BKV

Core Strategic Framework

• BKV operates an integrated closed-loop business platform combining upstream natural gas production, ERCOT power generation, and revenue-generating carbon capture, which creates hard-to-replicate competitive advantages.
• The company emphasizes a "said-did" culture of consistent execution against stated plans, which was validated by Q2 2026 results that met or exceeded guidance across all business lines.

Power Business Progress

• ERCOT is experiencing accelerating power demand growth driven by AI infrastructure, data centers, and broad industrial development, with a new record peak load of over 91 gigawatts reached in July 2026. BKV is well positioned to meet this growing demand with its integrated development model.
• At the Temple Energy Complex, the company received air permits for up to 400 megawatts of modular generation (Phase 1 of development) in Q2, maintaining confidence in near-term energization timelines. A DPA (Delivery and Power Agreement) is expected to be signed between 2026 and early 2027.
• BKV is expanding its power strategy to Jack County, Texas, where it has secured 6,200 acres of site control with clear 345 KV grid access, and has submitted interconnection applications for a second integrated energy complex replicated from the Temple model.
• Combined Temple and Jack County developments have the potential to add an incremental 1.4 gigawatts of dispatchable generation, roughly doubling BKV's total generation capacity to nearly 3 gigawatts within the next few years.

Upstream Operational Highlights

• The Barnett shale operation achieved the lowest all-in cost per lateral foot ($525 per lateral foot DCNF) of any major U.S. shale gas basin, while delivering record well performance. BKV has now brought online the five best-performing pads in Barnett history over the past five quarters, and drilled the two longest laterals in basin history in Q2.
• Base decline management initiatives and AI optimization added approximately 12 million cubic feet per day to production run rate, maintaining one of the industry's lowest base decline rates. Overall well performance now exceeds type curve by 25% after 180 days, driven by the advanced completions program.
• The successful Yarbrough 8H appraisal well in the Upper Barnett delivered 2x 30-day production above type curve at expected costs, unlocking the full 114-well Upper Barnett inventory and lowering break even for half the inventory to $3.25 per MMBTU. Combined Upper and Lower Barnett provide more than 15 years of economically viable development inventory supporting a flat to modest growth production profile.
• BKV has brought all natural gas marketing fully in-house, giving the company exposure to premium Gulf Coast markets and enabling capture of incremental margin across the value chain, with early benefits already reflected in Q2 results.

Carbon Capture Operational Highlights

• Two new CCUS projects (Cotton Cove and Eagleford) were commissioned in H1 2026 as committed, bringing the total operating portfolio to three projects all actively injecting CO2 and generating 45Q tax credits. New CCUS wells drilled in Q2 were completed ahead of schedule, under budget, and exceeded reservoir quality expectations.
• BKV has received independent auditor validation for its carbon sequestered gas (CSG) offset certification, positioning the company to commercialize the CSG product in H2 2026. CSG provides an incremental monetization layer on top of existing 45Q tax credit economics, offering customers a differentiated low-carbon natural gas solution.
• The CCUS development pipeline remains on track to hit a 1.5 million tons per annum injection run rate target by 2028, with active progress on East Texas projects with Comstock, I-West, and other third-party opportunities.

• Upstream Production: Full-year 2026 upstream production guidance was raised to a midpoint of 950 million cubic feet equivalent per day, a 1.6% increase from prior guidance, implying 3-4% year-over-year production growth. Originally guided full-year upstream development capital expenditure is maintained.
• Strategic Power Capital Expenditure: 2026 full-year strategic power capex guidance was increased to $400 million to $475 million, an increase of $128 million at the midpoint. The increase is driven by accelerated purchases of long-lead-time equipment primarily for the Jack County project, intended to preserve schedule certainty and maintain BKV's speed-to-power competitive advantage. Non-power capital budget guidance remains unchanged.
• Gas Differentials: Full-year 2026 guidance incorporates slightly wider gas differentials to reflect current market outlook and planned ethane rejection for the remainder of the year, which is offset by higher NGL realizations from increased exposure to heavier NGL components.

1. Upstream: The upstream business delivered production above the high end of guidance in Q2 2026, with total cash costs down 10% quarter-over-quarter versus Q1 2026. It is the core cash flow engine for BKV, driving overall strong quarterly financial results. It contributed to the quarter's record-adjusted EBITDAX of $142 million and record-adjusted net income of $51 million. Full-year 2026 production is guided to a midpoint of 950 million cubic feet equivalent per day, implying 3-4% year-over-year production growth.

2. Power: Power generation delivered strong operational and financial results in Q2 2026. Temple facilities generated over 2,200 gigawatt-hours of electricity, a 16% year-over-year increase, with a 70% capacity factor. On a hedged basis, average power prices were $42 per megawatt-hour, with an average spark spread of $22 per megawatt-hour. Gross power adjusted EBITDA was $36 million before corporate allocations, representing a meaningful contribution to BKV's total consolidated cash flow. Power currently makes up roughly 25% of BKV's total operating cash flow in the quarter, and the development pipeline could double total generation capacity to nearly 3 gigawatts over the next few years.

3. Carbon Capture (CCUS): Three carbon capture projects (Barnett Zero, Cotton Cove, Eagleford) are now operational, with Cotton Cove and Eagleford commissioned in H1 2026 as planned. Combined, these facilities have injected approximately 400,000 tons of CO2 through the end of Q2 2026, and generate revenue from 45Q tax credits. CCUS operational performance is on track to hit a 1.5 million tons per annum injection run rate target by 2028.

• ERCOT's ongoing regulatory review and batching process for interconnection requests could lead to delays for lower-quality speculative projects, though BKV management believes its well-developed, economically viable projects are well positioned to emerge as high-priority opportunities.
• Commercialization of new power generation projects depends on successfully signing long-term power purchase agreements with counterparties, and there is no guarantee that ongoing negotiations will result in finalized contracts on favorable terms.
• Monetization of non-core assets such as the Northeast Pennsylvania Marcellus position is dependent on a material rebound in natural gas prices to generate sufficient market interest, which may not occur.
• Scaling of the carbon capture and CSG business is dependent on continued regulatory progress (including permitting in Louisiana) and customer demand for low-carbon products, which may develop slower than expected.
• Execution of large-scale power generation development carries inherent schedule and cost risk, even with advance procurement of long-lead equipment.

Q: How will Jack County be configured, and what impact will ERCOT's interconnection batching process have on BKV's development plans? / A: Jack County will follow the same configuration as the Temple Energy Complex: anchored by a behind-the-meter private use network with combined cycle generation, with full grid connection as the preferred end state. Grid connection improves reliability and allows BKV to sell excess power back to the grid, which aligns with current market demand. Management believes the ERCOT interconnection review process will filter out low-quality speculative projects, leaving high-quality, commercially viable projects like BKV's in a stronger position. BKV's projects align with policymakers' goals for reliable, job-creating investment that does not shift costs to consumers, so the process is ultimately bullish for the company. (312 characters)

Q: What progress has been made on Jack County commercial discussions, how will the increased CapEx be used, and how does its PPA timing compare to Temple? / A: Jack County progressed faster than expected after securing 6,200 acres of site control in a strategic location close to the Dallas-Fort Worth metroplex, Barnett gas fields, and existing major 345 KV transmission infrastructure. The increased CapEx funds advance purchases of long-lead equipment to lock in timeline certainty for the project. Demand for bring-your-own-generation for data centers and industrial loads is accelerating, and BKV's proven execution track record makes it a preferred partner for customers, with commercial discussions progressing well. The full development timeline for Jack County is expected to be 48 to 60 months, similar to large combined cycle project industry norms. (398 characters)

Q: Could the Northeast PA asset be sold to fund power growth? What is the company's view on this opportunity? / A: BKV's base plan is to continue operating the Northeast PA Marcellus asset for cash flow, as it is a high-quality asset that provides diversification for gas sales into the Northeast winter market. Management says it would entertain a sale if it receives a compelling offer, but meaningful market interest is unlikely without a substantial rebound in natural gas prices, which has not occurred yet. For now, the asset continues to generate steady cash flow for the company, so there is no pressure to monetize immediately. (297 characters)

Q: What drove the improved Upper Barnett breakeven, and how repeatable are these strong results across the inventory? / A: The break even reduction to $3.25 per MMBTU for half the 114-well Upper Barnett inventory is driven by multiple factors: proven superior geological and reservoir properties in the Upper Barnett hotspot, strong legacy well results that were confirmed by the recent Yarbrough 8H appraisal well, and synergies from existing lower Barnett infrastructure that reduce development costs. The Yarbrough 8H delivered 2x 30-day production above expectations at on-budget costs, confirming the technical understanding of the play. BKV will drill another appraisal well in H1 2027 to further de-risk the inventory, and will blend Upper Barnett wells into existing Lower Barnett development pads to capture additional synergies. (386 characters)