BKV Corp

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 Item 1 of Part I, 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, 2024 included in our 2024 Annual Report on Form 10-K filed on March 31, 2025. 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.

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 Item 1 of Part I of this report.

Overview

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; our natural gas midstream business; power generation; and CCUS. We expect our owned and operated upstream and natural gas midstream businesses to achieve net zero Scope 1 and Scope 2 emissions by theearly 2030s, and net zero Scope 1, 2, and 3 emissions by thelate 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 and third CCUS projects 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.

Recent Developments

•Second Amendment to the RBL Credit Agreement. On May 6, 2025, with the unanimous consent of our credit facility lenders, we entered into the Second Amendment to Credit Agreement, which 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. See “Liquidity and Capital Resources — RBL Credit Agreement” for additional information regarding the RBL Credit Agreement and the covenants contained therein.

•Strategic CCUS Joint Venture. As previously announced, on May 8, 2025, BKV dCarbon Ventures, together with C Squared Solutions, Inc., a subsidiary of the Energy Transition Fund managed by Copenhagen Infrastructure Partners, and, for the limited purposes specified therein, BKV Corporation, entered into the BKV-CIP JV Agreement forming the BKV-CIP Joint Venture for the purpose of developing CCUS projects. Also on May 8, 2025 and contemporaneously with their entry into the BKV-CIP JV Agreement, the parties thereto also entered into certain ancillary agreements related to the joint venture. BKV dCarbon Ventures has contributed to the BKV-CIP Joint Venture its ownership of the Barnett Zero and Eagle Ford Projects, and has committed to future contributions of certain CCUS projects, related assets, and/or cash, in exchange for a 51% interest therein. Subject to certain exceptions, BKV intends to develop its CCUS projects exclusively through the BKV-CIP Joint Venture. For more information regarding the terms of the BKV-CIP JV Agreement and ancillary agreements entered into by the Company and BKV dCarbon Ventures in connection therewith, please refer to the Company’s Current Report on Form 8-K filed on May 8, 2025.

Operational and Financial Highlights

Below are some highlights of our operating and financial results for the three months ended March 31, 2025.

•Production of natural gas, NGLs, and oil was 68.5 Bcfe, or 761.1 MMcfe/d.

•Average realized product prices, excluding the impact of settled derivatives, were $3.15 per Mcfe.

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•Production revenues were $216.1 million and midstream revenues were $2.8 million.

•Lease operating expense was $33.7 million, or $0.49 per Mcfe.

•Net loss was $(78.7) million.

•Net cash provided by operating activities was $22.6 million.

•Accrued capital expenditures were $58.0 million.

Factors That Affect Comparability of Our Financial Condition and Results of Operations

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.

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.

Supply, demand, market risk, and the impact on natural gas, NGL, 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 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.

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.

Other factors significantly affecting our financial condition and results of operations include, among others:

•success in drilling new wells;

•the availability of attractive acquisition opportunities and our ability to execute them;

•the amount of capital we invest in the leasing and development of our properties;

•facility or equipment availability and unexpected downtime; and

•delays imposed by or resulting from compliance with regulatory requirements.

Production Volumes.

The following table presents our historical production volumes for the periods presented:

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Sources of Revenues

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, 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.

Realized Commodity Prices

NYMEX Henry Hub, for gas prices, and NYMEX WTI, for oil prices, are widely used benchmarks for the pricing of natural gas and oil in the United States. The price we receive for our natural gas and oil production is generally different than the NYMEX price because of adjustments for delivery location (“basis”), relative quality and other factors. As such, our revenues are sensitive to the price of the underlying commodity to which they relate. For further discussion on our derivative contracts, see Note 5 - Derivative Instruments to the unaudited condensed consolidated financial statements. The following is a comparison of average pricing excluding and including the effects of derivatives:

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(1) Impact of derivatives prices excludes $13.3 million of gains on derivative contract terminations for the three months ended March 31, 2024.

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