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Marathon Petroleum Corp. invests in LF Bioenergy

Marathon Petroleum Corp. invests in LF Bioenergy
LF Bioenergy's first dairy farm renewable natural gas (RNG) project is expected to be in service in mid-2023 (photo courtesy LF Bioenergy).

Marathon Petroleum Corp. (MPC) has announced the acquisition of a 49.9 percent interest in LF Bioenergy LLC, an emerging producer of renewable natural gas (RNG) in the United States (US), from Cresta Fund Management for US$50 million.

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LF Bioenergy has been focused on developing and growing a portfolio of dairy farm-based, low-carbon intensity RNG (aka biomethane) projects.

Current projects are under various stages of development, with the first facility, located in upstate New York (NY), nearing completion and expected to be in service in the first half of 2023.

LF Bioenergy is thrilled to have Marathon as an investor. This development benefits our dairy farmer partners by providing LF with additional resources to support the long-term plans for our pipeline of RNG projects. Marathon’s industry expertise and its goal to lower the carbon intensity of its operations and the products it offers will help LF continue to execute our “Farmers First” strategy of helping farmers improve their sustainability, operations, and profitability. We intend to leverage Marathon’s capabilities and expertise to accelerate our vision of providing tailored solutions based on the specific needs of our dairy partners, said Brent Lilienthal, President, and CEO of LF Bioenergy.

LF Bioenergy is backed by Cresta Fund Management (Cresta), a growth equity firm with advanced industry knowledge, managing US$1.4 billion in assets.

We are excited about the progress LF has made since our initial investment in 2021 as well as the value that Marathon will provide to LF and its stakeholders. Adding Marathon as a partner is an important milestone for LF, and the partnership between Marathon, LF, and Cresta will provide a strong foundation for the ongoing decarbonization of the hard-to-abate agricultural and transportation sectors, said Chris Rozzell, Cresta’s Managing Partner.

Provision for additional investment

The agreement includes the potential for up to an additional US$50 million based on the achievement of predetermined earn-out targets.

LF Bioenergy’s management and origination teams continue to expand the portfolio with additional sanctioned projects while progressing their existing pipeline of opportunities toward final investment decisions.

As specific project milestones are achieved, MPC is expected to fund its share of capital expenditures, building out this portfolio to produce over 6 500 MMBtu per day by the end of 2026.

This RNG transaction demonstrates our commitment to lower carbon investments. This platform will create the opportunity for further integration and advances MPC’s goal to lower the carbon intensity of its operations and the products it offers, said Dave Heppner, SVP of Strategy and Business Development at MPC.

Jones Day acted as legal advisor and Barclays acted as exclusive financial advisor to MPC in connection with this transaction.

Weil, Gotshal & Manges LLP acted as legal advisor and Guggenheim Securities LLC acted as financial advisor to Cresta and LF Bioenergy.

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