Carbon Streaming Corporation has recently unveiled its financial results for the second quarter and the first half of 2024, showcasing significant achievements such as carbon credit sales, a strategic alliance with tech giant Microsoft, and updates to its carbon credit portfolio. Let’s delve into the key highlights of the company’s financial performance and notable developments in its carbon credit portfolio.
Financial Performance and Carbon Credit Achievements
Carbon Streaming (Cboe CA: NETZ) is leading the way in utilizing streaming transactions, a dynamic funding model, to amplify carbon credit projects. The company is dedicated to supporting initiatives that produce top-tier carbon credits while making positive contributions to the environment, local communities, and biodiversity.
Cash Position:
The company stands firm with a robust cash position of $43.5 million and zero corporate debt. Revenue from Carbon Credits:
In the second quarter of 2024, Carbon Streaming raked in $0.5 million from carbon credit streaming and royalty agreements, marking a significant surge from the $38,000 reported in the same period in 2023.
Operating Loss:
Despite these gains, the company faced a net loss of $2.8 million, showcasing a substantial improvement from the $9.2 million loss in the corresponding quarter last year. The adjusted net loss stood at $1.7 million, up from $0.8 million in Q2 2023.
Cost Optimization:
Continuing its restructuring endeavors, the company is on track to slash ongoing operating expenses by over $1 million annually. This includes the termination of consulting contracts and alterations in senior management and the Board.
Carbon Credit Pricing and Sales Strategy
The average price of carbon credits sold by the company in Q2 surged to $6.85 per ton, up from $6.60/ton in the same period last year. This pricing mirrors current market conditions, characterized by volatility but with promising growth potential as global demand for carbon credits escalates.
Furthermore, NETZ witnessed a nearly 23% increase in revenue from selling carbon credits in the second quarter ($54,000 Q2 2024 vs $44,000 Q2 2023). The number of carbon credits sold from the company’s inventory, distinct from those delivered under its carbon streaming agreements, also soared by almost 16% to $7.9 million in Q2 2024 from $6.6 million in Q2 2023.
The results are even more impressive when comparing achievements for the first half of 2024 versus the previous year. The company anticipates retaining 15% to 25% of cash flows from the sale of carbon credits acquired through its streaming agreements, contingent on specific terms and market conditions. This retention strategy is crafted to maximize revenue while offering stability against market fluctuations.
Carbon Credit Deal with Microsoft
In a landmark agreement, Carbon Streaming joined forces with Microsoft and Rubicon Carbon Capital LLC to enter a carbon credit streaming agreement for the Azuero Reforestation project in Panama. Microsoft has committed to procuring 100% of the carbon credits delivered by Carbon Streaming until 2040 under this long-term offtake agreement.
This collaboration underscores Microsoft’s dedication to fulfilling its sustainability objectives and underscores the mounting demand for top-notch carbon credits.
Key Portfolio Updates and Outlook
Rimba Raya Stream:
The company’s Rimba Raya project in Indonesia encountered a legal hurdle when its Forest Utilization Business License was revoked by the Indonesian Ministry of Environment and Forestry (MOEF) in April 2024. However, a court ruling temporarily reinstated the license, allowing project activities to resume. The situation remains uncertain, with the MOEF appealing the decision. Carbon Streaming is actively exploring legal avenues to safeguard its investment.
Community Carbon Stream:
In May 2024, the company revamped the terms of its Community Carbon Stream, focusing on its most robust projects, including cookstove and water purification initiatives in various regions. The project secured a landmark authorization from the Tanzanian government for the first-ever carbon credits under Article 6 of the Paris Agreement.
Sustainable Community Stream:
In July 2024, the company terminated its agreement with Will Solutions due to unmet milestones and project delays. Ongoing discussions are in progress, with Carbon Streaming intending to enforce its legal rights.
Key Milestones:
Significant upfront payments were made for the Community Carbon, Sheep Creek Reforestation, and Feather River Reforestation projects upon reaching their respective milestones. A pilot program was initiated in India for the Nalgonda Rice Farming project, leveraging advanced monitoring technology to boost project efficiency. The Enfield Biochar project in Maine hit its first biochar production milestone, progressing towards full operational capacity.
Strategic Outlook:
Carbon Streaming is steadfast in its mission to solidify its position as a frontrunner in carbon credit financing, emphasizing high-quality projects and strategic partnerships. The company is strategically positioning itself for long-term success by prioritizing cash flow generation and portfolio optimization, as per NETZ’s report.
Continuing its quest for top-notch carbon removal and avoidance projects, Carbon Streaming leverages its robust relationships with project developers and carbon credit buyers like Microsoft.
