BKV Corp
For the period ended Mar 31, 2025. Filed May 9, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 9, 2025
BKV$17.55-3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001628280-24-047546
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0001628280-25-024150
Item 2. Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 165 previous paragraphs and 80 current paragraphs.
34 unchanged; 29 reworded; 16 added; 94 removed; 8 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Our oil revenues increased by approximately$1.5 million, or 79%, to$3.5 million for the three months ended March 31, 2025, from$1.9 million for the three months ended March 31, 2024. Theincrease was primarily due tohigher production volumes during thethree months ended March 31, 2025, which accounted for a $1.7 million increase in period-over-period revenues(calculated as the change in period-to-period volumes times the prior period average price). Theincrease was offset bythe impactof commodity price decreases, excluding the effect of derivative settlements, which accounted for a $0.2 million decrease in period-over-period revenues(calculated as the change in the period-to-period average price times current period production volumes).
Current report
We generated $3.3 million in Section 45Q tax credits during the three months ended March 31, 2025 related to CO 2 waste sequestration activities under our Barnett Zero Project compared to $2.3 million during the three months ended March 31, 2024. The increase period over period was due to more CO 2 waste sequestered in 2025 compared to the prior period.
Current report
Our related party revenues were $0.4 million for the three months ended March 31, 2025, compared to $1.1 million for the three months ended March 31, 2024. The decrease in related party revenues was due to a $0.7 million decrease in operating fee income with BKV-BPP Power, attributable to lower contracted rates.
Current report
Other revenues includes the gain (loss) on the sale of assets and the sale of third-party natural gas. Other revenues were $1.9 million for the three months ended March 31, 2025 compared to $1.4 million for the three months ended March 31, 2024. The period-over-period increase was primarily due to an increase in third party gas sales of $2.5 million and an increase in the gain on sale of assets of $0.4 million, offset by the impairment on our asset held for sale of $2.4 million.
Current report
Lease operating and workover expenses were $35.1 million, or $0.51 per Mcfe, for thethree months ended March 31, 2025, which was an increase of approximately $0.6 million from $34.5 million, or $0.46 per Mcfe, for thethree months ended March 31, 2024. Theincrease in lease operating expenses during thethree months ended March 31, 2025 compared to the same period in 2024 was primarily driven by a credit received of $1.5 million for a water sharing agreement during the three months ended March 31, 2024. The increase was also due to increases in repairs and maintenance and timing of fees of $1.0 million and vehicle expense of $0.4 million during the three months ended March 31, 2025. This was offset by $1.4 million of less workover and operating activity due to winter storms and $1.0 million decreases in compression and water expenses due to well shut-ins during the three months ended March 31, 2025.
Current report
Depreciation, depletion, amortization, and accretion was $40.0 million, or $0.58 per Mcfe, for thethree months ended March 31, 2025, which was a decrease of approximately $12.2 million, or 23%, from $52.2 million, or $0.70 per Mcfe, for thethree months ended March 31, 2024. The decrease in depreciation, depletion, amortization, and accretion during thethree months ended March 31, 2025 compared to thethree months ended March 31, 2024 was primarily due to a depletion rate adjustment in 2025.
Current report
General and administrative expenses were $25.3 million, or $0.37 per Mcfe, for the three months ended March 31, 2025, which was an increase of approximately $4.6 million, or 22%, from $20.6 million, or $0.28 per Mcfe, for the three months ended March 31, 2024. The increase in general and administrative expenses during the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was due to increases from Company-wide growth initiatives of $2.6 million in employee bonuses, contract labor, employee-based compensation, and employee expenses, and $2.0 million in consulting and information technology-related expenses.
Current report
Other operating expenses were $6.2 million, or $0.09 per Mcfe, for thethree months ended March 31, 2025, which was a decrease of approximately $2.3 million, or 27%, from $8.6 million, or $0.11 per Mcfe, for thethree months ended March 31, 2024. The decrease in other operating expenses during thethree months ended March 31, 2025 compared to the same period in 2024 was primarily due to $5.0 million of accrued waste emissions costs established by the Inflation Reduction Act recognized during the three months ended March 31, 2024. This was offset by an increase of $1.6 million in third-party natural gas purchases due to increased volumes and increased natural gas prices during the three months ended March 31, 2025 compared to the same period in 2024.
Current report
Interest income. Interest income was$0.1 million for the three months ended March 31, 2025, which was a decrease of $1.5 million, compared to $1.6 million for the same period in 2024. The decrease was primarily due to the cessation of interest earned on restricted cash following the repayment of the Term Loan Agreement in June 2024, which had previously funded the debt service reserve account.
Current report
In April 2025, the U.S. government announced a baseline tariff of 10% on products imported from all countries and an additional individualized reciprocal tariff on the countries with which the United States has the largest trade deficits, including China. Increased tariffs by the United States have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Current uncertainties about tariffs and their effects on trading relationships may impact the demand for, and price of natural gas, NGLs, and oil, increase the costs of goods and services or the availability of raw materials that we rely on to operate our business or impact interest rates. Although we are continuing to monitor the economic effects of such announcements, as well as opportunities to mitigate their related impacts, costs and other effects associated with the tariffs remain uncertain and could adversely impact our financial position, results of operations, and liquidity.
Removed paragraphs (94)
Previous report
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous report
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1, Financial Statements in this report on Form 10-Q and our audited consolidated financial statements and related notes, including“Management's Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2023 included in our final prospectus dated September 25, 2024 (the“Prospectus”) filed with the Securities and Exchange Commission (“SEC”). The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expectations. We disclaim any duty to publicly update any forward-looking statements except as otherwise required by applicable law.
Previous report
In this section, references to “BKV,” the “Company,” “we,” “us,” and “our” refer to BKV Corporation and its subsidiaries, unless otherwise indicated or the context otherwise requires. For more information on our organizational structure, see “Note 1 - Business and Basis of Presentation” to our condensed consolidated financial statements included in Part I, Item 1 of this report.
Previous report
Overview
Previous report
We are a forward thinking, growth driven energy company focused on creating value for our stockholders through the organic development of our properties as well as accretive acquisitions. Our core business is to produce natural gas from our owned and operated upstream businesses, which are supported by our four business lines: natural gas production; natural gas gathering, processing and transportation (our “natural gas midstream business”); power generation; and carbon capture, utilization and sequestration (“CCUS”). We expect our owned and operated upstream and natural gas midstream businesses to achieve net zero Scope 1 and Scope 2 emissions by the early 2030s, and net zero Scope 1, 2 and 3 emissions by the late 2030s. We maintain a “closed-loop” approach to our net zero emissions goal through the operation of our four business lines. We are committed to vertically integrating portions of our business to reduce costs and improve overall commercial optimization of the full value chain. For instance, in the Barnett, our natural gas production is gathered and transported in part through our midstream systems and we commenced sequestration operations at our first CCUS project in November 2023. We expect our second CCUS project to commence sequestration activities in the first half of 2026 and are evaluating a robust backlog of actionable CCUS opportunities. We believe that our differentiated business model, net zero emissions focus, highly experienced management team and technology-driven approach to operating our business will enable us to create stockholder value.
Previous report
Recent Developments
Previous report
Initial Public Offering
Previous report
•Initial Public Offering. On September 27, 2024, we completed our initial public offering (the “IPO”) of 15,000,000 shares of common stock at a price to the public of $18.00 per share. After underwriting discounts and commissions of $16.2 million, we received net proceeds from the offering of $253.8 million. We also granted the IPO underwriters a 30-day option to purchase up to 2,250,000 additional shares of common stock on the same terms. The underwriters partially exercised the option and, on October 28, 2024, purchased 701,003 shares of common stock, resulting in additional net proceeds of $11.9 million, after deducting underwriting discounts and commissions of $0.8 million.
Previous report
Dispositions
Previous report
•Sales of Chaffee and Chelsea Assets. On June 14, 2024, we sold our wholly-owned subsidiary, BKV Chaffee Corners, LLC (“Chaffee”), which owned a non-operated interest in approximately 9,800 net acres and 116 gross (24.2 net) wells and 122 Bcfe of proved reserves in the Marcellus Shale in the Appalachian Basin of Northeast Pennsylvania (“NEPA”), as well as our interest in the Repsol Oil & Gas operated midstream system, for a purchase price of $106.7 million. On June 28, 2024, our wholly-owned subsidiary, BKV Chelsea, LLC (“Chelsea”), sold certain of its non-operated upstream assets, including its interest in approximately 6,800 net acres and 214 gross (15.4 net) wells and 35 Bcfe of proved reserves in NEPA for a purchase price of $25.0 million.
Previous report
Credit Facilities
Previous report
•Refinancing. On June 11, 2024, the amounts outstanding under the Term Loan Credit Agreement, the Revolving Credit Agreement and the SCB Credit Facility (each as defined in the notes to our condensed consolidated financial statements included in Part I Item 1 of this report) were paid off with proceeds from the loans under the RBL
Previous report
Credit Agreement (as defined below) and cash on hand. The Term Loan Credit Agreement, the Revolving Credit Agreement, and the SCB Credit Facility were terminated concurrently with the repayment of the remaining amounts owed thereunder. See “Liquidity and Capital Resources — Loan Agreements and Credit Facilities” for additional information regarding our loan agreements and credit facilities.
Previous report
•RBL Credit Agreement. On June 11, 2024, BKV Corporation and BKV Upstream Midstream, LLC (“BKV Upstream Midstream”) entered into a reserve-based lending agreement (the “RBL Credit Agreement”), with Citibank, N.A. as administrative agent and the financial institutions party thereto, and with BKV Corporation as the guarantor and BKV Upstream Midstream as the borrower. The RBL Credit Agreement has a maximum credit commitment of $1.5 billion. As of September 30, 2024, the RBL Credit Agreement had an outstanding balance of $190.0 million, a borrowing base of $800.0 million, and an elected commitment of $600.0 million. The RBL Credit Agreement includes a $50.0 million sublimit for the issuance of letters of credit. See “Liquidity and Capital Resources — Loan Agreements and Credit Facilities” for additional information regarding the RBL Credit Agreement and the covenants contained therein.
Previous report
Operational and Financial Highlights
Previous report
Below are some highlights of our operating and financial results for the three and nine months ended September 30, 2024.
Previous report
•Production of natural gas, NGLs, and oil was 70.2 Bcfe and 217.2 Bcfe for the three and nine months ended September 30, 2024, respectively.
Previous report
•Average realized product prices, excluding the impact of settled derivatives, were $1.81 per Mcfe and $1.82 per Mcfe for the three and nine months ended September 30, 2024, respectively.
Previous report
•For the three and nine months ended September 30, 2024, production revenues were $127.0 million and $394.5 million, respectively, and midstream revenues were $2.7 million and $10.2 million, respectively.
Previous report
•Lease operating expense was $32.8 million, or $0.47 per Mcfe and $98.2 million, or $0.45 per Mcfe for the three and nine months ended September 30, 2024, respectively.
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•Net income (loss) for the three and nine months ended September 30, 2024 was $12.9 million and $(85.4) million, respectively.
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•Net cash provided by operating activities for the nine months ended September 30, 2024 was $74.8 million.
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•Accrued capital expenditures were $57.3 million for the nine months ended September 30, 2024.
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Factors That Affect Comparability of Our Financial Condition and Results of Operations
Previous report
Our business depends on many factors, primarily commodity prices, market supply and demand for natural gas, NGLs, and oil, upstream capital costs, and production costs. We continually monitor domestic and global factors which may cause our actual results of operations to differ from historical results or expected outlook.
Previous report
Commodity Pricing. The natural gas and NGL industry is cyclical and commodity prices are highly volatile, and we expect these prices to continue to remain volatile in the near future. In order to manage our market exposure of price volatility, we utilize derivative contracts in connection with our natural gas operations to provide an economic hedge of our exposure to commodity price risks associated with anticipated future natural gas and NGL production. However, there are still market risks beyond our control that may impact our financial condition, results of operations, and cash flows.
Previous report
Supply, demand, market risk, and the impact on natural gas, NGLs, and oil prices. Natural gas and oil prices are subject to large fluctuations in response to relatively minor changes in the demand for natural gas, NGLs, and oil. Prices are affected by current and expected supply and demand dynamics, including the level of drilling, completion, and production activities by other natural gas production companies, global industry-wide supply chain disruptions, widespread shortages of labor, material, and services, the ability to agree and maintain production levels by members of OPEC and other oil producing countries, and political instability of other energy producing countries, resulting in increased supply in the global market. Other factors impacting supply
Previous report
and demand include weather conditions (including severe weather events), pipeline capacity constraints, inventory storage levels, basis differentials, export capacity, supply chain quality and availability, strength of the U.S. dollar as well as other factors, the majority of which are outside of our control.
Previous report
Upstream Capital Costs. Businesses engaged in the exploration and production of natural gas and NGLs, such as ours, face the challenge of natural production declines. As initial reservoir pressures are depleted, natural gas and NGL production from a given well naturally decreases. Thus, as does any natural gas exploration and production company, we deplete part of our asset base with each unit of natural gas and NGLs we produce. We attempt to overcome this natural decline by drilling and refracturing to unlock additional reserves and acquiring more reserves than we produce. Our future growth will depend on our ability to enhance production levels from our existing reserves and to continue to add reserves in excess of production in a cost-effective manner, through development of existing assets and acquisitions. Our ability to make capital expenditures to increase production from our existing reserves and to add reserves through drilling is dependent on our capital resources and can be limited by many factors, including our ability to access capital in a cost-effective manner and to timely obtain drilling permits and regulatory approvals.
Previous report
Other factors significantly affecting our financial condition and results of operations include, among others:
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•success in drilling new wells;
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•the availability of attractive acquisition opportunities and our ability to execute them;
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•the amount of capital we invest in the leasing and development of our properties;
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•facility or equipment availability and unexpected downtime; and
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•delays imposed by or resulting from compliance with regulatory requirements.
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Production Volumes.
Previous report
The following table presents our historical production volumes for the periods presented:
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Sources of Revenues
Previous report
Currently, substantially all of our revenues are derived from the sale of our natural gas production and the NGLs that are extracted from processing our natural gas, though we also generate a portion of our revenues from the sale of crude oil, midstream and surface operations, a minority equity interest in a midstream system, and certain marketing revenue and other income. Our midstream and surface operations primarily support our own exploration and production operations, with revenues generated primarily from fees charged for midstream and surface services, including transportation, freshwater sourcing and disposal, and other services to us and our affiliates and, to a lesser extent, third parties.
Previous report
Realized Commodity Prices
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Reworded paragraphs (29)
Previous wording
Our operating revenues include revenues from the sale of natural gas, NGLs, and oil, midstream revenues, gains and losses on our derivative contracts, marketing revenues, and other revenues. The following table provides information on our revenues for the periods presented:
Current wording
Our operating revenues and other income from operations include the activity from the sale of natural gas, NGLs, and oil, midstream revenues, gains and losses on our derivative contracts, marketing revenues, Section 45Q tax credits, related party revenues, and other income from operations. The following table provides information on our revenues and other operating income for the periods presented:
Previous wording
Our natural gas revenues decreased by approximately $112.0 million, or 30% to $267.1 million for the nine months ended September 30, 2024, from $379.0 million for the nine months ended September 30, 2023. The impact of commodity price decreases, excluding the effect of derivative settlements, provided a $78.9 million decrease in period-over-period revenues(calculated as the change in the period-to-period average price times current period production volumes). Thedecrease was also due to lower production volumes during the nine months ended September 30, 2024, primarily from the assets from the Exxon Barnett Acquisition, and from thesale of Chaffee and certain non-operated assets held by Chelsea, which collectively accounted for a$33.1 million decrease in period-over-period revenues(calculated as the change in period-to-period volumes times the prior period average price).
Current wording
Our natural gas revenues increased by approximately$71.6 million, or 74%, to$168.0 million for the three months ended March 31, 2025, from$96.3 million for the three months ended March 31, 2024. The impact of commodity price increases, excluding the effect of derivative settlements, provided an$80.6 million increase in period-over-period revenues(calculated as the change in the period-to-period average price times current period production volumes). Theincrease was offset by lower production volumes during the three months ended March 31, 2025, primarily from the assets in the Barnett and from the sale of Chaffee and certain non-operated assets held by Chelsea in June 2024, which collectively accounted for an$8.9 million decreasein period-over-period revenues(calculated as the change in period-to-period volumes times the prior period average price).
Previous wording
Our NGL revenues decreased by approximately$12.8 million, or 25% to$37.5 million for the three months ended September 30, 2024, from$50.2 million for the three months ended September 30, 2023. The impact of commodity price decreases, excluding the effect of derivative settlements, accounted for a$9.0 million decrease in period-over-period revenues(calculated as the change in the period-to-period average price times current period production volumes). Thedecrease was also due to lower production volumes during the three months ended September 30, 2024, which accounted for a$3.8 million decreasein period-over-period revenues(calculated as the change in period-to-period volumes times the prior period average price).
Current wording
Our NGL revenues increased by approximately$1.3 million, or 3%, to$44.7 million for the three months ended March 31, 2025, from$43.4 million for the three months ended March 31, 2024. The impact of commodity price increases, excluding the effect of derivative settlements, accounted for a$3.7 million increase in period-over-period revenues(calculated as the change in the period-to-period average price times current period production volumes). Theincrease was offset by lower production volumes during the three months ended March 31, 2025, which accounted for a$2.5 million decreasein period-over-period revenues(calculated as the change in period-to-period volumes times the prior period average price).
Previous wording
Our midstream revenues decreased by approximately $2.1 million, or 17%to $10.2 million for the nine months ended September 30, 2024, from $12.2 million for the nine months ended September 30, 2023. This decrease was primarily due to the divestiture of Chaffee of $1.5 million as we sold our Repsol Midstream Interest in connection with this sale. The remainder of thedecrease was due to changes in deal structures that reduced midstream transportation revenue while increasing third party gas sales.
Current wording
Our midstream revenues decreased by approximately $1.4 million, or 33%, to $2.8 million for thethree months ended March 31, 2025, from $4.1 million for thethree months ended March 31, 2024. This decrease was primarily due to the divestiture of Chaffee of $1.2 million as we sold our Repsol Midstream Interest in connection with this sale. The remainder of the decrease was due to changes in deal structures that reduced midstream transportation revenue while increasing third party gas sales.
Previous wording
For the three months ended September 30, 2024, we had net realized and unrealized gains on derivative contracts of$35.3 million compared to net realized and unrealized gains on derivative contracts of$9.3 million for the three months ended September 30, 2023. Theincreased gains for thethree months ended September 30, 2024 were from our settled derivatives, which were in a gain position of $38.3 million due to lower natural gas prices during this period compared to the same period in the prior year. This was offset by the fair value change in our open derivative positions, which were in more of an unrealized loss position of $3.0 million for thethree months ended September 30, 2024 compared to thethree months ended September 30, 2023.
Current wording
For the three months ended March 31, 2025, we had net realized and unrealized losses on derivative contracts of$152.2 million compared to net realized and unrealized losses on derivative contracts of$3.7 million for the three months ended March 31, 2024. Theincreased losses for thethree months ended March 31, 2025 were from our open derivative positions, which were in more of an unrealized loss position of $134.0 million compared to thethree months ended March 31, 2024 of$40.1 million. The increased losses on our derivative contracts were also due to realized losses of $18.2 million compared to realized gains of$36.5 million due to higher natural gas prices during this period compared to the same period in the prior year.
Previous wording
Our marketing revenues increased by approximately $2.0 million to $8.7 million for the nine months ended September 30, 2024 from $6.7 million for the nine months ended September 30, 2023. Our marketing revenues are derived under our marketing agreement with a third party pursuant to which we receive a fixed percentage of all net income realized in the resale of our and other producers’ hydrocarbons. The increase in marketing revenues during thenine months ended September 30, 2024 was primarily due to colder than normal weather in NEPA for the month of January 2024.
Current wording
Our marketing revenues increased by approximately $1.6 million, or 32% to $6.5 million for thethree months ended March 31, 2025 from $4.9 million for thethree months ended March 31, 2024. Our marketing revenues are derived under our marketing agreement with a third party pursuant to which we receive a fixed percentage of all net income realized in the resale of our and other producers’ hydrocarbons. Theincrease in marketing revenues during thethree months ended March 31, 2025 was primarily due to a higher pricing environment compared to the same period in 2024.
Previous wording
Taxes other than income were $10.7 million, or $0.15 per Mcfe, for the three months ended September 30, 2024, which was a decrease of approximately $7.0 million, or 40%, from $17.7 million, or $0.23 per Mcfe, for the three months ended September 30, 2023. The decrease in taxes other than income during the three months ended September 30, 2024 compared to 2023 was due to decreases in ad valorem and property taxes, and natural gas and NGL production taxes, both associated with our operations in the Barnett of $5.1 million and $1.9 million, respectively. Certain ad valorem and production taxes are not applicable to our NEPA properties.
Current wording
Taxes other than income were $10.2 million, or $0.15 per Mcfe, for the three months ended March 31, 2025, which was a decrease of approximately $1.1 million, or 10%, from $11.4 million, or $0.15 per Mcfe, for the three months ended March 31, 2024. The decrease in taxes other than income during the three months ended March 31, 2025 compared to 2024 was due to decreases in ad valorem and property taxes associated with our operations in the Barnett and NEPA of $4.9 million and $0.2 million, respectively. This was offset by production taxes of $4.0 million in the Barnett. Certain ad valorem and production taxes are not applicable to our NEPA properties.
Previous wording
Gathering and transportation expenses were$54.7 million, or$0.78 per Mcfe, for thethree months ended September 30, 2024, which wasa decrease of approximately$7.8 million, or 12%, from$62.5 million, or$0.80 per Mcfe, for thethree months ended September 30, 2023. This decrease was driven by decreased production in the Barnett of $4.4 million and natural gas and NGL rate decreases of $3.5 million and $1.8 million, respectively. This was offset by new contracts we entered into during 2024 where we started incurring gathering costs to commercially sequester the CO 2 waste utilizing our Barnett Zero Project of $1.4 million and outsourcing gathering costs with our midstream business of $0.4 million.
Current wording
Gathering and transportation expenses were$55.8 million, or$0.81 per Mcfe, for thethree months ended March 31, 2025, which wasa decrease of approximately$3.3 million, or 6%, from$59.1 million, or$0.79 per Mcfe, for thethree months ended March 31, 2024. This decrease was driven by decreased production in the Barnett of $3.2 million and NGL rate decreases of $0.4 million. This was offset by new contracts we entered into during 2024 where we started outsourcing gathering costs with our midstream business of $0.3 million.
Previous wording
Gains on contingent consideration liabilities. We recognized a gain on contingent consideration liabilities accruing as an earnout obligation under the purchase agreements executed in connection with the Devon Barnett Acquisition and the Exxon Barnett Acquisition. The gain on contingent consideration liabilities was$3.9 million for the three months ended September 30, 2024, which was an increase of approximately$2.7 million from the$1.2 million gain for the three months ended September 30, 2023. The$3.9 million gain compared to the$1.2 million gain was primarily attributable to the current period's gain on contingent consideration liabilities with the Devon Barnett Acquisition of$3.9 million compared to the prior period’s gain of$0.5 million, as well as the current period's negligible gain on contingent consideration liabilities with the Exxon Barnett Acquisition compared to prior period's gain of$0.7 million. There were higher gains in the current period due to a higher decrease in the forward curve commodity pricing for natural gas (NYMEX) and oil (WTI) assumptions used in the Monte Carlo simulations during the three months ended September 30, 2024 compared to a slight decrease during the three months ended September 30, 2023.
Current wording
Gains on contingent consideration liabilities. For the three months ended March 31, 2024, we recognized a gain on contingent consideration liabilities accruing as an earnout obligation under the purchase agreements executed in connection with the Devon Barnett Acquisition and the Exxon Barnett Acquisition. The gain on contingent consideration liabilities was$6.6 million for the three months ended March 31, 2024, and consisted of gains of$4.6 million and$2.0 million from the Devon Barnett Acquisition and the Exxon Barnett Acquisition, respectively. The contingent considerations under these purchase agreements expired in 2024.
Previous wording
Earnings from equity affiliate. Earnings from our equity affiliate was $50.6 million for thethree months ended September 30, 2024, which was change of $1.5 million, from $49.1 million compared to thesame period in 2023. Earnings from our equity affiliate is related to our investment in, and our proportionate share in the income or losses of the Power Joint Venture.
Current wording
Losses from equity affiliate. Losses from our equity affiliate were $9.6 million for thethree months ended March 31, 2025, which was a change of $1.9 million, from $7.7 million compared to thesame period in 2024. Losses from our equity affiliate are related to our investment in, and our proportionate share in the income or losses of the BKV-BPP Power Joint Venture.
Previous wording
Interest expense. Interest expense was$40.4 million for the nine months ended September 30, 2024, which was a decrease of$14.0 million, from$54.4 million for the nine months ended September 30, 2023. The decrease in interest expense during the nine months ended September 30, 2024 was primarily due to lower interest rates on our RBL Credit Facility, which we entered into on June 11, 2024, and subsequently paid down the outstanding balances on our SCB Credit Facility, the Revolving Credit Agreement, and the Term Loan Credit Agreement, which incurred higher interest rates.
Current wording
Interest expense. Interest expense was$5.1 million for thethree months ended March 31, 2025, which was a decrease of$11.0 million, from$16.1 million for the three months ended March 31, 2024. The decrease in interest expense during thethree months ended March 31, 2025 was primarily due to lower interest rates incurred during thethree months ended March 31, 2025 on our RBL Credit Facility, which we entered into on June 11, 2024, compared to the interest rates on our Term Loan Credit Agreement and Revolving Credit Facilities during thethree months ended March 31, 2024.
Previous wording
Interest expense, related party. Interest expense from our related party was$1.3 million for thethree months ended September 30, 2024, which was a decrease of$0.7 million, from$2.0 million for thethree months ended September 30, 2023. The decrease was primarily due to the repayment on the BNAC A&R loan of $25.0 million in June 2024.
Current wording
Interest expense, related party. Interest expense from our related party borrowings with BNAC was$2.0 million for thethree months ended March 31, 2024, whichwas paid down in June 2024.
Previous wording
Income tax benefit (expense). For the three months ended September 30, 2024, we had an income tax expense of $11.3 million, which was a change of $6.1 million, from $5.2 million income tax expense for the three months ended September 30, 2023. During the three months ended September 30, 2024, the increase was due to executive compensation disallowance, offset by the benefit from the monetization of certain tax credits under IRC Section 45Q of the Code from the injection of CO 2 waste in the Barnett Zero well, IRC Section 45I Marginal Well Credits from marginal production, excess tax benefits relating to the vesting of restricted shares, and by state apportionment changes due to the sale of Chaffee.
Current wording
Income tax benefit. For the three months ended March 31, 2025, we had an income tax benefit of $29.2 million, which was an increase of $16.2 million, from a $13.0 million in income tax benefit for the three months ended March 31, 2024. During the three months ended March 31, 2025, the increase in income tax benefit was due to higher net losses and excess tax benefits relating to the vesting of restricted shares.
Previous wording
Our primary needs for cash are to fund our upstream development, midstream, power, and CCUS projects, fund operations and capital expenditures, fund acquisitions, fund asset retirement obligations, cover any debt interest or minimum volume commitment obligations, pay down debt, and return capital to stockholders. Our primary uses of cash during the nine months ended September 30, 2024 and 2023 were to pay down debt and fund the development of our natural gas properties.
Current wording
Our primary needs for cash are to fund our upstream development, midstream, power, and CCUS activities, fund operations and capital expenditures, acquisitions, and asset retirement obligations, cover any debt interest or minimum volume commitment obligations, pay down debt, and return capital to stockholders. Our primary use of cash during the three months ended March 31, 2025 and 2024 was to fund the development of our natural gas properties.
Previous wording
During thenine months ended September 30, 2024 and 2023, cash paid for capital expenditures was $52.8 million and $161.1 million, respectively. Capital expenditures for our operated properties are largely discretionary and within our control. We could choose to defer a portion of these planned capital expenditures depending on a variety of factors, including, but not limited to, the success of our drilling activities, prevailing and anticipated prices for natural gas and NGLs, the availability of equipment, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs, and the level of participation by other interest owners. We will continue to monitor commodity prices and overall market conditions and can adjust our rig cadence up or down in response to changes in commodity prices and overall market conditions.
Current wording
During thethree months ended March 31, 2025 and 2024, cash paid for capital expenditures was $57.4 million and $19.9 million, respectively. Our current estimated budget for accrued capital expenditures in 2025 is approximately $320 million to $380 million. Capital expenditures for our operated properties are largely discretionary and within our control. We could choose to defer a portion of these planned capital expenditures depending on a variety of factors, including, but not limited to, the success of our drilling activities, prevailing and anticipated prices for natural gas and NGLs, the availability of equipment, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs, and the level of participation by other interest owners. We will continue to monitor commodity prices and overall market conditions and can adjust our rig cadence up or down in response to changes in commodity prices and overall market conditions.
Previous wording
Historically, our primary sources of capital and liquidity have consisted of internally generated cash flows from operations, together with loans and capital contributions from our majority stockholder. We believe that our cash flows from operations, cash on hand, and borrowings under our RBL Credit Agreement will provide sufficient liquidity to fund our operations and our capital expenditures into 2025, excluding our CCUS business. We expect to fund up to 50% of our CCUS business from a variety of external sources, which may include joint ventures, project-based equity partnerships, and federal grants with the remaining capital needs being funded with cash flows from operations. We are targeting completion of third-party CCUS financing in 2025; however, there can be no assurance that we will be able to complete any CCUS financing on our targeted timeline or at all.
Current wording
Historically, our primary sources of capital and liquidity have consisted of internally generated cash flows from operations, together with loans and capital contributions from our majority stockholder, BNAC. We also enter into financial instruments to reduce the impact of commodity price volatility and provide a level of certainty and stability around cash flows. We currently believe that our cash flows from operations, cash on hand, borrowings under our RBL Credit Agreement, and our commodity hedges in place will provide sufficient liquidity to fund our operations and our capital expenditures into 2025, excluding our CCUS business. We expect to fund up to 50% of our CCUS business from a variety of external sources, which may include joint ventures, project-based equity partnerships, debt financing, and federal grants with the remaining capital needs being funded with cash flows from operations.
Previous wording
The following table summarizes our cash flows for the nine months ended September 30, 2024 and 2023:
Current wording
The following table summarizes our cash flows for the three months ended March 31, 2025 and 2024 (in thousands):
Previous wording
Cash flows provided by operating activities. Net cash provided by operating activities was $74.8 million for the nine months ended September 30, 2024, compared to $115.4 million for thenine months ended September 30, 2023. Net cash provided by operating activities decreased during the nine months ended September 30, 2024 compared to thenine months ended September 30, 2023 due to a $57.5 million decrease in working capital, a $33.7 million decrease in income from operations (excluding net unrealized gains (losses), depreciation, depletion, amortization, and accretion, equity-based compensation, and gain on sales of assets), resulting from lower natural gas prices compared to 2023, a $14.8 million increase in cash paid for interest, and $3.9 million of transaction costs associated with the sale of Chaffee and Chelsea, offset by reduced settlements of contingent liabilities of $45.0 million and cash received from the sale of call options of $23.5 million.
Current wording
Cash flows provided by operating activities. Net cash provided by operating activities was $22.6 million for the three months ended March 31, 2025, compared to $19.3 million for thethree months ended March 31, 2024. Net cash provided by operating activities increased during the three months ended March 31, 2025 compared to thethree months ended March 31, 2024 due to a $24.7 million increase in income from operations (excluding net unrealized gains (losses), depreciation, depletion, amortization, and accretion, equity-based compensation, and impairment of asset held for sale), resulting from higher natural gas prices compared to 2024, and a $20.4 million increase in working capital. These increases were offset by cash received in January 2024 for the sale of call options of $23.5 million, cash paid in February 2025 for the purchase of put options of $16.2 million, a decrease in interest income of $1.5 million, and a $0.5 million increase in cash paid for interest.
Previous wording
Cash flows provided by (used in) investing activities. Net cash provided by investing activities was $80.6 million for the nine months ended September 30, 2024, compared to net cash used in investing activities of $156.3 million for the nine months ended September 30, 2023. Contributing to the cash inflow during the nine months ended September 30, 2024 were the total proceeds from the sale of Chaffee and Chelsea of $131.7 million. The change was also due to the decrease of $108.3 million of capital expenditures for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as well as the decrease of $23.4 million of expenditures on CCUS activities over the same period. This was offset by additional cash used of $6.6 million in other investing activities.
Current wording
Cash flows used in investing activities. Net cash used in investing activities was $56.0 million for the three months ended March 31, 2025, compared to net cash used in investing activities of $19.9 million for the three months ended March 31, 2024. The change was due to the increase of $39.7 million of capital expenditures (excluding CCUS activities) for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This was offset by the decrease of $2.2 million of expenditures on CCUS activities over the same period and additional cash proceeds on the sale of assets of $1.3 million.
Previous wording
The following table presents our capital expenditures (excluding leasehold costs and acquisitions) on an accrual basis for thenine months ended September 30, 2024 and 2023 and reconciles to cash flows used for capital expenditures in the condensed consolidated statements of cash flows.
Current wording
The following table presents our capital expenditures (excluding leasehold costs and acquisitions) on an accrual basis for thethree months ended March 31, 2025 and 2024 and reconciles to cash flows used for capital expenditures in the condensed consolidated statements of cash flows.
Previous wording
Cash flows provided by (used in) financing activities. Net cash used in financing activities was$289.2 million for thenine months ended September 30, 2024, which consisted of net payments on debt of $468.0 million, payments of $53.2 million for taxes related to net share settlement of restricted stock units, and payments of debt issuance costs and debt extinguishment costs of $18.3 million. This was offset by net proceeds from the issuance of common stock from our IPO of $253.8 million, after deducting underwriting discounts and commissions. For thenine months ended September 30, 2023, net cash provided byfinancing activities was$80.2 million, which was primarily due to a capital contribution from BNAC in the amount of $150.0 million in exchange for 7,500,000 shares of our common stock, offset by net payments on debt of $64.0 million and other financing payments of $6.0 million.
Current wording
Cash flows provided by (used in) financing activities. Net cash provided by financing activities was$33.8 million for thethree months ended March 31, 2025, which consisted of net borrowings on debt of $35.0 million, and was offset by payments of $1.2 million for taxes related to net share settlement of restricted stock units. For thethree months ended March 31, 2024, net cash used infinancing activities was$1.6 million, which was due to net payments on debt of $1.0 million and payments of deferred offering costs of $0.6 million.
Previous wording
As of September 30, 2024, we had cash and cash equivalents of$31.3 million, compared to $25.4 million of cash and cash equivalents, and restricted cash of $139.7 million as of December 31, 2023. Our net working capital deficit was $13.3 million as of September 30, 2024, compared to adeficit of $100.1 million as of December 31, 2023.
Current wording
As of March 31, 2025, we had cash and cash equivalents of$15.3 million, compared to $14.9 million of cash and cash equivalents as of December 31, 2024. Our net working capital deficit was $148.5 million as of March 31, 2025, compared to adeficit of $71.6 million as of December 31, 2024.
Previous wording
On June 11, 2024, BKV Corporation, as guarantor, and BKV Upstream Midstream, as borrower, entered into the RBL Credit Agreement with Citibank, N.A., as the administrative agent, and the financial institutions party thereto. The RBL Credit Agreement includes a maximum credit commitment of $1.5 billion. As of September 30, 2024, the RBL Credit Agreement had a borrowing base of $800.0 million and an elected commitment of $600.0 million. As of November 13, 2024, $180.0 million of revolving borrowings and $14.6 million of letters of credit were outstanding under the RBL Credit Agreement, leaving $405.4 million of available capacity thereunder for future borrowings and letters of credit. The loans may be borrowed, repaid and reborrowed during the term of the RBL Credit Agreement. The RBL Credit Agreement will mature on June 12, 2028. The obligations under the RBL Credit Agreement are secured and guaranteed on a secured basis by BKV Corporation, BKV Upstream Midstream, and all of BKV Upstream Midstream’s current and future material restricted subsidiaries. Loans under the RBL Credit Agreement bear interest at one, three,or six-month term SOFR or ABR, as applicable, plus a credit spread adjustment of 0.10% for SOFR borrowings, plus an applicable margin per annum. Interest is payable on the last day of each interest period and at maturity. We are obligated to pay certain fees to the lenders and administrative agent under the RBL Credit Agreement, including commitment fees on the average daily amount of the undrawn portion of the commitments.
Current wording
On June 11, 2024, BKV Corporation, as guarantor, and BKV Upstream Midstream, as borrower, entered into the RBL Credit Agreement with Citibank, N.A., as the administrative agent, and the financial institutions party thereto. The RBL Credit Agreement includes a maximum credit commitment of $1.5 billion. As of March 31, 2025, the RBL Credit Agreement had a borrowing base of $750.0 million, an elected commitment of $600.0 million, and the ability to issue up to $40.0 million in letters of credit. The loans may be borrowed, repaid, and reborrowed during the term of the RBL Credit Agreement. The RBL Credit Agreement will mature on June 12, 2028. The obligations under the RBL Credit Agreement are secured and guaranteed on a secured basis by BKV Corporation, BKV Upstream Midstream, and all of BKV Upstream Midstream’s current and future material restricted subsidiaries. Loans under the RBL Credit Agreement bear interest at one, three, or six-month term SOFR or ABR, as applicable, plus a credit spread adjustment of 0.10% for SOFR borrowings, plus an applicable margin per annum. Interest is payable on the last day of each interest period and at maturity. We are obligated to pay certain fees to the lenders and administrative agent under the RBL Credit Agreement, including commitment fees on the average daily amount of the undrawn portion of the commitments. On May 6, 2025, with the unanimous consent of our credit facility lenders, we amended the RBL Credit Agreement to, among other things, increase the borrowing base by $100.0 million and the elected commitment by $65.0 million. This amendment constituted the semiannual borrowing base redetermination. As of May 9, 2025, $230.0 million of revolving borrowings and $14.1 million of letters of credit were outstanding under the RBL Credit Agreement, leaving $420.9 million of available capacity thereunder for future borrowings and letters of credit.
Previous wording
The RBL Credit Agreement contains various restrictive covenants that, among other things, limit BKV Upstream Midstream’s ability and the ability of its restricted subsidiaries to, subject to certain exceptions: (i) incur indebtedness; (ii) incur liens; (iii) acquire or merge with any other company; (iv) sell assets or equity interests of their subsidiaries; (v) make investments; (vi) pay dividends or make other restricted payments; (vii) change their lines of business; (viii) enter into certain hedge agreements; (ix) enter into transactions with affiliates; (x) own any subsidiary that is not organized in the United States; (xi) prepay any unsecured senior or subordinated indebtedness; (xii) engage in certain marketing activities; and (xiii) allow, on a net basis, gas imbalances, take-or-pay or other prepayments with respect to their proved oil and gas properties.
Current wording
The RBL Credit Agreement contains various restrictive covenants that, among other things, limit BKV Upstream Midstream’s ability and the ability of its restricted subsidiaries to, subject to certain exceptions: (i) incur indebtedness; (ii) incur liens; (iii) acquire or merge with any other company; (iv) sell assets or equity interests of their subsidiaries; (v) make investments; (vi) pay dividends or make other restricted payments; (vii) change their lines of business; (viii) enter into certain hedge
Previous wording
BKV-BPP Power, LLC and BKV-BPP Cotton Cove, LLC Joint Ventures
Current wording
BKV-BPP Power and BKV-BPP Cotton Cove Joint Ventures
Previous wording
Under the terms of the BKV-BPP Power, LLC Agreement and BKV-BPP Cotton Cove, LLC Agreement, we do not have the ability to unilaterally cause the Power Joint Venture or BKV-BPP Cotton Cove, LLC to make distributions. During the nine months ended September 30, 2024 and 2023 no distributions were made by the Power Joint Venture or BKV-BPP Cotton Cove, LLC. In addition, we may be required to make additional capital contributions to one or both joint ventures to fund items approved in their respective annual budgets or other matters approved by their respective boards. Such additional capital contributions, which are not subject to any limit on the potential amount required, would reduce the amount of cash otherwise available to us. However, any additional capital contributionsto the Power Joint Venture must be approved by a majority of the Power Joint Venture's eight member board of managers, four of which are appointed by us and four of which are appointed by Banpu Power US Corporation (“BPPUS”). Similarly, any additional capital contributions to BKV-BPP Cotton Cove, LLC must receive the unanimous approval of BKV-BPP Cotton Cove, LLC's six member board of managers, four of which are appointed by us and two of which are appointed by BPPUS.
Current wording
Under the terms of the BKV-BPP Power LLC Agreement and BKV-BPP Cotton Cove LLC Agreement, we do not have the ability to unilaterally cause BKV-BPP Power or BKV-BPP Cotton Cove to make distributions. During the three months ended March 31, 2025 and 2024, no distributions were made by BKV-BPP Power or BKV-BPP Cotton Cove. In addition, we may be required to make additional capital contributions to one or both joint ventures to fund items approved in their respective annual budgets or other matters approved by their respective boards. Such additional capital contributions, which are not subject to any limit on the potential amount required, would reduce the amount of cash otherwise available to us. However, any additional capital contributionsto BKV-BPP Power must be approved by a majority of BKV-BPP Power's ten member board of managers, five of whom are appointed by us and five of whom are appointed by BPPUS. Similarly, any additional capital contributions to BKV-BPP Cotton Cove must receive the unanimous approval of BKV-BPP Cotton Cove, LLC's six member board of managers, four of whom are appointed by us and two of whom are appointed by BPPUS.
Previous wording
We may enter into off-balance sheet arrangements and transactions that could give rise to material off-balance sheet arrangements. As of September 30, 2024, our material off-balance sheet arrangements and transactions included volume commitments of $337.6 million and letters of credit of $14.6 million against the RBL Credit Agreement. For further information regarding these arrangements, see “Note 10 - Commitments and Contingencies” to our condensed consolidated financial statements and under “—Loan Agreements and Credit Facilities — RBL Credit Agreement.”
Current wording
We may enter into off-balance sheet arrangements and transactions that could give rise to material off-balance sheet arrangements. As of March 31, 2025, our material off-balance sheet arrangements and transactions included volume commitments of $304.7 million and letters of credit of $14.1 million against the RBL Credit Agreement. For further information regarding these arrangements, see “Note 10 - Commitments and Contingencies” to our condensed consolidated financial statements and under “—Loan Agreements and Credit Facilities — RBL Credit Agreement.”
Previous wording
Management’s discussion and analysis of our financial condition and results of operations are based upon our historical consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, and related disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. There have been no material changes to our critical accounting policies and estimates as described in our Prospectus with the exception of equity-based compensation due to the 2024 Plan put in place subsequent to the IPO.
Current wording
Management’s discussion and analysis of our financial condition and results of operations are based upon our historical consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of certain assets, liabilities, and related disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. For more information, see Note 1 - Business and Basis of Presentation to our condensed consolidated financial statements. As of March 31, 2025, there have been no material changes to our critical accounting policies and estimates as described in our 2024 Annual Report on Form 10-K for the year ended December 31, 2024.
Previous wording
We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act of 1933, as amended (the“Securities Act”), including as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As a result, for so long as we qualify as an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies. We have elected to take advantage of certain of the reduced disclosure obligations in this Quarterly Report on Form 10-Q and may elect to take advantage of other reduced reporting requirements in our future filings with the SEC. As a result, the information that we provide to our stockholders may be different from other public reporting companies.
Current wording
We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act of 1933, as amended, including as modified by the Jumpstart Our Business Startups of 2012 (the “JOBS Act”). As a result, for so long as we qualify as an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies. We have elected to take advantage of certain of the reduced disclosure obligations in this Quarterly Report on Form 10-Q and may elect to take advantage of other reduced reporting requirements in our future filings with the SEC. As a result, the information that we provide to our stockholders may be different from other public reporting companies.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
agreements; (ix) enter into transactions with affiliates; (x) own any subsidiary that is not organized in the United States; (xi) prepay any unsecured senior or subordinated indebtedness; (xii) engage in certain marketing activities; and (xiii) allow, on a net basis, gas imbalances, take-or-pay or other prepayments with respect to their proved oil and gas properties.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
Our marketing revenues decreased by approximately $0.2 million, or 10% to $1.7 million for thethree months ended September 30, 2024 from $1.9 million for thethree months ended September 30, 2023. Our marketing revenues are derived under our marketing agreement with a third party pursuant to which we receive a fixed percentage of all net income realized in the resale of our and other producers’ hydrocarbons.
Previous report — wording carried elsewhere
Interest expense. Interest expense was$9.2 million for thethree months ended September 30, 2024, which was a decrease of$10.9 million, from$20.1 million for the three months ended September 30, 2023. The decrease in interest expense during thethree months ended September 30, 2024 was primarily due to lower interest rates incurred during thethree months ended
Previous report — wording carried elsewhere
September 30, 2024 on our RBL Credit Facility compared to the interest rates on our Term Loan Credit Agreement and revolving credit facilities during thethree months ended September 30, 2023.
Previous report — wording carried elsewhere
Our operating revenues include revenues from the sale of natural gas, NGLs, and oil, midstream revenues, gains and losses on our derivative contracts, marketing revenues, and other revenues. The following table provides information on our revenues for the periods presented:
Previous report — wording carried elsewhere
Our operating expenses reflect costs incurred in the development, production and sale of natural gas, NGLs, and oil. The following table provides information on our operating expenses:
Previous report — wording carried elsewhere
The following table summarizes our components of lease operating expenses for the periods presented:
Previous report — wording carried elsewhere
Taxes other than income were $31.9 million, or $0.15 per Mcfe, for the nine months ended September 30, 2024, which was a decrease of approximately $27.3 million, or 46%, from $59.2 million, or $0.25 per Mcfe, for the nine months ended September 30, 2023. The decrease in taxes other than income during the nine months ended September 30, 2024 compared to 2023 was due to decreases in ad valorem and property taxes, and natural gas and NGL production taxes, both associated with our operations in the Barnett of $19.2 million and $8.0 million, respectively. Certain ad valorem and production taxes are not applicable to our NEPA properties.
Previous report — wording carried elsewhere
Earnings from equity affiliate. Earnings from our equity affiliate was $27.6 million for the nine months ended September 30, 2024, which was a decrease of $7.2 million, from $34.8 million compared to the same period in 2023. Earnings from our equity affiliate is related to our investment in, and our proportionate share in the income or losses of the Power Joint Venture.