Leases, Right-of-Use Assets and Related Liabilities |
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| Leases, Right-of-Use Assets and Related Liabilities | 9. Leases, Right-of-Use Assets and Related Liabilities The Company is party to an operating lease for the Company’s office and research facility in Englewood, Colorado, which expires in January 2029. On March 30, 2026, the Company signed an operating lease agreement for adjacent space in the same building. The lease for the adjacent space expires in July 2030. The Company also has an operating lease for additional office space in Albuquerque, New Mexico, which expires in 2026. The Company’s primary office facility lease contains an option to extend the lease which is not included in the length of the term as management does not reasonably expect to exercise. The additional office space lease does not contain an option to extend. In connection with the Company’s sale of Agri-Energy, LLC, in October 2025, the Company entered into a 30-year ground lease with the buyer to provide the Company access to assets retained at the Agri-Energy facility in Luverne, Minnesota for the potential future production of isobutanol at that facility. The lease payments total $1.00 for the entire 30-year period. There are two options to renew the lease, each for an additional 20-year period, which the Company expects to exercise. In addition, the Company has the right to terminate the lease at any time and for any reason with 12 months’ notice to the lessor. In connection with the Company’s acquisition of substantially all the assets and certain liabilities of Red Trail Energy in January 2025, the Company assumed rail car lease agreements used to transport dried distillers grains, all of which are classified as operating leases. The Company has four finance leases for land and one for a processing facility. The land leases are related to our renewable natural gas operations at NW Iowa RNG. The Company leases land from dairy farmers on which it has built three anaerobic digesters, and a gas upgrade facility to condition raw biogas from cow manure provided by the farmers. These leases expire at various dates between 2031 and 2050. In addition, the Company has leased various equipment which it has classified as finance leases, which expire at various dates between 2029 and 2031. The Company accounts for lease components separately from non-lease components for the Company’s dairy lease asset class. The total consideration in the lease agreement is allocated to the lease and non-lease components based on their relative standalone selling prices. These leases contain options to extend the leases, which management reasonably expects to exercise and are included in the length of the terms. In August 2024, the Company entered into an amendment that extended the term of an existing agreement to use a third-party processing facility beyond the previous 12-month term, which resulted in the agreement being recorded as a lease. The agreement for the leased facility expired in 2025, with no option to extend the lease term. Lease amortization for the third-party processing facility was recorded as a component of Project development costs on the Condensed Consolidated Statement of Operations prior to the signing of a customer offtake agreement in August 2024, and after which it is included as a component of work-in-progress inventory, to be expended as a component of Cost of production as sales are made in future periods. The following tables present the (i) costs by lease category, (ii) other quantitative information, and (iii) future minimum payments under non-cancelable financing and operating leases as they relate to the Company’s leases (in thousands, except for weighted averages):
(1)When our leases do not provide an implicit interest rate, we calculate the lease liability at lease commencement as the present value of unpaid lease payments using our estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.
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| Leases, Right-of-Use Assets and Related Liabilities | 9. Leases, Right-of-Use Assets and Related Liabilities The Company is party to an operating lease for the Company’s office and research facility in Englewood, Colorado, which expires in January 2029. On March 30, 2026, the Company signed an operating lease agreement for adjacent space in the same building. The lease for the adjacent space expires in July 2030. The Company also has an operating lease for additional office space in Albuquerque, New Mexico, which expires in 2026. The Company’s primary office facility lease contains an option to extend the lease which is not included in the length of the term as management does not reasonably expect to exercise. The additional office space lease does not contain an option to extend. In connection with the Company’s sale of Agri-Energy, LLC, in October 2025, the Company entered into a 30-year ground lease with the buyer to provide the Company access to assets retained at the Agri-Energy facility in Luverne, Minnesota for the potential future production of isobutanol at that facility. The lease payments total $1.00 for the entire 30-year period. There are two options to renew the lease, each for an additional 20-year period, which the Company expects to exercise. In addition, the Company has the right to terminate the lease at any time and for any reason with 12 months’ notice to the lessor. In connection with the Company’s acquisition of substantially all the assets and certain liabilities of Red Trail Energy in January 2025, the Company assumed rail car lease agreements used to transport dried distillers grains, all of which are classified as operating leases. The Company has four finance leases for land and one for a processing facility. The land leases are related to our renewable natural gas operations at NW Iowa RNG. The Company leases land from dairy farmers on which it has built three anaerobic digesters, and a gas upgrade facility to condition raw biogas from cow manure provided by the farmers. These leases expire at various dates between 2031 and 2050. In addition, the Company has leased various equipment which it has classified as finance leases, which expire at various dates between 2029 and 2031. The Company accounts for lease components separately from non-lease components for the Company’s dairy lease asset class. The total consideration in the lease agreement is allocated to the lease and non-lease components based on their relative standalone selling prices. These leases contain options to extend the leases, which management reasonably expects to exercise and are included in the length of the terms. In August 2024, the Company entered into an amendment that extended the term of an existing agreement to use a third-party processing facility beyond the previous 12-month term, which resulted in the agreement being recorded as a lease. The agreement for the leased facility expired in 2025, with no option to extend the lease term. Lease amortization for the third-party processing facility was recorded as a component of Project development costs on the Condensed Consolidated Statement of Operations prior to the signing of a customer offtake agreement in August 2024, and after which it is included as a component of work-in-progress inventory, to be expended as a component of Cost of production as sales are made in future periods. The following tables present the (i) costs by lease category, (ii) other quantitative information, and (iii) future minimum payments under non-cancelable financing and operating leases as they relate to the Company’s leases (in thousands, except for weighted averages):
(1)When our leases do not provide an implicit interest rate, we calculate the lease liability at lease commencement as the present value of unpaid lease payments using our estimated incremental borrowing rate. The incremental borrowing rate represents the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term and is determined using a portfolio approach based on information available at the commencement date of the lease.
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