BKV (NYSE:BKV) reported its strongest financial quarter since going public, citing record adjusted EBITDAX and adjusted net income, higher-than-guided upstream production, the commissioning of two carbon capture projects and progress on its Texas power-development strategy.
Chief Executive Officer Chris Kalnin said the company’s integrated model—combining Barnett shale natural gas production, ERCOT power generation and carbon capture operations—continued to perform at or above plan during the second quarter of 2026.
Record financial results and updated capital plans
Chief Financial Officer David Tameron said BKV generated record adjusted EBITDAX of $142 million and record adjusted net income of $51 million during the quarter. Adjusted net income was more than double the first-quarter result, despite lower natural gas prices, he said.
The company generated $40 million of adjusted free cash flow and spent $198 million on total capital expenditures, within its guided range. Upstream capital spending was at the low end of guidance, while power spending was modestly above expectations because BKV accelerated purchases of long-lead equipment, according to Tameron.
BKV ended the quarter with $1.1 billion of net debt, net leverage of 1.8 times and total liquidity of $840 million. Tameron said the company held $170 million of cash entering the second half and expected year-end liquidity to be unchanged or potentially higher even with higher strategic power spending.
The company increased its 2026 strategic power capital guidance, subject to board approval, to a range of $400 million to $475 million. The midpoint represents a $128 million increase, primarily related to long-lead equipment orders associated with the Jack County project. BKV said it expects to finance its power build-out through liquidity, free cash flow, equipment financing, a refinancing of existing power joint-venture debt and, after power-purchase agreements are signed, project financing.
- Remaining 2026 natural gas production was 66% hedged at an average price of $3.88 per MMBtu.
- For 2027, BKV had nearly 500 million cubic feet per day of natural gas hedged, with more than half swapped at about $4 per MMBtu and the remainder protected by collars.
- The company had 700 megawatts of 2026 power generation hedged and about 400 megawatts of 2027 spark-spread swaps in place.
Upstream production guidance rises
President of Upstream Eric Jacobsen said production exceeded the high end of the company’s guidance range while capital expenditures and lease operating expenses came in below their midpoints. Total cash costs declined 10% from the first quarter, he said.
BKV raised its full-year production outlook to a midpoint of 950 million cubic feet equivalent per day, a 1.6% increase from its previous midpoint. The updated forecast implies 3% to 4% year-over-year production growth, according to Jacobsen, while the company maintained its original upstream development capital budget.
Jacobsen said BKV achieved an all-in drilling, completion and facilities cost of $525 per lateral foot, which he described as the lowest cost per lateral foot among major U.S. shale gas basins. The company brought online two wells that ranked among the best drilled in Barnett history, including a pad with the second-highest 30-day production rate in the basin’s history.
BKV said its advanced-completions program, across 22 wells, has delivered production 20% above its base type curve. Combined with what the company calls Positive Offset Well effects and operating efficiencies, well performance was 25% above type curve after 180 days.
In the Upper Barnett, the Yarbrough 8H appraisal well produced at approximately twice its type curve over its first 30 days while meeting expected development costs. The results lowered the break-even price for nearly half of BKV’s Upper Barnett inventory to $3.25 per MMBtu and unlocked its 114-well Upper Barnett inventory, Jacobsen said. The company plans to drill another Upper Barnett well in the first half of 2027.
Power projects advance at Temple and Jack County
BKV’s Temple power facilities generated more than 2,200 gigawatt-hours in the second quarter, up 16% from a year earlier, with a 70% capacity factor. On a hedged basis, power prices averaged $42 per megawatt-hour and the average spark spread was $22 per megawatt-hour. Gross power adjusted EBITDA was $36 million before corporate expense allocations.
Kalnin said commercial talks at the Temple Energy Complex had narrowed to a select group of counterparties and were advancing. The company maintained its expectation to sign a power-purchase agreement between 2026 and early 2027.
BKV is pursuing a three-phase development plan at Temple:
- Approximately 200 megawatts of modular generation that can begin operating without a load interconnection.
- Activation of a grid-connected Private Use Network to supply behind-the-meter power and utilize capacity at Temple I and II.
- Development of a proposed Temple III combined-cycle gas turbine facility to serve additional customer demand and provide ERCOT generation.
The company received air permits during the second quarter for up to 400 megawatts of modular generation at Temple. Kalnin said the permits preserve flexibility, while BKV has identified 200 megawatts as a firm initial amount and will determine final capacity based on customer design and load requirements.
BKV also expanded its North Central Texas development footprint through a potential second energy complex in Jack County. The company has 6,200 acres under site control, visibility to 345-kilovolt grid access, and submitted generation and interconnection applications. BKV intends to develop gas-fired generation supported by commercial arrangements, with an option for carbon capture and use of BKV-supplied gas through company-owned midstream infrastructure.
The combined Temple and Jack County developments could add 1.4 gigawatts of dispatchable capacity, bringing BKV’s total generation capacity to nearly 3 gigawatts within the next few years, the company said.
Carbon-capture portfolio reaches three operating projects
BKV commissioned the Cotton Cove and Eagle Ford carbon-capture projects in the first half of 2026, joining the existing Barnett Zero facility. The three operating projects are injecting carbon dioxide and generating Section 45Q tax credits, according to management.
Combined injection at the facilities reached approximately 400,000 tons of carbon dioxide through the end of the second quarter. BKV said Cotton Cove and Eagle Ford are expected to have financial characteristics consistent with Barnett Zero.
The company is advancing additional projects in East Texas, with Comstock and at High West in Louisiana, along with other opportunities. These projects are intended to support a targeted carbon dioxide injection run rate of 1.5 million tons per year in 2028.
During the quarter, BKV drilled two additional carbon-capture wells—one at High West and one in East Texas—ahead of schedule and under budget, with reservoir quality exceeding expectations, Jacobsen said. The company also advanced pre-FEED engineering work for post-combustion capture projects and expects to move into FEED during the second half of 2026.
Separately, BKV received independent-auditor validation related to certification of carbon offsets for its Carbon Sequestered Gas initiative. Management said the validation was a key step toward commercialization in the second half of the year and could provide an additional monetization layer beyond 45Q tax-credit economics.
About BKV (NYSE:BKV)
BKV Corporation engages in the acquisition, operation, and development of natural gas and NGL properties. It is also involved in the gathering, processing, and transportation of natural gas. The company was founded in 2015 and is based in Denver, Colorado with additional offices in Tunkhannock, Pennsylvania and Fort Worth, Texas. BKV Corporation, LLC operates as a subsidiary of Banpu North America Corporation.
