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BKV Corp (BKV)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024: total revenues and other operating income $119.8M; GAAP net loss −$57.5M (−$0.68 diluted EPS) driven by unrealized hedging losses and equity affiliate losses; non-GAAP adjusted EPS $0.01; Adjusted EBITDAX $71.9M; net cash provided by operating activities $43.8M .
  • Upstream outperformed: net production 774.5 MMcfe/d, above guidance (720–750); capex $60.3M, below low end of 4Q guidance ($65.0M) .
  • Power JV shoulder-season maintenance and moderate pricing led to Q4 softness (BKV implied share net loss −$17.2M; Adjusted EBITDA $0.5M), but management guided FY25 Power JV Adjusted EBITDA to $130–$170M and highlighted AI/data-center demand catalysts in ERCOT .
  • 2025 guidance: total capex $320–$380M, net production 755–790 MMcfe/d; strong liquidity $435.8M and net leverage 0.65x support execution; CFO transition announced (David Tameron to succeed John Jimenez) .

What Went Well and What Went Wrong

What Went Well

  • Production and capital efficiency: Q4 net production 774.5 MMcfe/d beat guidance on better-than-forecasted well performance and accelerated development; capex $60.3M below guided low end due to cost discipline . Management: “we delivered more upstream activity at a faster pace and at lower cost than we had forecasted” .
  • Cash generation and balance sheet: Adjusted Free Cash Flow $5.4M in Q4, FY Adjusted FCF $91.6M (14.9% margin); net debt $150.1M, net leverage 0.65x; liquidity $435.8M .
  • CCUS momentum: Barnett Zero sequestered 44,437 metric tons CO2e in Q4 (173,325 life-to-date); FID on new Eagle Ford CCUS project (~90,000 t/yr); JV partner negotiations targeted to conclude in 90–120 days; economics consistent with ~$50/ton EBITDA margin .

What Went Wrong

  • GAAP earnings headwinds: Q4 unrealized derivative loss (−$64.5M), equity affiliate loss (−$17.2M) drove GAAP net loss −$57.5M (−$0.68 diluted EPS) despite adjusted EPS +$0.01 .
  • Power JV seasonal softness and maintenance: Q4 capacity factor 37.5% with planned major maintenance; BKV implied share net loss −$17.2M; Adjusted EBITDA $0.5M .
  • Taxes other than income were depressed in Q4 due to ad valorem true-up, creating modeling noise (one-time $4–$7M impact) .

Financial Results

GAAP and Non-GAAP Summary (YoY)

MetricQ4 2023Q4 2024
Total Revenues and Other Operating Income ($USD Millions)$301.973 $119.782
Net Income (Loss) ($USD Millions)$37.540 $(57.457)
Diluted EPS ($USD)$0.53 $(0.68)
Adjusted Net Income (Loss) ($USD Millions, non-GAAP)$(29.538) $0.780
Adjusted EPS ($USD, non-GAAP)$(0.45) $0.01
Adjusted EBITDAX ($USD Millions, non-GAAP)$67.409 $71.915
Net Cash from Operating Activities ($USD Millions)$7.868 $43.762
Adjusted Free Cash Flow ($USD Millions, non-GAAP)$41.685 $5.444
Adjusted Free Cash Flow Margin (%)22.0% 3.1%

Selected Prior Quarter vs Current

MetricQ3 2024Q4 2024
Net Income ($USD Millions)$12.9 $(57.5)
Diluted EPS ($USD)$0.18 $(0.68)
Adjusted Net Income (Loss) ($USD Millions)$(18.6) $0.8
Adjusted Free Cash Flow ($USD Millions)$19.6 $5.4
Accrued Capital Expenditures ($USD Millions)$24.4 $60.3
Net Production (MMcfe/d)762.6 774.5

Segment and KPI Details

  • Upstream Pricing/Mix/Costs: | Metric | Q4 2023 | Q4 2024 | |--------|---------|---------| | Net Production per Day (MMcfe/d) | 838.4 | 774.5 | | Natural Gas Realized Price (ex-derivatives, $/Mcf) | $2.14 | $2.10 | | Natural Gas Realized Price (incl. derivatives, $/Mcf) | $2.33 | $2.23 | | Lease Operating & Workover ($/Mcfe) | $0.47 | $0.49 | | Gathering & Transportation ($/Mcfe) | $0.85 | $0.80 | | Total Operating Cash Costs ($/Mcfe) | $1.49 | $1.33 |

  • Power JV (BKV-BPP): | Metric | Q4 2023 | Q4 2024 | |--------|---------|---------| | Total Revenues, net ($USD Millions) | $47.9 | $67.0 | | Net Income (Loss) ($USD Millions) | $(35.7) | $(34.4) | | Adjusted EBITDA ($USD Millions) | $0.364 | $0.923 | | Capacity Factor (%) | — | 37.5% | | Generation (GWh) | — | 1,228 |

  • Liquidity and Leverage (12/31/2024): | Metric | Value | |--------|-------| | Cash & Cash Equivalents ($USD Millions) | $14.9 | | Total Debt ($USD Millions) | $165.0 | | Net Debt ($USD Millions) | $150.1 | | Net Leverage (x) | 0.65x | | Total Liquidity ($USD Millions) | $435.8 |

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Production (MMcfe/d)Q4 2024720–750 774.5 actual Beat
Total Capex ($USD Millions)Q4 2024≥ $65.0 low end $60.3 actual Below guidance (positive)
Net Production (MMcfe/d)Q1 2025N/A740–770 —
Net Production (MMcfe/d)FY 2025N/A755–790 —
Total Capex ($USD Millions)FY 2025N/A$320–$380 —
Development Capex ($USD Millions)FY 2025N/A$205–$235 —
CCUS & Other Capex ($USD Millions)FY 2025N/A$115–$145 —
Per-Unit Costs ($/Mcfe)FY 2025N/ALOE $0.48–$0.52; G&T $0.80–$0.84; G&A ex-SBC $0.32–$0.35; SBC $0.06–$0.07 —
Power JV Adjusted EBITDA ($USD Millions)FY 2025N/A$130–$170 —

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Current Period (Q4 2024)Trend
AI/Data Center Power DemandUnique value proposition for baseload decarbonized power; ERCOT growth; targeting data centers Detailed ERCOT outlook; proactive Temple maintenance; exploring PPAs/private use networks; 700 MW hedged; FY25 JV EBITDA guide $130–$170M Strengthening focus, near-term hedged moderation, long-term bullish
CCUS Strategy & JV PartnerBarnett Zero ~140k tons since start-up; multiple permits and Class II/VI applications Barnett Zero reliability 97%; Q4 sequestration 44,437 tons; Eagle Ford CCUS FID (~90k t/yr); exclusive negotiations with global investor; 90–120 day timeline Execution momentum; partner timeline defined
Upstream Capex DisciplineSystematic approach; maintenance vs growth thresholds around ~$3–$3.25 gas; flex to grow at $3.50–$4 Q4 beat with lower capex; potential Capex increase in 2H25 if prices stay strong; production ramp expected H2 2025 Flexing up on stronger strip; continued discipline
Hedging PolicyHedge ~50% PDP for 24 months; 2025 avg gas $3.49, NGL $21.82 CAL25 gas hedged at ~$3.43/MMBtu; NGL ~$21.82; Q4 GAAP loss heavily driven by derivative losses Stable policy; derivative P&L volatility persists
Taxes Other Than IncomeNot highlightedQ4 ad valorem true-up depressed “taxes other than income” (one-time) One-time headwind; modeling normalization ahead
M&A/Power FootprintLean-forward posture on power acquisitions; Barnett consolidation synergies Evaluating PPAs and new builds; looking beyond ERCOT; targeting platform JV for CCUS Broader opportunity set; platform approach

Management Commentary

  • CEO: “Our integrated approach, combining natural gas upstream and midstream, power generation, and CCUS provides a winning formula to meet the expected surge in AI-driven demand” .
  • Upstream President: “In the fourth quarter, we delivered more upstream activity at a faster pace and at lower cost than we had forecasted” .
  • CFO: “We had a net loss… heavily driven by net derivative losses of $58 million… after adjusting… adjusted net income of approximately $1 million or $0.01 per diluted share” .
  • CFO (Power JV outlook): “Based on our pricing outlook and the current hedge position, the Power JV is targeting a gross 2025 adjusted EBITDA range of $130 million to $170 million” .

Q&A Highlights

  • PPAs/private networks: Management comfortable dedicating up to ~750 MW to a PPA to retain redundancy across the two Temple plants .
  • CCUS JV economics and spend: ~$90M of FY25 CCUS within $130M CCUS & other; JV assumptions not required for the spend; margins around $50/ton consistent with Barnett Zero economics .
  • Taxes modeling: Q4 “taxes other than income” lowered by ad valorem true-up ($4–$7M); revert to historical levels going forward .
  • Upstream activity cadence: Considering incremental 2H25 Capex if gas prices remain strong; prioritizing refracs/new drills; potential ramp into late 2025 setting up strong 2026 .
  • CCUS platform JV: 49% participation with potential Capex carry consistent with prior commentary; 90–120 day window to finalize .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS, revenue, and EBITDA was unavailable at the time of request due to data access limits. As a result, quantitative comparisons to Wall Street consensus cannot be provided here. We will update when S&P Global data is accessible.

Key Takeaways for Investors

  • Underlying operating strength despite GAAP noise: Adjusted EBITDAX rose YoY (+$71.9M vs $67.4M) and adjusted EPS turned positive, while unrealized hedge losses depressed GAAP results—focus on non-GAAP trajectory and cash generation .
  • Upstream execution and capital efficiency: Production beat with lower-than-guided capex indicates high return inventory depth; watch for Capex increase decision in 2H25 if strip stays strong .
  • Power JV near-term moderated, long-term torque: Maintenance and hedges temper FY25, but AI/data-center load growth in ERCOT/PJM plus ability to decarbonize via CCUS are potential multi-year re-rating catalysts; FY25 guide $130–$170M Adjusted EBITDA .
  • CCUS scaling with credible economics: Barnett Zero performance and new Eagle Ford FID (~90k t/yr) underpin ~$50/ton margin narrative; JV partner timeline (90–120 days) could derisk financing and accelerate growth .
  • Balance sheet capacity to fund plan: Liquidity $435.8M, net leverage 0.65x, net debt $150.1M provide flexibility to execute FY25 capex and pursue M&A .
  • Watch list items for the next quarter: Derivative P&L volatility relative to hedge book; per-unit costs vs guidance; Power JV pricing and hedge coverage; progress on PPAs and CCUS JV .
  • Leadership transition: CFO succession to David Tameron (effective April 1, 2025) is orderly; continuity in strategy and investor relations expected .