OPAL Fuels Inc. (OPAL) stock intrinsic value fair value estimate & owner earnings analysis

What the business is. OPAL Fuels captures methane from landfills and dairy farms, cleans it into renewable natural gas (RNG), and earns most of its money from the environmental credits that gas creates when it is used as truck fuel: federal RINs under the Renewable Fuel Standard and state low-carbon-fuel credits. At the end of 2025 it had 12 RNG plants in operation (9.1 million MMBtu a year of OPAL's share of design capacity, including 50% stakes in Emerald, Sapphire, Noble Road, Pine Bend and Atlantic), 15 landfill-gas power plants (105.8 MW), and a fuel-station business that builds, services and dispenses at CNG/RNG truck stations. Revenue was $349 million in 2025. Landfill gas rights run at least 20 years, usually with renewals, and all but one landfill is still taking waste, so the gas supply itself is durable. The swing factor is the price of the credits, which is set by federal and state regulators, not by OPAL. Control and share count. Fortistar, controlled by Mark Comora, owns about 84% of the economic interest and about 89.5% of the votes through high-vote stock. Only about 29 million Class A shares trade; another 144.4 million Class B and D shares held by Fortistar can be exchanged into Class A. We value per share on all 173.4 million economic shares, because the company's cash flow belongs to all of them. Accounting judgements that matter. (1) One-time tax-credit sales. In 2025 OPAL sold federal investment tax credits on its Prince William, Polk and Sapphire plants for $36.3 million of cash, and that cash is inside the $36.5 million of reported operating cash flow. These credits are earned once, when a plant is built, and the program no longer applies to new projects, so we exclude them from the recurring level. Without them, 2025 operating cash flow before working-capital swings was about $15 million. The annual report's discussion of cash flow does not point this out. (2) Upkeep versus expansion spending. Almost all of the $71-$131 million a year of capital spending since 2022 went into building new plants and stations; the company says its planned $154 million for the next year is mainly construction. A mechanical rule that treats spending beyond revenue growth as upkeep calls most of it upkeep and shows the business losing money every year from 2022 to 2025. That overstates upkeep here. We instead use depreciation (about $22 million in 2025) as the ongoing upkeep cost in the base and bear cases. The power plants needed only $1.1 million of capital spending in 2025, which supports a lower figure in the bull case. (3) Joint ventures. We count all cash the joint-venture plants paid to OPAL ($17 million in 2025), not only the part booked as income. The recurring level. Measured before interest, after stock pay, after upkeep and excluding tax-credit sales, the business produced roughly $26 million in 2025, down about 30% from roughly $37 million in 2024. The drop came from lower RIN prices (about $30 million less revenue from price alone) and the end of a European carbon-credit contract for three power plants in late 2024 ($16 million of revenue), partly offset by the new Prince William and Polk plants. The first half of 2026 was no better: revenue fell 5% and cash flow was weaker. So our base case starts 2026 about 30% lower, at roughly $18 million, and does not assume credit prices recover. What it owes. At June 30, 2026: about $445 million of debt, mostly a bank term loan at SOFR plus 3.5%, rising to 4.0%, that matures September 1, 2028, plus the $19 million Sunoma loan at about 8%. Senior to the common are $120 million of preferred units sold in March 2026 to a Fortistar affiliate at 12% compounding, which refinanced NextEra's $100 million preferred when NextEra demanded redemption, and $30 million of 8% preferred held by Hillman, another Fortistar affiliate. There is also about $11.5 million of partners' interests in consolidated projects. Cash was $91 million. Because the term loan and the 12% preferred cost well above our 6% rate, we add about $44 million for that extra cost. In total the common shareholders stand behind roughly $546-606 million of claims, depending on the case. The loan requires debt of no more than 4.0 times cash flow as the bank defines it, and a debt service coverage ratio of at least 1.2. Base case (-$1.21 per share). The existing plants and stations produce about $18 million a year before interest for 25 years, which matches the length of the gas-rights contracts. Clean-fuel production tax credits, which are law through 2029, add about $8 million a year. This is our estimate: 2025's non-cash credit benefits, which include one plant's investment credit, totalled $16.5 million. Three landfill plants under construction since 2024 (Cottonwood, Kirby Canyon, and a 50% share of Burlington; 1.8 million MMBtu of design capacity) come on line in 2027. At 2025 utilization and roughly $15 per MMBtu of plant-level cash margin, net of about $45 million still to spend after tax credits, they add about $94 million. The business is worth about $352 million against about $561 million owed, a shortfall of about $209 million. In this case the company appears to owe more than it is worth. Its cash flow before interest (about $26 million in 2026) is below its interest bill plus preferred dividends (about $48 million). Bear case (-$2.45 per share). Credit prices stay at 2026 levels, the existing business produces about $12 million a year for 20 years, the new plants start a year late and yield less, and the 2028 refinancing and the 12% preferred cost more. The business is worth about $181 million against about $606 million owed, a shortfall of about $425 million. This is where a debt-for-equity restructuring or heavy dilution at the 2028 maturity would leave today's shareholders. Bull case (+$0.83 per share). Upkeep proves closer to what the power plants show, so the existing business produces about $32 million a year for 30 years. Production credits run about $12 million a year through 2029. All three landfill plants perform well, and the two California dairy digesters (Hilltop and Vander Schaaf), stalled since the contractor was terminated in 2024 and in arbitration set for May 2026, are finished. The business is worth about $690 million against about $546 million owed, leaving about $144 million. Growth we did and did not credit. We credited only plants already under construction. We did not credit OPAL's development pipeline, the six power plants it may convert to RNG, a recovery in RIN or state credit prices, or growth in station volumes. None of these is contracted or proven, and a price recovery is a market call, not a feature of the business. What would make this wrong. A sustained rise in RIN prices from federal volume requirements would lift every case. So would upkeep costs well below depreciation or a better-than-expected refinancing in 2028. On the other side, a tighter credit market or Fortistar's control over the preferred, loan terms and future share issues could leave less for public shareholders. Only summary figures for the first half of 2026 were available, so the 2026 starting level is an estimate.