BP acquires RNG producer Archaea Energy for $4.1B

The oil and gas giant BP has agreed to acquire Archaea Energy, one of the nation's largest renewable natural gas producers, for about $4.1 billion.

Why it matters: Renewable natural gas is generally compatible with existing infrastructure, making it one of the easier ways for a fossil company to diversify in the energy transition.

What's happening: BP is acquiring Archaea for $3.3 billion cash and $800 million in net debt.

• Archaea, based in Houston, operates 50 renewable natural gas and landfill-to-gas facilities in the U.S.
• The deal will boost BP's renewable natural gas (RNG) production by about 50%.

Of note: Archaea Energy and another RNG producer, Aria Energy, went public via SPAC in 2021.

• The two companies merged with Rice Acquisition for $347 million and $680 million, respectively.
• The deal valued the combined companies at $1.15 billion.

Zoom out: RNG can provide meaningful carbon reduction, particularly when it's made from waste such as landfills and food scraps, instead of crops specifically grown for fuel.

• However, methane leaks remain an issue.