Financial Data and Key Metrics Changes - BKV reported a net loss of $57 million in Q4 2024, primarily due to net derivative losses of $58 million, resulting in a negative $0.68 per diluted share [46] - Adjusted net income for Q4 2024 was approximately $1 million, or $0.01 per diluted share, while the full year adjusted net loss was $40 million [47] - The company generated positive adjusted free cash flow of $92 million for the full year 2024, with an adjusted free cash flow margin of 15% [45] Business Line Data and Key Metrics Changes - The upstream business produced 774 million cubic feet equivalent per day in Q4 2024, exceeding guidance by 5% [20] - The Power JV's average capacity factor was 38% in Q4 2024, with total generation of 1,200 gigawatt hours [37] - BKV's implied share of the Power JV's net loss in Q4 was about $17 million, with adjusted EBITDA of $0.5 million [38] Market Data and Key Metrics Changes - ERCOT's long-term load forecast estimates demand could reach 150 gigawatts by 2030, nearly doubling from the 2023 peak load of 85 gigawatts [10] - Power prices in Q4 averaged $36.90 per megawatt hour, with average natural gas costs of $2.50 per MMBtu, resulting in an average spark spread of $19.37 per megawatt hour [37] Company Strategy and Development Direction - BKV aims to redefine the energy company concept by integrating traditional and new energy approaches, focusing on four business lines: power, carbon capture, upstream, and midstream [8] - The company is exploring building additional combined cycle units to address projected demand growth and baseload supply mismatches [13] - BKV is actively pursuing M&A opportunities and expects significant transactions in the coming years [12] Management's Comments on Operating Environment and Future Outlook - Management remains bullish on the carbon capture industry, citing strong bipartisan support and economic incentives like the 45Q tax credit [14] - The company anticipates robust long-term demand growth in the power sector, particularly in ERCOT, despite short-term price moderation [11] - Management expressed confidence in achieving a goal of injecting over 1 million tons of CO2 by the end of 2027 [31] Other Important Information - The company plans to increase total capital expenditures to between $320 million and $380 million for 2025, with approximately $220 million allocated for development [43] - BKV's outstanding RBL balance was $165 million, representing a net leverage ratio of 0.65x, with total liquidity of $436 million as of year-end [45] Q&A Session Summary Question: Capacity dedication for PPAs in ERCOT - Management indicated a comfort level of dedicating up to 750 megawatts of capacity for PPAs, maintaining operational redundancy [56][58] Question: Progress on PPA agreements and new plants - Discussions for existing plants are active, with expectations for announcements in the next 12 to 24 months, while also exploring agreements for new plants [60][61] Question: CCUS capital spending guidance - Approximately $90 million of the $130 million CCUS and other CapEx guidance is expected to be allocated for CCUS projects [68][69] Question: Production taxes and timing impacts - The variance in production taxes was attributed to delays in ad valorem assessments, with expectations for a return to historical levels [75][77] Question: Upstream activity and gas prices - Management remains committed to a disciplined CapEx approach, with potential increases in the second half of 2025 if prices remain strong [80][81] Question: Margin comparison for CCUS contracts - The margin for the new CCUS contract is comparable to the Barnett Zero project, around $50 per ton EBITDA margin [87] Question: Power EBITDA guidance for 2025 - The guidance reflects a moderate outlook due to increased renewable generation and lower forward pricing, but long-term demand growth is anticipated [90][91] Question: Barnett operators' response to improved gas strip - Stabilization in gas prices could trigger more transactions among Barnett operators, reducing bid-ask spreads [99][100] Question: Upstream performance drivers - The strong performance was driven by new well development and effective base decline management, with expectations for continued success [105][106]

BKV (BKV) Q4 2024 Earnings Call February 26, 2025 10:00 AM ET Company Participants David Tameron - VP, Strategic Finance & Investor RelationsChris Kalnin - CEOEric Jacobsen - President - UpStreamJohn Jimenez - Chief Financial OfficerScott Gruber - Director - Oilfield Services & Equipment ResearchNone - ExecutiveBetty Jiang - Managing DirectorJake Roberts - Director - E&P Research Conference Call Participants Nitin Kumar - Senior AnalystBertrand Donnes - Financial AnalystTim Rezvan - Managing Director & Equi ...

Financial Performance - Total revenues for Q4 2024 were $119.8 million, with a net loss of $57.5 million, or $(0.68) per diluted share[5]. - Total revenues and other operating income for Q4 2024 were $119.782 million, a decrease of 60.3% compared to $301.973 million in Q4 2023[38]. - The company reported a net loss of $57,457,000 for Q4 2024, compared to a net income of $37,540,000 in Q4 2023[53]. - Adjusted Net Income for Q4 2024 was $780,000, compared to a loss of $29,538,000 in Q4 2023[53]. - Adjusted EPS for Q4 2024 was $0.01, while it was $(0.45) in Q4 2023[53]. - Cash flows from operating activities for the year ended December 31, 2024, were $118.538 million, slightly down from $123.299 million in 2023[40]. - The company reported total assets of $2.231 billion as of December 31, 2024, down from $2.683 billion in 2023, a decrease of 16.8%[34]. - Retained earnings decreased to $124.5 million as of December 31, 2024, from $267.4 million in 2023, a decline of 53.4%[36]. Production and Operations - Total hydrocarbon production for Q4 2024 was 774.5 MMcfe/d, exceeding the guidance range of 720-750 MMcfe/d[19]. - Net production per day decreased to 774.5 MMcfe/d in Q4 2024 from 838.4 MMcfe/d in Q4 2023, representing a decline of 7.5%[22]. - The average natural gas cost was $2.50/MMBtu in Q4 2024, resulting in an average spark spread of $19.37/MWh[11]. - The average realized natural gas price for Q4 2024 was $2.10/MMBtu, with an average price including hedges of $2.23/MMBtu[6]. - Average realized natural gas prices, including derivatives, were $2.23/Mcf in Q4 2024, down from $2.33/Mcf in Q4 2023, a decrease of 4.3%[22]. - The average NYMEX Henry Hub price for natural gas was $2.79/Mcf in Q4 2024, compared to $2.88/Mcf in Q4 2023, a decline of 3.1%[22]. Capital Expenditures and Liquidity - Capital expenditures for Q4 2024 were $60.3 million, below the low end of the guidance range of $65.0 million[5]. - Capital expenditures in Q4 2024 were $60.3 million, significantly higher than $16.3 million in Q4 2023, marking an increase of 269.3%[23]. - Total liquidity as of December 31, 2024, was $435.8 million, consisting of $14.9 million in cash and cash equivalents and $420.9 million available under the reserve-based lending agreement[25]. - The net leverage ratio as of December 31, 2024, was 0.65x, below the long-term target range of 1.0x to 1.5x[25]. - For FY 2025, total capital expenditures are projected to be between $320 million and $380 million, with net production expected to range from 755 to 790 MMcfe/d[27]. Environmental Initiatives - The Barnett Zero project sequestered 44,437 metric tons of CO2 equivalent in Q4 2024, with a total of 173,325 metric tons since startup[16]. Joint Ventures and Adjusted Metrics - BKV's implied proportionate share of Power JV Adjusted EBITDA was $0.5 million for Q4 2024, compared to $0.2 million in Q4 2023[14]. - Power JV Adjusted EBITDA for Q4 2024 was $923,000, up from $364,000 in Q4 2023, indicating positive operational performance[70]. - The net income (loss) for the Power JV in Q4 2024 was $(34,358,000), slightly improved from $(35,716,000) in Q4 2023[70]. - Power JV Adjusted EBITDA for the year ended December 31, 2024 was $67,899,000, down from $189,761,000 in 2023[70]. Derivative Activities - The fair value of the company's derivative activities as of December 31, 2024, included a loss of $12.460 million from swaps and a gain of $4.017 million from collars[47]. - Unrealized gains on derivatives for Q4 2024 were $64,537,000, contrasting with losses of $(93,284,000) in Q4 2023[59]. - Total cash settlements from early termination of natural gas derivative contracts were significant, impacting the financial results[60]. - The early termination of derivative contracts contributed an increase of $7.6 million to Adjusted Free Cash Flow for Q4 2023[64]. Shareholder Information - Basic weighted-average shares outstanding increased to 84,387,000 in Q4 2024 from 66,276,000 in Q4 2023[53]. - The company raised $265.661 million from the issuance of common stock in its initial public offering[40].

Core Viewpoint - The article emphasizes the importance of identifying and sustaining trends in short-term investing, highlighting that sound fundamentals and positive earnings estimates are crucial for maintaining momentum in stock prices [1]. Group 1: Trend Analysis - The "Recent Price Strength" screen is a useful tool for investors to identify stocks that are currently trending upwards, supported by strong fundamentals and trading near their 52-week high [2]. - BKV has shown a significant price increase of 35.1% over the past 12 weeks, indicating strong investor interest and potential for further upside [3]. - A recent price increase of 12.4% over the last four weeks suggests that BKV's upward trend is still intact, and it is trading at 92.6% of its 52-week high-low range, indicating a possible breakout [4]. Group 2: Fundamental Strength - BKV holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, which are critical for short-term price movements [5]. - The Zacks Rank system has a strong historical performance, with Rank 1 stocks averaging an annual return of +25% since 1988, reinforcing the potential for BKV's continued success [6]. - The Average Broker Recommendation for BKV is also 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [6]. Group 3: Investment Opportunities - In addition to BKV, there are other stocks that meet the criteria of the "Recent Price Strength" screen, suggesting a range of potential investment opportunities for trend-focused investors [7]. - The article encourages investors to explore over 45 Zacks Premium Screens tailored to different investing styles, which can help identify winning stock picks [7].

Financial Performance - The company reported a net income of $12.9 million for the three months ended September 30, 2024, contrasting with a net loss of $85.4 million for the nine months ended September 30, 2024 [113]. - Total revenues for the nine months ended September 30, 2024 were $461.2 million, a decrease from $678.0 million in the same period of 2023 [150]. - Total revenues decreased to $173.1 million for the three months ended September 30, 2024, from $191.4 million for the same period in 2023 [125]. - Natural gas revenues decreased by approximately $112.0 million, or 30%, to $267.1 million for the nine months ended September 30, 2024, from $379.0 million in the same period of 2023 [151]. - Natural gas revenues decreased by approximately $34.1 million, or 28%, to $87.9 million for the three months ended September 30, 2024, compared to $122.0 million for the same period in 2023 [126]. - NGL revenues decreased by approximately $12.8 million, or 25%, to $37.5 million for the three months ended September 30, 2024, from $50.2 million for the same period in 2023 [127]. - Oil revenues decreased by approximately $0.6 million, or 27%, to $1.6 million for the three months ended September 30, 2024, from $2.2 million for the same period in 2023 [128]. - Midstream revenues decreased by approximately $1.1 million, or 30%, to $2.7 million for the three months ended September 30, 2024, from $3.8 million for the same period in 2023 [130]. - Total operating expenses decreased to $559.7 million for the nine months ended September 30, 2024, down from $578.8 million in the prior year, reflecting a 3% reduction [161]. - Total operating expenses decreased slightly to $194.1 million for the three months ended September 30, 2024, from $196.7 million for the same period in 2023 [135]. Capital and Financing - The company completed its initial public offering (IPO) on September 27, 2024, selling 15,000,000 shares at $18.00 per share, resulting in net proceeds of $253.8 million after underwriting discounts [106]. - The RBL Credit Agreement has a maximum credit commitment of $1.5 billion, with an outstanding balance of $190.0 million as of September 30, 2024 [110]. - The RBL Credit Agreement has a maximum credit commitment of $1.5 billion, with a borrowing base of $800.0 million and an elected commitment of $600.0 million as of September 30, 2024 [180]. - Net cash provided by investing activities was $80.6 million for the nine months ended September 30, 2024, compared to a net cash used of $156.3 million in the same period of 2023, primarily due to proceeds from the sale of Chaffee and Chelsea totaling $131.7 million [176]. - Net cash used in financing activities was $289.2 million for the nine months ended September 30, 2024, which included net payments on debt of $468.0 million and payments for taxes related to net share settlement of restricted stock units of $53.2 million [177]. - As of September 30, 2024, the company had cash and cash equivalents of $31.3 million, an increase from $25.4 million as of December 31, 2023, while the net working capital deficit improved to $13.3 million from $100.1 million [179]. Production and Operations - For the three months ended September 30, 2024, natural gas production was 55,456 MMcf, down from 61,792 MMcf in the same period of 2023, representing a decrease of approximately 3.0% [120]. - Production revenues for the three months ended September 30, 2024, were $127.0 million, while midstream revenues were $2.7 million [112]. - Lease operating expenses for the three months ended September 30, 2024, were $32.8 million, or $0.47 per Mcfe [113]. - Lease operating and workover expenses were $102.2 million, or $0.47 per Mcfe, for the nine months ended September 30, 2024, a decrease of 10% from $114.2 million, or $0.48 per Mcfe, in 2023 [162]. - Gathering and transportation expenses were $54.7 million, or $0.78 per Mcfe, a decrease of 12% from $62.5 million, or $0.80 per Mcfe, in Q3 2023 [139]. - Gathering and transportation expenses were $167.8 million, or $0.77 per Mcfe, for the nine months ended September 30, 2024, an 8% decrease from $183.1 million in the same period of 2023 [164]. Environmental and Sustainability Initiatives - The company expects to achieve net zero Scope 1 and Scope 2 emissions by the early 2030s and net zero Scope 1, 2, and 3 emissions by the late 2030s [105]. - The company commenced sequestration operations at its first CCUS project in November 2023, with a second project expected to start in the first half of 2026 [105]. - The company expects to fund up to 50% of its CCUS business from external sources, targeting completion of third-party CCUS financing in 2025 [172]. Internal Controls and Risks - The company experienced a material weakness in internal control over financial reporting related to income tax accounting, which could lead to material misstatements in financial statements [205]. - The company has implemented additional internal controls to address the identified material weakness, although effectiveness is not guaranteed [206]. - The company actively monitors counterparty credit risk and requires minimum credit standards for all counterparties involved in derivative contracts [201]. Derivative Instruments and Market Risks - The company has entered into financial derivative instruments to hedge against commodity price fluctuations, covering portions of projected production through 2027 [195]. - The primary market risk exposure for the company is in the pricing of natural gas and NGL production, which is driven by volatile spot regional market prices [193]. - The company’s hedging activities do not provide complete protection against basis risk, which could result in economic losses [198]. - As of September 30, 2024, the estimated fair value of the company's commodity derivative instruments was a net liability of $3.1 million, compared to a net asset of $102.5 million as of December 31, 2023 [199]. - A hypothetical increase or decrease of $0.10 per Mcf in NYMEX would have resulted in a $7.0 million change in natural gas hedge revenues, while a $1.00 per Bbl change in NGL purity product price would have resulted in a $5.0 million change in NGL hedge revenues [196]. - The company had $190.0 million of outstanding borrowings under the RBL Credit Agreement as of September 30, 2024, with an average annualized interest rate of approximately 9.4% [203].