bp to acquire RNG producer Archaea Energy for $4.1 billion

By Erin Voegele | October 17, 2022

Archaea Energy Inc. on Oct. 17 announced that it has agreed to be acquired by bp for approximately $4.1 billion, including $3.3 billion in cash and $800 million of net debt. Subject to regulatory and Archaea shareholder approval, the transaction is expected to be complete by the end of 2022. Once the acquisition is complete, Archaea will operate as a subsidiary within bp and become part of the larger global organization.

Houston, Texas-based Archaea Energy current operates 50 renewable natural gas (RNG) and landfill gas-to-energy facilities across the U.S., producing approximately 6,000 barrels of oil equivalent per day (boe/d) of RNG. At closing, the company’s production is expected to provide an immediate 50 percent increase in bp’s biogas supply volumes.

According to bp, Archaea also has a development pipeline of more than 80 projects that underpin the potential for approximately five-fold growth in RNG production by 2030. That pipeline includes 40 RNG projects expected to be developed as part of a joint venture formed by Archaea and Republic Services Inc. earlier this year. That joint venture will convert landfill gas into pipeline-quality RNG that can be used for a variety of applications to displace conventional natural gas.

bp said the acquisition of Archaea will accelerate growth of bp’s strategic bioenergy transition growth engine. Archaea said its acquisition by bp will provide the RNG company with access to unmatched, world-class platform, capabilities and capital resources for acceleration of its growth plans. Archaea also said its business will be able to access bp's trading capabilities and broad customer base, further helping many of bp’s customers achieve their decarbonization goals.

“Archaea was founded with a mission to build the world’s leading RNG development company to reduce global emissions and make multi-generational sustainability impacts,” said Nick Stork, CEO and co-founder of Archaea. “In a very short period of time, we have rapidly become a leading RNG platform in the U.S., and today’s announcement will further enable this business to realize its full potential. bp is a world-class partner and a strong fit for Archaea, with a strategic focus on bioenergy and an operational history in the RNG value chain that is fully aligned with ours and our partners’. We are excited to join them in our mission to increase the role of RNG in helping customers reach their long-term climate goals, and I look forward to our hard-working team joining the bp organization to help achieve their bioenergy objectives. I am incredibly proud of our employees at Archaea who have driven this tremendous value creation and will continue to push forward Archaea’s drive to foster clean energy growth and promote domestic energy reliance.”

"After a thorough review, our board determined that combining Archaea’s RNG assets and our strong development backlog with bp’s existing bioenergy business and deep operational and financial resources is the best way to create a stronger platform to achieve Archaea’s full potential, while maximizing value for our shareholders,” said Daniel Rice, chairman of Archaea’s board. “Today’s news would not be possible without the entire Archaea organization, our best-in-class employees and our industry partners.”

“Archaea is a fantastic fast-growing business, and bp will add distinctive value through our trading business and customer reach,” said Bernard Looney, bp chief executive. “It will accelerate our key bioenergy growth engine, creating a real leader in the biogas sector, and support our net zero ambition. And, importantly, we're doing this while remaining focused on the disciplined execution of our financial frame. Investing with discipline into the energy transition, creating further value through integration – this is exactly what bp’s transformation into an integrated energy company is all about.”