BKV Q2 2026 Earnings Call Transcript

BKV (NYSE: BKV ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary BKV Corporation reported its strongest financial quarter since going public, achieving record Adjusted EBITDAX and Adjusted Net Income, with upstream production at the high end of guidance and capital expenditures at the low end. The company successfully commissioned two carbon capture projects and made significant progress in its power growth strategy, particularly in ERCOT, with plans for development in Jack County aimed at replicating the success of the Temple Energy Complex. BKV increased its full-year production guidance and maintained its development capex while reporting a 10% reduction in total cash costs for the quarter.

The company's upstream business continues to drive strong financial performance. 5 million tons per annum injection run rate by 2028. Management expressed confidence in the company's integrated strategy linking natural gas, power, and carbon capture, which is expected to generate cash while funding future growth. Full Transcript OPERATOR Good morning everyone, and welcome to BKV's second quarter 2026 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. Michael Hall, CFA — VP of Investor Relations and FP&A Thank you, Operator, and good morning everyone. Thank you for joining BKV Corporation second quarter 2026 earnings conference call. With me today are Christopher Kalnin, Chief Executive Officer, Eric Jacobsen, President of Upstream, and David Tameron, 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 that could cause actual results to differ materially from any forward-looking statements, as well as reconciliations of non-GAAP financial measures, please see the Company's public filings, including the Form 8-K filed today.

I would also point listeners to the updated investor presentation posted this morning on our Investor Relations website. We encourage everyone listening to review those slides and our forthcoming quarterly report to be filed with the SEC for further information on our business operations, results from the quarter, and details on our updated 2026 guidance. I'd now like to turn the call over to our CEO, Christopher Kalnin. Christopher Kalnin — Chief Executive Officer Thank you, Michael, and good morning everyone.

The second quarter was BKV's strongest financial quarter since going public: record Adjusted EBITDAX, record Adjusted Net Income, upstream production at the high end of guidance with capital at the low end, two carbon capture projects commissioned as we committed, and continued progress in our power growth strategy. Across every business line, the quarter came in at or above plan. That consistency reflects a deliberate, systematic approach to running the company in line with our stated culture, and it's one of the most important things we will demonstrate to you as investors. What makes these results particularly meaningful is the strategic platform that generates them.

BKV is a differentiated company combining high-quality Barnett upstream production, existing power generation assets in ERCOT, and revenue-generating carbon capture facilities into a single integrated platform. The closed-loop strategy of gas, power, and carbon capture creates competitive advantages that are difficult to replicate and increasingly valuable in today's energy markets. The results this quarter are evidence that the strategy is working and, as you will hear this morning, the momentum behind each of those businesses continues to build. With that, let me walk you through where we stand.

I will begin with our power business. ERCOT's power needs are accelerating, and we are seeing it clearly in the market today. AI infrastructure, data centers, and broad industrial load growth are all converging on the grid at the same time. ERCOT recently reached a record load level in July of more than 91 gigawatts.

The scale of this market signal is striking. Further, ERCOT currently has over 470 gigawatts of load in its interconnection queue, and several analysts' reports project ERCOT to be one of the fastest-growing power demand markets in the country. BKV is actively engaged with ERCOT, the PUCT, legislators, and local communities as the frameworks evolve, and we believe we are well positioned within them. We have submitted both load and generation interconnect applications across our development projects, and a number of our prospective customers are participating in the batch process as well.

We believe our integrated platform, development readiness, and track record as a responsible operator and committed community partner position us well to help meet Texas' growing power needs. As ERCOT establishes the path forward, the macro backdrop has continued to strengthen, and BKV is operating at the center of it. With our existing power generation fleet demonstrating strong operational performance, our Temple facilities posted high availability and increased capacity factors both year over year and quarter over quarter. Our structured commercial process has matured meaningfully since our last earnings call at Temple.

We have narrowed our focus to a select set of counterparties with whom our discussions have advanced significantly. This progress reinforces our confidence in our original expectation of signing a DPA within 2026 to early 2027. As part of these customer engagements, we are implementing a three-phase development program at our Temple Energy Complex. Phase one is our modular generation units of approximately 200 megawatts, which can be implemented with date-certain energization time frames, as no load interconnection is required to commence commercial operations.

Phase two involves activating our grid-connected private use network, or PUN, unlocking the full use of our existing spinning reserves and capacity at Temple 1 and 2 through supplying behind-the-meter power to potential customers. Phase three involves developing an additional CCGT facility called Temple 3 to support additional potential customer load ramps and supply incremental dispatchable generation through the ERCOT grid. We have made substantive progress in all our phases, and in particular in Phase one. We received our air permits for modular generation in the second quarter for up to 400 megawatts, reinforcing our confidence in our near-term energization timelines.

We are now extending our power strategy to Jack County, where we are expanding our North Central Texas footprint for the potential development of a second energy complex. This development targets replicating the same integrated ability to platform that has made Temple compelling. In Jack County, we aim to develop natural gas-fired generation backed by commercial arrangements with the option for carbon capture. We also intend to supply BKV's own natural gas to the site using BKV-owned midstream infrastructure in Jack County.

We have 6,200 acres of site control, line of sight to 345 kV grid access, and submitted generation and interconnect applications. We are pleased by the progress on commercial discussions we are having related to the project and excited to mature the project toward commercialization. The integrated BKV platform is designed to rinse and repeat across Texas and potentially beyond. BKV's one-stop-shop offering is a differentiated end-to-end solution that has the potential to add significant value to the bottom line.

4 gigawatts of dispatchable generation, approximately doubling our total generation capacity to nearly 3 gigawatts within the next few years. Turning to our upstream business, the second quarter once again demonstrated the strength and consistency of our operating mode: production at the high end of our guidance range, capital expenditures at the low end, continuing a track record of execution that demonstrates our excellence in upstream. Upstream remains a powerful financial engine for BKV.

It generates the cash flow and operational excellence that helps drive everything else we do, and the contributions of the upstream business are a key driver of our strong financial performance this quarter. BKV continues to innovate in unlocking the full potential of the Barnett. Our teams have developed leading approaches to manage market-leading base decline while adding significant potential inventory to our reserve base, resulting in substantive production capacity for years to come. I'm incredibly excited about the continued potential of the Barnett.

We are also realizing the benefits of bringing our natural gas marketing fully in-house. BKV now controls 100% of its natural gas marketing, with a significant number of customers engaged and creating exposure to premium Gulf Coast markets. Our second quarter results reflect early evidence of the incremental margins this marketing capability has the potential to generate. BKV is now positioned to continue to capture incremental margin through the value chain and from end customers.

Turning to our carbon capture business, the first half of 2026 was defined by delivery. We commissioned Cotton Cove and Eagle Ford as we promised to do in the first half of the year. Our portfolio now stands at three operating projects—Barnett Zero, Cotton Cove, and Eagle Ford—actively sequestering CO2 and generating 45Q tax credits. Combined, these facilities have injected approximately 400,000 tons of CO2 through the end of the second quarter, and going forward we expect Cotton Cove and Eagle Ford to demonstrate financial characteristics consistent with what we've established at Barnett Zero.

Our development pipeline beyond those operating projects is equally active. 5 million tons per annum injection run rate in 2028. A significant near-term commercial milestone is the progress in our Carbon Sequester Gas, or CSG, initiative. We have received validation from our independent auditor on the certification for our carbon offsets, a critical step in the broader certification process that positions us to advance commercialization in the second half of the year.

CSG gives customers a differentiated low-carbon natural gas solution and gives BKV an incremental monetization layer on top of our existing 45Q economics. It is a direct expression of what our closed-loop strategy is designed to produce. With that, I will turn it over to our President of Upstream, Eric Jacobsen, to walk through our operating results in more detail. Eric Jacobsen — President, Upstream at BKV Corporation Thanks, Chris.

The second quarter was another exceptional quarter for our upstream business as we demonstrated once again that operational excellence translates directly into stronger financial performance. We delivered production above the high end of our guidance while spending below the midpoint of both our capital and LOE guidance ranges. Additionally, total cash costs for the quarter were down 10% compared with the first quarter of 2026. Our strong first half performance gives us the confidence to raise our production outlook for the year while maintaining our originally guided development capex.

6% increase. Our first half performance and updated guidance lead to an increased expectation of 3 to 4% year-over-year production growth. The significance of these results extends well beyond higher production. We're producing more gas with greater capital efficiency, lower costs, and stronger well performance, and those operational improvements are translating directly into stronger cash flow generation and increased confidence in our outlook.

This performance reflects the compounding benefits of our relentless focus on operational excellence. S. shale gas basin at $525 per lateral foot, all-in D&C, while simultaneously delivering better well performance—in fact, among the very best in Barnett history. Through our subsurface acumen and the continued refinement of our advanced completions program, the results of our development program are rewriting the record books in the Barnett.

During the quarter, our operations team brought online two additional wells that rank amongst the best ever drilled in the Barnett, including a pad that achieved the second-best 30-day production rate in Barnett history. In fact, BKV has now delivered the five best performing pads in the history of the Barnett, all of which have come online over the past five quarters. These production records are only part of the story. We also drilled the two longest laterals in the Barnett, with one approaching three miles in lateral length.

Beyond new development, we continued to execute the base production optimization blitzes we discussed last quarter, as well as continuing to leverage AI tools and initiatives, further flattening what was already one of the industry's lowest PDP base decline rates while adding approximately 12 million cubic feet per day to our production run rate. These projects continue to demonstrate the value we can unlock across our existing asset base. These are not isolated successes. Across 22 wells, our advanced completions program has consistently outperformed expectations, delivering sustained production 20% above our base type curve.

Combined with the benefits of our positive offset wells, or POW FX, and continued operating efficiencies, overall well performance now exceeds type curve by 25% after 180 days. These results reinforce what we continue to say: not only is the Barnett back, but through disciplined execution, continuous innovation, and relentless operational excellence, we believe it is better than ever. One of the most exciting developments this quarter came from our Upper Barnett appraisal program with the Yarbrough 8H. The well delivered production approximately two times above type curve over its first 30 days while coming in at expected development costs.

The stellar Upper Barnett well results from this quarter confirm our confidence in Upper Barnett performance. 25 per MMBtu and unlocks the entire 114-well Upper Barnett inventory. The results further validate our technical understanding of the Upper Barnett and strengthen our confidence in its potential as a long-duration, largely untapped inventory opportunity within our existing footprint. Importantly, they also reinforce our long-term development runway.

We continue to believe the combined Upper and Lower Barnett provide more than 15 years of highly economic inventory capable of supporting a flat to modest growth production profile. It's the quality of that inventory, not simply the quantity, that gives us confidence in the long-term outlook for our upstream business. Given these encouraging results, we plan to drill another Upper Barnett well in the first half of 2027, while continuing to identify opportunities to incorporate additional Upper Barnett locations into our long-term development program.

Overall, we view the performance this quarter and sustained development success as further evidence that the Barnett continues to compete favorably with any shale gas basin in the country. Turning to carbon capture, our platform continues to scale and, more importantly, we're continuing to demonstrate our ability to execute. As Chris mentioned, we now have three active CCUS projects that are injecting CO2 and receiving 45Q tax credits, demonstrating our ability to consistently move projects from development into commercial operation. We are also continuing to see strong progress across the broader, growing portfolio.

During the quarter, we drilled two additional CCUS wells ahead of schedule and under budget, with reservoir quality that exceeded our expectations. One well was drilled on our premier High West acreage in Louisiana and the second in East Texas with the same major midstream company as our recently commissioned Eagle Ford project. These results continue to validate the quality of our carbon storage pore space while reinforcing our confidence that High West and East Texas represent two significant long-term growth opportunities for the business.

In addition, our Class 6 well permit applications in Louisiana continue to progress through regulatory review, representing another potential important milestone as we advance our broader carbon capture portfolio. We're also making meaningful progress on our post-combustion capture initiatives.