BKV Corporation Q4 FY2025 earnings call

• 2025 was a transformational year, exemplifying "said-did" culture and positioning for sustained growth. - Upstream exceeded expectations throughout 2025, with strong production growth and successful Bedrock acquisition. - Carbon capture had progress with partnerships and project advancements. - Power business is a core growth engine, with Temple plants performing well and PPA discussions ongoing. - 2025 corporate financial performance showed strong adjusted EBITDAX and positive free cash flow.

Upstream: In 2025, upstream business delivered 8% exit-to-exit organic production growth, with development capital well within cash flow and top-tier F&D costs. Bedrock acquisition in Q3 expanded footprint in Fort Worth Basin, adding over 100 MMcfe/d production and nearly 1 Tcfe of proved reserves. Full year 2025 upstream development capital spend was $245 million. Fourth quarter production outperformed guidance at 940 MMcfe/d. 2026 upstream guidance: production 935 MMcfe/d on $240 million development capital spend. Carbon Capture: 2025 had meaningful progress, Barnett Zero facility achieved cumulative injection over 311,000 metric tons since Nov 2023. Refreshed near-term CCUS injection target to 1.5 million tons per annum within 2028. Eagle Ford and Cotton Cove projects on track. Power: Temple plants had high availability factors in 2025. Fourth quarter combined average capacity factor 57%, full year 59%, generating over 7,600 gigawatt-hours. 2026 power JV EBITDA guidance $135 to $175 million. First quarter gross power JV EBITDA expected $25 to $35 million.

• Upstream 2026: production 935 MMcfe/d on $240 million development capital spend. - Power JV 2026: EBITDA range $135 to $175 million. - 2026 capital investment program: total gross capital expenditures $410 to $560 million, net capital investment midpoint $324 million, fully funded within cash flow. - Upstream 2026 hedge: protects over 60% of forecasted production, gas hedged at $3.85 per MMBtu, NGLs hedged at $22 per barrel. - Power business 2026: hedged 40% of ERCOT generation capacity through HERCOs, locked in fixed spark spreads on roughly 100 megawatts.

• Risks associated with recently completed power JV transaction or integration of recently acquired upstream assets. - Risks related to non-GAAP financial measures, where actual results could differ materially from forward-looking statements.

Q: Good morning. Team, congrats on just strong execution across all segments in your first year. I want to start with a question on the strategic power growth capex. Can you, Chris, speak to what specifically is that spending on?

A: Hey, Betty, thanks for the question. So you are correct. The power investments are strategic. As you can imagine right now, as you discuss long-term offtake agreements with potential customers, those designs are going to be in a private use network type setup. That is the assumption here. And so as part of a private use network, you need to invest in transformers, switches, power lines, generation equipment, earthworks, pipelines, water. And that infrastructure then gets recovered over the life of a contract. Right? And so what we are guiding here is that we have got designs and/or investments that need to be made to enable this, and that is really where you see that capital. When you think about the existing Temple 1, Temple 2 capex, you can imagine historically that has been in that sort of $5 million-ish per year level, and we expect that to continue. So the vast majority of what we are guiding here to is really for establishment of a private use network type setup, and that is, again, we think incredibly important to accreting value in a very capital-efficient manner for BKV Corporation.

Q: And it also sounds like you recover this capex in that PPA contract down the line as well?

A: Exactly. It works just like a lease, Betty. If you invest and a landlord puts in infrastructure, then they recover it in the rent. It is the same concept. In a PPA, you basically amortize the cost of your capital over the life of a contract as part of the investments you make.

Q: Good morning, and I will echo the congrats on a strong performance last year. Given multiple vectors of growth here, Chris, I wanted to come back to power. You are investing in a private use network. It sounds like that is separate from the grid, so just wanted to confirm that. And then there are discussions happening at ERCOT around alterations to their grid connect approval process. How is that impacting your discussions with potential customers for a longer-term PPA?

A: Hey, Scott. Thanks. Good questions. On the private use network, the setup would be ultimately to connect it back into the grid. So you can imagine it is a behind-the-meter setup. You would hypothetically connect into a data center directly from your generation assets, but then you would have a switching yard that would feed a substation which is grid-connected. And those timelines may not match up one-to-one, and so, as we have mentioned, this is probably where you are going to see the market move with co-located power generation over the next few years. The reason for that is manyfold, but a lot of it has to do with transmission congestion. One of the biggest constraints in the market—this will get to your second question—is the ability to move electrons in sizable form in and out of localized areas. Having co-located power in a private use network setup really does solve a lot of the issues associated with that. It optimizes the amount of capex that needs to be incorporated in the grid. That is really where we see the market going. In terms of the regulation specific for Texas and ERCOT, I think it is overall bullish. Texas is going big on data center infrastructure. It is open for business. There is a very strong feeling here in the state to promote investments in the power grid. We think Texas is one of the states that is really going to figure this out quickly, and BKV Corporation is taking a leadership position in power in Texas. With regards to the regulations themselves, the major concerns of the grid operators are: one, we want to ensure grid reliability—so how are you considering that; two, we want to make sure rates are fair and equitable to existing customers across the state; and three, we need to make sure that new investments are built into the system or are encouraged. The regulations are orienting towards large load—that is the SB 6 regulation that everyone is talking about here—and we think it is incredibly constructive because what they are doing is creating a framework to high-grade projects that address all those three things: grid reliability, ability to ensure equitable rates to existing customers in the state, and then adding grid generation assets. Our designs that we have been describing, including the capex I mentioned, address those three key points. We think this is going to high-grade the projects that are real, that have real customers, that have real funding behind them, and weed out those projects which are speculative and not as real. Overall, we are active with the regulators and the stakeholders here in the state, and we think that Texas figures this out very quickly. A lot of customers have that same view.

Q: Hello, good morning. Thank you for taking my questions. On power, on slide seven, you referenced a potential PPA execution on 4.5 terawatt-hours of unutilized capacity. Can you just clarify whether this implies a PPA covering just a portion of the Temple plants' capacity, with the remainder being sold into merchant markets? Or just how you are seeing the structure of a PPA shaping up based on your latest discussions?

A: Yes. Jonathan, it is Chris here. It is a good question. When you look at Temple today, we have two identical power plants in Temple 1 and 2, each 750 megawatts. Today, we hedge roughly half of the complex—so one power plant–equivalent worth of power. There are several reasons you do that. Oftentimes, you can sequence your maintenance to be down on one plant and be fulfilling your power obligations off the other, and so we see a PPA in a similar type structure. A PPA effectively is a long-term hedge on power prices. You could imagine that you are going to always be looking at about half your capacity being contracted and the other half being floated so that you can manage around your maintenance schedules and have resiliency as well. The balance of the volumes that are not contracted, you are absolutely right, from a behind-the-meter setup, you would be able to feed that into the grid and sell that, and you are able to load balance. If you have additional power that the customer is not using, you would theoretically sell that additional power into the grid as well. When you think about these agreements, they are structured like long-term offtake agreements that you would see potentially even for an LNG contract. They are substantive. You can imagine something like 750 megawatts over 10 to 20 years with a structured price, which is somewhat a capacity payment blended with an energy payment, and at a price that is typically about strip. These are the structures that we see in the market today and are good reference points. You are starting to see the announcements on the gas side for these. That is how you can envision something like this coming together.

Q: Good morning. I wanted to start by circling back to the power capital, and I guess my question is maybe in context of slide 25. When we think about that guidance, is that a function of the number of potential PPAs? Is it a function of the scale of the agreement or even maybe the geographical distance from Temple?

A: Morning, Jake. Yes. Thanks, Jake. Good question. I think the slide is meant to show the activity around Temple. If you think about where people are building massive amounts of data center infrastructure, they are looking for a few things. One is the ability to add generation assets and grid interconnect—that is critical. Number two, they are looking for proximity to existing fiber lines and/or data center clusters that are already in existence. Number three, they are looking for a buildable, friendly environment where licensing, contracting, and regulations are streamlined. Temple sits right between the Dallas–Fort Worth area and the San Antonio cluster, and this slide is meant to show the amount of activity in Temple. The city of Temple itself has been astronomical in the last, especially 24 months, around that, and it is for the reasons that I just mentioned. It is flat land, it is buildable, it is Texas, it is grid-connected, there are three 345 kV lines. That is the intention. In terms of how you would actually design, the closer to the generation assets, the better, as you build. You are going to see more and more of this co-located power design that I am describing here. That is critical because of what I mentioned around grid congestion. If you are pulling huge amounts of megawatts, the more localized you can match that demand and supply, the less taxing amount of infrastructure you rely on the grid. That is where you are seeing loads in the past in that 200 to 300 megawatt level for data centers—now folks are talking about gigawatt plus. When you are talking about a gigawatt interconnection, you really do need localized generation support. You can imagine the closer you are to generation assets, you optimize your capex more and you get better bang for buck in terms of the overall design. That is where this goes, and you are seeing that in this slide here on ’25 with 1.5 gigawatts of generation capacity.

Q: So I just have a question about the East Texas project. In the last quarter, you said that the target FID was going to be in first half 2026, but this quarter, you said it is going to be in the internal FID in December. So is that project still waiting for FID, or is it ready?

A: Yes. Thank you. This is Eric. Thank you for the question, Fu, about our East Texas project where we reached internal FID. Yes, we are very excited about that. That is stage one in our trajectory towards our final investment decision, which we have not put out a timeline on just yet. What I can say is we are progressing that project with the same major midstream operator for which we are doing the Eagle Ford project about to start. All of the documents and agreements are in place. We will be drilling the injection well this year, with an anticipated start-up sometime in 2027, as we have signaled. FID is forthcoming on that. We will be drilling the well. We are very excited for that here in the first half of the year, and we look at that as a continuation of our kind of sweet spot so far in these Class II natural gas processing projects, generating that $48 per ton in EBITDA margin and stair-stepping into additional projects in our ramp to 1.5 million tons.

Q: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Christopher Kalnin for closing comments.

A: Thank you, everyone. I appreciate your time. BKV Corporation is positioned for growth along all our three vectors. We are very excited about 2026, and we look forward to future announcements around that. Thank you, everyone.