Earnings call transcript: BKV Corp Q2 2025 sees stock surge after earnings beat

BKV Corp (BKV) reported its second-quarter 2025 earnings, showcasing robust financial performance that exceeded market expectations. The company reported an earnings per share (EPS) of $0.39, surpassing forecasts, and a significant revenue of $322.04 billion. Following the announcement, BKV’s stock surged by 9.92% in pre-market trading, reflecting strong investor confidence. With a market capitalization of $1.69 billion, InvestingPro analysis suggests the stock is currently fairly valued, with analyst price targets ranging from $24 to $33 per share.

Key Takeaways

• BKV’s EPS of $0.39 exceeded market expectations.
• Revenue reached $322.04 billion, indicating strong operational performance.
• Stock price increased by 9.92% in pre-market trading.
• Upstream production exceeded guidance, reaching 811 MMcfe/day.
• BKV raised its full-year production guidance to 800 MMcfe/day.

Company Performance

BKV Corp demonstrated strong performance in the second quarter of 2025, with significant achievements in both financial and operational metrics. The company’s net income reached $105 million, translating to $1.23 per diluted share. While InvestingPro data shows the company wasn’t profitable over the last twelve months, analysts forecast profitability for the full year 2025, with an expected EPS of $1.01. BKV’s upstream production exceeded expectations, and the company continues to lead in the Barnett Shale with innovative strategies.

Financial Highlights

• Revenue: $322.04 billion, a strong performance for the quarter.
• Earnings per share: $0.39, exceeding market forecasts.
• Net income: $105 million, or $1.23 per diluted share.
• Adjusted EBITDAX: $88 million.
• Capital expenditures: $79 million, 12% below the midpoint of guidance.

Earnings vs. Forecast

BKV’s actual EPS of $0.39 surpassed market forecasts, marking a positive surprise for investors. This performance aligns with the company’s historical trend of exceeding expectations, further solidifying its strong market position.

Market Reaction

Following the earnings announcement, BKV’s stock price rose by 9.92% in pre-market trading, reaching $22.05. This increase reflects investor optimism and confidence in the company’s future prospects. The stock’s performance is noteworthy, especially when compared to its 52-week range of $15 to $26.78.

Outlook & Guidance

BKV has raised its full-year production guidance to 800 MMcfe/day, reflecting its confidence in continued operational efficiency. The company also outlined a capital budget of $320 million and aims to achieve 1 million tons/year CO2 injection by 2027, underscoring its commitment to sustainable practices.

Executive Commentary

CEO Chris Kalman stated, "BKV delivers on what we say we will do," highlighting the company’s consistent performance. Eric Jacobson, President of Upstream, emphasized BKV’s strategic positioning, stating, "We are in the sweet spot of all shale basins with low decline, PDP weighted and cash flowing assets."

Risks and Challenges

• Market volatility could impact future stock performance.
• Regulatory changes in the energy sector may pose challenges.
• Fluctuations in natural gas prices could affect profitability.
• Supply chain disruptions could impact operational efficiency.

Q&A

During the earnings call, analysts inquired about the recent acquisition of Bedrock’s Barnett Shale assets, which is expected to add 100 MMcfe/day in production. BKV also discussed its plans to optimize lateral lengths and well designs, as well as exploring power purchase agreement opportunities with hyperscalers.

Full transcript - BKV Corp (BKV) Q2 2025:

Conference Operator: Good morning everyone and welcome to PKV’s Second Quarter twenty twenty five Earnings Conference Call. As a reminder, today’s call is being recorded. And at this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. I would now like to turn the call over to Mr.

Michael Hall, Vice President of Investor Relations. Please go ahead, sir.

Michael Hall, Vice President of Investor Relations, BKV Corporation: Thank you, operator, and good morning, everyone. Thank you for joining BKV Corporation’s second quarter twenty twenty five earnings conference call. With me today are Chris Kalman, Chief Executive Officer Eric Jacobson, President of Upstream and David Tamron, Chief Financial Officer. Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward looking statements, which are subject to certain risks, uncertainties and assumptions. Actual results could differ materially from those in any forward looking statements.

In addition, we may refer to non GAAP measures. For a more detailed discussion of the risks and uncertainties, including those associated with the closing of the Bedrock acquisition, which remains subject to customary closing conditions and integration of those assets into our existing portfolio, which could cause actual results to differ materially from any forward looking statements, as well as the reconciliations of non GAAP financial measures, please see the company’s public filings, including the Form eight ks filed today. We have also posted an updated investor presentation on our website. I’d now like to turn the call over to our CEO, Chris Kalman.

Chris Kalman, Chief Executive Officer, BKV Corporation: Thank you, Michael, and thank you everyone for joining us to discuss our second quarter results. I would like to start this call by taking a moment to reflect on the recent flooding in the Texas Hill Country. Our hearts are with everyone in Kerr County, across the Hill Country, and around the world who are feeling the devastating effects of the flooding. We are holding you all in our thoughts and prayers. We’re proud to be part of the Texas community, and we’re actively responding and doing our part as well.

We have made a $50,000 contribution to the Kerr County Relief Fund and are matching all donations made by DKB employees, two to one, for every dollar they give to agencies that are actively responding and assisting to those impacted by the floods. Turning to our results. The second quarter was marked by significant macro and regulatory events that have overall strengthened the business environment for BKB across our natural gas, carbon capture, and power businesses. In particular, the macro backdrop for natural gas remains bullish. While this summer has been marked by typical seasonality for natural gas, the expected ramp in Gulf Coast natural gas demand is well underway, with new LNG facilities coming online and ramping into the 2025 and throughout the full year of 2026.

The ERCOT power market has continued to show long term strength, as a recently released EIA study projects ERCOT to be the fastest growing electricity sales market in The US, with over 20% growth projected between 2024 and 2026. This load growth is being driven by residential, commercial, industrial, and importantly, AI and data center electricity demand. In the near term, we will be actively monitoring Texas power markets throughout the remainder of the summer and early fall, as these months are the most significant months for power demand. Our carbon capture business has benefited from one big beautiful bill act that solidifies the durability of the 45Q tax credit and demonstrates strong support for carbon capture. Further, we believe that progress in securing emitter volumes remains one of the key gating items in the carbon capture business.

And BKV’s strong progress in this regard underscores our leadership in this space. Overall, I’m excited to share with you another exceptional quarter that demonstrates our continued progress across all our business lines, highlighting our cultural value of delivering on promises. Our upstream business significantly exceeded our second quarter guidance from a production and capital efficiency perspective. Our production came in above the high end of our production range, while our operating teams were able to keep development and total company capital spending at the low end of our prior ranges. On the back of these results, we are increasing our 2025 production guidance midpoint to 800,000,000 cubic feet equivalent per day, while reducing our overall corporate capital budget midpoint to three twenty million.

This was made possible in part by our proactive forward planning and domestic supply sourcing strategy, which has positioned our company robustly to help mitigate impacts of future anticipated tariffs. Further, we are pleased to announce that we have signed definitive agreements to acquire Bedrock’s Barnett Shale assets. This acquisition is a strong strategic fit, as it extends our leadership position in the Barnett and improves our reserve life with low decline PDP assets and meaningful well inventory. Subject to customary closing conditions, we anticipate that closing will occur in the third or early in the 2025. Upon closing of the asset acquisition, BKV will add over 100,000,000 cubic feet equivalent per day of production and nearly one Tcfe of 1P reserves to our Barnett portfolio.

In our power business, BKV is pleased to share that we have reserved manufacturing slots for natural gas turbines with a major power plant manufacturer. The optionality provided by these turbine slots enhances our ability to discuss additional power needs with large data center companies and hyperscalers. DKV remains in active discussions with these potential customers regarding long term PPAs and is actively analyzing the market dynamics around PPA transactions to optimally position our Temple Power Generation assets for maximum value. BKV’s continued investment in carbon capture has solidified our leadership position in this industry and has allowed us to accelerate momentum in our CCUS business. Consistent with this, we recently announced yet another CCUS emitter agreement with our major midstream partner at another of their plants in Texas.

We have seen continued momentum in our discussions with additional emitters, and our partnership with CIP continues to provide us with the opportunity to accelerate our CCUS project pipeline. We are also excited to announce that we have inked a seminal deal for the supply of carbon sequestered gas or CSG to Gunvor, a global leading commodities trader. ESG enables the decarbonization of our energy and allows end users to utilize around the clock carbon neutral energy that commands a premium in the marketplace. Overall, BKV has demonstrated strong progress around our closed loop strategy, which combines the winning formula of gas, power, and carbon capture to create premium value in one of the fastest growing energy markets in the world, the state of Texas. We believe we are ideally positioned to benefit from megatrends that are driving the energy markets, and we are excited to continue to demonstrate the uniqueness of our business model as we progress our business strategy and execute on our said and did culture.

Now I’d like to hand the call over to BKV’s President of Upstream, Eric Jacobsen, to discuss operational specifics for the quarter. Eric, over to you.

Eric Jacobson, President of Upstream, BKV Corporation: Thanks, Chris. The second quarter was indeed exceptional for our operations as we continued to demonstrate the strength of our assets and our operational excellence. Our upstream business continued to outperform expectations for the second quarter while we maintained capital discipline. Our upstream teams have accelerated activity versus our budget, drilling and completing longer and more technically demanding wells in fewer days. Importantly, our production outperformance has been about more than just pulling activity forward.

We have also meaningfully outperformed our sanction type curves across the 15 TILs this quarter and TILs from previous quarters as our continuous improvements in completion and subsurface optimizations have borne fruit. As a result, in the second quarter, our upstream segment continued its history of beating projections, delivering net production of eight eleven million cubic feet equivalent per day, exceeding the high end of our guidance range of eight zero five million cubic feet equivalent per day. Additionally, our teams have delivered all of this at lower than expected capital investment as we continuously find new ways to increase efficiencies and push our unit costs lower than planned. What’s particularly impressive is that we’ve achieved these results while keeping development CapEx at $63,000,000 the low end of our guidance range. Our Barnett development costs continue to trend lower with an approximate 11% reduction in dollar per lateral foot well cost compared to our last continuous development activity, reducing from a $632 per lateral foot average in twenty twenty threetwenty twenty four to approximately $560 per lateral foot through 2025.

To highlight a few details behind our $560 per lateral foot cost performance, our Upstream team achieved several notable company records this quarter, all while maintaining our top notch safety track record. We drilled the longest well in company history, reaching a total measured depth of over 20,000 feet. Year to date, we have also drilled seven wells with greater than 90 degree azimuthal bends in the lateral, including a U-turn well. We are also hitting company records on the completion side. During the second quarter, we averaged over twenty two pumping hours per day on two pads in the Barnett, resulting in the two fastest pads completed in BKB’s history.

In addition to our lower than projected development capital spend, companywide lease operating and workover expense came in below the low end of the guidance range for the second quarter at $0.46 per Mcf equivalent, reflecting the success of our cost reduction initiatives as well as our increased vertical integration and production outperformance. As Chris mentioned, we are pleased to revise the midpoint of our full year 2025 production guidance range up to 800,000,000 cubic feet equivalent per day, an increase of nearly 4% over our previous midpoint, while maintaining the same development capital range of $2.00 5,000,000 to $235,000,000 as originally guided. For the third quarter, we expect production midpoint to be at eight twenty million cubic feet equivalent per day with a range of eight zero five million to eight thirty five million cubic feet equivalent per day. This guidance excludes the anticipated impact of the Bedrock acquisition, which subject to customary closing conditions is expected to close late in the third or early in the fourth quarter. In addition, while still remaining within the upper range of our original development capital guidance, we anticipate an additional three to four drilled and completed NEPA wells in late twenty twenty five beyond the initial full year 2025 plan, which should put us in a very good place heading into 2026.

We are delivering more production in 2025 than planned and more activity within the same original CapEx range. As mentioned, we are excited to share that our proven platform for success in the Barnett should be enhanced by the acquisition of Bedrock Energy Partners Barnett assets for a total purchase price of $370,000,000 subject to customary closing conditions, which will further solidify our leadership in the basin and extend our reserves significantly. The assets include over 1,000 producing wells, the vast majority of which are located in the heart of our Barnett acreage and are very complementary to our existing footprint. Upon closing, these assets will allow for extending laterals on our existing acreage, adding accretive near term inventory and pulling multiple levers for cost optimization. The assets really fit hand in glove with our current acreage and we anticipate applying BKV’s proven Barnett playbook to these locations very quickly.

The acquisition is expected to add over 100,000,000 cubic feet equivalent per day of production and nearly one Tcfe approved reserves and over 70 undeveloped new drill locations, approximately 50 of which are Tier one locations with a weighted breakeven average of about $2.5 per MMBtu consistent with our current inventory portfolio. There are also 80 refrac locations giving KB the opportunity to further our refrac program leadership. The base decline complements our current leading low decline position at around 7% on both a one year and five year basis. We view the pending Bedrock acquisition as further evidence that we are in the sweet spot of all shale basins with low decline, PDP weighted and cash flowing assets, low nitrogen gas to deliver to Gulf Coast demand centers and a long runway of exceptionally capital efficient inventory. Turning to our CCUS business, the tailwinds Chris mentioned are supporting a robust deal pipeline.

In addition to our operating Barnett 0 facility, we now have two additional CCUS projects that have reached FID, with three more projects progressing towards FID. All told, we have four Class II well permits that have been approved, seven Class VI well permit applications submitted and under review by the EPA, and two recently approved MRV plans keeping our project pipeline on track. The new East Texas project we announced will be co located with an existing natural gas facility and is the sixth such facility to be announced by BKV. We forecast that the project will achieve an average annual sequestration rate of approximately 70,000 metric tons of CO2 per year in a class two injection well. While initially owned by BKV Decarbon Ventures, this project may be transferred to BKV’s CIP joint venture in the future.

On CIP, our partnership with them is now underway and has really energized this portion of our business through funding, a strategically aligned vision for CCUS, and additional project potential. It is a relationship we are very excited about. Regarding the macro environment, I’d like to reiterate that the passage of the one big beautiful bill act and its preservation and expansion of the 45 q tax credit was a big win for us and the industry. Transferability for the life of the credits made the investment horizon significantly more certain and attractive as well. During the second quarter, we progressed projects successfully across multiple fronts.

The inter operation Barnett 0 facility remained on track with 99% reliability and with over 30,000 metric tons of CO2 injected. On the CCUS project development side, we finished drilling in June and completing in July the injection well at our Eagle Ford project with our major midstream partner. This is an important milestone and one which we are incredibly proud of, especially as the work was completed to specifications and at around $1,500,000 below budget. The quickening pace of our CCUS project development is very encouraging, and we are confident that our goal of 1,000,000 tons per year of CO2 injection run rate by the 2027 is attainable. Consistent with our commentary during the 1Q call, following resequencing of projects on the back of the CIP partnership, we have reduced our full year guidance for CCUS and other CapEx to a range of $85,000,000 to $115,000,000 with a midpoint of $100,000,000 down from a midpoint of $130,000,000 And with the passage of three BA, we are excited about the consistent and robust cash flow potential and investment opportunities in the space moving forward.

Overall, our team’s performance in the second quarter extended our leadership position and legitimate high fidelity delivery on the CCUS front. I’ll now turn the call over to our CFO, David Tamron, for a review of our Power business and financial results.

David Tamron, Chief Financial Officer, BKV Corporation: Thank you, Eric. Our Power business delivered strong results in the second quarter. And as Chris mentioned, we’re making excellent progress in our discussions with several hyperscalers and data center operators. The Tipple Complex, which sits at the center of major data center build outs at ERCOT, uniquely positions BKV to provide energy solutions for those looking to address their power needs today. During the second quarter, our typical plants delivered a combined average capacity factor of 59% and total generation was over 1,900 gigawatt hours.

Power prices averaged $4,634 per megawatt hour with average natural gas cost of $2.98 per MMBtu, resulting in an average spark spread of $25.15 CKV’s implied proportionate share of power JV adjusted EBITDA was $18,000,000 and gross Power JV adjusted EBITDA of $36,000,000 was above the high end of our guided range for the second quarter in a row as favorable weather conditions and advantaged pricing drove outperformance late in the quarter. As we look to the remainder of 2025, we expect gross third quarter Power JV adjusted EBITDA of 55,000,000 to $75,000,000 and are maintaining our annual guidance of 130,000,000 to $170,000,000 This guidance range factors in normal seasonal downtime currently scheduled for the Temple plants in the ’5 as well as our current hedge position. As a reminder, fourth quarter ’twenty four included major maintenance downtime that impacted our results. Now shifting to BKV’s corporate financial performance. Our strong results were led by our upstream business as those assets and our operating team continue to drive exceptional outcomes.

Net income in the second quarter came in at $105,000,000 or $1.23 per diluted share, which was $0.39 per share on an adjusted basis with combined adjusted EBITDAX attributable to BKB of $88,000,000 Strong production combined with lower than forecasted LOE largely offset the impact of widening differentials experienced during the quarter. Accrued capital expenditures in the second quarter were $79,000,000 which included $63,000,000 for upstream development and $16,000,000 for CCUS and other. The combined $79,000,000 was 12% below the midpoint of guidance. Quarter after quarter, we continue to do more with less. Big picture, while staying within cash flow, throughout the quarter, we continued to grow upstream business, we invested in our CCUS partnership and achieved a modest amount of debt paydown.

Moving to the balance sheet. As of June 30, outstanding draws on our RBL were $200,000,000 representing a net leverage ratio of only 0.63 times. We also had cash and cash equivalents of just over 21,000,000 Combined with the remaining availability on our RBL, our total liquidity stood at $472,000,000 at the end of the second quarter. This does not include the anticipated borrowing to fund the pending Bedrock acquisition, which subject to customary closing conditions is expected to close late in the third or early in the fourth quarter. With respect to Bedrock financing, the transaction is expected to be funded with $110,000,000 of seller issued equity equivalent to approximately 5,200,000.0 shares, which are subject to a sixty day lockup provision, with the remaining $260,000,000 being put on our RBL.

Based on a recent strip, on a combined basis, we expect our updated net leverage ratio to be at the lower end of our one to 1.5 times targeted range. Moving on to hedging. I’d like to reiterate that we hedge at least 50% of forecasted PDP production for twenty four months. Based on our current position, for the 2025, we have 58% of our anticipated natural gas production hedged at an average price of $3.45 per MMBtu, and NGLs are hedged at an average of $21.73 per weighted barrel. Our 2026 position stands at approximately half our natural gas PDP production hedged at $3.84 per MMBtu and roughly 40% of our NGL PDPs hedged at 22.1 per weighted barrel.

Finally, for third quarter twenty twenty five guidance and for a comprehensive look at our updated full year guidance ranges, you can refer to a complete schedule, which can be found in the press release that was posted this morning. With that, I’d like to turn the call back over to Chris to wrap things up.

Chris Kalman, Chief Executive Officer, BKV Corporation: Thanks, David. DKV delivers on what we say we will do. And as you can see, we have continued this trend. In upstream, we outperformed on our natural gas production and capital efficiency expectations, driving us to raise full year production guidance within the originally guided capital expenditure range. We further expanded our position in the Barnett with our acquisition of Bedrock, bringing in an accretive asset to expand our Barnett portfolio.

In carbon capture, we extended our leadership position with the East Texas project and the continued momentum with emitters and our joint venture partner, CIP. Additionally, we signed a seminal deal with Gunvor for the purchase, marketing, and sale of carbon sequestered gas, demonstrating premium pricing potential for the unique combination of our gas and carbon capture assets. In power, we remain active in PPA discussions with hyperscalers and data center operators looking for energy solutions in Texas as we have the unique combination of gas, power, and carbon capture in place today and available to be delivered to the market at a premium. We look forward to future announcements in this regard. Finally, I would like to take a moment to thank our incredible employees for their hard work and dedication.

I would also like to thank our shareholders and Banpu for your continued belief in the BKB vision. Operator, we are now ready to take questions.

Conference Operator: Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for a participant using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment while we poll for questions. Our first question is from Scott Gruber with Citigroup. Please proceed.

Scott Gruber, Analyst, Citigroup: Yes. Good morning and congrats on the deal.

Chris Kalman, Chief Executive Officer, BKV Corporation: Thanks, Scott.

Scott Gruber, Analyst, Citigroup: Can you guys hear me? Oh, thanks. Great.

David Tamron, Chief Financial Officer, BKV Corporation: Yep. We can

Scott Gruber, Analyst, Citigroup: hear you. Yep. We can hear you. Obviously, one of the key benefits of purchasing adjacent acreage is improving your ability to lengthen laterals and continue to drive better economics into play. I guess the question in the Barnett is with the producing wells in existence, how much running room do you have to increase laterals?

So maybe just some color on kind of long laterals as a percentage of the program today and how that improves with the acquisition?

Eric Jacobson, President of Upstream, BKV Corporation: Good morning, Scott. This is Eric and thanks very much for the question. Yes, you’re absolutely correct. The lengthening of laterals and the accretion of inventory is certainly one of many advantages of the Bedrock deal that we’re very excited about. In addition to it fitting complementary with low decline base, with adding infrastructure scale and contiguous acreage to our portfolio, selling more low nitrogen gas to data centers and to Gulf Coast demand centers, for example.

We’re also excited about the inventory accretion, as you mentioned. I think we announced 50 kind of equivalent Tier one lateral adds plus another 20 Tier two, so a total of 70 up to 70 equivalent 10,000 foot lateral adds. Of that 50 Tier one, roughly close to half of those are extending existing laterals from our current acreage as you mentioned. And then on top of that, I’ll reference the 80 refracs that have been additive as a result. So all told, kind of 70 equivalent 10,000 foot laterals, 80 refracs, it adds another couple of years of inventory and even better capital efficient inventory with the lengthening of laterals and the accretion of those high quality sticks from bedrock acreage.

Scott Gruber, Analyst, Citigroup: I appreciate the color. And you guys have made a lot of progress on cost per foot. I think you guys brought in a high spec rig to help with that. And you mentioned a U shaped well as well. So just as you think about the cost per foot, maybe just some color on how much you think you can continue to drive that with longer laterals, U shaped wells, just some color on thoughts around cost per foot heading into ’26.

Eric Jacobson, President of Upstream, BKV Corporation: Yes, sure. Thanks for that follow-up there, Scott. Yes, we’re very pleased as you referenced to have reduced our cost per foot lateral by 11% compared to our previous kind of continuous twenty twenty three, twenty twenty four programs in the first half of this year. I would say that Barnett was the first to receive shale technology and now two decades later we’re able to implement the best of shale technology and we’re seeing that. We’re certainly not in the late innings of that.

We have more room to run. The resulting cost improvements have been from definitely extending lateral lengths from optimal subsurface placement, from enhancing and improving frac designs, from setting records and learning lessons every day on lateral feet per day, on completion pumping hours, on records on rig mobs, etcetera. And those the nice thing about those Scott is those are structural changes and we expect those to remain as we continue to add additional structural changes from the lengthening of laterals as a result of bedrock for one as you mentioned, from advancing completion designs, we’re trialing and evaluating new completion designs right now, more on that in quarters to come. And there’s certainly our use of data and analytics trending towards AI. We have the largest data set of anybody in the Barnett and quite possibly one of the largest data sets of anybody in the shale basins in The U.

S. And we are using that on the upstream PDP production side as well as our D and C platform to advance our structural cost reduction. So more to come there on a number of fronts. We did reference the seven wells we’ve drilled with 90 degree azimuthal bends including one U-turn well. I would say those high angle and U-turn wells represent about 5% of our inventory going forward.

So we can certainly drill them and we’ve proven the competency and capability of drilling those. But our preference is to drill 10,000 foot and much longer straight laterals with slight jogs or bends and that’s the 95% kind of platform of our inventory going forward.

Scott Gruber, Analyst, Citigroup: Got it. Appreciate all the color. I’ll turn it back. Thank you.

Jake Roberts, Analyst, TPH and Company: You bet. Thanks Scott.

Conference Operator: Our next question is from Chris Baker with Evercore ISI. Please proceed.

Chris Baker, Analyst, Evercore ISI: Yes, good morning. Just want to stick on the upstream. First question is for Eric. Just curious given the success you guys continue to see there. How does that kind of shake out in terms of maintenance CapEx at this point and maybe just how you see Bedrock fitting into the picture there?

Eric Jacobson, President of Upstream, BKV Corporation: Yes, sure. Great question and good morning to you, Chris. So I think to Bedrock piece first, as we mentioned before, it just it does fit hand in glove with our acreage position and our low decline kind of base portfolio. So at a roughly 7% base decline that Bedrock brings to us, it fits in perfectly with our cash flowing PDP wedge and perfectly, Chris, with a lower reinvestment rate and a lower maintenance CapEx rate. We’ve said with our current 800,000,000 cubic feet a day or so re guide raised to 800, our maintenance CapEx is in the 170 to 180 range.

That probably increases by around 20,000,000 to 25,000,000 with Bedrock because it’s such low decline and because the asset is so nicely accretive to our acreage position with the extended laterals and continued efficiencies in the capital program. So all told fits in very nicely. It’s a hand in glove sort of match for us and our maintenance CapEx is still extremely low with addition of Bedrock.

Chris Baker, Analyst, Evercore ISI: That’s great. Thanks. And as a follow-up, maybe Chris, can you talk a little bit about to the extent you can, just the turbine spots you mentioned earlier, delivery window, scale the units, any additional color there would be great. Thank you.

Chris Kalman, Chief Executive Officer, BKV Corporation: Yeah, thanks. So on the turbines, as we mentioned, this gives us tremendous optionality as we talk with hyperscalers and data center companies. Idea there is that as you think about SB6 and other regulations in the market, think increasingly folks are going to be concerned if you’re taking power off the grid and behind the meter type setups, you need to be able to displace that power with additional generation. So the thought there is that we would, you know, we can point with certainty to timeframes that we could do that and we would link those deals clearly with a PPA so that any incremental capacity we’d be building against would be, very low risk funded by these PPAs. So that’s the thought there.

We continue those discussions, stay tuned for future announcements, but we think it’s incredibly positive and it puts us in a tremendous position with the hyperscalers and data center companies.

Chris Baker, Analyst, Evercore ISI: Great, thank you both.

Conference Operator: Our next question is from Betty Jiang with Barclays. Please proceed.

Betty Jiang, Analyst, Barclays: Good morning. I want to first ask about the CIP partnership now that you’re moving forward. What are the initial focus areas of the partnership? Any changes in the project sourcing process and any new development that you could highlight so far?

Chris Kalman, Chief Executive Officer, BKV Corporation: Yeah, I’ll start with the partnership. Baer, feel free to chime in on some of the projects. But in terms of the partnership, it’s tremendous. As we mentioned in the last earnings call, CIP is a global infrastructure investor. They’ve got really a global view on carbon capture.

Think about things like the carbon offset markets, clearly very active in Europe and they have BKV is their exclusive platform invest in carbon capture here in The U. S. So it’s incredibly synergistic in terms of their plans right now in the joint venture. We have two projects, as we mentioned, Barnett 0 and our Eagle Ford project. Clearly, projects mature to the right stage, we bring them into the joint venture.

And then as we’ve mentioned, it’s a 51%, 49% joint venture where BKB holds the majority and consolidates. And then there’s some reversionary interest over certain return hurdles. So that’s the structure that’s continuing. You can see that from our financials that they’re investing into the joint venture and that will ramp over time. They’ve committed up to $500,000,000 and so we’re excited to be able to deploy that alongside our capital.

Eric, maybe give some color on sort of the sourcing and additional projects that we’re thinking about there.

Eric Jacobson, President of Upstream, BKV Corporation: Sure. Yes, good morning, Betty. I’ll just build on Chris’ comments there with the projects. We are on track as mentioned for the Eagle Ford project that’s in the JV along with Barnett 0 to start that up in 1Q of next year. We’re progressing outside of the JV at the moment, the other announced projects, two gas plants in the Western Haynesville with Comstock, Bethel and Marquet, as well as the recently announced East Texas project we have with our major midstream partner.

As those progress towards qualified status and eventually FID, those will be contemplated in the JV. And then further, as Chris alluded to, one of many benefits that CIP brings is relationships with emitters and other project contacts. So they brought a lot of projects to the table. Those are in the sort of advanced appraisal stage to pre FID and so more on those to come as they mature.

Betty Jiang, Analyst, Barclays: Great. Thank you for that. And then my follow-up is on the carbon sequester gas deal with Gongor. I know the volume initially is still fairly small, but does that start with a test of concept around how you’re thinking about gas premium related to or premium price related to these type type of transaction and how large do you see this partnership that could potentially expand over time?

Chris Kalman, Chief Executive Officer, BKV Corporation: Yes, good questions, Betty. I’m glad you picked up on that. In terms of the volume, the initial up to 10,000 MMBtus a day is really structured to be equivalent to a NASB contract. I think that’s the most kind of fluid contract structure. I think we’ve done that from a market structuring perspective.

We’re really excited about the partnership with Gunvor. They’re committed to the deal. They believe in the product. They’re really excited about being able to market this. Clearly, we’re establishing a market.

So as you know, you’re in a period of price discovery and you’re also in a period of building the market. In terms of how much this relationship could scale, I think we’ve shared in the past that we’ve got over 100 Bcf a day of gas in The U. S, right, that’s moving around. And so a portion of that is going to be this type of product. When you think about marine fuel where LNG is being used increasingly and the need to lower CI scores around LNG usage for marine fuels, this type of product is ideal for that.

When you think about around the clock carbon neutral power that data centers want, again, this product sits there. And then when you think about industrial folks that need to export to Europe for CBAM and need their CI scores to come down, this product serves as an ideal product for that. And then finally, about ethanol producers as you think about them producing or any sort of hydrogen where you have to lower your score. So anytime you’re focused on lowering your CI score and avoiding compliance costs, this product fits perfectly in mix. And that’s why clearly Gunvor sees that and is excited about it.

And we think the size of the market is pretty substantial, albeit it will be a subset of the broader gas markets here in The U.

: S. Very interesting, Dee. Thank you.

Conference Operator: Our next question is from John Nardini with KeyBanc Capital Markets. Please proceed.

Michael Hall, Vice President of Investor Relations, BKV Corporation0: Hi, good morning. Thank you for taking my questions. On the power side, in the release, you mentioned working with counterparties to improve capacity factors and realize spark spreads. You mentioned this a bit in the prepared remarks, but wondering if you could just talk through what a potential deal might look like through the PPAs behind the meter solutions or other commercial agreements to help drive those improvements?

Chris Kalman, Chief Executive Officer, BKV Corporation: Yeah, good question, John. So in terms of the power business, right, as you saw, we’ve got tremendous headroom in the Temple Energy Complex. Today we have a capacity of 1,500 megawatts. We’re using our capacity factors we shared is in that 55%. So clearly we’ve got some running room.

Typically a baseload plant like that can run as high as 90% capacity factor. So we think there’s pretty substantive headroom and a lot of that is through the evening hours and into the night where generally in the ERCOT market you’re offbeat. When you think about sort of partnering or working with hyperscalers or data centers, you’re going to be looking at more around the clock type usage, right? And so I think some of that you’re going to contemplate as potentially a behind the meter structure where you can deliver power directly. I think we cite Temple as an ideal area to build an additional infrastructure.

It’s central to country, it’s got great access to gas, water, power, and land. And so it puts it in a really ideal position. So you can imagine that as we are in these discussions that a portion of power is buying the meter, there’s an ability to also tap into the grid because you need that reliability. And then you’re setting up a contract structure which is flexible. So you typically, you will see contract structures out there, everything from more fixed price to sort of a tolling type arrangement.

And we’ll continue to analyze that in the market, what’s the ideal setup. What’s unique about BKV and our ability is we produce both gas and power. And so our flexibility on the contract side is incredibly dynamic. We can go at all the whole spectrum from fixed price all the way to tolling arrangements. And so we think it’s incredibly competitive.

We’re obviously going to be excited to continue those discussions and look forward to future announcements in those regard.

Michael Hall, Vice President of Investor Relations, BKV Corporation0: Okay, that’s great. I appreciate those comments. Sticking to the power side, you posted relatively strong results for this segment this quarter. Just considering we’re mostly past the peak of our pricing period this summer, how do you see those the Tampa plants performing for the remainder of the year, specifically relative to the same period in prior years?

David Tamron, Chief Financial Officer, BKV Corporation: Yes, good morning, John. It’s Dave Tamron. Yes, if you look at what the third quarter has done to date, it has been a little light off to a slow start, but there’s still remember, we still got half of the summer left as far as August and September. And this morning, right, we put out the 130 to 170 number, we’re very confident in that number. We wouldn’t have put out that number if we weren’t confident in that.

And if we think about what that implies for 4Q, one thing I think that everybody needs to be aware of is ’4 had major maintenance that was planned. So if you look at 4Q twenty five versus 4Q twenty four, keep that in mind for 4Q twenty five, you can see implied by our guidance at the midpoint, we’re at about $20,000,000 That’s just what the math is, and we’re very confident in those numbers. So we’re still near term, a little bit of weather, we’re fighting right now, but still time left in the summer. And then longer term, keep in mind, right, longer term, the supply dynamics, the demand dynamics at ERCOT are still very, very bullish for us. That’s one of the best we made.

And Chris outlined during the road show and over last year of what we’re looking at. If you look at ’26, ’27, very strong very strong demand, so we’re still very bullish on the dynamics if we think about the long term. Does that answer your question?

Michael Hall, Vice President of Investor Relations, BKV Corporation0: Yeah. That’s perfect. That’s all I had. I’ll hand it back.

Conference Operator: Our next question comes from Jacob Roberts with TPH and Company. Please proceed.

Jake Roberts, Analyst, TPH and Company: Good morning.

David Tamron, Chief Financial Officer, BKV Corporation: Hey, Jake. Hi, Jake.

Jake Roberts, Analyst, TPH and Company: One of the on on Bedrock, I was curious, Chris, if you could kind of relay how competitive these processes are at the moment. And then for Eric, you’ve done a good job laying out why the asset made sense for BKV in terms of offset acreage, the midstream component, the decline rates. I’m wondering as you look at other deals, which one of those factors is going to be the most important in your guys’ minds pursue more acreage?

Chris Kalman, Chief Executive Officer, BKV Corporation: Yes. Thanks, Jake. I’ll start and then I’ll hand it over to Eric there. So on the question of the process, one thing that’s important to note is, PKV is clearly the dominant producer of the Barnett. So when it comes to the folks kind of looking to exit or to monetize their positions, puts us in a great position when it comes to those discussions.

Now with regards to Bedrock specifically, they were very interested in being a shareholder of BKB as well. And so that was truly a bilateral discussion where we kind of engaged with them and they saw the benefits and we’re excited about being a shareholder in BKV alongside of being able to kind of benefit from the synergies that Eric mentioned. That’s going to be one dimension. You’re going to have other processes in the play where they’re going to be more bids and kind of more auction type structures. But I would imagine that the deal flow is going to be a combination of bilateral and auction processes depending on who the seller is and their motivation.

The nice thing as I mentioned is that we are the natural kind of owner of these assets and so we would be one of the first calls that I would guess anyone would make on that. So and as you grow in the basin it improves your economics even more, right? So there’s a sort of a bit of a flywheel effect as you continue to consolidate the basin. So I think that puts us in a great position. Again, having stock as a currency, we’ve mentioned that on the road show is going to make us even more attractive as an acquirer and I think that’s been proven here as we’ve shared.

But Eric, if you want to talk about kind of opportunity set going forward.

Eric Jacobson, President of Upstream, BKV Corporation: Sure. Yeah. Morning, Jake, and thanks for that question. I think as you’re aware and is included in our investor deck, there are a number of other opportunities in the Barnett, Chris alluded to this too, that are quite attractive. From multiple perspectives, the same as Bedrock, low decline basin, sweet spot with inventory, more gas, the Gulf Coast demand standards, accretion on nearer term inventory like with Bedrock, infrastructure and contiguous acreage, etcetera.

All of those matter, but I’d say, Jake, to your question of what’s most important is us structuring a deal that where we can achieve accretive economics overall with our playbook applied in all four of those different areas. So that’s what’s most important to us. We’re able to achieve that with Bedrock and we see a lot of runway left with our playbook and our proven track record in the Barnett to do that.

Jake Roberts, Analyst, TPH and Company: Great, that’s really helpful. As a follow-up, Eric, just making sure on the Bedrock stuff that you picked up, are the liquids cuts relative to new drills and refracs pretty similar to what you guys laid out on slide 13 for the legacy portion?

Eric Jacobson, President of Upstream, BKV Corporation: Yes, they’re fairly similar in the kind of liquid content. I think we have a it’s actually a little higher 63% gas and thirty six percent thirty seven percent liquids. So it’s a little higher on the liquid percentage. And then the liquid constituents are a little richer on the Bedrock acreage. So a little higher value in the liquid constituency split.

Jake Roberts, Analyst, TPH and Company: Great. Appreciate the time guys.

David Tamron, Chief Financial Officer, BKV Corporation: You bet. Thank you. Hey, it’s Dave Cameron. Just before we take the next question, I just want everybody to be aware, we do not have any forward guidance. In our forward guidance, we do not include anything for Bedrock.

Once we close that transaction, we’ll come back and update guidance and and we’ll do that for the close. But just as of today, the guidance in the release does not include Bedrock.

Conference Operator: Our next question is from Jeff Jay with Daniel Energy Partners. Please proceed.

Michael Hall, Vice President of Investor Relations, BKV Corporation1: Guys. Good morning, Jeff. Hey, how’s it going? Good. Looking at the productivity gains you’ve made and how your wells are producing above type curve now, I just wonder if and I’m sorry if I missed it earlier, but what are the key drivers of that outperformance?

And I guess my follow-up to that would be, given that how competitive your new drills were with the refrac program even in last year, does this sort of outperformance kind of change how you think about the mix of refracs and new sticks going forward?

Eric Jacobson, President of Upstream, BKV Corporation: Great. You bet, Jeff. Thanks for the question and good morning to you as well. Yes, I think so there’s nothing like as far as your question on outperformance, there’s nothing like repetition and consistent quality crews and the application of lessons. And we have a rigorous lessons learned and applied culture.

And the result of all those in combination has led us to lower cost per foot and the outperformance to type curve you referenced. I think there’s several components if you dive a next step deeper. One is our understanding the basin on the subsurface side and our ability to optimize subsurface with not only lateral lengths, but spacing, well placement relative to offset production, well placement relative to uphold challenges. And then certainly there’s some completion element to it. We’ve optimized and right sized and engineered our completions depending on where we are in the acreage And the sum total of all that has led to that 17% outperformance versus type curve that you referenced.

And then if you add in the fact that we are really executing to a high degree, the outperformance relative to plan is even greater than that because of the acceleration of our TILs. I think we referenced 3342% with new drills and refracs respectively. So it’s a combination of type curve outperformance in the areas I mentioned and accelerating due to execution and that’s what’s led us to be above plan. With respect to kind of the split of new drills and refracs, yes, but both are actually outperforming as we mentioned on the compared to plan and we’re excited about the advancements in both those completion advancements I mentioned and the well placement subsurface optimization has translated into our refrac program as well. So I would expect going forward they’re both highly competitive, highly accretive.

They both have a nice sweet spot in our operation cadence. So I would expect us to continue to have sort of 80% of our CapEx invested in new drills and 20% in refrac. And just to remind you all, we have five twenty or so refracs excluding or sorry, new drills excluding bedrock and 2,100 refracs excluding bedrock. So we have a long runway to go in both and we’ll keep that kind of split up going forward.

Michael Hall, Vice President of Investor Relations, BKV Corporation1: Thanks very much.

David Tamron, Chief Financial Officer, BKV Corporation: You bet.

Conference Operator: There are no further questions at this time. I would like to turn the call back over to Chris for closing remarks.

Chris Kalman, Chief Executive Officer, BKV Corporation: Great. Thank you. And just want to close by saying appreciate everyone’s time listening to our call. We just want to underscore that PKV is on a journey with our closed loop strategy that we think is unique, commands a premium and really is differentiated. We’re excited about the future.

We look forward to future announcements and underscoring our said dead culture. I want to thank everyone for their time. Have a great day.

Conference Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time, and thank you for your participation.

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