Zefiro Methane talks growth, debt cuts, carbon sales

Executive Summary

• Zefiro Methane Corp. provided a strategic update highlighting significant financial improvements and operational milestones achieved since the appointment of new leadership in June 2025.
• The company reported record financial performance for the first half of fiscal 2026, achieving $22.2 million in revenue, $3.8 million in adjusted EBITDA, and $300,000 in net income, while simultaneously reducing high-interest debt by approximately $2.8 million.
• Key operational achievements include the sale of 92,956 metric tonnes of carbon credits, the expansion of operations into Louisiana (the 8th state), and the acquisition of over $25 million in government-financed contracts in Ohio.

Key Details

• Financial Performance (H1 Fiscal 2026):
  • Revenue: $22.2 million (an increase of ~$4.7 million or 27% compared to the prior six-month period).
  • Gross Profit: $8.1 million (an increase of ~$4.2 million or 108% compared to the prior period).
  • Adjusted EBITDA: $3.8 million (an improvement of ~$6.3 million compared to the prior period).
  • Net Income: $300,000 (a significant turnaround from an operating loss of $6.1 million in the prior period).
  • Q3 2026 Revenue Guidance: Approximately $10.0 million.
  • FY 2026 Revenue Run Rate Target: $40.0 million.
• Debt Reduction:
  • Reduced approximately $2.8 million of high-interest debt during the current fiscal quarter.
  • Parent-level debt reduced by 65.7%, from $3.5 million to $1.2 million in 2026.
  • Eliminated more than $2.0 million in high-interest debt at the parent level in January 2026.
  • Paid off the remainder of $500,000 high-interest debt using a new $300,000 promissory note due in 2027 and free cash flow.
• Carbon Credit Sales:
  • Completed the sale of 92,956 metric tonnes of carbon credits to four counterparties in February 2026.
  • First-ever sale of carbon offsets under the American Carbon Registry (ACR) methodology for orphan oil/gas wells (Project 959 in Custer County, Oklahoma).
  • Offsets delivered to institutional clients including Mercuria Energy America LLC and EDF Trading.
• Government Contracts (Ohio):
  • Won approximately 37% of all funding received by the State of Ohio from the phase 1 formula grant under the Infrastructure Investment and Jobs Act (IIJA).
  • Awarded over $25 million in government-financed contracts between June 2025 and February 2026, including:
    • $19.6 million CMAR contract for marginal wells (3-year term).
    • $4.5 million CMAR contract for orphan wells.
    • Belmont 6 project: $420,784.45.
    • Morrow 8 project: $522,233.
• Operational Expansion:
  • Expanded operations into Louisiana in January 2026 with a three-month energy infrastructure project near Lake Charles, generating more than $5 million in revenue upon completion.
  • Total operational footprint now spans eight states: Pennsylvania, New York, Ohio, West Virginia, Kentucky, Oklahoma, Virginia, and Louisiana.
• Methane Monitoring (West Virginia):
  • Awarded a contract by the West Virginia Department of Environmental Protection for preplugging and postplugging methane monitoring under the Methane Emissions Reduction Program (MERP).
  • Contract value increased from an initial $800,000 to $1.3 million.
  • Monitored over 800 wells to date.

Notable Quotes

• Luke Plants, CEO, Zefiro Environmental Services: "Working with Catherine since she stepped into CEO role has created a very pro-active growth-oriented environment that was needed to drive the business and capitalize on the immense opportunities in both segments of the business, environmental services and environmental markets."
• Tina Reine, Chief Commercial Officer: "We're actively working behind the scenes to prepare for ACR's updated orphan well methodology, which is set to be published this year and will give us the ability to continue originating and selling carbon offsets from plugging orphan oil/gas wells here in the United States... Zefiro was actually one of the only carbon offset originators to complete a deal of this size during the 2025 year in the voluntary carbon markets."
• Daryl Heald, Board Member: "These are very exciting times for Zefiro, both as a business that is now consistently driving positive EBITDA, but also as an environmental services company that is making a noticeable difference in American communities with each well that gets plugged."