BKV Corporation

Good morning, everyone, and thank you for joining BKB Corporation's first quarter 2025 earnings conference call. With me today are Chris Kalman, Chief Executive Officer, and Eric Jacobson, President of Uptream. 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. Additionally, we may refer to non-GAAP measures for more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, as well as the reconciliations of any non-GAAP financial measures. Please see the company's public filings, including the Form 8-K 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.

Thank you, David. And thank you to everyone for joining us to discuss our first quarter results. BKV's business model is poised to grow rapidly in multiple economic scenarios. BKV sits at the confluence of some of the biggest mega trends in energy. As one of the largest natural gas producers in Texas, we expect natural gas demand to continue to grow robustly, both domestically and globally. Further, Efforts to decarbonize the global economy continue to show demand for low carbon gas. This trend has helped to accelerate growth in our carbon capture business and the demand for our carbon offsets that are produced by this business. Further, we remain confident in the robustness of the 45Q tax credit. As this part of the tax code has strong bipartisan backing and the current administration has vocalized its support of the carbon capture business. Finally, the U.S. power boom, driven by cloud compute and generative AI, is real and happening and continues to drive strong projected growth in the power industry, with Texas expected to see some of the strongest demand growth across the country. Our power joint venture's modern combined cycle gas-fired power plants located in temple texas are ideally situated to serve this insatiable power demand growth bkv's four business lines of upstream midstream carbon capture and power generation each standalone make money but in combination create premium margins and differentiated products like carbon sequestered gas or csg a completely decarbonized natural gas product that is scalable affordable, fully certified, and commands a premium to regular natural gas. The current macroeconomic landscape has headwinds, including persistent inflation, the potential impact of tariffs, and scenarios of slowing economic growth. However, despite these challenges, CKV is a new kind of energy company that is vertically integrating into the value chain and differentiating how energy gets developed and sold. Our proactive management of our supply chain puts us in a position where we project minimal supply chain disruptions and expect limited cost impacts to our businesses, reinforcing our ability to deliver value in any environment. The first quarter exemplifies BKV's continued delivery on our promises, showcasing our company's said and did culture. where we say what we are going to do and then do it. Let's start with our upstream and midstream businesses. Once again, we delivered on the high end of expectations. Our upstream and midstream businesses are operating at full throttle, delivering strong financial and operational results. Our assets in the Barnett and Northeast Marcellus continue to show room for optimization as we drive down development costs per lateral foot while delivering at or above our sanction type curves. Further, BKV continues to defy gravity with our low base production decline rates. We are driving cost efficiencies across our asset base and enhancing our operations with strategic initiatives that include the use of data and analytics. This quarter's results reflect outstanding operational execution, disciplined financial management, and our team's ability to deliver consistently. These outcomes reaffirm the strength of our ability to execute and our confidence in the Barnett shale as a play with significant continued running room where we have over 15 years of inventory and ability to serve long-term natural gas demand. The Barnett is geographically advantaged with direct access to unconstrained midstream infrastructure proximity to booming LNG export markets, and a front row position to supply natural gas to the growing AI data center market. The Barnett is experiencing a true renaissance, and we believe it can compete with the best basins in the country when comparing the full cycle economics. In power, we outperformed our guidance in the first quarter, and that is the result of the combination of prudent financial planning and strong operational management that allows the Temple plants to maintain equivalent availability factors at approximately 90% for the plants, inclusive of downtime for maintenance, while having significant capacity factor running room to capitalize on power demand growth and scarcity pricing in the ERCOT market. As a result of the comprehensive maintenance programs conducted in the last two quarters, the Temple plants are well positioned to run at full capacity through the peak summer seasons in Texas. The demand growth in ERCOT is real, fueled by the expansion of data centers, population increases, economic development, industrial growth, and the broader shift towards electrification. Our momentum in the discussions with hyperscalers and data center companies underscores the strength of our position in Texas as one of the go-to energy companies to serve the upcoming low demand. We are active in discussions with these potential customers and expect that agreements with these customers will be accretive to our power business. We believe our existing power assets, combined with the ability to serve decarbonized natural gas in the form of CSG, ideally positions BKVs in discussions with data center companies that need power but also want to decarbonize this power and who are willing to pay a premium for this. Our CCUS business is consistently hitting milestones that we set out to achieve. Our team has been operating our flagship Barnett Zero facility safely and reliably for over a year, and both our Cotton Cove and South Texas carbon capture projects remain on track for initial injection of CO2 next year. Our recent announcement of our partnership with Comstock Resources Helping them to decarbonize their midstream assets in the Hainesville underscores the momentum we have here. I want to take a moment to thank Jay Allison and his team for their belief in BKV, and I look forward to a strong partnership with Comstock in our carbon capture projects with them. In previous calls, I have referenced working towards a potential joint venture partnership to help scale our CCUS business. I am pleased to emphasize that we have signed definitive agreements with Copenhagen Infrastructure Partners, or CIP, for their commitment to invest $500 million in our carbon capture business, with the ability to invest up to $1 billion upon mutual agreement. This creates an exciting new platform for us to accelerate the growth in the carbon capture business while accretively diversifying the source of capital for that growth. CIP brings deep expertise, proven execution capability, and significant capital investment, all critical for the continued growth of our CCUS business. Their global track record in developing complex projects and commitment to decarbonization makes them an ideal partner for us as we work to accelerate our CCUS project pipeline. and maximize the impact of our projects. We are incredibly excited about the prospect of serving more customers and growing our geographic footprint across the U.S. BKV has built a new kind of energy company that focuses on delivering energy solutions across our four business lines. We enjoy the best of both the traditional energy industry while accretively participating in the energy transition. BKV has the ability to offer decarbonized, around-the-clock energy that is scalable, sustainable, and profitable, and the momentum we have is showing results. With that, I'd like to turn the call over to Eric Jacobson, our president of Upstream, to go through the details of our upstream, midstream, and carbon capture businesses.

Eric? Thank you, Chris. BKV's upstream business in northeast Pennsylvania and the Barnett continues to deliver outstanding results fueled by strong production and top tier operational efficiency. I want to take a moment to reiterate that we view our position in the Barnett Shale as an important strategic advantage for our upstream business. The Barnett Shale is undergoing a true renaissance and we're leading the charge. The basin is now proving its resilience and value in a big way and our reimagining of it is paying dividends. With more than 15 years of high quality inventory, highly desired and sought after low nitrogen content gas, limited to no takeaway capacity constraints, and a peer leading low base decline, the Barnett offers us significant running room, operational flexibility, and resilient cash flow generation. It's uniquely positioned at the intersection of two transformative forces, the LNG export boom and the explosive AI-driven growth of data centers literally at our feet. We're unlocking value through disciplined capital efficiencies, continued optimization of capex versus development, and deep basin knowledge and expertise. The Barnett is not only back, it's thriving. Our first quarter production was 761 million cubic feet equivalent per day, coming in above the midpoint of guidance. This was accomplished at meaningfully lower CapEx investment than forecast and yet at or even slightly ahead of planned activity levels. For the first quarter, the development CapEx spend was $48 million, 26% below the midpoint of our guided range for the quarter. This lower than forecast CapEx number was the result of development efficiencies carried forward from Q4 of 2024. We were able to further these efficiencies and maintain a strong safety record while drilling even more challenging wells in the first quarter. We recently drilled, for example, two horizontals with 110-degree bends mid-lateral with our one-rig Barnett program. We also achieved a BKV record of completing 14 Barnett new well frac stages in 24 hours this quarter. These efficiencies also enabled acceleration of turn-in lines, or TILs, I would like to note that we anticipate second and third quarter CapEx to be higher than first quarters following the planned cadence of our upstream investment. Given our advanced purchase of long lead procurement items for 2025 CapEx to get ahead of potential tariff impact and our continued increase in efficiencies, we do not expect material capital inflation impacts in our 2025 program. In fact, our 2025 well costs are coming down considerably. For example, We are approaching a double digit percentage cost reduction in cost per lateral foot for our new drills now when compared to a few quarters ago. In Q1, we put six new wells into production with the aggregate of the six wells producing at or above sanction type curves. This, along with accelerating these new well tills and continuing our highly robust refract program, helped us achieve overall production above the midpoint of the range for the quarter. We continue to expect a ramp in our production in the second half of 2025 as natural gas strip pricing remains elevated moving into 2026, and we forecast a Q4 2025 exit at production slightly above that of Q4 of 2024. We will deliver on all of this while maintaining our flexible yet disciplined capital investment framework. Across the Barnett and NEPA, our upstream business continues to be the backbone of our closed-loop operations model, and the cash flow generated from this business line makes it exceptionally well-suited to maintain strong performance now and well into the future. With low base decline, disciplined cost management, no midstream takeaway constraints, and a high-quality long-duration inventory, our upstream assets are built for resilient performance and capital-efficient development. These combined advantages underpin our ability to deliver sustainable long-term value and consistently meet or beat performance targets. In addition to stellar performance in our upstream business, I am also excited to share highlights from our growing CCUS business. The announcement of our joint venture with CIP is needle moving and it not only de-risks but accelerates our CCUS development efforts in 2026 and beyond. In the near term, We are hyper-focused on optimizing our existing Barnett Zero CCUS operation and moving forward our other FID and pre-FID projects. Here are several highlights of what we have accomplished in CCUS since our last call. In the first quarter, BKV submitted a Class 6 permit application to the Louisiana Department of Energy and Natural Resources for five CO2 injection wells totaling 10 million tons per year of injection capacity as a part of our High West CCUS project. Additionally, we signed an exclusive LOI with Comstock Resources to develop CCUS projects at two of Comstock's natural gas processing facilities in their Western Haynesville operating area in East Texas. As part of the agreement, the companies plan to develop CCUS injection wells to permanently sequester CO2 waste produced at Comstock's Bethel and Marquet Natural Gas Processing and Production Facilities in Texas. Our Cotton Cove project, which previously reached FID, remains on track for first injection in the first half of 2026. And the CCUS project in South Texas, with a leading midstream energy company that we announced in February, is similarly on track to have initial injection of CO2 in the first quarter of 2026. Operations at our flagship CCUS project, Barnett Zero, continue to be highly reliable. Reliability for Barnett Zero in the first quarter was 100% with nearly 39,000 metric tons of CO2 injected. Once again, we are delivering on what we promised. Our CCUS strategy is being validated by our actions. We announced an exciting CCUS partnership with a global infrastructure leader in CIP. We are developing natural gas processing projects with multiple parties across multiple basins, including a major midstream company and a peer upstream company. We have submitted and received approval for four class two injection wells in the state of Texas to date, along with submitting three class six permit applications across Texas and Louisiana. And we have a flagship operating CCUS facility in Barnett Zero that has delivered consistently and safely since initial injection in late 2023. With all of these advancements in our CCUS business, we have clear line of sight to a 1 million ton per year injection run rate by the end of 2027. We are building a world-class CCUS portfolio, and we're just getting started. With that, I will hand the call over to our CFO, David Tamron, to go over some details on our power business and BKV's financial results.