The soluble fractions of facultative organisms grown on C 1 compounds are capable of oxidizing organic compounds in the presence of a cofactor system comprissing NADH 2 or NADPH 2 . The soluble fraction is obtained by aerobically growing the microorganism in a fermentor under continuous gassing with a mixture of a C 1 compound and air and, initially, carbon dioxide before harvesting. Preferably, the C 1 compound is methane. One facultative organism which is useful in the microbiological oxidation of oxidizable organic substrates is Methylobacterium organophilum (CRL. 26, NRRL B-11,222). This newly discovered and isolated methylotrophic microorganism strain and its natural and/or artificial mutants grow well under aerobic conditions in a culture medium in the presence of a C 1 compound as the major carbon and energy source.