Renewable Energy M&A: Camber Energy acquires renewable diesel production facility in Nevada for an enterprise value of $1bn

Texas-based Camber Energy agreed to acquire a 100% stake in New Rise Renewables Reno, a 43 million gallons per year facility that is currently being brought online, from RESC Renewables Holdings. The purchase price stands at $750mn, while the liabilities associated with the plant amount to $251mn, implying a transaction enterprise value of $1bn. The purchase price will be paid at deal closing by delivery of a $750mn convertible promissory note in favor of the seller. Under the terms of the note, Camber Energy is required to pay at least $100mn of the principal amount no later than 30 days from either the facility’s commercial operation date or the closing date, whichever comes later. The note also requires Camber Energy to make additional payments following the achievement of certain production and sale goals related to the produced fuel.

As per Enerdatics research, the deal marks the second largest transaction, by value, for liquid clean fuels in the US, after Chevron’s acquisition of the Renewable Energy Group for an EV of $2.75bn in Feb '22. Camber Energy cited a 2022 report by national cooperative bank CoBank, that forecasted a 3.3X growth in renewable diesel production in the US during this decade from 1.5 billion gallons per year in 2022 to 6.5 billion gallons per year by 2030. The report also highlighted the incentives provided under the recently approved Inflation reduction Act (IRA), which include an extension of the $1/gallon tax credit for biomass-based diesel through to 2024, following which the rebate will be based on the fuel’s carbon intensity score. Additional government programs that are driving the adoption of clean fuels include the federal Renewable Fuel Standard and California’s Low Carbon Fuel Standard. 

The primary benefit of renewable diesel over biodiesel is that the former is chemically identical to petroleum diesel and can thus be used as a “drop-in” fuel, which means that older engines will not require any modifications to accommodate the fuel. Biodiesel, on the other hand, requires additional blending with petroleum diesel before it can be used by commercial engines, which will impact its adoption in the short to medium term.

The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.