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Good morning, everyone, and welcome to BKV's First Quarter 2026 Earnings Conference Call. As a reminder, today's call is being recorded. [Operator Instructions]I would like now to turn the call over to Mr. Michael Hall, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining BKV Corporation's First Quarter 2026 Earnings Conference Call. With me today are Chris Kalnin, Chief Executive Officer; Eric Jacobsen, President of Upstream; and David Tameron, Chief Financial Officer.

Before we begin, I would like to remind participants that our comments today will include forward-looking statements, which are subject to certain risks, uncertainties and assumptions. Actual results could differ materially from those in any forward-looking statements. In addition, we may refer to non-GAAP measures. For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, including those associated with the recently completed Power JV transaction or the integration of recently acquired upstream assets as well as the reconciliations of non-GAAP financial measures, please see the company's public filings, including the Form 8-K filed this morning. We have also posted an updated investor presentation on our website, and we encourage everyone to review those materials alongside today's call.

With that, I'll turn the call over to our CEO, Chris Kalnin.

Thank you, Michael, and good morning, everyone. We entered 2026 with strong momentum across the business, and the first quarter marks another meaningful step forward for BKV as we demonstrate how our strategy continues to deliver results. Macro dynamics, including recent events in the Middle East, create an overall constructive backdrop for BKV. Heightened global concern over energy security is driving structural demand for U.S. LNG, which we believe will benefit Gulf Coast directed basins such as the Barnett. Continued momentum in AI and data center growth is also poised to generate significant power demand, especially in ERCOT. At the same time, the carbon capture industry continues to expand and has become a key economic segment focused on carbon emissions reduction.

During the first quarter, we continued to strengthen our commercial platform by assuming control of a substantial portion of our gas marketing and trading activities. We expect to fully market our own volumes by mid-2026. Over time, this initiative is expected to enhance margins, increase commercial flexibility and improve our ability to offer creative solutions across gas, power, carbon capture and LNG. BKV has focused on doing what we said we would do to prove out our closed-loop strategy.

We delivered on production, maintained capital discipline, advanced our carbon capture platform, continue to expand our footprint in the Barnett, increased ownership in our power joint venture, bolstered our balance sheet and consistently moved the broader business forward. Our said-did consistency matters and provides a strong foundation as we continue to build a differentiated energy company. What is clear is how our platform across natural gas, power and carbon capture is translating into value creation opportunities. Upstream continues to perform at a high level. Carbon capture is expanding into a multi-asset platform and Power is poised for continued growth with strong momentum in commercial discussions from data center developers and hyperscalers.

In the first quarter, our upstream business again outperformed expectations, with production trending toward the upper end of our guidance range and capital spending squarely in line with plan. This business continues to do what we need it to do, operate efficiently, continuously improve development performance and generate meaningful cash flow. Across the portfolio, our teams are enhancing capital efficiency while maintaining high standards of safety, improving cost structure and driving production performance to fully exploit our asset base. At the same time, with the Bedrock assets fully integrated, we are well on our way to unlocking incremental value from the portfolio. We are utilizing advanced completions, longer laterals and AI and data-driven optimization. We are taking our execution playbook and driving torque across the basin.

We believe this execution playbook is repeatable over time, particularly in mid-tenured shale plays with characteristics similar to the Barnett, including lower decline rates, PDP-heavy assets and strong access to premium markets like the Gulf Coast. The Barnett is proving to be a critical basin in today's environment with demand for natural gas increasing. We are well positioned from a regional and infrastructure standpoint to help meet that demand. In carbon capture, we continue to scale the platform and have established BKV as a credible leader in this space. Barnet Zero has proven the economic attractiveness of point source fit-for-purpose carbon capture projects.

Importantly, in April, we commenced commercial sequestration operations at our Cotton Cove carbon capture project. Cotton Cove's operationalization is an important milestone that reinforces the economic viability of carbon capture projects at lower volume thresholds. Further, our Eagle Ford CCUS project is progressing well towards COD. Together, these CCUS projects highlight our ability to execute and scale our carbon capture business. In conjunction with our joint venture partner, Copenhagen Infrastructure Partners, we are building a portfolio of economic, repeatable and profitable projects, and our new project development pipeline continues to be high graded towards attractive potential future opportunities. Our CCUS business also enables BKV to offer differentiated products such as carbon sequestered gas or CSG. CSG is a carbon-neutral gas product that combines environmental offsets from our CCUS business with standardized natural gas contracts and enhances the economics of our 45Q underwriting case.

We expect CSG to hit the market in the second half of 2026 in partnership with Gunvor. We also believe CSG can provide decarbonization optionality for future data center or hyperscaler customers seeking to decarbonize their around-the-clock power. For some time now, we have talked about the opportunity for our power business in ERCOT, driven by data centers and AI infrastructure and broad load growth. This demand is increasingly urgent and customers are actively working to secure solutions that can be delivered on accelerated timelines and at a scale that addresses the rapid adoption of AI. In Texas, regulatory and policy frameworks continue to evolve in support of infrastructure development and grid reliability. We are actively engaged with legislators, regulators, industry leaders and local communities in helping to shape how SB 6 and related frameworks are developed. We believe strongly that Texas remains committed to supporting substantial data center investment and will work actively with industry to ensure this happens.

To address the speed to power need, we are engaged in a structured process to evaluate and develop a package of power solutions that we believe will allow us to meet customer needs and time lines while preserving flexibility as their platform scale over time. The first component of our solution is modular power, and we have entered into supply agreements to acquire the equipment to provide up to 200 megawatts of generation and have further line of sight for additional power. If developed, any modular generation would be additive to our existing power generation platform. This modular power capacity is designed to improve speed to power, flexibility and optionality. We believe modular power can be deployed to provide a near-term bridging solution for data center operators and hyperscalers.

The second component of our solution would utilize existing generation capacity at our Tempel I and II power plants through a grid-connected private use network or PUN. We believe this capability could potentially support up to 750 megawatts of available capacity to provide contracted power over time and offer customers access to reliable, dispatchable power from an operating base that is already in place. The compelling combination of our modular solutions and PUN offering is driving our conversations with data center and hyperscaler customers and has the potential to support a meaningful contracted platform with attractive build economics at structurally lower delivered cost of power and leading time to power.

A third and key component of our power solutions is the potential to build an additional brownfield combined cycle power plant called Temple III. We have reserved 600 megawatts of CCGT capacity from an OEM that can be operationalized by the end of the decade. Within the area of Tempel, we have substantial site control, existing water and electrical infrastructure and an equity-owned natural gas supply, giving the Tempel Energy complex a structural advantage in the market. Taken together, the 3 components of our potential Tempel offering have translated into what we view as substantial commercial momentum with potential data center and hyperscaler customers within the structured process.

Further, in the first quarter, we secured an incremental 6,200-acre site in North Central Texas, providing an additional potential platform for longer-dated power expansion. As disclosed during our recent equity offering, we have also secured reservation agreements for another 600-megawatt CCGT power island for 2028 that could be deployed to grow this second energy footprint in tandem with a potential customer. At this site, BKV would aim to deliver the full trifecta of gas, power and carbon capture services. Through our structured process, we have matured our commercial discussions with potential long-term power offtakers. We are approaching commercialization deliberately with discipline and with focus on securing the right counterparties and the right structures. We continue to remain confident in our original expectation of signing a PPA within 2026 to early 2027.

As we move forward, we now have line of sight of potentially up to 1.4 gigawatts of incremental power generation, which would be backed by potential long-term customer agreements. We are excited about the power business and look forward to future announcements.

Stepping back, natural gas demand is growing across LNG, industrial and power markets. ERCOT's power demand growth continues to accelerate and a subset of customers are increasingly focused on reliable, dispatchable energy that can also be paired with low-carbon solutions. Our platform combines upstream gas, operating power assets, development-ready power options and carbon capture capabilities in a way that gives customers flexibility while giving BKV multiple pathways to create value. Finally, we continue to evaluate disciplined inorganic and portfolio optimization opportunities across the business, including potential monetization of noncore assets to redeploy capital into higher return opportunities that leverage our platform, enhance our closed-loop strategy and drive long-term shareholder value.

With that, I'll turn it over to our President of Upstream, Eric Jacobsen.

Thanks, Chris. The first quarter was another strong one for our operations, and we continue to see consistent performance across upstream and carbon capture. What stands out is not just strong performance, but continued quarter-over-quarter improvement across production costs, completions and inventory quality. To highlight a few of the quarter's Upstream operating results, we delivered solid performance across the board, production of approximately 925 million cubic feet equivalent per day towards the upper end of guidance. Development capital of approximately $82 million, slightly below the guided midpoint. Lease operating and workover expense of approximately $0.54 per Mcfe at the upper end of guidance due to timing of expenses and weather in the quarter, while we firmly maintain full year guidance.

Continued D&C cost improvements with full year plan for base well costs at an average of $533 per lateral foot and our new advanced completions designs at only around $22 per lateral foot in incremental cost on a program-wide basis. Strong well performance with 2 new wells brought online in the quarter, ranking in the top 15 of Barnett wells over the past decade on an Mcfe basis as measured by peak monthly production. Within our '25 and '26 development program, we have now delivered 8 of the top 15 Barnett wells over the past decade. Additionally, we added meaningful production and economic uplift from the POW or positive offset well concept affiliated with new wells and introduced last quarter. This includes recent POW where output doubled due to POW with no incremental capital. And over time, we see POW not only sustained but getting even better as shown in our investor presentation.

Overall, we are delivering improvements across all facets of our upstream and midstream operations as we continue to deepen our expertise and make advancements that are broadly applicable across mid-tenured shale basins.

I would particularly spotlight our new approach to advanced completions in the Barnett. Since the start of 2025, we have deployed an advanced completions design on roughly 1/3 of our Barnett wells, and the results to date are highly encouraging. We are observing an approximate 20% well performance uplift over the first 180 days after completion with the cumulative production plot gap appearing to widen even further over time compared to base completions. We see significant implied incremental value per well from advanced completions and broad applicability across the portfolio. Currently, we believe these new completion designs can be applied to 30% to 40% of our robust and long-life inventory, providing a notable uplift in asset value. For the first half of 2026, we have 10 wells slated for advanced completion. And importantly, the associated CapEx investment is already embedded in our capital program for 2026. Stated another way, we are getting more value out of the same capital framework.

Our continuous improvements from advanced and base completions plus much more continue to deliver tangible results, particularly in the liquids-rich portion of the Barnett. A key driver in our recent well outperformance has been the liquids profile, which represents 20% of our production mix in the Barnett this past quarter. Our liquids exposure provides flexibility across commodity environments and enhances the overall cash flow resilience of the asset base. We also continue to leverage AI, data and analytics to optimize base production, further solidifying our competitive advantage of having the lowest base decline compared to any of our peers by a considerable margin. As a proof point of that, during the quarter, we leaned into optimization blitzes, which focus on plunger lift analytics. These blitzes resulted in an incremental base uplift of over 15 million cubic feet a day since early February, all delivered with de minimis capital spend. These results converge on something important.

The Barnett is not simply a low-decline PDP asset, rather it's a stable platform with substantial inventory and optionality for value-accretive torque and growth over many years to come. When we look at the opportunities in front of us, we believe the Barnett returns stand toe to toe with any gas shale basin in the country. When we combine our demonstrated asset performance with Gulf Coast market access and vast midstream infrastructure, I can say that the Barnett is back and it is better than ever.

Turning to carbon capture. We continue to make steady progress, highlighted by adding Cotton Cove to our operating CCS project platform. Cotton Cove, which commenced injection on time and is forecasted under CapEx budget, is expected to achieve a sequestration rate of approximately 32,000 metric tons of CO2 per year. We are also on track to commence injection at our Eagle Ford project before the end of Q2. This project is forecast to achieve an average sequestration rate of approximately 90,000 metric tons of CO2 per year. Together, these projects establish a growing portfolio of operating and economically viable carbon capture assets, and this progress demonstrates that the platform is scaling in a measured and credible way.

Barnett Zero performed well during the quarter, operating at greater than 99% run time and sequestering approximately 35,800 metric tons of CO2, bringing total sequestration since start-up to nearly 350,000 metric tons of CO2. It continues to serve as an important operating and economic proof point for the business. We are also advancing the overall CCS project portfolio. Our East Texas project remains on track following internal FID last year, and we executed definitive agreements with Comstock Resources to advance CCUS projects in the Western Haynesville. These advancements represent another step forward as we work towards our targeted 1.5 million tons per annum injection run rate by 2028.

We have received notice that our Louisiana Class VI permit applications associated with the High West project are advancing through technical review, each application representing 2 million tons per year of injection capacity. We have also recently commenced drilling a test well at High West. In addition, we are continuing FEED studies related to carbon capture at natural gas-fired power facilities, which are expected to further inform future development opportunities. We continue to see strong partner interest and a healthy pipeline of opportunities as we move forward. Put simply, our carbon capture business is continuing to progress as an increasingly important complement to our broader gas and power platform.

And with that, I'll turn it over to David.

Thank you, Eric. The first quarter marks a solid start to the year with strong upstream performance, continued carbon capture progress and ongoing momentum in our power platform. Turning to Power. The consolidation of the Power JV marks an important step in elevating this segment within BKV's financial story. It enhances transparency and control while providing clearer insight into its underlying performance and earnings power. Operationally, our Power business delivered a strong quarter with nearly 2,000 gigawatt hours of generation, a capacity factor of 62%, power prices averaging $51 per megawatt hour and gross power JV adjusted EBITDA of $20 million after absorbing an additional $4 million of allocated corporate G&A as a result of the consolidation. Those figures underscore that the business we own today is already substantial and cash generative.

Looking ahead, we see meaningful growth potential in power, but we intend to advance that opportunity deliberately. The Temple Energy Complex provides a strong operating foundation and our phased offering architecture offers multiple avenues to extend duration and visibility as commercial milestones are achieved. In short, power is no longer just adjacent upside. It is an operating business and a source of disciplined option value. At the corporate level, first quarter results reflect strong continued underlying performance. The quarter was driven by strong execution across the business and a disciplined approach to capital, enabling us to generate positive free cash flow before power growth capital. We delivered net income of $44 million and adjusted EBITDAX attributable to BKV of $112 million, along with $119 million of capital expenditures. Overall, the business is well positioned. And as we look to the quarters ahead, BKV has taken a systematic approach to growth.

We ended the quarter with a strong balance sheet. Net debt was $962 million and net leverage was 2.1x. As a reminder, this is the first quarter we have consolidated our Power financials, and the numbers reflect $562 million of net debt related to Power. Total liquidity was $974 million, including cash on hand and available RBL capacity. This provides a solid foundation as we advance our growth strategy. As Chris noted, we intend to advance the Power platform in phases, aligning capital commitments with commercial progress.

With that, let me discuss our financial framework for 2026. Over the past year, we delivered on strategy and execution, growing production, maintaining capital discipline, strengthening the balance sheet and advancing our core businesses. These principles remain unchanged. As our power platform matures, capital allocation will work in conjunction with commercial progress. We're applying the same discipline that defines the rest of our business, prioritizing returns, optimizing the capital structure and financial flexibility. At a high level, we're using cash flow from our commodity business to fund measured investments in power, building option value today while moving toward a lower volatility, longer duration earnings profile. On financing, we are encouraged by ongoing discussions and are evaluating a ring-fenced capital structure with an approximately 70 to 30 debt-to-equity mix. We expect to fund the equity outlay through free cash flow from our base business, supplemented by partner contributions, our recent equity offering and potential portfolio optimization.

On the debt side, we are engaging with banks and other capital providers regarding Project style financing and early feedback has been constructive. With respect to hedging, we continue to emphasize risk management. Our program is designed to protect downside risk while preserving upside participation. We currently have 67% of our 2026 natural gas production hedged at an average price of $3.86 per MMBtu and 56% of NGLs hedged at an average of $24.56 per barrel. For 2027, we have nearly 500 million a day of natural gas hedged with more than half of that swapped at $4 per MMBtu and the rest protected by collars. In power, we have 700 megawatts of power generation hedged for 2026. This hedge position helps manage volatility while preserving exposure across a meaningful portion of the platform.

For guidance, we are maintaining our full year base business outlook. Production remains at 915 to 955 MMcfe per day, capital spending of $290 million to $400 million and Power JV adjusted EBITDA of $135 million to $175 million. Additionally, we now expect Power growth capital and investments to be in the range of $280 million to $340 million for the full year. The higher investment is primarily driven by ongoing negotiations resulting in additional capital related to modular power generation equipment deposits and other fungible long lead time items. Our capital budget for the year includes turbine reservation payments, modular equipment commitments, private use network long lead items and other development readiness investments. As a reminder, we expect to partially offset our aggregate capital investments with partner capital of approximately $85 million to $105 million. All in, total net BKV funded capital investments are expected to be in the range of $485 million to $635 million.

Our new non-GAAP free cash flow disclosures highlight continued generation of free cash flow before Power growth spending. Maintenance and sustaining capital support the strength of the base business, while strategic capital investments are directed toward creating incremental shareholder value through longer duration, lower volatility earnings. At a high level, we expect strong upstream performance, solid contribution from our existing power platform and disciplined advancement of our broader growth opportunities.

With that, I'll turn it back to Chris.

Thank you, David. To close, this was a quarter defined by strong execution, clear momentum and continued progress against our strategy. We are outperforming expectations in upstream, driving efficiencies and delivering meaningful cash flow. We are building a growing high-quality carbon capture portfolio. And in Power, we are scaling our business and maturing a differentiated platform, which addresses the critical needs of the AI and data center boom. We thank you for your support and look forward to updating you as we continue to execute and build on this momentum.

Operator, we are now ready to take any questions.

[Operator Instructions] The first question comes from Betty Jiang with Barclays.

I want to start with the strategic growth capital in power. Clearly, there's -- you're seeing a lot of momentum in your commercial conversations, and that's leading to another increase in the strategic growth capital. Chris, can you speak to the uses of the incremental investments from the last update? And specifically for the modular units, can you talk about the timing of securing these units? And is it fair to say that this is the first phase of a multiphase power supply framework that you outlined in Slide 25 in that slide?

It's David. Let me start with that, and I'll turn it over to Chris to see if he has any additional comments. But if you think about the capital increase, it's primarily for the additional modular equipment, so think about 200 megawatts. This obviously is a good thing for us. We're moving -- we're in Phase 1, as Chris outlined in his prepared remarks, moving to phase -- advancing the progress. I'll leave it there at that. But so there's the modular piece in there as well, there's some redundant gas supply infrastructure that we're focused on as well. So does that answer your question on that? And just as a reminder, for the full year, if you think about that number, long lead time items, modular equipment, interconnection infrastructure, some midstream, turbines, et cetera, as we outlined last quarter. But the change 1Q to 2Q is additional modular spend on the back of the commercial discussed.

Yes, Betty, just to add to David, we're very excited about the 3-phased approach that we talked about on our prepared remarks. The first phase being the modular units, which gives us certainty and time to power. It's additive generation to the grid, which is important when you consider private use network. And then it also allows us to really build a strong technical solution that combines with our CCGTs and Pemble. So we think it's incredibly exciting. It's part of a comprehensive solution that we described. You can see the definition that we've clarified. I think that speaks to the amount of momentum we have with customers.

And it's really compelling. And I think this is the solution you're going to start really seeing in the market as grid operators contend with the amount of load requests that are happening and yet there is just an incredible insatiable time to power demand for the AI data center group. And so BKV believes that our archetype of what we're structuring here really will serve as a common template for gas-fired generation or thermal generation to supply the needs of -- a lot of the compute needs that happen from the AI build-out.

Got it. So would you be able to shed any light on the timing of when you can -- when these modular units could arrive or that's part of the?

I'll share that we expect to operationalize a number of the units in '27. So we're expecting delivery. These are Gunvor units, so well proven 30 to 40 years in the industry and well established in the data center community. So suffice to say, it's a pretty defined technical solution that our teams have developed in conjunction with potential customers. And we believe they're very near-term focused in terms of the time line that I just outlined.

That's helpful. My follow-up is on the portfolio optimization that you mentioned in the prepared remarks. And you talked about potentially monitoring -- monetizing some noncore assets. Can you just speak to how you're thinking about that rationalization? And what could be in that? Would you consider selling the Marcellus if that's a noncore asset?

Yes, it's a good question, Betty. I think when you think about our portfolio, we're always evaluating every component and where we can generate the highest return. So, we're going to be actively evaluating all 3 lines of our portfolio. When it comes to kind of different pieces of the portfolio, it's just a math equation, right? So what is the market willing to pay for certain assets versus what can we reinvest those assets or those cash flows into other parts of our business. Certainly, we've talked about the Marcellus in the past. The base case is a hold for cash and manage it, and we've done that very successfully under Eric's leadership. But we're going to evaluate -- as you see, we're growing. We're going to evaluate what the opportunity set is. And if there's an opportunity to kind of redeploy capital from certain assets that we can monetize, then we absolutely will be open to doing that.

The next question comes from Scott Gruber with Citi.

I want to come back to the modular power gen assets. Chris, how do you think about the owned versus lease option on those assets? There appears to be a case -- a use case for BKV through the start of Temple III and the second site. But what's the long-term plan for those assets? Would you expand that offering and kind of look to run microgrids for third party? Just kind of talk us through kind of your thoughts with this different type of asset and the kind of owned versus lease option.

Yes, Scott, thanks for the question. I think when you think about these modular units, we've done the economics in many different ways. I think when you look at BKV's kind of trifecta of assets and the way we want to configure the flexibility we demand, I think there's a clear case for ownership because I think it allows you to really deploy your assets in a way that gives you maximum flexibility and we believe, economic outcomes in the long-term. I also think being a one-stop shop, we have huge flexibility. Your question around how we can kind of deploy those assets. We certainly believe that as we've designed it right now in the phased approach for Tempel that these assets will be utilized as part of that private use micro grid that you're discussing. And so, we believe that, that will be additive. It allows us to develop a more comprehensive technical solution. For example, just the ability to kind of ramp in smaller increments of power and/or provide additive generation back into the grid.

Scott, if you think about these private use networks, they're typically interconnected into the grid. And so, you want to be able to both upload power as well as download power, right? And the modular units give you that additional power that you can supply back into the grid, which is an important discussion point when you're talking with regulators and ERCOT about going behind the meter with these types of deals. So, I think to your question, I think longer-term, we see this as part of a portfolio that we own, that we can maneuver in our one-stop shop approach. Obviously, any commercial arrangements would be part of a capital return on this investment that we're discussing. And obviously, we're really excited to be able to share emerging details on this technical solution we develop.

That's great. I appreciate the color. And then turning to the upstream and the new completion design, which seems to be bearing increasing fruit over time. You guys mentioned a widening gap to the previous design. Can you just provide some more color on where you see it being applicable? I think I heard 30% to 40% of the inventory. And then as you guys continue to assess the upper Barnett, what kind of learnings can you take from the enhanced design to the upper?

Yes. Scott, this is Eric. Great questions. Thank you for that on the advanced completions in the upper Barnett. As you noted in our release, we showed that our advanced completions are steadily improving at a 180-day mark of about 20% over our base completions and growing. So, we're really excited about the value contribution. And at the end of the day, for us, it's all a value proposition. So, 20% improvement in performance at 180 days, improved reserves, improved value for a fairly modest cost add on a programmatic basis of just $22 per foot as we've shown. So, we've done a number of those in '25. We'll do even more in '26, and we anticipate it will become a go-to part of our D&C playbook across about 30% to 40% of our acreage as we assess it today.

And yes, absolutely, the learnings will be applied to the upper Barnett well. We just drilled that well. We'll frac it utilizing some of these advanced completion techniques, and we hope in about a quarter or so to be able to share results. So yes, the advanced completions, it varies depending on where we are geographically in the basin and what the associated reservoir properties are. Sometimes it's higher sand, sometimes it's higher fluid intensity, sometimes both. But we'll apply them on a fit-for-purpose basis to our existing inventory and of course, the upper Barnett as well, Scott. So very excited about it on all fronts.

The next question comes from Jonathan Mardini with KeyBanc.

Just on the strategic spend, the slide deck notes a portion of the spend will maintain optionality for post-contract growth. Just curious if you could unpack what that represents and whether it ties to potentially early work and infrastructure spend on the North Central Texas position or just where you currently stand on progress there in terms of discussions or feasibility studies.

Jonathan, it's David Tameron. Yes, let me give you a couple of pieces to that answer. First, let me just talk about the spend itself. If you think about the net CapEx, we put a gross CapEx number out there. If you take away the contributions or subtract the contributions we'll get from our partners, it's a $560 million at the midpoint, net CapEx to BKV for 2026. So let me start there. I'm going to use the Street EBITDA, I'm not endorsing this number. But if you look at the Street EBITDA, let me just talk about funding that $560 million piece. So, Street EBITDA is at $530 million, call it $100 million for interest, it gets you to approximate cash flow of $430 million. If you look at our balance sheet at the end of the first quarter, we had $300 million. So, the $430 million plus $300 million gets you to $730 million of spend against that $560 million. So, plenty of flexibility, plenty of cushion there. Keep in mind, we also have an undrawn -- largely undrawn revolver. We have about $700 million on the revolver we can tap.

So big liquidity, net leverage stays at -- so the way we're approaching this spend, it does give us a lot of flexibility. You heard Chris talk about the fungibility of the modular. We talk about the one-stop shop, the ability longer-term to move this to wherever it is most optimal for us and we can earn a good return on investment. So, anything, Chris, you want to add?

No, Jonathan, it's a good question. And like David said, I think the ability for us to continue to exploit value from these assets is a critical component of these technical solutions. You can imagine not only on the back of commercial arrangements, but you're also, given our structure, able to sell into the merchant market in Texas. And so, we're going to be looking to play both sides of that equation with a grid-connected private use network. So, I think that's the point that I'd just add to that.

And just to maybe follow up on the private use network at the Tempel complex. You talked about a hybrid structure with grid connectivity. Can you just walk us through maybe at a higher level, what that regulatory path looks like to enable a PUN there off of existing capacity, if there are approval studies, other processes required would be helpful to understand.

Yes. It's a really good question, Jonathan. Obviously, all the grid operators across the U.S. are trying to figure this out. ERCOT, we believe, is in a great position given that we have an SB 6 framework that's been put out there by the legislators. SB 6 specifies a very specific category of private use network, which is around large load interconnections with co-located power. And in the SB 6 framework, there's actually a time frame of 120 days that's outlined as an approval time lag to review and evaluate these private use networks. One of the critical elements that is being discussed to actualize these private use networks is this idea of load limiting or self-limiting the amount of load you pull from the grid.

And so, you could imagine to support the time lines for grid upgrades that there is a time line where you submit your proposal, that proposal gets reviewed and studied by a combination of the transmission service providers and the regulator. within a defined time frame. And then you agree on a stairstep amount of power that you would draw from the grid. And so, you may get, for example, hypothetically, a few hundred megawatts at your initial interconnection and limit that amount to the grid. And then you'd also manage how you buffer that power if you're going to pull to or from the grid depending on grid reliability issues. So, a lot of this is outlined in SB6. I think the good news is Texas is really leaning into this.

And as I said, there's a bound time frame as well as a very specific categorization for the type of private use network that BKV and other large power operators in Texas are contemplating. And I think that allows us to believe and have confidence in the time lines to get this private use network actualized. And the modular power just gives us a date certain that's near in the future to build the anchor position and then roll into that larger private use network that we discussed.

The next question comes from Jacob Roberts with TPH.

I wanted to stick on the modular for a bit. My reading of the deck is that the strategic capital this year is largely for deposits. So, I'm wondering what the spend in 2027 potentially is on the 200 megawatts all in, maybe on a dollar per megawatt basis, if you could.

Yes, a couple of things, Jake. Thanks for the question. You are correct in the sense that if you think about the capital spend on these, right, there's some deposits upfront. If you think about going into '27, it will be largely EPC spend. And again, that's going to be contingent on the signing of a PPA, right? So, once we get that PPA if when -- I should correct myself, if when we get that PPA signed, then we'd move into the second phase, if you will, of that spend. Does that answer your question?

Yes. No, that's helpful. I just wanted to make sure I understood the time line.

Yes. And then one more piece. We've talked about -- yes, let me just come back one more piece. We've talked about once we get a PPA signed, we're going to go to a ring-fenced debt-to-equity split of 70% to 30%. So, 70% debt, 30% equity. But once we get that PPA signed, you'd see us do project financing on that piece.

Perfect. And then circling back to more of the upstream side of things. Chris, you mentioned the transition to marketing more of your own volumes as occurring, I think, in the second half of this year. Can you pin down that time frame anymore? And if you could expand on the margin enhancement you're expecting to see? I think some of your peers have had success in kind of moving into this segment.

Yes. It's a good question, Jake. I mean I think when you look at the time frame, you can imagine that we're excited about the full second half of the year being able to kind of market our own volumes. So, I think hopefully, that gives you some clarity on the time line. In terms of improvement in margins, I think it's hard for me to obviously articulate that. But what I would say is you see a number of our peers with their ability to kind of extract value from longer-term deals, whether that's LNG, whether that's maneuvering pipes, different core and very liquid markets and/or being able to sell our gas to our own power plants. So, I think these are some of the aspects that you can expect on horizon. And our view is that, that's going to narrow our differentials and continue to provide uplift to our margin profile as well as enhance our ability to have one-stop shop conversations with potential hyperscalers and data center customers.

I think one of the things that's unique about BKV is we can literally supply the molecules to electrons and then be able to decarbonize. And that's where we see the trifecta of the business model coming. And having that control over our gas marketing, our retail power marketing really brings that whole house together. And we're very excited to be able to demonstrate that over the next few quarters here.

[Operator Instructions] Our next question comes from Michael Furrow with Pickering Energy Partners.

I'd like to follow up on the gas marketing integration. The company has been operating across the hydrocarbon value chain for quite some time from upstream, midstream to downstream. And Chris, I appreciate your comments. It seems like a logical step that should have some upside to the business. But my question is why now? What are some of the changing market dynamics that caused this decision to be made today than in the past?

Yes. It's a good question, Mike. I think there's a couple of things playing into that. One is obviously, as we've grown, we've reached a critical mass in terms of size. You saw our production for the first quarter here being very substantive at 925. We're just at that critical mass where it makes sense to in-source. When you look at outsource versus in-source decisions, you really need to look at sort of what's the size because there's a cost to doing that. So, first thing is we're at that critical mass, it makes a ton of sense. Number two, I think the global dynamics around long-term structural LNG are fundamentally shifted, as I mentioned in my prepared remarks. And that's going to set up, we believe, for very constructive long-term gas prices here in the U.S. So being able to really maneuver particularly long-term agreements and/or the associated takeaway that goes with that and having full control of that is going to be critical.

The third piece, of course, is this idea of one-stop shop and the data center boom that's going on in Texas. I mean, Texas is the fastest when you look at percentage growth, fastest-growing data center market in the country. And so with us being able to now have a single conversation without any third parties involved where we can sit around the table with a hyperscaler and say, "Hey, gas, power, carbon capture all can be done in one project, one shop." I think having control of that right now in these conversations is incredibly power. So, for those 3 reasons, it makes a ton of sense for us to do that, and that sort of drives the timing.

Great answer. That makes a lot of sense. Appreciate that. I'd like to follow up on the increased strategic CapEx. I mean it seems like it's opening up a very exciting opportunity set. But in the near-term, it does put a bit more pressure on the balance sheet now. Leverage is still manageable and after consolidating the Power JV, the business can likely carry higher leverage. So maybe this is a question for you, David. How is the team thinking about long-term leverage targets at the corporate level? And what would the company be comfortable with if the right opportunity came along?

Yes, good question. Yes, a couple of things. So, if we think about our business, right, and we've talked about this before, we deliberately set it up intentionally. We have the upstream, right, which is obviously generating cash flow. We think the right leverage for that business is 1x to 1.5x. If we think about power, and right now, that leverage on the upstream is just right about 1. If we think about power, with this consolidation, we're at 4.6x on a trailing 12. You look at industry partners, you look at averages, that 4 to 5 feels like the right range to be in. Again, that's nonrecourse, right? Any PPA have this ring fence, but that's a nonrecourse to BKV. And then finally, CCUS, we don't have any leverage. So, there's an opportunity there. Also remind you that we have refinancing opportunity here come mid-year in the power side and the existing debt on that facility.

So, I think those are the ways we think about leverage. We're comfortable with those ranges right now. And again, when we look at our balance sheet and we prepped for this, right? You've heard us talk repeatedly over quarter-over-quarter about how we're taking care of the balance sheet. We're preparing for growth. And this is all part of that. We have close to $1 billion of liquidity just today, leverage, to your point, at 2x. So, we feel comfortable where we're at today.

I would now like to turn the floor back over to Chris Kalnin for closing remarks.

Great. Thank you, operator. I want to thank everyone for your interest in BKV. We're really excited about the future. We look forward to future announcements. And for all your mothers out there, I want to wish you a happy Mother's Day this weekend. Thank you.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Good morning, everyone, and welcome to BKV's Fourth Quarter and Full Year 2025 Earnings Conference Call. As a reminder, today's call is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Michael Hall, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining BKV Corporation's Fourth Quarter and Full Year 2025 Earnings Conference Call. With me today are Chris Kalnin, Chief Executive Officer; Eric Jacobsen, President of Upstream; and David Tameron, Chief Financial Officer.

Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements, which are subject to certain risks, uncertainties and assumptions. Actual results could differ materially from those in any forward-looking statements. In addition, we may refer to non-GAAP measures.

For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, including those associated with the recently completed power JV transaction for the integration of recently acquired upstream assets as well as the reconciliations of non-GAAP financial measures, please see the company's public filings included in the Form 8-K filed today.

I would also point listeners to the updated investor presentation posted this morning on our Investor Relations website. We encourage everyone listening to review those slides in our forthcoming annual report to be filed with the SEC for further information on our business, operations, results from the quarter and full year details on our 2026 guidance.

I'd now like to turn the call over to our CEO, Chris Kalnin.

Thank you, Michael, and thank you, everyone, for joining us to discuss our fourth quarter and full year 2025 results. As we close out 2025, I'm proud to report that BKV delivered a transformational year that exemplifies our said-did culture and positions the company for sustained long-term profitable growth.

We generated strong earnings, maintained a fortress balance sheet and delivered strong growth. 2025 marked our first full year as a public company, and we executed across each pillar of our closed loop strategy. Our business lines of upstream natural, gas natural gas midstream, carbon capture and power deliver premium low-carbon energy solutions that are increasingly sought after in today's energy markets.

In our Upstream business, we exceeded expectations throughout the year and our performance across the Barnett and Northeast Pennsylvania showcased the depth, durability and competitiveness of our upstream assets with approximately 8% exit-to-exit organic production growth on upstream development capital well within cash flow and with top-tier F&D costs.

The successful close of the Bedrock acquisition in the third quarter was executed in line with our plans. The transaction materially expanded our footprint in the Fort Worth Basin and added high-quality assets. We added more than 100 million cubic feet equivalent per day of production and nearly 1 Tcfe of proved reserves through our leading position in the basin.

Our upstream business remains foundational to our growth strategy. We believe we have built a scalable, repeatable and disciplined operating model for extracting value from mid-tenure Shale basins. Our team is at the forefront of driving efficiency by leveraging technology data and AI to optimize development and performance across our portfolio.

This is a model that we believe wins in mid-tenure gas basins over the long term. In our carbon capture business, we had meaningful progress in 2025. Earlier in the year, we secured a transformative partnership with Copenhagen Infrastructure Partners, or CIP, who committed up to $500 million for joint investment in carbon capture opportunities.

We are working hand-in-hand with their team to scale this business profitably. Our flagship Barnett Zero facility continues to operate efficiently and has achieved cumulative injection of over 311,000 metric tons since first injection in November 2023. Further, we have announced multiple new projects during the year, including projects in Texas with a large midstream operator and Comstock Resources.

We recently signed definitive agreements with Comstock Resources, the sequester CO2 from their [ Bethel and Mark ] facilities in the Western Haynesville play. We expect to commence commercial operations in 2028. I would like to thank Jay and his team for their continued strong partnership in these projects.

BKV has taken a clear leadership position in carbon capture and materially advance the projects in our pipeline towards commerciality. On the back of that momentum, we are refreshing our near-term CCUS injection target to 1.5 million tonnes per annum within 2028.

We believe this volume run rate will enable the business to contribute materially to our financials. Carbon capture remains a key growth driver in 2026 and beyond. We remain on track for the start-up of our Cotton Cove and Eagle Ford facilities in the first half of 2026 and are excited about the future opportunities in this business.

Our power business is a core growth engine within our closed loop strategy. On the back of our recent Power JV transaction, which closed on January 30, we now hold a 75% majority ownership in the 1.5 gigawatts of low heat rate generation capacity at the temple plants which are located at the center of ERCOT's accelerating AI and data center boom.

BKV's power assets performed well during winter storm firm. Within ERCOT, natural gas supplied nearly 60% of power generation through periods of peak load. This represents nearly 4x the next closest source and reinforces the central role of natural gas in ensuring grid reliability.

We are well positioned to deliver capital-efficient growth from these assets as we seek to secure long-term fixed offtake agreements in the form of power purchase agreements, or PPAs. In the second half of 2025, we continue to advance our structured and competitive process to secure a long-term off-taker for our Temple energy complex.

We are currently evaluating proposals from multiple counterparties, which have shown strong interest in our offering. The broad participation in this process has reinforced our conviction that our Temple energy complex is uniquely positioned to provide near-term power solutions to some of the largest technology companies and infrastructure developers in the country.

We remain confident in the time lines we previously outlined and continue to target a potential PPA in 2026 to early 2027. BKV's position in the state of Texas is ideally situated to benefit from the confluence of some of the biggest megatrends in energy. The Barnett Shale in the Fort Worth Basin sits underneath one of the fastest-growing markets for power and industrial growth in the country.

We believe Texas is set to attract significant investment dollars in data center and other infrastructure over the coming years. BKV is working closely with state regulators, policymakers and stakeholders to ensure investments in power and other forms of energy generate win-win outcomes for the state.

Our strategy is backed by a systematic investment approach which combines the winning formula of gas, power and carbon capture to generate premium margins from our energy portfolio. Our carbon sequester gas product which we expect to hit the market this year is a prime example of the unique energy products that BKV's closed-loop strategy can bring to the market.

BKV is excited about the future as we believe our differentiated strategy will create leading risk-adjusted returns for our shareholders. With that, I'd like to hand the call over to BKV's President of Upstream, Eric Jacobsen, to discuss our upstream and CCUS operational performance for the quarter and full year.

Thanks, Chris. 2025 was an outstanding year for our operations, capped by a strong fourth quarter that highlighted the depth and quality of our asset base the strength of our team and the disciplined, efficient approach we apply across the business.

For the full year 2025, our upstream business delivered and, in many cases, exceeded the targets we previously set, including the following highlights. We delivered robust and organic production growth of 8% exit to exit while spending well within upstream cash flow and driving continued cost efficiencies.

We've beat and raised our full year legacy production guidance twice in the year by 4% at midyear and then by another 1% and all within our initial development CapEx and while maintaining LOE at the midpoint of guidance. We achieved a step change in completions efficiency setting multiple internal records above 22-horsepower hours per day.

We drilled several company record laterals, including the longest well in the history of the Barnett Shale. We delivered top-tier performing new Barnett wells with 3 ranking among the highest in the entire history of the basin based on first month production.

We lowered D&C cost per lateral foot to a gas peer-leading $545 per foot. We achieved consistent and sustained positive offset well or [ powell ] production a unique advantage in the Barnett, which we discussed further in our investor presentation. We delivered lowest base decline amongst our peers, supported by our extensive data set and application of AI technology.

We seamlessly integrated our recently acquired bedrock assets, adding scale and inventory to our leading Barnett position. And we ended the year with approximately 6 trillion cubic feet equivalent of 1P reserves valued at NYMEX [ NPV10 ] of $3.1 billion. The fourth quarter was a continuation of the results we had seen all year.

We again outperformed guidance across key metrics punctuated by 0 reportable safety incidents, production that outperformed the upper end of our guidance range at 940 million cubic feet equivalent per day, we delivered our first Nipa well to production for the year and drilled 3 additional wells with completions expected in mid- to late 1Q of '26.

And we had over $6 million invested in rapidly progressing bedrock development, landing full year 2025 development capital spend at $245 million. To note, we invested $319 million all-in corporate CapEx, which was below the initial low end of full year guidance.

And we executed our first post-acquisition completions on the Bedrock assets including 2 DUCs and 2 refracs with strong results. One more example of Barnett competitiveness and an important proof point in the continued optimization of the Barnett development is what we refer to as positive offset wells or power.

In addition to new wells outperforming type curve expectations, we are consistently observing a material and sustained uplift in parent well performance across our DSUs following new completions. Based on early analysis across approximately 30 new wells in their offsets, we have seen an approximate 22% uplift above type curve on average through the first 150 days of production, roughly half of this outperformance is due to [ Powell, ] whether [ Powell ] peer-leading D&C costs structurally lowered operating costs, we're applying big data and AI.

These and more combined to validate our comprehensive operating approach of delivering durable value over the long term. and there are more innings yet to go. It is a model that we believe wins in every mid-tenure gas basin. We are applying that model to our Bedrock acquisition which has proven to be everything we anticipated and more with integration progressing ahead of pace.

The assets fit seamlessly with our existing acreage position, creating further opportunities for lateral extensions, inventory additions and multiple optimization levers. As an example of further accreting value or what we call torque, we are actively evaluating over 60 equivalent, 10,000-foot Tier 1 locations compared to 50 underwritten and over 100 refrac candidates compared to 80 underwritten.

Importantly, value creation from the acquisition is exceeding our underwriting assumptions and development counts, early time performance day 1 LOE reductions and other areas reflecting our ability to apply torque to the asset and unlock incremental synergies and value.

These assets complement our low base decline, attractive economics and highly competitive and accretive inventory opportunities, which are all trademarks of our dominant Barnett position. Our performance throughout 2025 confirms that the Barnett is not only alive and well, but highly attractive and ideally positioned relative to other shale plays with advantaged access to the heart of the Gulf Coast gas market.

Looking ahead to 2026, we expect continued strong performance from our upstream operations, enhanced by the full integration of our bedrock assets. While the impacts of winter storm burn resulted in significant and unanticipated downtime, we still expect strong production in the range of $900 to $930 million cubic feet equivalent per day during Q1.

Development CapEx spend in the first quarter, we anticipate to be in a range of $70 million to $100 million. For the full year 2026 we are guiding to 935 million cubic feet equivalent per day of production on $240 million of development capital spend right in line with our 2025 development program.

Our upstream business continues to serve as the backbone of our closed loop operations model, generating the cash flow that enables growth across all our business lines while maintaining operational excellence and capital efficiency.

Turning to carbon capture. 2025 was a year of strong and accelerating momentum for the business against the backdrop of growing market demand and supportive policy tailwinds, we advanced multiple projects across our portfolio, progressing them through critical stages of evaluation, development and execution.

Key highlights from the continued expansion and maturation of our development pipeline include our Eagle Ford and Cotton Cove projects continue to progress as planned with commencement of operations at both locations on track. At our East Texas project, where we are working with the same large midstream company as we are in the Eagle Ford, we have reached internal FID and are currently scheduled to begin drilling the injection well in the first half of this year.

And we also plan to drill our High West stratigraphic test well in the first half of the year. In addition, as Chris mentioned, we have recently executed definitive agreements with Comstock to add CCUS to their vessel and Marquee facilities in the Western Haynesville play in East Texas.

We continue to advance discussions on additional CCUS opportunities with new partners and emitters with a focus on larger projects that offer greater economies of scale. Several of these opportunities are referenced in our updated investor presentation, and we look forward to providing updates as appropriate.

Our flagship Barnett Zero facility continues to maintain exceptional reliability providing the operating model that we will apply to our soon-to-be commissioned projects. Given our continued execution and expanding project base, our path to achieving 1.5 million tonnes per year run rate CO2 injection during 2028 is well within reach.

In addition to the projects currently underway, we have commissioned several studies to evaluate the feasibility and cost profile of deploying post-combustion carbon capture technologies. Demand signals continue to strengthen across power and industrial markets as customers seek reliable, low-carbon energy solutions, and we are positioning the business to remain a leader in this space.

I'll now turn the call over to our CFO, David Tameron for a review of our Power business and financial results.

Thank you, Eric. 2025 was a year of meaningful progress for BKV as we continue to execute and deliver on our promises. We had significant transactions in upstream, Power and CCUS. We strengthened our balance sheet and improved our capital structure issuing our first-ever bond while also increasing float and improving liquidity in our stock.

We entered 2026 with significant momentum and are well positioned to capitalize on our strategic initiative. In our power business, we delivered consistent performance throughout 2025, with the Temple Energy complex maintaining high availability factors, minimal unplanned downtime and strong operational execution.

The Temple plant achieved a combined average capacity factor of 57% during the fourth quarter of 2025 and 59% for full year 2025, generating over 7,600 gigawatt hours. During the fourth quarter, power prices averaged $49.69 per megawatt hour with natural gas costs averaging $3.55 per MMBtu.

This resulted in an average quarterly spark spread of $24.54 per megawatt hour. For the full year, power prices averaged $48.86 per megawatt hour with natural gas cost averaging $3.31 per MMBtu. This resulted in an average full year spark spread of $25.36 underscoring the growing power demand in ERCOT average spark spreads for the full year are up over 15% versus the prior year.

Power JV adjusted EBITDA was $31 million for the fourth quarter and $127 million for the full year of which BKV had a 50% interest, reflecting our new controlling ownership stake, beginning with our first quarter 2026 results, we will consolidate the power JV.

For the first quarter, we expect gross power JV EBITDA of $25 million to $35 million, reflecting typical seasonal patterns, capture of storm-related power pricing and strong operational performance thus far in the quarter. Importantly, we weathered winter storm firm without any related downtime.

This is an important proof point for the reliability of our [indiscernible] assets as we engage in PPA offtaker discussions. For full year 2026, we are guiding to a power JV EBITDA range of $135 million to $175 million. This outlook reflects the strength of the platform we've built continued operational execution and confidence in the earning power of our Temple assets.

Turning to our 2025 corporate financial performance. These results clearly demonstrate our team's relentless focus on execution and ability to consistently deliver. Combined adjusted EBITDAX attributable to BKV was $109 million in the fourth quarter and $390 million for the full year. This represented a 19% increase quarter-over-quarter and a 47% increase year-on-year.

For the fourth quarter, adjusted net income was $27 million or $0.29 per diluted share. For full year '25, adjusted net income totaled $122 million or $1.40 per diluted share. Capital expenditures totaled $102 million for the fourth quarter and $319 million for the full year. This full year result is below the loan of our original guidance reflecting highly competitive capital efficiency and our ongoing attention to capital discipline and cost optimization.

Importantly, after fully funding all capital investments across our business lines, and excluding any cash contribution from our Power JV, we generated positive free cash flow for the entire year. And we did this while further strengthening our balance sheet and improving our liquidity. At year-end, total debt was $500 million, with the only debt outstanding reflected in our recently issued senior notes.

Net leverage ratio was 0.9x. Cash and cash equivalents totaled $199 million, and total liquidity stood at $984 million, more than double the prior year. Looking ahead, our 2026 capital investment program is structured to lay the foundation for a multiyear phase of disciplined growth. There are 3 key components of this program.

First, total gross capital expenditures of $410 million to $560 million, including an anticipated $135 million of gross strategic power capital. This power investment reflects the constructive conversations we are having with multiple potential PPA offtakers.

Second, on a net basis and excluding our power growth capital, we are targeting a net capital investment at midpoint of $324 million, effectively flat year-on-year. Third, and importantly, based on current strip pricing and just as we did in 2025, we expect our total full year net capital expenditures to be fully funded within cash flow.

This approach reinforces our commitment to disciplined capital allocation while positioning the company for sustainable, long-term value creation. Regarding hedging, our program continues to provide downside protection while allowing participation in favorable market conditions.

In our Upstream business, our total 2026 hedge position protects just over 60% of forecasted production with gas hedged at $3.85 per MMBtu and NGLs hedged at $22 per barrel. In our power business, for 2026, we have hedged 40% of our ERCOT generation capacity through heat rate call options or HRCOs.

These HRCOs include substantial premium revenues that help mitigate annual earnings volatility. We've also locked in fixed spark spreads on roughly 100 megawatts while retaining meaningful merchant exposure across the balance of the platform. For the remainder of our 2026 guidance, please refer to our complete schedule, which can be found both in the press release and our latest investor deck.

With that, I'll turn the call back to Chris for his closing remarks.

Thanks, David. As we conclude our discussion of 2025 and look ahead to 2026, I want to highlight what truly differentiates BKV. We have built a distinctive winning strategy, connecting natural gas production, power generation and carbon capture into a virtual closed loop platform uniquely positioned to serve the evolving needs of the energy market.

This strategy is operating today, delivering results and positions us to shape solutions for the evolving needs of hyperscalers, data center developers and industrial customers. Looking ahead to 2026, we see clear growth vector. Increased control of our power JV is expected to enhance earnings and cash flow while enabling tangible strides towards executing a PPA.

Our CCUS business is accelerating momentum with additional projects coming online soon and with an increasingly high-graded portfolio of attractive projects in development. Our upstream business remains a reliable, repeatable cash engine with leading corporate decline rates and F&D metrics.

Finally, I want to thank our exceptional BKV team for their commitment to our values, our safety culture and their focus on the execution of our strategy. We entered 2026 with strong momentum. Clear line of sight to growth and confidence in our ability to create long-term risk-adjusted shareholder value.

Operator, we are now ready to take questions.

[Operator Instructions] Our first question comes from Betty Jiang with Barclays.

Congrats on the strong execution across all segments in your first year. I want to start off with a question on the strategic power growth CapEx. Can you just -- Chris, can you speak to what specifically is that spending on? Clearly, it's not maintenance. And it's align with the progress in the conversation that you are seeing.

So can you just give us a bit more color on is the spending ahead of contract that you're expected to sign later this year, early next year.

Yes. Betty, thanks for the question. So you're 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's 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're guiding here is that we've got line of sight to designs and/or investments that need to be made to enable this. And that's really where you see that capital. When you think about the existing Temple 1, Temple 2 CapEx, you could imagine, historically, that's been in that sort of million-ish per year level, and we expect that to continue.

So the vast majority of what we're guiding here to is really for establishment of a private use network type setup, and that's again, we think, incredibly important to accreting value in a very capital-efficient manner for BKV.

Yes, Betty, just if I could tack on one thing. Just keep in mind that all this is going to be funded within cash flow. Our entire '26 program, including this power strategic power capital is going to be within cash flow for 2026.

Got it. And then also it sounds like you will recover this CapEx in that PPA contract down the line as well.

Exactly. It works just like a lease Betty, if you invest in landlord puts in infrastructure, then they recovered in the rent. It's the same concept, right in a PPA, you basically amortize the cost of your capital over the life of a contract as part of the investments you make.

Got it. That makes sense. My follow-up is on the CCUS business. It's really good to see that 1 million tonne per annum target getting raised to 1.5. Clearly, momentum on that asset. Can you speak to the financial implication of that business going forward? Maybe help us with maybe dollar per ton margin on that business? And what are you seeing in the market to drive that confidence to raise that long-term target?

This is Eric. Yes, thanks for the question on CCUS. It's a good one. And we've signaled before on the back of the passage of the one big beautiful Bill Act some expanded commercial interest. We continue to see that in that commercial interest and the subsequent projects like Comstock that we were excited to announce definitive agreements reached upon.

In total has given us the confidence to raise that target to 1.5 million tonnes run rate within 2028. So we're stair stepping into that already this year with 2 more projects coming on in the first half. We'll be drilling another injection well, a high West stratigraphic well and then advancing these commercial agreements like Comstock towards FID. You can think about the economics of these projects in the kind of $48 per ton EBITDA range. And those are the kind of solid economics we use as we march forward towards that 1.5 million tonnes.

Our next question comes from Scott Gruber with Citigroup.

-- Congrats on the strong performance last year, given multiple vectors of growth here. Chris, I wanted to come back to power. You're investing in a private use network. It sounds like that's separate from the grid. So I just wanted to confirm that. And then there's 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.

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's 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 so think of it in simple terms, the analogy would be something like a private use network that connects them into a broader grid. And those time lines may not match up on one, but that's the end goal. And so as we've mentioned, this is probably where you're going to see the market move with co-located power generation over the next few years.

And 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 kind of move electrons in sizable form in and out localized areas.

And having co-located power in a private use network set up 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. And so that's really where we see the market going. In terms of the regulation specific for Texas and ERCOT, I think it's overall bullish.

Look, Texas is going big on infrastructure, particularly data center infrastructure -- it's open for business. There's a very strong feeling here in the state to promote investments in the power grid. And so we think Texas is one of the states that's really going to figure this out quickly and BKV 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 are encouraged -- and so the regulations are really orienting towards large load. That's the SV6 regulation that everyone is talking about here.

And we think it's incredibly constructive because what they're doing is creating a framework to high-grade projects that address all those 3 things, right, grid reliability, ability to ensure equitable rates to existing customers in the state and then adding grid generation assets.

And our designs that we've been describing, including the CapEx I mentioned, address those 3 key points. So 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 sort of not as real. So overall, I think we're active with the regulators and the stakeholders here in the state, and we think that Texas figures is out very quickly. And I think a lot of customers have that same view.

I appreciate all the color. And I also want to turn to the Comstock deal get to see that across the finish line. Can you just walk through the injection ramp at those facilities as well as the timing of the associated CapEx? Is there CapEx associated with those projects in the second half of this year, for instance, just some color there would be great.

Yes. So thanks, Scott. It's a good question. Just appreciate Jay and his team really working with us on this project. I think -- if you think about what we've guided to, we're expecting to be injecting in '28. So that's when we're going to commercialize these projects. We didn't guide to a volume ramp. Obviously, that's something that we're working with Comstock and we'll kind of figure out.

I think you can think about the volume as multiples of our current injection amounts. So it's a significant amount of injection volume. If you think about the spend curve, most of these projects follow a typical construction S curve. So within the last 12 months before injection, that's when you see a majority of the CapEx gets spent.

We've kind of historically guided to sort of a couple of hundred bucks a ton of capital that has to go into investment. And so that's probably not a good -- sorry, that's probably not a bad way to think about it.

But yes, I think you should expect that spend to be more sort of back-end loaded and then the volumes themselves to be multiples of what we're currently injecting.

Our next question comes from Jonathan Margine with KeyBanc Capital Markets.

On Power on Slide 7, you referenced a potential PPA execution on 4.5 terawatt hours of unutilized capacity. Can you just clarify whether this implies that a PPA covering just a portion of the temple plant capacity with the remainder being sold into merchant markets or just how you're seeing the structure of a PPA shaping up based on your latest discussions?

Jonathan, it's Chris here. It's a good question. So when you look at Temple today, we've got 2 identical power plants in Temp 1 and 2, each 750 megawatts. Today, we hedge roughly half of the complex. So one power plant equivalent worth of power. And there are several reasons you do that, right?

Oftentimes, you can sequence your maintenance to be down on one plant and be fulfilling your power obligations of the other. And so we see a PPA in a similar type structure. PPA effectively is a long-term hedge on power prices. And so you could imagine that you're going to always be kind of looking at about half your capacity being kind of contracted and the other half being floated so that you can manage, as I said, around your maintenance schedules and just have resiliency as well.

And so the balance -- when you have the balance of the volumes that are not contracted, you're absolutely right, you would -- from a behind-the-meter set up, you actually able to feed that into the grid and sell that. and you're able to load balance, right? So if you've got additional power that the customer is not using, you would again theoretically sell that additional power into the grid as well.

So when you think about these agreements, they're structured like long-term offtake agreements that you would see potentially even for an LNG contract. So they're substantive, you can imagine something like 750 megawatts over 10 to 20 years. With sort of a structured price, which is somewhat capacity payment, blended with an energy payment and at a price that's typically above strip, right?

So these are the structures that we see in the market today and I think, are good reference points and you're seeing -- starting to see the announcements on the gas side for these. But yes, that's how you can envision something like this coming together.

Okay. That's great. I appreciate that. Just moving on to CCUS. On the sequestration outlook for a 1.5 million ton annual run rate by 2028, an increase from the prior 1 million tons you saw by 2027. Just on that gradual ramp, can you just help us understand how you see those volumes scaling throughout 2030.

Sure. Eric here. So yes, the ramp through 2030. So I'll start with the ramp into 2028, the 1.5 million tons. As you referenced, we've updated and upgraded that on the back of a lot of commercial interest, as I mentioned earlier, following the One Big Beautiful Bill. We've taken that commercial interest and translated it into projects like the Comstock project like others in the making that we're progressing towards FID.

As I mentioned, we have the 2 this year. We're drilling some more wells. We're really excited about this kind of steady cadence of CapEx to get us to that 1.5 million tons by 2028. And then as we ramp from there into the volumes start to ramp significantly on the back of some of this commercial interest in bigger projects that we're navigating now on the back of the 7 Class V permits that we filed, 6 of which are in Louisiana, all of which are progressing nicely.

You'll remember in our High West project is surrounded by 30 million tons of CO2 emissions within a 30-mile radius. So you can see the size and the magnitude of projects that help us start to scale this business dramatically past 2020. And on the back of these existing Class 6 permits, roughly 50,000 acres we have under post-pace lease and a really nice platform to grow post 2028 as we deliver on the 1.5 million ton run rate within that year.

Understood. Appreciate the context. I'll leave it there.

Our next question comes from Michael Ferro with Pickering Energy Partners.

It seems like the company's willingness to develop a Temple 3 plants, if it's underpinned by an offtake agreement, it's a positive indicator for your outlook on the PPA market as a whole. So would you say that your confidence level has improved in signing a quality PPA, and therefore, the potential for TMP plant has improved?

Yes, Michael, good question. Absolutely, right? If you look at what I've just described in terms of the way the regulators are thinking about the large load applications and the overall has [indiscernible] process having additional generation assets co-located with additional data center infrastructure is, in our minds, very critical.

And so you need to be able to show that you're going to not only kind of take power from the grid, but you're also going to contribute power to the grid and add to grid resiliency. So that enters the concept of we believe that Temple 3 does contribute to that.

It adds additional resiliency to the temple energy complex when you got you could imagine Temple 1, 2. And originally, Temp was designed for 3 power plants. There's a sufficient amount of space, water, gas, infrastructure et cetera. And so it makes a lot of sense that as you start to design a private use network, you would include the construction and development of additional generation assets in the form of a hypothetically Temple 3, right?

So we're excited about that. Again, it would be backed by commercial arrangements in the same vein of the capital we're spending on the power side. You're looking for a return on that capital as part of an agreement and so we would not move forward without those agreements in place.

But as you've highlighted, the optimism around what's happening in Texas and the overall amount of data center infrastructure that we expect to be built is, I would say, really accelerating and BKV is at the forefront of that. I appreciate that detail.

As a follow-up, I'd like to go on the Upper Barnett appraisal program that's targeted for this year. Now the preakkeeping costs appear higher than the core lower Barnett position. So the company's ultimate goals here with this program? And maybe you can provide us with maybe a well count that the company plans to test this year?

Yes, sure. Michael, this is Eric. Thanks for the good question on the upper Barnett. We're excited about the future of the Upper Barnett as included in our inventory counts. We'll be testing one well at least this year, possibly to. Yes, at the moment, our breakevens are slightly higher than our average for the lower Barnett.

But on the back of the success we've had in Lower Barnett, dramatically lowering dollar per foot cost by 30% over the last 3 years. Enhancing and advancing completions, negotiated gathering, compression, processing, transport for the upper Barnett and our ability to proven to execute in the high $0.40 per Mcfe F&D costs.

We'll translate all those learnings in the upper Barnett this year. We'll drill the 1 well. We'll evaluate it. We may drill a second by the end of the year, and then we'll have a steady dose of upper Barnett wells as part of our program going forward.

But we absolutely expect to delineate and confirm those 100 wells this year. We're excited about those on the back of the older vertical wells, some refracs we've had in the area. So we really think the upper Barnett is prospective, and we look forward to sharing kind of some more results by midyear, second half of the year.

Our next question comes from Jacob Roberts with TPH & Company.

I wanted to start 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?

Yes. So thanks, Jay. Good question. I think the slide is meant to show the activity around temple, right? If you think about where people are building massive amounts of data center infrastructure, they're looking for a few things. One is the ability to add generation assets and grid interconnect.

That's critical. Number two, they're looking for proximity to existing fiber lines and/or data center clusters that are already in existence. And number three, they're looking for a buildable friendly environment where just in terms of licensing, contracting, regulations, et cetera, are streamlined.

Temple sits right between Dallas-Fort Worth area and the San Antonio, Austin cluster. And this slide is meant to show the amount of activity in Temple. The city of Temple it South has been astronomical in the last especially 24 months around that. And it's for the reasons that I just mentioned, right? It's proximity, it's flat land, it's billable. It's Texas. It's grid connected. There's 30, 45 KV lunch. So that's the intention.

In terms of how you'd actually design, the closer to the generation assets, the better, right, as you build, you're going to see more and more of this colocated power design that I'm just describing here. That's critical because of what I mentioned around grid congestion.

If you're pulling huge amounts of megawatts the more localized you can match that demand and supply, the less taxi amount of infrastructure you rely on the grid. And so that's where you're seeing loads in the past were sort of in that 200, 300-megawatt level for data centers, now folks are talking about gigawatt plus.

And so when you're talking about a gigawatt interconnection, you really do need localized generation support. So 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 just the overall design. So that's kind of where this goes, and you're seeing that in this slide here on 25.

But like I said, Temple is an incredibly active area for data center development, and we're excited to be at the heart of that with 1.5 gigawatts of generation capacity.

That's helpful. And then maybe taking a longer-term view on the gas marketing side of things, could you remind us on how your Barnett takeaway contracts are currently structured? And maybe in terms of the ability to eventually shift more of those volumes toward what could become more valuable hubs, specifically Kt and Ship Channel.

Yes. Sure. Jake, this is Eric. Thanks for the question on the contractual nature of our marketing. As we show in our slide deck, right now from the Barnett, anyway, roughly 40% of our gas goes to NGPL Texo.

30% to Houston Katy ship and 30% to Transco. We received a very nice uplift from the Transco Station on a typical run rate basis. I think over time, a lot of contracts, firm contracts are expiring over the next 2 or 3 years. enabling us opportunities to sell the gas into multiple markets, and this is exactly why we're so very excited to be positioned in the Gulf Coast.

We can sell to our own power plants or other power plants. We can sell locally to the DFW area. We can expand some of our contracts to these existing hubs directly to industrials in the Gulf Course corridor. And then, of course, the big boom of all the LNG expansion that's going -- this hitting to the tune of in our estimation, 17 Bcf over the next 4 or 5 years.

So being positioned in the Gulf Coast having multiple access to multiple points in hubs as well as infrastructure that was built to handle far more than the Barnett is producing today as a basin. And the contractual nature of our expiries that allow us the flexibility.

We're very excited for margin enhancement, what we call alpha margin as a result of our marketing coming out of the Barnett and really increasing the commercial generation of cash flow and margin from our company.

Yes, Jake, it's David. It's something we're actively managing. We spent a lot of time on that internally. And you've heard Chris talk about right? End of the day, we want to be the highest dollar per molecule provider out there, and this is part of that. So you'll see us over the 6 to 9 months relate to more color around our marketing efforts, and I think will be well received by yourself on the street.

[Operator Instructions] Our next question comes from [indiscernible] with ROTH Capital Partners.

So I just have a question about the East fixes project in the last quarter, you said that the target FID was going to be in first half '26. But this quarter, you said it's going to be urate internal FID in December. Is that project are still waiting for FID? Or is it ready -- that's 1 question.

Yes. Thank you. This is Eric. Thank you for the question, about our East Texas project, where we reached internal FID. Yes, we're very excited about that. That's kind of Stage 1 in our trajectory towards our final investment decision which we haven't put out a time line on just yet.

But what I can say is we're progressing that project with the same major midstream operator for which we're doing the Eagle Ford project about to start. All of the documents and agreements are in place we'll be drilling the injection well this year with an anticipated start-up sometime in 2027 is what we've signaled.

So FID is forthcoming on that. We'll be drilling the well. We're 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 tonnes.

And just my second question about the M&A after backlog positions. So what are the consents on the M&A right now?

Yes, Fu, it's Chris here. I think we've shown this is a company that knows how to do M&A. The Bedrock acquisition is going incredibly well in terms of just being able to integrate those assets and really absorb them into the Barnett. The Barnett remains our core M&A target. There's a natural roll up on the upstream side.

There are a number of players that we've shown in the past, there's over a Bcf of M&A opportunities in the basin, and we'll continue to prioritize those. More broadly speaking, we're always looking in the M&A markets, right? We think this business model for mid-year gas basins is ideally positioned, and we really are mastering it.

We manage some of the oldest Shale wells -- Shale wells in the entire country, and we understand how to manage them really, really well, and we've demonstrated that. So as we look in the Gulf Coast at basins and evaluate sort of the horizon will be active evaluating and analyzing opportunities and looking for accretive risk-adjusted transactions that BKV can continue to scale our business model in line with the winning formula of gas, power and carbon capture.

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

Thank you. And thank you, everyone. I appreciate your time. BKV is positioned for growth along all our 3 vectors. We're very excited about 2026, and we look forward to future announcements around that. Thank you, everyone.

Good morning, everyone, and welcome to BKV's Third Quarter 2025 Earnings Conference Call. As a reminder, today's call is being recorded. [Operator Instructions] I would now like to turn the call over to your host, Mr. Michael Hall, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining BKV Corporation's third quarter 2025 earnings conference call. With me today are Chris Kalnin, Chief Executive Officer; Eric Jacobsen, President of Upstream; and David Tameron, Chief Financial Officer.

Before we provide our prepared remarks, I'd like to remind all participants that our comments today will include forward-looking statements, which are subject to certain risks, uncertainties and assumptions. Actual results could differ materially from those in any forward-looking statements. In addition, we may refer to non-GAAP measures. For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, including those associated with the closing of our acquisition of a majority control position in the Power JV, which remains subject to customary closing conditions, including approval by at least 75% of the disinterested shareholders of Banpu Power and the integration of the upstream assets we recently acquired in our Bedrock acquisition into our existing portfolio as well as the reconciliations of non-GAAP financial measures, please see the company's public filings, including the Form 8-K filed today.

I would also point listeners to the updated investor presentation posted this morning on our Investor Relations website. We encourage everyone listening to review those slides for further information on our business, operations and results from the quarter.

I'd now like to turn the call over to our CEO, Chris Kalnin.

Thank you, Michael, and thank you, everyone, for joining us to discuss our third quarter results. BKV delivered another strong quarter, reinforcing our said-did culture and disciplined execution of our strategy. The third quarter was marked by several notable achievements that reinforce the strength of our business model and accelerated momentum of our closed-loop strategy.

I want to begin this quarter by highlighting significant progress in our Power business. At the end of October, we announced that we have entered into a definitive agreement to acquire 1/2 of Banpu Power's interest in our Power joint venture for an equivalent value of approximately $1,000 per kilowatt of generation capacity. At the close of the transaction, which is expected to occur in Q1 2026, BKV will increase our overall ownership in the JV to 75%, giving us over 1.1 gigawatts of low heat rate equity power generation in the ERCOT market. We are thrilled to have reached this agreement to acquire the majority and controlling stake in the Power JV as it's a critical step to advancing our closed-loop strategy and enhances our growth flexibility.

I would like to thank the Banpu Power team for their strong partnership in our successful joint venture. We are excited about our ability to drive growth in our Power business. And we are confident that our differentiated business model has ideally positioned us to benefit from the macro energy tailwinds that are driving the U.S. markets. Controlling the Power JV transforms it into a strategic growth engine, allowing us to consolidate results, align strategy and accelerate our ability to create long-term value.

Looking ahead to 2026 and beyond, ERCOT's long-term fundamentals remain exceptionally strong. Texas continues to experience unprecedented load growth from AI data centers, industrial expansion and steady residential demand. The state of Texas remains open for business and is proactively facilitating and in some cases, fast tracking interconnections to meet this surge in electricity demand. The passage of Senate Bill 6 is aimed at improving interconnection planning and grid reliability to support this growth. For BKV, this combination creates a durable expanding market for our existing Temple assets and a clearer pathway to secure premium PPAs.

Our confidence in the Power business is grounded in the tangible progress we've made in discussions with hyperscalers, data centers and other potential customers. We are encouraged by the unique tailored energy solutions that BKV is able to offer these potential counterparties. In particular, our capability to provide a one-stop offering that combines power, natural gas and carbon capture is a true winning formula and is resonating deeply with long-term AI and data center customers as evidenced by recent announcements from major hyperscalers. We also continue to actively negotiate with OEMs to secure additional power generation capacity to serve future load growth from potential customers backed by secure commercial agreements.

In our carbon capture business, we are experiencing strong momentum. Importantly, we are seeing a significant uptick in interest from potential PPA customers that are interested in the combination of gas-fired generation and carbon capture. Further, we are making meaningful progress towards our goal of an injection rate of 1 million tons per annum by year-end 2027. Existing projects are advancing on schedule and we expect to have 2 more operational projects within the first half of 2026. Overall, there is optimism following the One Big Beautiful Bill Act by emitters across the sector.

BKV's carbon capture business has demonstrated strong leadership. In particular, our strong partnerships with Copenhagen Infrastructure Partners, Comstock Resources, Gunvor, and a large midstream company and others all underscore both the credibility and the momentum of our carbon capture business.

Our upstream business remains a core cash engine for the company. Our Barnett and NEPA assets outperformed expectations again, delivering strong overall results, including outperforming on production, cost and capital efficiency.

In the third quarter, we successfully closed our Bedrock acquisition, materially expanding our operational footprint in the Fort Worth Basin. This transaction reinforces our position as the leading operator in the play and underscores our role as the natural consolidator of the Barnett. We believe the Barnett sits at the sweet spot of all the shale plays, positioned at the epicenter of U.S. demand growth in and around the premium markets of the Gulf Coast.

We continue making strong progress integrating the Bedrock assets into our portfolio and are excited to realize the benefits from the combined operations. The Bedrock acquisition brings high-quality assets for both existing production and new developments, including new wells and refrac candidates. We are excited to demonstrate the accretive nature of this transaction over the quarters to come.

BKV's closed-loop strategy, combining gas, power and carbon capture is a winning formula that is in line with the biggest trends in energy. The ability to offer carbon-neutral power solutions in Texas, in particular, positions us uniquely in discussions with many customers who are willing to pay premiums for these energy solutions. We remain confident in our business and our ability to capitalize on the megatrends in the market, which are driving the future of energy. With that, I'd like to hand the call over to BKV's President of Upstream, Eric Jacobsen, to discuss our operational performance for the quarter.

Thanks, Chris. The third quarter was another outstanding one for our operations as we further capitalized on momentum in both our upstream and CCUS business lines. Our upstream business delivered another excellent quarter, beating our production guidance at the midpoint with volumes up 9% year-over-year and 2% sequentially at 7% below our guided CapEx midpoint. As a reminder, we raised full year 2025 production guidance by approximately 4% at the end of last quarter and have continued to maintain the same base business capital range.

We remain a leader in managing low base decline through the leveraging of data analytics and artificial intelligence, outdelivering new well performance expectations and setting the standard for sustained capital-efficient production in the Barnett.

Moving to the close of the Bedrock acquisition. BKV has already captured value from these newly acquired Bedrock assets. Integration has been seamless. And our teams are already applying our proven operating playbook to enhance value through improved performance, reduced costs and accelerated efficiency gains, all of which we call torque or delivering value even better than underwriting assumptions. The Bedrock acquisition also adds meaningful development runway, including at least 50 equivalent new drilling locations and 80 refrac opportunities, creating substantial near-term value potential. You'll see us continue to drive these development and torque initiatives in the quarters ahead, further proving BKV's leadership strength in the Barnett.

During the third quarter, we drilled 8 new wells, completed 8 wells and performed 11 refracs, bringing our total to date refrac count to over 400, distinguishing ourselves as the refrac leader in North America. Our year-to-date Barnett D&C cost average is $545 per lateral foot, representing a further 3% reduction from our second quarter performance and a 14% reduction from our 2023 to 2024 program average. This cost improvement was achieved while drilling longer laterals and implementing enhanced completion designs that have resulted in excellent well performance and accelerated turn-in lines.

Further, during 2025, we turned in 3 of the 25 best 1-month peak wells in the entire recorded history of the Barnett, including 2 of the top 3 this decade, a clear proof point of our subsurface completions and operational excellence, reflecting the technical acumen of our teams. Our teams have delivered all of this with an expected capital investment as we continuously find new ways to increase efficiencies and outperform expectations. In fact, our total full year corporate capital guidance remains unchanged at $290 million to $350 million. Within that corporate CapEx range, we continue to see legacy development capital at the high end of our previously guided range, and we have added approximately $10 million of development capital to kickstart our Bedrock torque initiatives.

We've delivered substantially more activity and strong results while exercising highly disciplined and capital-efficient investments. For the fourth quarter, we expect production to average 910 million cubic feet equivalent per day with a range of 885 million to 935 million cubic feet equivalent per day, representing the full integration of our bedrock assets and continued strong performance from our base business. The production guidance component of our base business, excluding Bedrock assets, is 810 million cubic feet equivalent per day, which would bring full year base production slightly above even our previous raised guidance midpoint.

Our continued effective and efficient upstream performance, coupled with the Barnett positioning to supply gas to high-margin Gulf Coast demand centers, enables continued strong financial performance for the long term. We're not only driving the success of our core upstream operations, we're fueling the growth of our other business lines.

Turning to our CCUS business. We are well positioned in this rapidly expanding segment. Since the passage of the One Big Beautiful Bill Act, we have received a significant increase in inquiries from potential emitter partners. These discussions are ongoing and we're encouraged by the quality of opportunities entering our pipeline. Combined with the projects already advancing through various stages of development, we believe the growth potential for this business remains strong while adhering to our capital framework. The Barnett Zero facility has now been operational for nearly 2 full years and once again achieved strong quarterly performance, maintaining over 99% uptime and injecting approximately 44,000 metric tons of CO2. Since project inception, approximately 286,000 tons of CO2 have been injected. Barnett Zero continues to serve as a vital proof point of concept for our broader CCUS strategy, showcasing BKV's technical expertise and providing tangible validation to current and prospective partners.

The project we announced on our last earnings call, the East Texas project with a leading midstream company, is moving forward, and we expect FID for that project in 2026. As a reminder, we anticipate that approximately 70,000 metric tons per year of CO2 could be captured on that project. This is the second project we are developing with that same midstream company. The previously FID-ed Eagle Ford and Cotton Cove projects both remain on schedule. These projects are expected to achieve average sequestration rates of approximately 90,000 and 32,000 metric tons per year of CO2 equivalent, respectively. The Cotton Cove injection well was successfully drilled in September, and both projects have received EPA approval of their measurement reporting and verification or MRV plans.

I also want to address recent developments in Louisiana, a strategic focal point for our CCUS business, where the governor signed a temporary moratorium on the consideration of new CCUS project permits. We view this as a constructive step that brings focus and clarity to the permitting process and advantages those like BKV that have already submitted quality permit applications. The state's decision to prioritize existing applications is helping to distinguish credible developers with technically sound near-term projects that can deliver real benefits to Louisiana. All 6 of BKV's permit applications, 5 from our large-scale High West Project adjacent to New Orleans and 1 from Donaldsonville near Baton Rouge have been classified as administratively complete and are among those advancing towards approval under Louisiana's primacy. We're encouraged by the state's active engagement and recent movement on permit issuances, which signal growing regulatory momentum and confidence in responsible carbon capture development.

We remain on track to reach 1 million metric tons per year of CO2 injection by the end of 2027 and see the related capital requirements as very manageable within cash flow under our existing capital plan. Together with our CIP partnership and a robust project pipeline, this positions us for meaningful free cash flow generation from CCUS later this decade.

I'll now turn the call over to our CFO, David Tameron, for a review of our Power business and financial results.

Thank you, Eric. Turning to our Power business. As Chris mentioned, we are thrilled to announce our pending acquisition of a majority control position in our Power JV. Increasing our ownership to a 75% equity stake means we will have over 1.1 gigawatts of power generation capacity in the growing ERCOT market. As previously disclosed, the total purchase price will be $376 million, which includes the assumption of $145 million of debt. The remaining $231 million will be funded 50% in cash and 50% in BKV stock, which equates to 5.3 million shares based on a predetermined VWAP price.

This transaction sets a clear marker on the value of this business line within BKV's portfolio and positions Power as a core growth engine for our company. The increased ownership will also come with an updated and aligned governance structure and will unlock additional potential for commercial opportunities. Following the close, which is expected to occur in the first quarter of 2026, we expect to include the Power JV results within BKV's consolidated financials, providing greater transparency into the business' strong cash flow generation and enabling investors to better recognize the value it brings to our overall portfolio.

While third quarter Power JV adjusted EBITDA was below our guidance, operational performance remains very strong. We are incredibly proud of our Temple team, which has set a high bar for performance and has established a solid foundation for our growing Power business. Pricing did disappoint during the quarter, largely reflecting milder weather in Texas as third quarter cooling degree days were 15% lower than the 5-year average. While this resulted in lower-than-expected prices, market strength remains evident and robust load growth continues to support long-term ERCOT fundamentals.

Power prices averaged $46.29 per megawatt hour during the quarter, with natural gas costs averaging $2.87 per MMBtu, resulting in an average spark spread of $25.82 as compared to $20.82 a year ago. For the quarter, BKV's share of power JV adjusted EBITDA was $20.4 million with gross power JV EBITDA coming in at $40.9 million. For the fourth quarter, we expect gross power JV EBITDA of $10 million to $30 million, reflecting typical seasonal patterns and continued operational execution.

Shifting to BKV's corporate financial performance. We delivered another outstanding quarter, highlighted by our upstream outperformance, disciplined capital spending and a strengthened balance sheet. Net income for the third quarter was $76.9 million or $0.90 per diluted share with adjusted earnings of $0.50 per diluted share. Combined adjusted EBITDAX attributable to BKV, including our proportionate share of the Power JV adjusted EBITDA was $91.8 million, representing a 50% increase from third quarter of 2024. These results were driven by higher production volumes, improved realized pricing and continued cost reductions across our upstream operations.

Accrued capital expenditures totaled $79.6 million for the quarter, 6% below the midpoint of guidance. The spending included $56 million for upstream development and another $24 million for CCUS and other. Our teams continued to deliver strong results and higher activity levels while maintaining capital discipline. During the quarter, we achieved 9% year-on-year production growth, advanced investments in our CCUS partnership and project pipeline and reduced debt levels in our power JV.

With regard to the balance sheet, we closed the third quarter in a strong financial position. Several positive developments further strengthened our capital structure, leaving us well positioned to fund and advance our growth initiatives. A key highlight was the successful execution of our inaugural bond offering. We issued $500 million of 7.5% senior notes, marking an important milestone in our capital market strategy. Proceeds from the bond were used to fund the cash portion of the purchase price for our Bedrock Shale acquisition, as well as pay off the outstanding RBL balance.

During the quarter, we also strengthened our liquidity position by expanding our elected commitments under the RBL, increasing it from $665 million to $800 million. The increase primarily reflects the additional borrowing base capacity associated with the Bedrock acquisition and underscores the continued support and confidence of our lending partners. Our balance sheet remains straightforward and conservatively positioned with $500 million of senior notes outstanding and no borrowings under our $800 million RBL. Our net leverage ratio as of September 30th stood at 1.3x within our stated leverage target of 1x to 1.5x.

Cash and cash equivalents totaled $83 million at quarter end. And combined with remaining RBL availability, total liquidity stood at $868 million. In addition to this strong liquidity position, we continue to manage commodity price risk through our prudent hedging program. For our updated hedge positions as well as fourth quarter 2025 guidance ranges, you can refer to our press release and our updated investor presentation, which are both posted on our website this morning.

We will release 2026 guidance in February. But in early looks at our budget, prior to considering any successful PPA negotiations, we see our newly combined business generating meaningful free cash flow. This is driven by both our upstream and power businesses, which more than fund the capital needs of our CCUS business. With that, I'd like to turn it back over to Chris for his concluding remarks.

Thanks, David. The third quarter of 2025 exemplifies BKV's said-did culture and positions the company for sustained long-term profitable growth. Our achievements this quarter span all aspects of our business. In Power, we announced the purchase of a controlling interest in the Power JV, increasing our ownership to 75%, which we expect to close in the first quarter of 2026. In upstream, we successfully closed the Bedrock acquisition while continuing to drive highly competitive capital efficiency and production growth.

In CCUS, we have additional momentum with high-quality projects, supported by our CIP partnership. Financially, we successfully priced our first corporate bond and maintained a strong balance sheet. The ongoing integration of our gas, power and carbon capture capabilities creates unique energy solutions that are increasingly valued in today's market. Looking ahead, we remain excited about the multiple growth vectors of our business.

I want to thank our exceptional team for their continued dedication and excellence in execution and our shareholders and partners for their ongoing support of BKV's vision and long-term strategy. We look forward to updating you on our continued progress in the quarters ahead.

Operator, we are now ready to take questions from the audience.

[Operator Instructions] Our first question comes from Betty Jiang with Barclays Bank.

Congratulations with the acquisition of a controlling stake in the Power business. So can we just start from there and talk to how gaining control of the power unit going forward would change your conversation or how you have that conversation with hyperscalers and growing the Power business over time?

Yes, Betty, thank you. So first of all, we're really pleased with the acquisition. It's clear to us that the power markets in Texas are poised for very strong growth and our move into buying 50% of Banpu Power's position is a signal of our optimism in the market. I think the ability to kind of control the JV and consolidate does a number of things for our discussions. Number one, it allows us to bring together in a very seamless way the energy solutions that we uniquely provide between power, gas and carbon capture so that we can structure commercial agreements in a singular holistic energy solution package that a lot of these hyperscalers and data center companies are very interested in. So that's the first thing.

The second thing is it positions us to really provide the transparency around our financials that investors are looking for. And I think also that allows us to be able to disclose a lot more information financially around what we're doing with the JV. And then the third angle is the way we've set it up from a growth or strategic flexibility engine for investments or additional opportunities, acquisitions, et cetera, in this 75:25 structure really is the right mix in our minds for long-term growth, and that allows us to deploy capital. When you think about expansions under the back of additional commercial agreements or additional acquisitions, it really does position us ideally. And that's a key part of these discussions with hyperscalers as well and potential data center companies.

My follow-up, staying with power, and I want to ask about SB6. I understand that law might have some changes in how the power discussion and a potential PPA could be struck. Can you just speak to how that might be impacting your conversation with the hyperscalers and then the optionality and other solutions that you can bring to the market despite that policy change?

Yes. So first of all, I think SB6 is really something that's constructive by the state of Texas. It's an effort to high-grade the types of projects that are in the queue. A lot of folks have been applying for interconnections but not all interconnection requests are created equal. And so SB6 has a framework that's being evolved to really streamline and high-grade the types of interconnections that are being requested in the state of Texas to get to the real demand that's coming in and allow that demand to materialize because in general, the posture of Texas is open for business. And we see this desire to streamline and enhance grid reliability while encouraging AI and data center investment, in particular, in the state of Texas.

So we think SB6 goes a good step of the way to get there. Clearly, the rules are being laid down as we speak, and BKV is very actively involved in evaluating and participating in that process.

With regards to the hyperscalers and the data center companies, I think the -- what we're seeing is the bet is that Texas figures this out pretty quickly relative to other grid regulators across the nation. And we feel like it's something that everyone wants to understand and understand how to deal with the rules. But I think what we're seeing is that there's a general feeling that this actually helps to streamline the process. And when it comes to companies like BKV with existing power-generating assets at 1.1 gigawatt of equity power today, I think it puts us in a great position to high-grade potential projects that we're looking at relative to kind of the broad universe of the interconnection request. So I think in general, I would say it's positive. Again, the rules are still being finalized. But we see this as a positive move by Texas to encourage investment in the power sector, encourage investment from the data centers and the hyperscalers. And in general, the belief is that Texas is open for business and we'll figure this out quicker than potentially other regulators across the country.

Our next question comes from Michael Furrow with Pickering Energy Partners.

Look, BKV has been able to put together quite the position in the Barnett relatively quickly as well as work down well costs and improve margins on the assets. So bringing back to the consolidation of the Power JV, the company is now trading at an expanded multiple and looking at it simplistically, this should ease further consolidation of the basin. So would you agree with that comment? Or are there certain dynamics of the Barnett M&A market that just may not be as clear to those of us on the outside looking in?

Yes, Michael, it's a good question. So if you look at what's happening in the Barnett, I think, one is when you ever look at a deal, for me and for the team here, it's about fundamental economics, right? Multiples are helpful but it's about what is the hold to maturity return as the last owner. And so we're looking at deals that will be accretive from both the purchase price perspective, the strip, but also what can you do with those assets from a optimization, a synergy, a dropping costs, enhancing the development.

You saw what we were able to do in the Bedrock transaction that we closed recently. And I think there's nearly a Bcf plus of opportunities in and around the Barnett. We believe that at our current multiple and with our position in the Barnett that we can continue to acquire accretive transactions in the market and we're very optimistic about continuing to be able to do that.

Just a follow-up on the power JV. I mean, look, the Temple assets really appear to be running on all cylinders. The availability factors look great. I think you disclosed only 3.5 days of downtime. So beyond adding incremental sort of around-the-clock baseload capacity, what else can the company do operationally to improve margins at the power plants outside of changing spark spread?

Yes. I mean, Michael, clearly, the number one thing is to get additional long-term contracted demand, right, and that in the form of commercial arrangements or PPAs. That's going to be front and center for the company. That's what we see 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 3 power plants. Today, there's 2 power plants there. We've got ample land space, water, gas. It's flat and we're on the fiber optic super highway between San Antonio, Austin and Dallas-Fort Worth. So we think it's ideally positioned. You can 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 is going big in power.

Our next question comes from Neal Dingmann with William Blair.

Nice quarter. Chris, my first question -- just really interested on capital allocation, specifically. Could you maybe, David, speak to how you all are thinking about managing all your opportunities throughout the closed-loop strategy? What I'm getting at is you all seem to have more opportunities when you look at the upstream opportunities. I mean, how do you think about managing this or the power opportunities along with potential shareholder return and maintaining a solid balance sheet?

Yes. First off, let's talk about near term, right? 2026 is going to be a strong year as far as free cash flow generation. Obviously, Eric and his team right on the upstream side, we have that cash flow engine 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 '26. One, 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 and I did as well, the bond and the upside to the RBL. So a number of avenues, triggers, and levers to pull as we think about financing.

then finally, 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 levers to pull if you think about '26, '27. And we look at our current structure of how we have our debt and capital structure of each entity, if you will, lined up. And they're all taken with the life cycle and the maturity of each of the respective business units. So we feel very good actually about where we're at today as we head into '26. Does that answer your question, Neal?

It does. A lot of opportunities. Perfect answer. then just secondly on looking at Slide 32, just on the forecasted sequestration. I'm just wondering, besides those projects, I think there's 4 or 5 announced. Are there others that are currently in the works? Or 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?

Yes, sure. Eric Jacobsen here. Thanks for your question. On Page 32, I think you're referencing the target of 1 million tons of CO2 injection run rate by the end of 2027. And yes, we listed 5 or so projects that have even been -- that have either been FID-ed or announced and on track towards FID. So all of those would contribute nicely to that 1 million 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 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 of growing above and beyond the 1 million tons towards an ultimate kind of 16 million 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 million tons of CO2 within a 30-mile radius. So you can see where that can really step change those sorts of projects, namely High West and some other Class Vis that we've submitted already can really step change in a nice combination with the other portfolio of projects we have around natural gas processing, other industrials and ethanol. So all told, Neal, we have a very high confidence in that 1 million 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.

Our next question comes from Jacob Roberts with TPH & Company.

Chris, I was wondering if you could spend some time talking about the incremental autonomy that the increase in the stake in the Power JV will give you, maybe less so about pursuing the closed-loop strategy with customers, but really specifically on capital allocation to the power segment as a whole.

Yes, 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 pro forma for close, that would give us a majority control. That allows us to there -- 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, Banpu Power. So I think what it does for us is it gives us very strong control of the ability to flex. Clearly, we're going to work with our partner in the joint venture in terms of how much capital we deploy 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, 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.

Great. 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?

Yes. 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 and 25% Banpu Power. That gives us an ability to grow both the power and the carbon capture alongside of 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 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 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 we'll obviously evaluate that from time to time going forward.

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.

Thank you, and thank you, everyone, for joining our call. We really appreciate the fact that you've spent time to evaluate BKV. 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. We see our 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, we hold dear the sacrifice that many families and individuals have made in protection of our country and freedoms. 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.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Good morning, everyone, and welcome to BKV's Second Quarter 2025 Earnings Conference Call. As a reminder, today's call is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Michael Hall, Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Thank you for joining BKV Corporation's Second Quarter 2025 Earnings Conference Call. With me today are Chris Kalnin, Chief Executive Officer; Eric Jacobsen, President of Upstream; and David Tameron, Chief Financial Officer.

Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements, which are subject to certain risks, uncertainties and assumptions. Actual results could differ materially from those in any forward-looking statements. In addition, we may refer to non-GAAP measures.

For a more detailed discussion of the risks and uncertainties, including those associated with the closing of the Bedrock acquisition, which remains subject to customary closing conditions and integration of those assets into our existing portfolio, which could cause actual results to differ materially from any forward-looking statements as well as the reconciliations of non-GAAP financial measures, please see the company's public filings, including the Form 8-K filed today. We have also posted an updated Investor Presentation on our website.

I'd now like to turn the call over to our CEO, Chris Kalnin.

Thank you, Michael, and thank you, everyone, for joining us to discuss our second quarter results. I would like to start this call by taking a moment to reflect on the recent flooding in the Texas Hill Country. Our hearts are with everyone in Kerr County across the Hill Country and around the world, we're feeling the devastating effects of the flooding. We are holding you all in our thoughts and prayers.

We're proud to be part of the Texas community, and we're actively responding and doing our part as well. We have made a $50,000 contribution to the Kerr County Relief Fund and are matching all donations made by BKV employees two-to-one for every dollar they give to agencies that are actively responding and assisting to those impacted by the floods. Turning to our results.

The second quarter was marked by significant macro and regulatory events that have overall strengthened the business environment for BKV across our natural gas, carbon capture and power businesses. In particular, the macro backdrop for natural gas remains bullish.

While this summer has been marked by typical seasonality for natural gas, the expected ramp in Gulf Coast natural gas demand is well underway with new LNG facilities coming online and ramping into the second half of 2025 and throughout the full year of 2026. The ERCOT power market has continued to show long-term strength as a recently released EIA study projects ERCOT to be the fastest-growing electricity sales market in the U.S. with over 20% growth projected between 2024 and 2026.

This load growth is being driven by residential, commercial, industrial and importantly, AI and data center electricity demand. In the near-term, we will be actively monitoring Texas power markets throughout the remainder of the summer and early fall as these months are the most significant months for power demand.

Our carbon capture business has benefited from one big Beautiful Bill Act that solidifies the durability of the 45Q Tax Credit and demonstrates strong support for carbon capture. Further, we believe that progress in securing emitter volumes remains one of the key gating items in the carbon capture business and BKV's strong progress in this regard underscores our leadership in this space.

Overall, I'm excited to share with you another exceptional quarter that demonstrates our continued progress across all our business lines, highlighting our cultural value of delivering on promises. Our Upstream business significantly exceeded our second quarter guidance from a production and capital efficiency perspective.

Our production came in above the high-end of our production range, while our operating teams were able to keep development and total company capital spending at the low end of our prior ranges. On the back of these results, we are increasing our 2025 production guidance midpoint to 800 million cubic feet equivalent per day, while reducing our overall corporate capital budget midpoint to $320 million.

This was made possible in part by our proactive forward-planning and domestic supply sourcing strategy, which has positioned our company robustly to help mitigate impacts of future anticipated tariffs. Further, we are pleased to announce that we have signed definitive agreements to acquire Bedrock's Barnett Shale assets.

This acquisition is a strong strategic fit as it extends our leadership position in the Barnett and improves our reserve life with low decline PDP assets and meaningful well inventory. Subject to customary closing conditions, we anticipate that closing will occur in the third or early in the fourth quarter of 2025. Upon closing of the asset acquisition, BKV will add over 100 million cubic feet equivalent per day of production and nearly 1 Tcfe of 1P reserves to our Barnett portfolio.

In our Power business, BKV is pleased to share that we have reserved manufacturing slots for natural gas turbines with a major power plant manufacturer. The optionality provided by these turbine slots enhances our ability to discuss additional power needs with large data center companies and hyperscalers.

BKV remains in active discussions with these potential customers regarding long-term PPAs and is actively analyzing the market dynamics around PPA transactions to optimally position our Temple power generation assets for maximum value. BKV's continued investment in carbon capture has solidified our leadership position in this industry and has allowed us to accelerate momentum in our CCUS business.

Consistent with this, we recently announced yet another CCUS emitter agreement with our major midstream partner at another of their plants in Texas. We have seen continued momentum in our discussions with additional emitters and our partnership with CIP continues to provide us with the opportunity to accelerate our CCUS project pipeline.

We are also excited to announce that we have inked a seminal deal for the supply of Carbon Sequestered Gas or CSG to Gunvor, a global leading commodities trader. CSG enables the decarbonization of our energy and allows end users to utilize around-the-clock carbon-neutral energy that commands a premium in the marketplace.

Overall, BKV has demonstrated strong progress around our closed-loop strategy, which combines the winning formula of gas, power and carbon capture to create premium value in one of the fastest-growing energy markets in the world, the State of Texas.

We believe we are ideally positioned to benefit from megatrends that are driving the energy markets, and we are excited to continue to demonstrate the uniqueness of our business model as we progress our business strategy and execute on our said and did culture.

Now I'd like to hand the call over to BKV's President of Upstream, Eric Jacobsen, to discuss operational specifics for the quarter. Eric, over to you.

Thanks, Chris. The second quarter was indeed exceptional for our operations as we continue to demonstrate the strength of our assets and our operational excellence. Our Upstream business continued to outperform expectations for the second quarter while we maintained capital discipline.

Our Upstream teams have accelerated activity versus our budget, drilling and completing longer and more technically demanding wells in fewer days. Importantly, our production outperformance has been about more than just pulling activity forward. We have also meaningfully outperformed our sanctioned type curves across the 15 TILs this quarter and TILs from previous quarters as our continuous improvements in completion and subsurface optimizations have borne fruit.

As a result, in the second quarter, our Upstream segment continued its history of beating projections, delivering net production of 811 million cubic feet equivalent per day, exceeding the high end of our guidance range of 805 million cubic feet equivalent per day. Additionally, our teams have delivered all of this at lower-than-expected capital investment as we continuously find new ways to increase efficiencies and push our unit costs lower than planned.

What's particularly impressive is that we've achieved these results while keeping development CapEx at $63 million, the low end of our guidance range. Our Barnett development costs continue to trend lower with an approximate 11% reduction in dollar per lateral foot well cost compared to our last continuous development activity, reducing from a $632 per lateral foot average in 2023/2024 to approximately $560 per lateral foot through 2Q of 2025.

To highlight a few details behind our $560 per lateral foot cost performance, our Upstream team achieved several notable company records this quarter, all while maintaining our top-notch safety track record. We drilled the longest well in company history, reaching a total measured depth of over 20,000 feet. Year-to-date, we have also drilled 7 wells with greater than 90-degree azimuthal bends in the lateral, including a U-turn well.

We are also hitting company records on the completion side. During the second quarter, we averaged over 22 pumping hours per day on two pads in the Barnett, resulting in the two fastest pads completed in BKV's history. In addition to our lower-than-projected development capital spend, company-wide lease operating and workover expense came in below the low end of the guidance range for the second quarter at $0.46 per Mcf equivalent, reflecting the success of our cost reduction initiatives as well as our increased vertical integration and production outperformance.

As Chris mentioned, we are pleased to revise the midpoint of our full year 2025 production guidance range up to 800 million cubic feet equivalent per day, an increase of nearly 4% over our previous midpoint while maintaining the same development capital range of $205 million to $235 million as originally guided.

For the third quarter, we expect production midpoint to be at 820 million cubic feet equivalent per day with a range of 805 million to 835 million cubic feet equivalent per day. This guidance excludes the anticipated impact of the Bedrock acquisition, which, subject to customary closing conditions, is expected to close late in the third or early in the fourth quarter.

In addition, while still remaining within the upper range of our original development capital guidance, we anticipate an additional 3 to 4 drilled and completed NEPA wells in late 2025 beyond the initial full year 2025 plan, which should put us in a very good place heading into 2026. We are delivering more production in 2025 than planned and more activity within the same original CapEx range.

As mentioned, we are excited to share that our proven platform for success in the Barnett should be enhanced by the acquisition of Bedrock Energy Partners' Barnett assets for a total purchase price of $370 million, subject to customary closing conditions, which will further solidify our leadership in the basin and extend our reserves significantly.

The assets include over 1,000 producing wells, the vast majority of which are located in the heart of our Barnett acreage and are very complementary to our existing footprint. Upon closing, these assets will allow for extending laterals on our existing acreage, adding accretive near-term inventory and pulling multiple levers for cost optimization.

The assets really fit hand in glove with our current acreage, and we anticipate applying BKV's proven Barnett playbook to these locations very quickly. The acquisition is expected to add over 100 million cubic feet equivalent per day of production and nearly 1 Tcfe of proved reserves and over 70 undeveloped new drill locations, approximately 50 of which are Tier 1 locations with a weighted breakeven average of about $2.50 per MMBtu, consistent with our current inventory portfolio.

There are also 80 refrac locations, giving BKV the opportunity to further our refrac program leadership. The base decline complements our current leading low decline position at around 7% on both a 1-year and 5-year basis. We view the pending Bedrock acquisition as further evidence that we are in the sweet spot of all shale basins with low decline, PDP-weighted and cash flowing assets, low nitrogen gas to deliver to Gulf Coast demand centers and a long runway of exceptionally capital-efficient inventory.

Turning to our CCUS business; the tailwinds Chris mentioned are supporting a robust deal pipeline. In addition to our operating Barnett Zero facility, we now have two additional CCUS projects that have reached FID with three more projects progressing towards FID. All told, we have four Class II well permits that have been approved, 7 Class VI well permit applications submitted and under review by the EPA and two recently approved MRV plans, keeping our project pipeline on track.

The new East Texas project we announced will be co-located with an existing natural gas facility and is the sixth such facility to be announced by BKV. We forecast that the project will achieve an average annual sequestration rate of approximately 70,000 metric tons of CO2 per year in a Class II injection well. While initially owned by BKV dCarbon Ventures, this project may be transferred to BKV's CIP joint venture in the future.

On CIP, our partnership with them is now underway and has really energized this portion of our business through funding, a strategically aligned vision for CCUS and additional project potential. It is a relationship we are very excited about. Regarding the macro environment, I'd like to reiterate that the passage of the One Big Beautiful Bill Act and its preservation and expansion of the 45Q Tax Credit was a big win for us and the industry.

Transferability for the life of the credits made the investment horizon significantly more certain and attractive as well. During the second quarter, we progressed projects successfully across multiple fronts. The [ interoperation ] Barnett Zero facility remained on track with 99% reliability and with over 30,000 metric tons of CO2 injected. On the CCUS project development side, we finished drilling in June and completing in July, the injection well at our Eagle Ford project with our major midstream partner.

This is an important milestone and one which we are incredibly proud of, especially as the work was completed to specifications and at around $1.5 million below budget. The quickening pace of our CCUS project development is very encouraging, and we are confident that our goal of 1 million tons per year of CO2 injection run rate by the end of 2027 is attainable.

Consistent with our commentary during the 1Q call, following resequencing of projects on the back of the CIP partnership, we have reduced our full year guidance for CCUS and other CapEx to a range of $85 million to $115 million with a midpoint of $100 million, down from a midpoint of $130 million.

And with the passage of O3BA, we are excited about the consistent and robust cash flow potential and investment opportunities in the space moving forward. Overall, our team's performance in the second quarter extended our leadership position and legitimate high-fidelity delivery on the CCUS front.

I'll now turn the call over to our CFO, David Tameron, for a review of our Power business and financial results.

Thank you, Eric. Our Power business delivered strong results in the second quarter. And as Chris mentioned, we're making excellent progress in our discussions with several hyperscalers and data center operators. The Temple complex, which sits at the center of major data center build-outs at ERCOT, uniquely positions BKV to provide energy solutions for those looking to address their power needs today.

During the second quarter, our Temple Plants delivered a combined average capacity factor of 59% and total generation was over 1,900 gigawatt hours. Power prices averaged $46.34 per megawatt hour with average natural gas cost of $2.98 per MMBtu, resulting in an average spark spread of $25.15. BKV's implied proportionate share of Power JV adjusted EBITDA was $18 million and gross power JV adjusted EBITDA of $36 million was above the high end of our guided range for the second quarter in a row as favorable weather conditions and advantaged pricing drove outperformance late in the quarter.

As we look to the remainder of 2025, we expect gross third quarter power JV adjusted EBITDA of $55 million to $75 million and are maintaining our annual guidance of $130 million to $170 million. This guidance range factors in normal seasonal downtime currently scheduled for the Temple Plants in the fourth quarter of '25 as well as our current hedge position.

As a reminder, fourth quarter '24 included major maintenance downtime that impacted our results. Now shifting to BKV's corporate financial performance. Our strong results were led by our Upstream business as those assets and our operating team continue to drive exceptional outcomes. Net income in the second quarter came in at $105 million or $1.23 per diluted share, which was $0.39 per share on an adjusted basis with combined adjusted EBITDAX attributable to BKV of $88 million.

Strong production combined with lower-than-forecasted LOE largely offset the impact of widening differentials experienced during the quarter. Accrued capital expenditures in the second quarter were $79 million, which included $63 million for upstream development and $16 million for CCUS and other. The combined $79 million was 12% below the midpoint of guidance. Quarter after quarter, we continue to do more with less.

Big picture, while staying within cash flow, throughout the quarter, we continued to grow our Upstream business, we invested in our CCUS partnership and achieved a modest amount of debt paydown. Moving to the balance sheet. As of June 30, outstanding draws on our RBL were $200 million, representing a net leverage ratio of only 0.63x.

We also had cash and cash equivalents of just over $21 million. Combined with the remaining availability on our RBL, our total liquidity stood at $472 million at the end of the second quarter. This does not include the anticipated borrowing to fund the pending Bedrock acquisition, which subject to customary closing conditions, is expected to close late in the third or early in the fourth quarter.

With respect to Bedrock financing, the transaction is expected to be funded with $110 million of seller issued equity equivalent to approximately 5.2 million shares, which are subject to a 60-day lockup provision with the remaining $260 million being put on our RBL. Based on a recent strip, on a combined basis, we expect our updated net leverage ratio to be at the lower end of our 1x to 1.5x targeted range.

Moving on to hedging. I'd like to reiterate that we hedge at least 50% of forecasted PDP production for 24 months. Based on our current position for the second half of 2025, we have 58% of our anticipated natural gas production hedged at an average price of $3.45 per MMBtu and NGLs are hedged at an average of $21.73 per weighted barrel.

Our 2026 position stands at approximately half of our natural gas PDP production hedged at $3.84 per MMBtu and roughly 40% of our NGL PDPs hedged at $22.01 per weighted barrel. Finally, for third quarter 2025 guidance and for a comprehensive look at our updated full year guidance ranges, you can refer to a complete schedule, which can be found in the press release that was posted this morning.

With that, I'd like to turn the call back over to Chris to wrap things up.

Thanks, David. BKV delivers on what we say we will do. And as you can see, we have continued this trend. In Upstream, we outperformed on our natural gas production and capital efficiency expectations, driving us to raise full year production guidance within the originally guided capital expenditure range.

We further expanded our position in the Barnett with our acquisition of Bedrock, bringing in an accretive asset to expand our Barnett portfolio. In carbon capture, we extended our leadership position with the East Texas project and the continued momentum with emitters and our joint venture partner, CIP.

Additionally, we signed a seminal deal with Gunvor for the purchase, marketing and sale of Carbon Sequestered Gas, demonstrating premium pricing potential for the unique combination of our gas and carbon capture assets. In Power, we remain active in PPA discussions with hyperscalers and data center operators looking for energy solutions in Texas as we have the unique combination of gas, power and carbon capture in place today and available to be delivered to the market at a premium.

We look forward to future announcements in this regard. Finally, I would like to take a moment to thank our incredible employees for their hard work and dedication. I would also like to thank our shareholders and Banpu for your continued belief in the BKV vision.

Operator, we are now ready to take questions.

[Operator Instructions] Our first question is from Scott Gruber with Citigroup.

Congrats on the deal. Can you guys hear me? You can hear me. So obviously, one of the key benefits of purchasing adjacent acreage is improving your ability to lengthen laterals and continue to drive better economics in the play. But I guess the question in the Barnett is with the producing wells in existence, how much running room do you have to increase laterals? So maybe just some color on kind of long laterals as a percentage of the program today and how that improves with the acquisition.

Sure. Scott, this is Eric, and thanks very much for the question. Yeah, you're absolutely correct. The lengthening of laterals and the accretion of inventory is certainly one of many advantages of the Bedrock deal that we're very excited about.

In addition to it fitting complementary with a low decline base with adding infrastructure scale and contiguous acreage to our portfolio, selling more low nitrogen gas to data centers and to Gulf Coast demand centers, for example. We're also excited about the inventory accretion, as you mentioned.

I think we announced 50 kind of equivalent Tier 1 lateral adds plus another 20 Tier 2, so a total of 70 -- up to 70 equivalent 10,000-foot lateral adds. Of that 50 Tier 1, roughly close to half of those are extending existing laterals from our current acreage, as you mentioned.

And then on top of that, I'll reference the 80 refracs that have been additive as a result. So all told, kind of 70 equivalent 10,000-foot laterals, 80 refracs. It adds another couple of years of inventory and even better capital-efficient inventory with the lengthening of laterals and the accretion of those high-quality sticks from Bedrock acreage.

I appreciate the color. And you guys have made a lot of progress on the cost per foot. I think you guys brought in a high-spec rig to help with that. And you mentioned a U-shaped well as well. So just as you think about the cost per foot, maybe just some color on how much you think you can continue to drive that with longer laterals, U-shaped wells. Just some color on thoughts around cost per foot heading into '26.

Yeah, sure. Thanks for that follow-up there, Scott. Yeah, we're very pleased, as you referenced, to have reduced our cost per foot lateral by 11% compared to our previous kind of continuous '23, '24 programs in the first half of this year. I would say that Barnett was the first to receive shale technology.

And now two decades later, we're able to implement the best of shale technology, and we're seeing that. And we're certainly not in the late innings of that. We have more room to run. The resulting cost improvements have been from definitely extending lateral lengths from optimal subsurface placement from enhancing and improving frac designs, from setting records and learning lessons every day on lateral feet per day, on completion pumping hours, on records on rig [ mobs ], et cetera.

And those -- the nice thing about those, Scott, is those are structural changes, and we expect those to remain as we continue to add additional structural changes from the lengthening of laterals as a result of Bedrock for one, as you mentioned, from advancing completion designs. We're trialing and evaluating new completion designs right now, more on that in quarters to come.

And then certainly, our use of data and analytics trending towards AI. We have the largest data set of anybody in the Barnett and quite possibly one of the largest data sets of anybody in the shale basins in the U.S. And we are using that on the upstream PDP production side as well as our D&C platform to advance our structural cost reductions. So more to come there on a number of fronts.

We did reference the 7 wells we've drilled with 90-degree azimuthal bends, including U-turn well. I would say those high angle and U-turn wells represent about 5% of our inventory going forward. So we can certainly drill them, and we've proven the competency and capability of drilling those. But our preference is to drill 10,000-foot and much longer straight laterals with slight [ jogs ] or bends, and that's the 95% kind of platform of our inventory going forward.

Our next question is from Chris Baker with Evercore ISI.

Just want to stick on the Upstream. First question is for Eric. Just curious, given the success you guys continue to see there, how does that kind of shake out in terms of maintenance CapEx at this point? And maybe just how you see Bedrock fitting into the picture there?

Yeah, sure. Great question, Chris. So I think to the Bedrock piece first, as we mentioned before, it just -- it does fit hand in glove with our acreage position and our low decline kind of base portfolio. So at a roughly 7% base decline that Bedrock brings to us, it fits in perfectly with our cash flowing PDP wedge and perfectly, Chris, with a lower reinvestment rate and a lower maintenance CapEx rate.

We've said with our current 800 million cubic feet a day or so reguide raise to 800 million. Our maintenance CapEx is in the $170 million to $180 million range. That probably increases by around $20 million to $25 million with Bedrock because it's such low decline and because the asset is so nicely accretive to our acreage position with the extended laterals and continued efficiencies in the capital program. So all told fits in very nicely. It's a hand-in-glove sort of match for us. And our maintenance CapEx is still extremely low with the addition of Bedrock.

That's great. And as a follow-up, maybe, Chris, can you talk a little bit about, to the extent you can, just the turbine slots you mentioned earlier, delivery window, scale of the units? Any additional color there would be great.

Yeah. Thanks. So on the turbines, as we mentioned, this gives us tremendous optionality as we talk with hyperscalers and data center companies. And the idea there is that as you think about SP6 and other regulations in the market, I think increasingly, folks are going to be concerned if you're taking power off the grid and behind-the-meter type setups, you need to be able to displace that power with additional generation.

So the thought there is that we would -- we can point with certainty to timeframes that we could do that, and we would link those deals clearly with a PPA so that any incremental capacity we'd be building against would be very low risk funded by these PPAs. So that's the thought there. We continue those discussions. Stay tuned for future announcements, but we think it's incredibly positive, and it puts us in a tremendous position with the hyperscalers and data center companies.

Our next question is from Betty Jiang with Barclays.

I want to first ask about the CIP partnership now that you're moving forward and what are the initial focus areas of the partnership? How is the -- any changes in the project sourcing process and any new development that you could highlight so far?

Yeah. I'll start with the partnership there. Feel free to chime in on some of the projects. But in terms of the partnership, it's tremendous. As we mentioned in the last earnings call, CIP is a global infrastructure investor. They've got really a global view on carbon capture. Think about things like the carbon offset markets, clearly very active in Europe.

And they have -- BKV is their exclusive platform to invest in carbon capture here in the U.S. So it's incredibly synergistic. In terms of their plans right now in the joint venture, we have two projects, as we mentioned, Barnett Zero and our Eagle Ford project. Clearly, when projects mature to the right stage, we bring them into the joint venture. And then as we've mentioned, it's a 51%, 49% joint venture where BKV holds the majority and consolidates.

And then there's some reversionary interest over certain return hurdles. So that's the structure that's continuing. You can see from our financials that they're investing into the joint venture, and that will ramp over time. They've committed up to $500 million. And so we're excited to be able to deploy that alongside our capital. Eric, maybe give some color on sort of the sourcing and additional projects that we're thinking about there.

Sure. Betty, I'll just build on Chris' comments there with the projects. We are on track, as mentioned, for the Eagle Ford project that's in the JV along with Barnett Zero to start that up in 1Q of next year. We're progressing outside of the JV at the moment, the other announced projects, two gas plants in the Western Haynesville with Comstock, Bethel and Marquez as well as the recently announced East Texas project we have with our major midstream partner.

As those progress towards qualified status and eventually FID, those will be contemplated in the JV. And then further, as Chris alluded to, one of many benefits that CIP brings is relationships with emitters and other project contacts. So they brought a lot of projects to the table. Those are in the sort of advanced appraisal stage to pre-FID, and so more on those to come as they mature.

Great. And then my follow-up is on the Carbon Sequestered Gas deal with Gunvor. I know the volume initially is still fairly small. But does that start with a test of concept around how you're thinking about gas premium related to -- or premium price related to these type of transaction? And how large do you see this partnership that could potentially expand over time?

Yeah. Good questions, Betty. I'm glad you picked up on that. In terms of the volume, the initial up to 10,000 MMBtus a day is really structured to be equivalent to an [indiscernible] contract. I think that's the most kind of fluid contract structure. I think we've done that from a market structuring perspective. We're really excited about the partnership with Gunvor.

They're committed to the deal. They believe in the product. They're really excited about being able to market this. Clearly, we're establishing a market. So as you know, you're in a period of price discovery and you're also in a period of building the market. In terms of how much this relationship could scale, I think we've shared in the past that we've got over 100 Bcf a day of gas in the U.S., right, that's moving around.

And so a portion of that is going to be this type of product. When you think about marine fuel where LNG is being used increasingly and the need to lower CI scores around LNG usage for marine fuels, this type of product is ideal for that. When you think about around the clock carbon-neutral power that data centers want.

Again, this product sits there. And then when you think about industrial folks that need to export to Europe for CBAM and need their CI scores to come down, this product serves as an ideal product for that. And then finally, think about ethanol producers as you think about them producing or any sort of hydrogen where you have to lower your score.

So any time you're focused on lowering your CI score and avoiding compliance costs, this product fits perfectly in that mix. And that's why clearly, Gunvor sees that and is excited about it. And we think the size of the market is pretty substantial, albeit it will be a subset of the broader gas markets here in the U.S.

Our next question is from Jon Mardini with KeyBanc Capital Markets.

On the Power side, in the release, you mentioned working with counterparties to improve capacity factors and realize spark spreads. You mentioned this a bit in the prepared remarks, but wondering if you could just talk through what a potential deal might look like through the PPAs, behind-the-meter solutions or other commercial agreements to help drive those improvements.

Yeah. Good question, Jon. So in terms of the Power business, right, as you saw, we've got tremendous headroom in the Temple Energy complex. Today, we have a capacity of 1,500 megawatts -- we're -- our capacity factors we shared is in that 55%. So clearly, we've got some running room. Typically, a baseload plant like that can run as high as 90% capacity factor.

So we think there's pretty substantive headroom. And a lot of that is through the evening hours and into the night where generally in the ERCOT market, you're upbeat. When you think about sort of partnering or working with hyperscalers or data centers, you're going to be looking at more round-the-clock type usage, right?

And so I think some of that, you're going to contemplate as potentially a behind-the-meter structure where you can deliver power directly. I think we cite Temple is an ideal area to build an additional infrastructure. It's central of the country. It's got great access to gas, water, power and land. And so it puts it in a really ideal position.

So you can imagine that as we are in these discussions that a portion of the power is behind the meter, there's an ability to also tap into the grid because you need that reliability. And then you're setting up a contract structure, which is flexible. So typically, you will see contract structures out there, everything from more fixed price to sort of a tolling type arrangement. And we'll continue to analyze that in the market, what's the ideal setup.

What's unique about BKV and our ability is we produce both gas and power. And so our flexibility on the contract side is incredibly dynamic. We can go all the whole spectrum from fixed price all the way to tolling arrangements. And so we think it's incredibly competitive. We're obviously going to be excited to kind of continue those discussions and look forward to future announcements in those regards.

Okay. That's great. I appreciate those comments. Sticking to the power side, you posted relatively strong results for this segment this quarter. Just considering we're mostly past the peak of pricing period this summer. How do you see the Temple Plants performing for the remainder of the year, specifically relative to the same period in prior years?

Jon, it's Dave Tameron. Yeah, if you look at what the third quarter has done to-date, it has been a little [ light off ] to a slow start, but there's still -- remember, we still got half of the summer left as far as August and September. And this morning, right, we put out the $130 million to $170 million number. We're very confident in that number.

We wouldn't have put out that number if we weren't confident in that. And if we think about what that implies for 4Q, one thing I think that everybody needs to be aware of is 4Q of '24 had major maintenance that was planned. So if you're looking at 4Q '25 versus 4Q '24, keep that in mind for 4Q '25, you can see implied by our guidance at the midpoint, we're at about $20 million. That's just what the math is, and we're very confident in those numbers.

So we're still near term, a little bit of weather, we're fighting right now, but still time left in the summer. And then longer term, keep in mind, right, longer term, the supply dynamics, the demand dynamics at ERCOT are still very, very bullish for us. That's one of the bets we made when Chris outlined during the roadshow and over the last year of what we're looking at. If you look at '26, '27, very strong demand. So we're still very bullish on the dynamics if we think about the long term. Does that answer your question?

[Operator Instructions] Our next question comes from Jacob Roberts with TPH & Company.

One of the -- on Bedrock, I was curious, Chris, if you could kind of relay how competitive these processes are at the moment. And then for Eric, you've done a good job laying out why the asset made sense for BKV in terms of offset acreage, the midstream component, the decline rates. I'm wondering as you look at other deals, which one of those factors is going to be the most important in your guys' minds as you pursue more acreage?

Yeah. Thanks, Jake. I'll start, and then I'll hand it over to Eric there. So on the question of the process, one thing that's important to note is BKV is clearly the dominant producer in the Barnett. So when it comes to the folks kind of looking to exit or to monetize their positions, it puts us in a great position when it comes to those discussions.

Now with regards to Bedrock specifically, they were very interested in being a shareholder in BKV as well. And so that was truly a bilateral discussion where we kind of engaged with them and they saw the benefits, and we're excited about being a shareholder in BKV alongside of being able to kind of benefit from the synergies that Eric mentioned. So that's going to be one dimension.

You're going to have other processes in the play where there are going to be more bids and kind of more auction type structures. But I would imagine that the deal flow is going to be a combination of bilateral and auction processes depending on who the seller is and their motivation. The nice thing, as I mentioned, is that we are the natural kind of owner of these assets. And so we would be one of the first calls that I would guess anyone would make on that.

So -- and as you grow in the basin, it improves your economics even more, right? So there's a sort of a bit of a flywheel effect as you continue to consolidate the basin. So I think that puts us in a great position. Again, having stock as a currency, we've mentioned that on the roadshow is going to make us even more attractive as an acquirer. And I think that's been proven here as we've shared. But Eric, if you want to talk about kind of opportunity set going forward?

Sure. Yeah. Jake, thanks for that question. I think as you're aware and as included in our investor deck, there are a number of other opportunities in the Barnett. Chris alluded to this, too, that are quite attractive. From multiple perspectives, the same as Bedrock, low-decline basin, sweet spot with inventory, more gas to Gulf Coast demand standards, accretion on nearer-term inventory like with Bedrock, infrastructure and contiguous acreage, et cetera.

All of those matter. But I'd say, Jake, to your question of what's most important is us structuring a deal that -- where we can achieve accretive economics overall with our playbook applied in all four of those different areas. So that's what's most important to us. We're able to achieve that with Bedrock, and we see a lot of runway left with our playbook and our proven track record in the Barnett to do that.

Great. That's really helpful. As a follow-up, Eric, just making sure on the Bedrock stuff that you picked up, are the liquids cuts relative to new drills and refracs pretty similar to what you guys laid out on Slide 13 for the legacy portion?

Yeah. They're fairly similar in the kind of liquid content. I think we have a -- it's actually a little higher, 63% gas and 36% -- 37% liquids. So it's a little higher on liquid percentage. And then the liquid constituents are a little richer on the Bedrock acreage. So a little higher value in the liquid constituency split.

It's Dave Tameron. Just before we take the next question, I just want everybody to be aware, we do not have any forward guidance. In our forward guidance, we do not include anything for Bedrock. So once we close that transaction, we'll come back and update guidance, and we'll do that after the close. But just as of today, the guidance in the release does not include Bedrock.

Our next question is from Geoff Jay with Daniel Energy Partners.

Looking at the productivity gains you've made and how your wells are producing above type curve now, I just wonder -- and I'm sorry if I missed it earlier, but what are the key drivers of that outperformance? And I guess my follow-up to that would be, given that how competitive your new drills were with the refrac program even last year, does this sort of outperformance kind of change how you think about the mix of refracs and new sticks going forward?

Great. You bet, Geoff. Thanks for the question. Yeah, I think -- so there's nothing like -- as far as your question on outperformance, there's nothing like repetition and consistent quality crews and the application of lessons. And we have a rigorous lessons learned and applied culture. And the result of all those in combination has led us to lower cost per foot and the outperformance to type curve you referenced.

And I think there are several components if you dive a next step deeper. One is our understanding of the basin on the subsurface side and our ability to optimize subsurface with not only lateral lengths, but spacing, well placement relative to offset production, well placement relative to uphole challenges. And then certainly, there's some completion element to it.

We've optimized and rightsized and engineered our completions depending on where we are in the acreage. And the sum total of all that has led to that 17% outperformance versus type curve that you referenced. And then if you add in the fact that we are really executing to a high degree, the outperformance relative to plan is even greater than that because of the acceleration of our TILs.

I think we referenced 33% and 42% with new drills and refracs, respectively. So it's a combination of type curve outperformance in the areas I mentioned and accelerating due to execution, and that's what's led us to be above plan. With respect to kind of the split of new drills and refracs, yes, both are actually outperforming, as we mentioned on the -- compared to plan.

And we're excited about the advancements in both those completion advancements I mentioned and the well placement and subsurface optimization has translated into our refrac program as well. So I would expect going forward, they're both highly competitive, highly accretive. They both have a nice sweet spot in our operation cadence.

So I would expect us to continue to have sort of 80% of our CapEx invested in new drills and 20% in refrac. And just to remind you all, we have 520 or so refracs excluding -- or sorry, new drills, excluding Bedrock and 2,100 refracs, excluding Bedrock. So we have a long runway to go in both, and we'll keep that kind of split up going forward.

There are no further questions at this time. I would like to turn the call back over to Chris for closing remarks.

Great. Thank you. And I just want to close by saying I appreciate everyone's time listening to our call. We just want to underscore that BKV is on a journey with our closed-loop strategy that we think is unique, commands a premium and really is differentiated. We're excited about the future. We look forward to future announcements and underscoring our [indiscernible] culture. I want to thank everyone for their time. Have a great day.

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.