Lightning JV may establish separate financing arrangements that contain restrictive covenants that may limit or restrict the entity’s ability to make cash distributions to the members of Lightning JV under certain circumstances. Additionally, from time to time, the Lightning JV may be involved in disputes or legal proceedings which may negatively affect the Lightning JV or our investment. See “Risk Factors—Risks Related to the Business and Industry of the Company—We currently own, and in the future may acquire, certain assets through joint ventures. As operating partner for some of our joint venture projects, we are exposed to counterparty credit risk, and as non-operating partner for other joint venture projects, we have limited control over management decisions and our interests in such assets may be subject to transfer or other related restrictions.” in Part I, Item 1A in the 2021 Annual Report for additional risks associated with joint ventures.

Effective December 31, 2022, we will be a large accelerated filer and no longer qualify as a smaller reporting company or emerging growth company, which will increase our costs and demands on management.

Based on the Company's aggregate worldwide market value of voting and non-voting common equity held by non-affiliates as of June 30, 2022, the Company will become a “large accelerated filer” and lose smaller reporting company and emerging growth company status on December 31, 2022. Due to this upcoming transition, we are devoting significant time and efforts to implement and comply with the additional standards, rules and regulations that will apply to us upon becoming a large accelerated filer and losing our smaller reporting company and emerging growth company status, diverting such time from the day-to-day conduct of our business operations. Compliance with the additional requirements of being a large accelerated filer will also increase our legal, accounting and financial compliance costs.

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As a smaller reporting company and an emerging growth company, we ~~are not~~have availed ourselves of the exemption from the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002. However, we may no longer avail ourselves of this exemption when we become a large accelerated filer and our independent registered public accounting firm will be required to ~~disclose any material changes from risk factors as previously disclosed~~formally attest to the effectiveness of our internal control over financial reporting in our Annual Report on Form ~~10-K/A. However, below is a partial list of material risks, uncertainties and other factors that could have a material effect on the Company and its operations:~~

●

~~we may not be able to complete our initial business combination in the prescribed time frame;~~

●

~~our expectations around the performance of a prospective target business or businesses may not be realized;~~

●

~~we may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination;~~

●

our officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest with our business or in approving our initial business combination;

●

~~we may not be able to obtain additional financing to complete our initial business combination or reduce the number of shareholders requesting redemption;~~

●

~~trust account funds may not be protected against third party claims or bankruptcy;~~

●

~~an active market for our public securities may not develop and you will have limited liquidity and trading; and~~

●

~~the availability to us of funds from interest income on the trust account balance may be insufficient to operate our business prior to the business combination.~~

~~For more information about our risk factors, see Item 1A of Part I in Amendment No. 1 to our Annual Report on Form 10-K/A~~10-K for the ~~period ended~~year ending December 31, ~~2020~~2022. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating. Due to the complexity and logistical difficulty of implementing the ~~section titled “Risk Factors” contained~~standards, rules and regulations that apply to non-emerging growth companies on an accelerated timeframe, there is an increased risk that we may be found to be in non-compliance with such standards, rules and regulations or to have significant deficiencies or material weaknesses in our ~~definitive proxy statement filed with~~internal controls over financial reporting. Any failure to maintain effective disclosure controls and internal control over financial reporting could materially and adversely affect our business, results of operations, and financial condition and could cause a decline in the ~~SEC on August 12, 2021, as the same may be amended or supplemented, with respect to our initial business combination.~~

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities~~

~~On October 26, 2020, we consummated the Initial Public Offering of 23,725,000 Units, including the Over-Allotment Units. The Units were sold at a~~trading price of $10.00 per Unit, generating gross proceeds of $237,250,000. The underwriters were granted a 45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 3,225,000 additional Units to cover over-allotments, if any, at $10.00 per Unit, less underwriting discounts and commissions. On October 23, 2020, the underwriters partially exercised the over-allotment option and, on October 26, 2020, the underwriters purchased the Over-Allotment Units.

Barclays Capital Inc., AmeriVet Securities Inc. and Academy Securities Inc. served as underwriters for the Initial Public Offering. The securities sold in the Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (File No. 333-249340). The SEC declared the registration statement effective on October 21, 2020.

In connection with the closing of the Initial Public Offering, we paid a total of approximately $4.3 million in underwriting discounts and commissions. In addition, the underwriters agreed to defer approximately $7.6 million in underwriting discounts and commissions, which amount will be payable upon consummation of the Initial Business Combination. Prior to the closing of the Initial Public Offering, the Sponsor loaned RAC OpCo approximately $300,000 under the Note.

In connection with the Initial Public Offering, we incurred offering costs of approximately $12.5 million, inclusive of approximately $7.6 million in deferred underwriting commissions. Other incurred offering costs consisted principally of preparation fees related to the Initial Public Offering. After deducting the underwriting discounts and commissions (excluding the deferred portion, which amount will be payable upon consummation of the Initial Business Combination, if consummated) and the Initial Public Offering expenses, $237.3 million of the net proceeds from our Initial Public Offering and certain of the proceeds from the private placement of the Private Placement Warrants (or $10.00 per Unit sold in the Initial Public Offering) was placed in the Trust Account. The net proceeds of the Initial Public Offering and certain proceeds from the sale of the Private Placement Warrants are held in the Trust Account and invested as described elsewhere in this Quarterly Report on Form 10-Q.

Class A Common Stock.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

On October 26, 2020, simultaneously with the closing of the Initial Public Offering and pursuant to separate Private Placement Warrants and Warrant Rights Agreements, dated September 21, 2020, by and among the Company and RAC OpCo, and each of the Sponsor and Atlas Point Fund, the Company completed the private sale of an aggregate of 6,771,000 Private Placement Warrants at a purchase price of $1.00 per Private Placement Warrant to the Sponsor and Atlas Point Fund, generating gross proceeds of $6,771,000.

There has been no material change in the planned use of the proceeds from the Initial Public Offering and Private Placement as is described in the Company’s final prospectus related to the Initial Public Offering.

~~Item~~

ITEM 3. ~~Defaults Upon Senior Securities~~

DEFAULTS UPON SENIOR SECURITIES

None.

~~None.~~

~~Item~~

ITEM 4. ~~Mine Safety Disclosures~~

MINE SAFETY DISCLOSURES

Not applicable.

~~Item~~

ITEM 5. ~~Other Information~~

OTHER INFORMATION

None.

Table of Contents

~~None.~~

~~Item~~

ITEM 6. ~~Exhibits.~~

EXHIBITS

The following is a list of exhibits filed as part of this Report.


Exhibit Number		Description
~~2.1†~~2.1+		Aria Merger Agreement (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, ~~(File No. 001-39644)~~ filed with the SEC on April 7,8, 2021).
~~2.2†~~2.2+		~~Archaea Merger Agreement (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K (File No. 001-39644) filed with the SEC on April 7, 2021).~~
~~2.3†~~	Amendment No. 1 to Business Combination Agreement, dated as of May 12, 2021, by and among the RAC Buyer, Aria and the Equityholder Representative (incorporated by reference to Exhibit 2.3 to the Company’s Quarterly Report on Form 10-Q, ~~(File No. 001-39644)~~ filed with the SEC on August 13, 2021).
~~2.4†~~2.3+		Amendment No. 2 to the Business Combination Agreement, dated as of June 11, 2021, by and among the RAC Buyer, Aria and the Equityholder Representative (incorporated by reference to Exhibit 2.4 to the Company’s Quarterly Report on Form 10-Q, ~~(File No. 001-39644)~~ filed with the SEC on August 13, 2021).
~~2.5†~~2.4+		Amendment No. 3 to the Business Combination Agreement, dated as of August 3, 2021, by and among the RAC Buyer, Aria and the Equityholder Representative (incorporated by reference to Exhibit 2.5 to the Company’s Quarterly Report on Form 10-Q, ~~(File No. 001-39644)~~ filed with the SEC on August 13, 2021).
~~2.6†~~2.5+		Archaea Merger Agreement (incorporated by reference to Exhibit 2.2 to the Company’s Current Report on Form 8-K, filed with the SEC on April 8, 2021).
2.6+		Amendment No. 1 to the Business Combination Agreement, dated as of May 12, 2021, by and among the RAC Buyer and Archaea Energy II, LLC (incorporated by reference to Exhibit 2.6 to the Company’s Quarterly Report on Form 10-Q, ~~(File No. 001-39644)~~ filed with the SEC on August 13, 2021).
3.1		Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, ~~(File No. 001-39644)~~ filed with the SEC on ~~October 27, 2020)~~September 21, 2021).
3.2		Certificate of Amendment to the Certificate of Incorporation (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on September 21, 2021).
3.3		Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s ~~Registration Statement~~Current Report on Form ~~S-1,~~8-K, filed with the SEC on ~~October 6, 2020)~~September 21, 2021).
~~10.1~~10.1+		~~Form~~First Amendment to Revolving Credit and Term Loan Agreement, dated as of ~~Subscription Agreement~~June 1, 2022, by Comerica Bank, as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, ~~(File No. 001-39644)~~ filed with the SEC on ~~April~~July 7, ~~2021)~~2022).
~~10.2~~10.2+		~~FPA~~Second Amendment to Revolving Credit and Term Loan Agreement, dated as of June 30, 2022, by and among the financial institutions from time to time signatory thereto, Comerica Bank, as administrative agent, and Archaea Energy Operating LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, ~~(File No. 001-39644)~~ filed with the SEC on ~~April~~July 7, ~~2021)~~2022).
10.3#		Archaea Energy Inc. Executive Severance Plan (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the SEC on July 7, 2022).
10.4#		Form of Participation Agreement – Archaea Energy Inc. Executive Severance Plan (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K, filed with the SEC on July 7, 2022).
10.5#*		Form of Performance-Based Restricted Stock Unit Grant Notice and Performance-Based Restricted Stock Unit Agreement under the Archaea Energy Inc. 2021 Omnibus Incentive Plan.
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

†__________________________________________

~~Certain schedules and similar attachments have been omitted. The Company agrees to furnish supplementally a copy of any omitted schedule or attachment to the SEC upon its request.~~

~~Filed herewith.~~

~~Furnished herewith.~~

+ The Company agrees to furnish supplementally to the SEC a copy of any omitted schedule or exhibit upon the request of the SEC in accordance with Item 601(a)(5) of Regulation S-K.

# Management contract or compensatory plan or arrangement.

*Filed herewith.

** Furnished herewith.

Table of Contents

SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto ~~duly~~ authorized.


			ARCHAEA ENERGY INC.
Date: August 15, 2022
~~Date: December 28, 2021~~	By:	/s/ ~~Chad Bellah~~Brian McCarthy
			~~Name:~~	~~Chad Bellah~~Brian McCarthy
			~~Title:~~	Chief ~~Accounting~~Financial Officer (Principal Financial Officer)

~~0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 true --12-31 Q2 0001823766 iso4217:USD xbrli:shares~~

~~Delaware~~	~~85-2867266~~
Delaware		85-2867266
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification ~~Number)~~No.)

~~4444 Westheimer Road, Suite G450~~
~~Houston, Texas~~		~~77027~~
~~(Address of principal executive offices)~~		~~(Zip Code)~~

			~~Page No.~~TABLE OF CONTENTS
		Page
Commonly Used Terms and Definitions		3

Forward-Looking Statements		5

PART I. FINANCIAL INFORMATION		1

Item 1.	~~Condensed Consolidated~~ Financial Statements ~~(Restated)~~	1

	Archaea Energy Inc.

	~~Condensed~~ Consolidated Balance Sheets as– As of June 30, ~~2021 (Unaudited) (as restated)~~2022 and December 31, ~~2020~~2021	16

	~~Unaudited Condensed~~ Consolidated Statements of Operations ~~for the~~ – Three and six months ended June 30, 2022 and 2021	7

	Consolidated Statements of Equity – Three and six months ended June 30, 2022 and 2021	8

	Consolidated Statements of Cash Flows – Six ~~Months Ended~~months ended June 30, 2022 and 2021	10

	Notes to Unaudited Consolidated Financial Statements	11

	Aria Energy LLC (Predecessor)

	Consolidated Statement s of Operations – Three and six months ended June 30, 2021 ~~(as restated)~~	233

	~~Unaudited Condensed~~ Consolidated ~~Statements~~Statement s of ~~Changes in Stockholders’ Equity for the~~ Comprehensive Income – Three and ~~Six Months Ended June~~six months ended June 30, 2021 ~~(as restated)~~	334



	~~Unaudited Condensed~~ Consolidated Statement of Cash Flows ~~for the~~ – Six ~~Months Ended~~ months ended June 30 , 2021 ~~(as restated)~~	435

	Notes to Unaudited ~~Condensed~~ Consolidated Financial Statements	536

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2140

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2350

Item 4.	Controls and Procedures ~~(Restated)~~	2450

PART II. OTHER INFORMATION		25

Item 1.	Legal Proceedings	2552

Item 1A.	Risk Factors	2552

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds ~~from Registered Securities~~	2554

Item 3.	Defaults Upon Senior Securities	2654

Item 4.	Mine Safety Disclosures	2654

Item 5.	Other Information	2654

Item 6.	Exhibits ~~(Restated)~~	2655

~~SIGNATURES~~	27SIGNATURES	56

	June 30, 2021			December 31, 2020
	(unaudited) (as restated)
Assets:
Current assets:
Cash	$	5,290		$	1,335,167
Prepaid expenses		469,693			662,865
Total current assets		474,983			1,998,032
Investments held in Trust Account		237,351,433			237,308,171
Total Assets	$	237,826,416		$	239,306,203

Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit:
Current liabilities:
Accrued expenses	$	7,950,051		$	118,446
Accounts payable		71,571			217,918
Franchise tax payable		99,452			65,481
Total current liabilities		8,121,074			401,845
Deferred legal fees		187,500			187,500
Deferred underwriting commissions in connection with the initial public offering		7,610,750			7,610,750
Derivative warrant liabilities		138,965,647			42,588,487
Total liabilities		154,884,971			50,788,582

Commitments and Contingencies

Class A common stock subject to possible redemption, $0.0001 par value; 23,725,000 shares at $10.00 per share as of June 30, 2021 and December 31, 2020, respectively		237,250,000			237,250,000

Stockholders’ Deficit:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding		-			-
Class A common stock, $0.0001 par value; 250,000,000 shares authorized; 2,500 shares issued and outstanding (excluding 23,725,000 shares subject to possible redemption) as of June 30, 2021 and December 31, 2020		-			-
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,931,350 shares issued and outstanding as of June 30, 2021 and December 31, 2020		593			593
Additional paid-in capital		-			-
Accumulated deficit		(149,384,365	)		(47,868,812	)
Total Rice Acquisition Corp. deficit		(149,383,772	)		(47,868,219	)

Non-controlling interest in subsidiary		(4,924,783	)		(864,160	)

Total stockholders’ deficit		(154,308,555	)		(48,732,379	)
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Deficit	$	237,826,416		$	239,306,203

	For The Three Months Ended June 30, 2021			For The Six Months Ended June 30, 2021
General and administrative expenses	$	6,168,889		$	9,168,480
Franchise tax expense		33,973			73,799
Total operating expenses		(6,202,862	)		(9,242,279	)
Other income (expense)
Change in fair value of derivative warrant liabilities		(108,151,160	)		(96,377,160	)
Interest earned on investments held in Trust Account		5,752			43,263
Net loss		(114,348,270	)		(105,576,176	)
Net loss attributable to non-controlling interest in subsidiary		(4,398,010	)		(4,060,622	)
Net loss attributable to Rice Acquisition Corp.	$	(109,950,260	)	$	(101,515,554	)

Weighted average shares outstanding of Class A common stock		23,727,500			23,727,500
Basic and diluted net income per share, Class A common stock	$	(3.86	)	$	(3.56	)
Weighted average shares outstanding of Class B common stock		5,931,350			5,931,350
Basic and diluted net loss per share, Class B common stock	$	(3.86	)	$	(3.56	)

	●	~~Part I, Item 1. Condensed Consolidated Financial Statements~~


			Total Equity
							Total Stockholders’ Equity
(in thousands)	Redeemable Noncontrolling Interests		Members’ Equity		Members’ Accumulated Deficit		Class A Common Stock		Class B Common Stock		Additional Paid-in Capital		Accumulated Deficit		Nonredeemable Noncontrolling Interests		Total Equity
Balance - December 31, 2021	$	993,301	$	—	$	—	$	7	$	5	$	—	$	(162,320)	$	—	$	(162,308)

Warrant exercises	—		—		—		—		—		1,555		—		—		1,555
Exchange of Class A Opco Units and Class B Common Stock for Class A Common Stock	(317,827)		—		—		1		(1)		317,827		—		—		317,827
Deferred tax impacts from exchange for Class A Common Stock transactions	—		—		—		—		—		780		—		—		780
Share-based compensation expense	—		—		—		—		—		8,923		—		—		8,923
Shares withheld for taxes on net settled awards	—		—		—		—		—		(1,762)		—		—		(1,762)
Net income (loss)	(4,071)		—		—		—		—		—		3,523		—		3,523

Adjustment of redeemable noncontrolling interests to redemption amount	(64,795)		—		—		—		—		64,795		—		—		64,795
Balance - June 30, 2022	$	606,608	$	—	$	—	$	8	$	4	$	392,118	$	(158,797)	$	—	$	233,333

	Common Stock								Additional					Non-controlling			Total
	Class A				Class B				Paid-In		Accumulated			Interest in			Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Subsidiary			Deficit
Balance - December 31, 2020		2,500	$	-		5,931,350	$	593	$	-	$	(47,868,812	)	$	(864,160	)	$	(48,732,379	)
Net income		-		-		-		-		-		8,434,707			337,387			8,772,094
Balance - March 31, 2021		2,500		-		5,931,350		593		-		(39,434,105	)		(526,773	)		(39,960,285	)
Net loss		-		-		-		-		-		(109,950,260	)		(4,398,010	)		(114,348,270	)
Balance - June 30, 2021		2,500	$	-		5,931,350	$	593	$	-	$	(149,384,365	)	$	(4,924,783	)	$	(154,308,555	)


			Total Equity
							Total Stockholders' Equity
(in thousands)	Redeemable Noncontrolling Interest		Members' Equity		Members' Accumulated Deficit		Class A Common Stock		Class B Common Stock		Additional Paid-in Capital		Accumulated Deficit		Nonredeemable Noncontrolling Interests		Total Equity
Balance - March 31, 2022	$	861,448	$	—	$	—	$	8	$	4	$	122,075	$	(180,747)	$	—	$	(58,660)
Warrant exercises	—		—		—		—		—		1,555		—		—		1,555
Exchange of Class A Opco Units and Class B Common Stock for Class A Common Stock	(3,135)		—		—		—		—		3,135		—		—		3,135
Deferred tax impacts from exchange for Class A Common Stock transactions	—		—		—		—		—		780		—		—		780
Share-based compensation expense	—		—		—		—		—		3,170		—		—		3,170
Shares withheld for taxes on net settled awards	—		—		—		—		—		(976)		—		—		(976)

Net income (loss)	10,674		—		—		—		—		—		21,950		—		21,950
Adjustment of redeemable noncontrolling interest to redemption amount	(262,379)		—		—		—		—		262,379		—		—		262,379


Balance - June 30, 2022	$	606,608	$	—	$	—	$	8	$	4	$	392,118	$	(158,797)	$	—	$	233,333

Cash Flows from Operating Activities:
Net loss	$	(105,576,176	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative warrant liabilities		96,377,160
Interest earned on securities held in Trust Account		(43,263	)
Changes in operating assets and liabilities:
Prepaid expenses		193,172
Accounts payable		(146,347	)
Accrued expenses		7,831,605
Franchise tax payable		33,972
Net cash used in operating activities		(1,329,877	)

Net change in cash		(1,329,877	)

Cash - beginning of the period		1,335,167
Cash - end of the period	$	5,290


	June 30, 2022			September 15, 2021
Equity Holder	Class A Opco Units	% Interest		Class A Opco Units	% Interest
Archaea	80,717,757	67.4	%	52,847,195	45.9	%
Total controlling interests	80,717,757	67.4	%	52,847,195	45.9	%
Aria Holders	—	—	%	23,000,000	20.0	%
Legacy Archaea Holders	33,350,385	27.8	%	33,350,385	29.0	%
Sponsor, Atlas and RAC independent directors	5,710,033	4.8	%	5,931,350	5.2	%
Total redeemable noncontrolling interests	39,060,418	32.6	%	62,281,735	54.1	%
Total	119,778,175	100.0	%	115,128,930	100.0	%

As of June 30, 2021	As Previously Reported			Adjustment			As Restated
Total assets	$	237,826,416		$	-		$	237,826,416
Total liabilities	$	154,884,971		$	-		$	154,884,971
Class A common stock subject to possible redemption		77,941,440			159,308,560			237,250,000
Preferred stock		-			-			-
Class A common stock		1,594			(1,594	)		-
Class B common stock		593			-			593
Additional paid-in capital		133,067,223			(133,067,223	)		-
Accumulated deficit		(123,144,622	)		(26,239,743	)		(149,384,365	)
Total Rice Acquisition Corp equity (deficit)		9,924,788			(159,308,560	)		(149,383,772	)
Non-controlling interest in subsidiary		(4,924,783	)		-			(4,924,783	)
Total stockholders’ equity (deficit)	$	5,000,005		$	(159,308,560	)	$	(154,308,555	)
Total Liabilities, Class A Common Stock Subject to Possible Redemption and Stockholders’ Equity (Deficit)	$	237,826,416		$	-		$	237,826,416

	For the Three Months Ended June 30, 2021						For the Six Months Ended June 30, 2021
	Class A			Class B			Class A			Class B
Basic and diluted net income per common share:
Numerator:
Allocation of net loss	$	(91,480,235	)	$	(22,868,035	)	$	(84,462,436	)	$	(21,113,740	)

Denominator:
Basic and diluted weighted average common shares outstanding		23,727,500			5,931,350			23,727,500			5,931,350
Basic and diluted net income per common share	$	(3.86	)	$	(3.86	)	$	(3.56	)	$	(3.56	)

Description	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets:
Investments held in Trust Account - U.S. Treasury securities	$	237,351,433	$	-	$	-

Liabilities:
Derivative warrant liabilities - Public warrants	$	67,616,251	$	-	$	-
Derivative warrant liabilities - Private placement warrants	$	-	$	-	$	71,349,396

Derivative warrant liabilities at January 1, 2021	$	15,541,987
Change in fair value of derivative warrant liabilities		(2,284,001	)
Derivative warrant liabilities at March 31, 2021		13,257,986
Change in fair value of derivative warrant liabilities		58,091,410
Derivative warrant liabilities at June 30, 2021	$	71,349,396