Carbon Streaming Corp.’s Q2 results saw it inch toward profitability – generating approximately $59,500 in revenue from 6,646 carbon credits.
This works out to an average price of $8.96 per credit.
Gross profits for the quarter were approximately $13,500 and the firm reported an adjusted net loss of about $1 million.
“Our focus here at Carbon Streaming is really on our sales and marketing efforts, and supporting our partnerships,” Justin Cochrane, Carbon Streaming’s CEO and founder, said during an investors’ call.
“Again, 22 projects in 12 countries around the world. And you'll see from our corporate activities we are focused on getting to profitability and doing that as quickly as we can.”
The Toronto-based company, formed in 2020, offers exposure to carbon credits. It works by investing capital in conservation, direct-air carbon capture, or reforestation projects around the world in exchange for the carbon credits which result.
Carbon Streaming (NETZ-NE) then sells those credits to buyers around the world, with 80 to 90 per cent of the revenue shared back with the project developers.
Typically, these projects are funded for anywhere between 20 to 40 years.
Carbon Streaming’s Q2 results
The company transferred or retired 97,184 carbon credits acquired under the first delivery of its streaming agreement with the Cerrado biome project. It is part of the second largest biome in Brazil and aims to protect its native forests and grasslands.
Carbon Streaming ended the quarter with $80.4 million in cash and no corporate debt.
The company also paid $4.6 million in upfront deposits and milestone payments for carbon credit streaming and royalty agreements.
“The revenue share that we have with each project does vary. On average, we see the 15 to 25 per cent range. But it does vary quite significantly by project,” Cochrane said during the call. “So it's not as simple as just applying a straight sort of revenue assumption across every project.”
Carbon Streaming undertook a corporate restructuring plan which resulted in personnel reductions and is anticipated to result in a reduction in operating costs in future periods. As a result, it incurred a non-recurring corporate restructuring charge of approximately $2.2 million.
“I don't have a sort of a specific quantity for that (general and administrative expenses), but we are expecting a reduction,” Cochrane explained. “What we can say is . . . protecting the balance sheet, focusing on sales, achieving profitability . . . That really is the focus for us.”
Carbon Streaming’s portfolio updates
In Q2, Carbon Streaming received the first carbon credits from two projects under its community carbon stream, the Ugandan cookstoves and water purification projects, resulting in additional payments of approximately $2.7 million. Distribution of cookstoves or water purification devices is now ongoing at six of the seven projects within the stream.
“In terms of pricing on cookstove projects in general, we do see pricing in the $6 to $8 range for cookstoves.,” Cochrane said. “And generally, we are selling inside that range for the most part on the Cerrado biome project.”
Carbon Streaming also increased its upfront investment in the Waverly biochar stream to $3.99 million. It now expects the project to remove over 262,000 tonnes of carbon dioxide equivalent emissions over the 25-year project life, which Cochrane explained translates to over 10,000 carbon credits annually.
In May, the company announced a pipeline agreement with Mast Reforestation, providing up to $19.7 million for a series of post-wildfire reforestation projects in the Western U.S., by entering into separate stream agreements for each project.
The Sheep Creek Reforestation Stream in Montana is the first under the agreement and is expected to remove approximately 225,000 tonnes of carbon dioxide equivalent, restoring more than 2,700 acres damaged in a 2021 fire. The carbon credits are expected to be issued in 2025 and 2026.
“This was a $3.8-million investment into the first project in Mast,” Cochrane said. “We do expect a number of additional projects to be announced with Mast in the coming months.”
The company expects to receive carbon credits or royalty payments from 10 or more projects in 2023.