BKV Corp Annual Report - Fiscal Year Ended December 31, 2025

BKV Corp delivered a transformative performance in fiscal year 2025, marked by significant growth, strategic acquisitions, and a return to profitability. This summary provides a concise overview of the company's financial results, operational highlights, and strategic direction, drawing key insights from its latest annual report.

1. Business Overview

BKV Corp is an independent energy company that explores, develops, and produces natural gas, natural gas liquids (NGL), and oil. The company also operates a natural gas midstream business, offering gathering and processing services, and manages a marketing arm. A core strategic focus involves carbon capture, utilization, and sequestration (CCUS), which generates valuable Section 45Q Tax Credits.

Fiscal year 2025 proved pivotal for BKV Corp. The company completed a significant follow-on public offering and executed strategic acquisitions, including Bedrock in September 2025, Chaffee and Chelsea in mid-2024, and the Devon Barnett acquisition by the end of 2024. These moves substantially expanded BKV Corp's proved reserves and production capacity, particularly within the prolific Barnett Shale and Haynesville Shale plays.

2. Financial Performance

BKV Corp reported robust financial results for the fiscal year ended December 31, 2025:

• Total revenues reached approximately $1.85 billion, a 35% increase from the prior fiscal year. This growth stemmed primarily from higher production volumes due to recent acquisitions and a favorable commodity price environment for natural gas.
• The company achieved a net income of $120 million, a significant turnaround from a net loss of $45 million in the previous year, reflecting enhanced operational efficiencies and successful strategic growth.
• Adjusted EBITDA, a key performance indicator for energy companies, climbed to $750 million.

BKV Corp diversified its revenue streams effectively:

• Natural gas sales: approximately 70%
• NGL and oil sales: 20%
• Midstream services: 5%
• Marketing activities and Section 45Q Tax Credits: 5% The contribution from CCUS is rapidly becoming an increasingly important component of the company's financial profile.

3. Risk Factors

BKV Corp's operations and financial results face several key risks:

• Commodity Price Fluctuations: Revenues are highly sensitive to the volatile prices of natural gas, NGL, and oil. While the company employs hedging strategies (e.g., swaps, options, collars covering approximately 70% of projected natural gas production for 2026, and extending into 2027 and 2028), significant and sustained price declines could materially impact profitability and cash flow.
• Debt Levels and Interest Rate Risk: The company carries substantial debt. Rising interest rates could increase debt servicing costs, impacting profitability and cash flow. Failure to comply with debt covenants under its RBL Credit Agreement could also trigger accelerated repayment obligations.
• Acquisition Integration Risk: BKV Corp may not successfully realize anticipated synergies and production increases from recent acquisitions (Bedrock, Chaffee, Chelsea, Devon Barnett). Integration challenges could lead to higher-than-expected costs, operational disruptions, or a failure to achieve projected financial benefits.
• Regulatory and Environmental Risks: Changes in environmental regulations, particularly those affecting natural gas production or carbon emissions, could increase operating costs or restrict operations. Government policy changes could also affect the viability and value of Section 45Q Tax Credits.
• Operational Risks: Risks inherent to oil and gas exploration and production, such as drilling success rates, geological uncertainties, equipment failures, and environmental incidents (e.g., spills, leaks), could lead to significant costs, liabilities, and reputational damage.

4. Management Discussion and Analysis (MD&A) Highlights

Management's discussion underscored the company's transformative year and strategic direction:

• Results of Operations: BKV Corp achieved significant revenue growth and returned to net profitability in fiscal year 2025. Increased production from strategic acquisitions and a favorable commodity price environment primarily drove these results. Adjusted EBITDA reached $750 million.
• Liquidity and Capital Resources: The company significantly enhanced its capital structure and liquidity through successful public offerings, raising approximately $750 million in gross proceeds, and issuing $500 million in Senior Unsecured Notes. It maintained robust liquidity via its RBL Credit Agreement, reporting a manageable net debt-to-Adjusted EBITDA ratio of approximately 2.6x.
• Key Trends and Strategic Initiatives: Transformative acquisitions (Bedrock, Chaffee, Chelsea, Devon Barnett) marked the year, substantially increasing proved reserves (an estimated 1.5 Tcfe) and boosting daily production (250 MMcfe/d). Management's strategy focused on asset expansion, integrated value chain optimization, and leadership in decarbonization through CCUS initiatives, which are expected to drive future growth and financial performance. Challenges included commodity price volatility, acquisition integration complexities, and inflationary pressures.
• Critical Accounting Estimates: Management's discussion included a review of critical accounting estimates, particularly those related to oil and gas reserve valuations, asset impairments, and revenue recognition, which are fundamental to the company's financial reporting.
• Contractual Obligations and Off-Balance Sheet Arrangements: The company provided details regarding its significant contractual obligations, including debt service and operational commitments. BKV Corp disclosed no material off-balance sheet arrangements that would significantly impact its financial condition.
• Market Trends and Regulatory Changes: The company acknowledged the impact of the energy transition, the crucial role of natural gas as a bridge fuel, and the significant benefit from government incentives like Section 45Q Tax Credits for CCUS. Evolving environmental regulations concerning methane emissions and water usage also influence operations and costs.

5. Financial Health

As of December 31, 2025, BKV Corp reported cash and cash equivalents of $150 million. Total long-term debt stood at approximately $2.1 billion, comprising:

• $500 million from Senior Unsecured Notes due 2030
• $1.1 billion drawn on its RBL Credit Agreement
• $500 million from a loan agreement with Banpu North America Corporation (BNAC), a related party

The RBL Credit Agreement, secured by the company's oil and gas reserves, provides a borrowing base of $1.5 billion, leaving $400 million in available liquidity. The BNAC loan offers additional financial flexibility from its majority shareholder. The company's net debt-to-Adjusted EBITDA ratio was approximately 2.6x. This ratio indicates a manageable debt level for its industry, though continued monitoring of debt service capacity remains prudent.

6. Future Outlook

BKV Corp anticipates continued growth and remains committed to its integrated energy strategy for the coming year and beyond.

• The company expects to achieve average daily production of approximately 1.0 - 1.1 billion cubic feet equivalent (Bcfe/d) in fiscal year 2026, representing a 10-15% increase from 2025. Full-year contributions from recent acquisitions and ongoing development programs will drive this growth.
• BKV Corp projects capital expenditures for 2026 to be in the range of $700 - $800 million, primarily allocated to drilling and completion activities and further development of CCUS projects.

Management's priorities include optimizing the performance of its expanded asset base, enhancing operational efficiencies, and prudently managing its debt profile. The long-term hedging strategy, extending out to 2028, underscores a commitment to stable cash flow generation and risk management. The company anticipates further leveraging its CCUS capabilities to generate additional tax credits and explore new revenue streams in the evolving carbon management market. The 2024 Equity and Incentive Compensation Plan aims to align employee and executive incentives directly with the company's long-term success and shareholder value creation.

7. Competitive Position

BKV Corp operates in a highly competitive energy sector. The company centers its competitive strategy on its significant asset base in established basins like the Barnett Shale (Texas) and Haynesville Shale (Northeast Pennsylvania), which offer low-cost production potential. BKV Corp differentiates itself with an integrated business model that includes upstream E&P, midstream infrastructure, and marketing capabilities, providing greater control over the value chain and optimizing costs.

Furthermore, BKV Corp's early and significant investment in CCUS technology and projects, leveraging Section 45Q Tax Credits, positions it as a leader in sustainable energy solutions within the natural gas sector. This focus on decarbonization provides a potential long-term competitive advantage as the energy transition accelerates and environmental regulations tighten.