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DATE
Monday, November 10, 2025 at 10 a.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — Chris Kalnin
- Chief Financial Officer — David Tameron
- President, CCUS and Power — Eric Jacobsen
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TAKEAWAYS
- Power Segment Majority Control -- BKV Corporation (BKV 0.35%) expects to obtain majority control (75%) of its power joint venture, enhancing autonomy over capital allocation and strategic direction in the segment, as described by “the governance has changed, right, on the JV. And so, you know, it's a pro forma for close, but would give us a majority control.”
- Free Cash Flow Generation -- Management stated “significant free cash flow” from existing operations supports both debt reduction and strategic investments, with further flexibility projected for 2026 due to the opportunity to refinance power segment debt midyear and access additional financing levers.
- Carbon Capture Injection Targets -- BKV Corporation targets an annual CO2 injection run rate of “On page 32, I think you're referencing the target of 1,000,000 tons of CO2 injected injection run rate by 2027,” with management expressing “very high confidence in that 1,000,000 tons and then growing from there,” citing a broader portfolio of ongoing and future projects.
- Long-term Expansion Plans -- The company plans to scale CCUS capacity towards “16,000,000 tons a year or so of annual run rate by the early 2030s,” supported by key projects like High West in Louisiana and a broader project pipeline across natural gas processing, industrial, ethanol, and renewables sources.
- Commercial Arrangements -- Management emphasized the strategic priority of securing “additional long-term contracted demand, right? And then in the form of commercial arrangements or,” to drive power segment growth and funding optimization.
- Joint Venture Ownership Structure -- The restructured JV splits power segment interest at 75% BKV Corporation and 25% Banhoo Power (pro forma for close), enabling “capital allocation optimization” and a platform for both organic and inorganic expansion within power.
- Capital Allocation Strategy -- Options for deploying free cash flow include deleveraging, new investments in power, and supporting CCUS spending, with “a number of avenues to triggers and levers to pull as we think about finance,” per management.
- High West Project Opportunity -- The High West project in Louisiana is highlighted as a critical pathway to ramping up CO2 injection volumes, benefiting from supportive permitting and proximity to large emitters, with “30,000,000 tons CO2 within a 30-mile radius.”
SUMMARY
BKV Corporation confirmed its intent to increase its equity stake in the power joint venture to 75%, which provides enhanced governance rights and independent capital deployment capability within the segment. Management stated plans to maintain a flexible capital structure, aided by refinancing opportunities and ample free cash flow, to address both debt reduction and growth investments across business units. The CCUS division is targeting a material scale-up in operational capacity, with concrete milestones including a forecasted 1,000,000 tons annual injection rate by 2027 and an aspirational target of 16,000,000 tons per year in the early 2030s, underpinned by both existing FID-ed and pipeline-stage projects.
- Michael Hall referenced “a great investment partner in CIP” sharing a 49% stake in capital outlays for the CCUS joint venture, reinforcing capital discipline within the initiative.
- David Tameron said, “once we consolidate, the power results and people start to see those show up in the numbers, that's another source of funding. That more than covers CCUS. And any spend needed there,” indicating internal funding synergies across business lines.
- The company emphasized leveraging commercial agreements such as PPAs for capacity and revenue growth in new and existing power assets, as well as for optimizing financial flexibility.
- Management highlighted a project pipeline supported by partnerships, diverse sources (natural gas processing, industrial, ethanol, and renewables), and favorable siting advantages.
INDUSTRY GLOSSARY
- CCUS: Carbon Capture, Utilization, and Storage — technology and processes for capturing industrial carbon dioxide emissions, utilizing or securely storing them to reduce atmospheric release.
- FID-ed: Refers to projects that have reached a Final Investment Decision, enabling committed capital deployment and project execution.
- PPA: Power Purchase Agreement — a long-term contract in which a power producer sells electricity to a buyer at predetermined terms.
- CIP: Copenhagen Infrastructure Partners — a private equity firm specializing in energy infrastructure investments, acting as a joint venture partner for BKV’s CCUS projects.
Full Conference Call Transcript
Michael Hall: Baseload capacity, beyond adding incremental sort of around the clock, operationally to improve margins at the power plants outside of a changing smart spread?
Chris Kalnin: Yes. I mean,
David Tameron: Michael, clearly, the number one thing is to get additional long-term contracted demand, right? And then in the form of commercial arrangements or, you know, PPAs. That's going to be front and center for the company. That's what we see as the most near-term capital-efficient accretive transactions that we could pursue. So that's definitely the priority. Beyond that, if you look at Temple originally, Temple was designed for three power plants. Today, there are two power plants there. We've got ample land, space, water, gas, it's flat, and we're on the fiber optic superhighway between San Antonio, Austin, and Dallas Fort Worth. So we think it's ideally positioned.
You could imagine there's room for another power plant on the back of commercial arrangements that could be added. Similar size and scale. So there's just a lot of areas of growth and reflected in our optimism about the power business and the fact that BKV Corporation is growing big in power.
Chris Kalnin: Understood. Thanks for the time. Thank you.
Operator: One moment please while we poll for questions. Our next question comes from Neil Dingmann with William Blair. Please proceed with your question. Good morning, guys. Nice quarter. Chris, my first question just really is interesting on capital allocation, specifically.
Michael Hall: Could you maybe, David, speak to how you all are
Operator: thinking about managing all your opportunities throughout the closed loop strategy? You know, what I'm getting at all seem to have more opportunities when you look at the upstream opportunities.
Eric Jacobsen: And then how, you know, how do you think about managing this or the power opportunities along with potential shareholder return and maintaining a solid balance sheet.
Michael Hall: Yes. Good morning, Neil.
Chris Kalnin: First off, let's talk about near term, right? 2020 is going to be a strong year as far as free cash flow generation. Obviously, Eric and his team right on that same side, we have that cash flow engine.
David Tameron: That's been there. I think once we consolidate, the power results and people start to see those show up in the numbers, that's another source of funding. That more than covers CCUS. And any spend needed there. So we do have significant free cash flow that we have options with, right? To your point, do you delever? Do you use that for strategic investments on the power side? But we do have options with that cash. And if you think about additional flexibility in 2026, we do have the power debt that's going to be available to refinance midyear.
We have additional flexibility now with the, as Chris mentioned in his prepared remarks that I did as well, the bond and the upside to the RVL. So a number of avenues to triggers and levers to pull as we think about finance. And then finally, you know, as it relates to power, obviously, if you start thinking about some type of commercial opportunities, that gives you financial flexibility depending on the level of counterparty you engage with, and we expect that to be a very solid counterparty if and when we get to that point. So a lot of flexibility, significant free cash flow generation, and still leverage to pull up, getting about 2026, 2027.
And we look at our current structure of how we have our
Operator: debt and
David Tameron: capital structure of each entity, if you will, lined up. And they're all thinking with the life cycle and maturity of each of the respective business units. So we feel good. We feel very good actually about where we're at today as we head into 2026. Yeah. Does that answer your question, Neil?
Eric Jacobsen: It does. A lot of opportunities. Perfect answer. And then
Chris Kalnin: just
Eric Jacobsen: secondly, on the way of looking at slide 32 just on the forecasted sequestration, I'm just wondering besides those projects, I think there's four or five announced. Are there others that are currently in the works or, you know, when I'm looking at that slide, and you're talking about the forecasted sequestration volumes, is that just what's known or maybe just anything you could comment on that about potential upside?
Chris Kalnin: Yeah.
Michael Hall: Sure. Good morning, Neil. Eric Jacobsen here. Thanks for your question. On page 32, I think you're referencing the target of 1,000,000 tons of CO2 injected injection run rate by 2027. And, yes, we list the five or so projects that have either been FID-ed or announced and on track towards FID. So all of those, you know, would contribute nicely to that 1,000,000 ton per year run rate. There are a large number of other projects in our portfolio, some of which have been brought through the CIP partnership, which has been exciting for us. Some of which we've been working on for quite a while.
And they continue to follow our trajectory of natural gas processing, large industrial, and then sort of ethanol and renewables. And all told, you can see where we have high confidence in that portfolio of projects growing above and beyond the 1,000,000 tons. Towards an ultimate kind of 16,000,000 tons a year or so of annual run rate by the early 2030s as we've announced. You can see on page 34 where one of the projects we're very excited about as we look to really ramp our injection volumes is our High West project in Louisiana where we're excited about the focus the state has brought to permitting there.
As well as being located in what we believe is a world-class reservoir in what I call one of the best emitter neighborhoods in the world. 30,000,000 tons CO2 within a 30-mile radius. You can see where that can really step change those sorts of projects, namely High West, some other class sixes that we've submitted already can really step change in a nice combination with the other portfolio projects we have around natural gas processing, other industrials, and ethanol. So all told, Michael, excuse me, Neil, we have a very high confidence in that 1,000,000 tons and then growing from there with a great portfolio of projects.
And a great investment partner in CIP to kind of split the 49% share of that check and keep our capital allocation right in line with where we want to be on CCUS.
Eric Jacobsen: Perfect. Thanks, Eric. Thanks, Dan.
Operator: Our next question comes from Jacob Roberts with TPH and Company. Please proceed with your question.
Chris Kalnin: Good morning.
Michael Hall: Hey, Jake.
Chris Kalnin: Hey. Chris, I was wondering if you could spend some time talking
Jacob Roberts: about the incremental autonomy that the increase in the stake in the power JV will give you, maybe less so about pursuing the closed strategy with customers, but really specifically on capital allocation to the power segment as a whole.
David Tameron: Jake, it's a good question. So as you know, and we shared in our press release, the governance has changed, right, on the JV. And so, you know, it's a pro forma for close, but would give us a majority control. That allows us to, you know, very efficiently decide how much capital goes into the power business, how quickly we want to grow that business. While also diversifying 25% of that capital to our partner Banhoo Power. So I think what it does for us is it gives us very strong control over the ability to flex.
Clearly, we're going to work with our partner in the joint venture in terms of how much capital we or how much debt we pay down. Right now, the power plant is delevering debt. It's generating cash. And so we're excited about that. And then as we look to grow into commercial agreements, you know, increase the capacity factor and potentially add additional generation capacity through on the back of commercial arrangements. We're going to have a lot of ability to kind of time optimize and size that capital in a way that fits with our overall portfolio capital allocation strategy.
Jacob Roberts: Great. I appreciate the color. And I'm wondering if there's a possibility of future power investments or spin-ups or inorganic opportunities that might come to the business outside of this JV?
David Tameron: Yeah. So we're really happy with the JV structure today. I think the way we've restructured it in that 75/25 setup really does give us the vehicle for growth. Jake, if you look at how we've set up our business, we've got the upstream and midstream business, 100% owned by BKV Corporation. We're 51% of the carbon capture business in our joint venture there with CIP. And then in the power business, we're 75% owners pro forma for the close 25% Banhoo Power. That gives us an ability to grow both the power and the carbon capture alongside the upstream, which is our cash engine, but to do it accretively.
And so as we think about additional acquisitions, which we believe are there on the market and we'll be evaluating very closely, and about some potential additional organic, you know, new generation assets on the back of commercial arrangements. We believe that the joint venture is the right structure for us to utilize because it does give us that, you know, capital allocation optimization, and it gives us a platform that's already working and winning in the marketplace. So we see that as the right vehicle for growth. And then, you know, we'll obviously evaluate that from time to time going forward.
Jacob Roberts: Thank you very much. I appreciate the time, guys.
Chris Kalnin: Thanks, Jake. Thank you, Jake.
Operator: We have reached the end of the question and answer session. I'd now like to turn the call back over to Chris Kalnin, BKV's CEO, for closing comments.
David Tameron: Thank you, and thank you, everyone, for joining our call. We really appreciate the fact that you've spent time to evaluate BKV Corporation. We're excited about the future. BKV stands at the precipice of some of the most exciting megatrends in energy. We are at the epicenter of the macro trends that are driving energy demand, particularly in the state of Texas.
Chris Kalnin: We see our
David Tameron: combination of natural gas power, and carbon capture as a winning formula that is going to transform and reshape the energy industry going forward. We're excited. We're pleased about our results this quarter, and we look forward to future results as we continue to deliver on our closed loop strategy. Before I close, I would like to take a moment to recognize our veterans, all those who have served. We thank you for your service. At BKV Corporation, we hold dear the sacrifice that many families and individuals have made in protection of our country and freedom. And we want to thank you as we go into Veterans Day tomorrow, and we want to recognize you.
So thank you everyone for joining the call. Thank you, veterans, and thank you. And we'll look forward to future announcements.
Operator: This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.