Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• BKV Corp (NYSE:BKV) delivered solid business performance in 2024, driven by impressive results from upstream operations.
• The company made significant progress in its carbon capture, utilization, and storage (CCUS) initiatives, including securing a financial joint venture partner.
• BKV Corp (NYSE:BKV) maintained a strong balance sheet, providing flexibility to advance its business across various sectors.
• The company marked a major milestone by debuting on the New York Stock Exchange in September 2024.
• BKV Corp (NYSE:BKV) is actively exploring opportunities to build additional combined cycle units to address projected demand growth in the power sector.

Negative Points

• BKV Corp (NYSE:BKV) reported a net loss of $57 million in the fourth quarter of 2024, driven by net derivative losses.
• The company's power joint venture experienced a net loss of $17 million in Q4, including major maintenance expenses.
• BKV Corp (NYSE:BKV) faces short-term headwinds in the power market due to moderate power demand and additional renewable generation.
• Production taxes were lower than expected, attributed to timing impacts and delays in finalizing assessed values.
• The company's adjusted EBITDA guidance for the power joint venture in 2025 is lower than anticipated, reflecting lower forward pricing.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with PR.

Q: Chris, regarding the Texas power market, how much of your capacity would you be comfortable dedicating to a Power Purchase Agreement (PPA) given the growing demand from data centers? A: Chris Callan, CEO: We have two modern combined cycle power plants, each about 750 megawatts. For a PPA structure, we wouldn't want to exceed 750 megawatts to maintain redundancy, which is crucial for data center companies. So, 750 megawatts is the upper limit we'd consider for PPAs.

Q: Can you provide more details on your CCS capital spending guidance and whether it assumes a joint venture? A: Eric Jacobson, President of Upstream: Of the $130 million CCS and other category, about $90 million is expected for CCS. This guidance assumes 100% CapEx on CCS without a joint venture.

Q: Could you explain the lower-than-expected production taxes and whether this is a timing issue? A: John Jimenez, CFO: The variance was due to ad valorem taxes, which are real estate and personal property taxes. Some counties delayed finalizing assessed values, resulting in a $47 million true-up in Q4. Going forward, assume production taxes return to historical levels.

Q: With the improved gas strip, do you expect more consolidation among Barnett operators, or will the bid-ask spread widen? A: Chris Callan, CEO: If prices stabilize, we expect more transactions as it aligns expectations on the strip. However, if prices rise further, the bid-ask spread might widen again. Stability could lead to more transactions in the second half of the year.

Q: Regarding the potential JV on carbon capture, how confident are you about finalizing it within the 90 to 120-day window? A: Chris Callan, CEO: We are optimistic about finalizing the JV within this timeframe. The partner is committed, and the bipartisan support for carbon capture adds confidence. However, nothing is certain until finalized, but we are prepared to proceed independently if needed.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.