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BKV’s first quarter came in strong, with production near the high end of guidance at about 925 MMcfe per day and net income of $44 million. The company also reaffirmed its full-year outlook for production, spending and Power JV earnings.
Carbon capture is scaling quickly, with Cotton Cove starting commercial sequestration and Eagle Ford expected to begin injection by the end of Q2. BKV is targeting a 1.5 million tons-per-year injection run rate by 2028 and expects its carbon-sequestered gas product to launch in the second half of 2026.
Power generation is becoming a major growth engine, driven by demand from data centers and hyperscalers in ERCOT. BKV is pursuing modular generation, existing plant capacity and Temple III, and still expects to sign a power purchase agreement within 2026 to early 2027.
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BKV (NYSE:BKV) reported a strong start to 2026, with executives highlighting upstream production near the high end of guidance, growing carbon capture operations and increased investment in power generation tied to data center demand during the company’s first-quarter earnings call.
Chief Executive Officer Chris Kalnin said the company entered the year with “strong momentum across the business” and that macro trends, including global energy security concerns, LNG demand and growth in artificial intelligence infrastructure, are creating a favorable backdrop for BKV’s natural gas, power and carbon capture strategy.
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“What is clear is how our platform across natural gas, power, and carbon capture is translating into value creation opportunities,” Kalnin said.
Eric Jacobsen, BKV’s President of Upstream, said first-quarter production was approximately 925 MMcfe per day, toward the upper end of the company’s guidance range. Development capital was approximately $82 million, slightly below the guided midpoint.
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Lease operating and workover expense was approximately $0.54 per Mcfe, at the upper end of guidance due to timing of expenses and weather, though Jacobsen said the company is maintaining its full-year guidance.
Jacobsen said BKV continued to improve drilling and completion performance in the Barnett Shale, with full-year base well costs planned at an average of $533 per lateral foot. The company’s advanced completion designs add about $22 per lateral foot in incremental cost on a program-wide basis.
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Two new wells brought online during the quarter ranked in the top 15 Barnett wells over the past decade on an Mcfe basis as measured by peak monthly production, Jacobsen said. He added that BKV’s 2025 and 2026 development program has delivered eight of the top 15 Barnett wells over that period.
Jacobsen also highlighted the company’s “positive offset well” concept, saying one recent pad doubled output with no incremental capital. He said advanced completions have shown about a 20% uplift in well performance over the first 180 days after completion and could be applied to 30% to 40% of BKV’s inventory.
Kalnin said the Barnett is well-positioned to benefit from rising demand for natural gas, particularly because of its infrastructure and access to Gulf Coast markets.
BKV executives said the company is continuing to scale its carbon capture platform. Kalnin said Barnett Zero has demonstrated the economic attractiveness of point-source carbon capture projects, while the Cotton Cove carbon capture project commenced commercial sequestration operations in April.
Jacobsen said Cotton Cove began injection on time and is forecast to come in under its capital budget. The project is expected to achieve a sequestration rate of approximately 32,000 metric tons of carbon dioxide per year.
BKV also expects to begin injection at its Eagle Ford project before the end of the second quarter. That project is forecast to achieve an average sequestration rate of approximately 90,000 metric tons of carbon dioxide per year.
Barnett Zero operated at greater than 99% runtime during the quarter and sequestered approximately 35,800 metric tons of carbon dioxide, bringing total sequestration since startup to nearly 350,000 metric tons, Jacobsen said.
The company is also advancing additional carbon capture projects, including East Texas and projects in the Western Haynesville through definitive agreements with Comstock Resources. Jacobsen said BKV is working toward a targeted 1.5 million tons per year injection run rate by 2028.
Kalnin also discussed carbon-sequestered gas, or CSG, which combines environmental offsets from carbon capture operations with standardized natural gas contracts. He said BKV expects CSG to reach the market in the second half of 2026 in partnership with Gunvor.
BKV’s management placed significant emphasis on power opportunities in ERCOT, particularly demand from data centers and hyperscalers. Kalnin said customers are increasingly seeking power solutions that can be delivered on accelerated timelines and at scale.
The company outlined a three-part power strategy centered on modular generation, existing capacity at its Temple I and II power plants and a potential new brownfield combined-cycle plant known as Temple III.
Kalnin said BKV has entered into supply agreements to acquire equipment for up to 200 megawatts of modular generation, with further line of sight for additional power. In the Q&A portion of the call, he said the company expects to operationalize a number of the units in 2027.
The company is also evaluating use of existing generation capacity at Temple I and II through a grid-connected private use network, which Kalnin said could potentially support up to 750 megawatts of available capacity over time. In addition, BKV has reserved 600 megawatts of combined-cycle gas turbine capacity for Temple III that could be operational by the end of the decade.
Kalnin said BKV also secured an incremental 6,200-acre site in North Central Texas during the quarter, creating another potential platform for longer-term power expansion. The company has reservation agreements for another 600 megawatts of combined-cycle gas turbine power island capacity for 2028 that could support the second site.
“We continue to remain confident in our original expectation of signing a PPA within 2026 to early 2027,” Kalnin said.
Chief Financial Officer David Tameron said BKV delivered net income of $44 million and adjusted EBITDAX attributable to BKV of $112 million in the first quarter. Capital expenditures totaled $119 million.
The company ended the quarter with net debt of $962 million and net leverage of 2.1 times. Tameron said those figures include $562 million of net debt related to power following consolidation of the Power JV. Total liquidity was $974 million, including cash and available borrowing capacity.
The power business generated nearly 2,000 gigawatt hours during the quarter, with a 62% capacity factor and average power prices of $51 per megawatt hour. Gross Power JV adjusted EBITDA was $20 million after absorbing an additional $4 million of allocated corporate general and administrative expense due to consolidation.
BKV maintained its full-year base business outlook, including production of 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.
The company now expects full-year power growth capital and investments of $280 million to $340 million, driven primarily by modular power generation equipment deposits and other long-lead items. Tameron said BKV expects to partially offset aggregate capital investments with partner capital of approximately $85 million to $105 million, resulting in total net BKV-funded capital investments of $485 million to $635 million.
Tameron said the company is evaluating a ring-fenced capital structure for power growth with an approximately 70-30 debt-to-equity mix. He said BKV expects to fund the equity portion through free cash flow from its base business, partner contributions, the company’s recent equity offering and potential portfolio optimization.
On hedging, Tameron said BKV has 67% of its 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, the company has nearly 500 million cubic feet per day of natural gas hedged, with more than half swapped at $4 per MMBtu and the remainder protected by collars. In power, BKV has 700 megawatts of generation hedged for 2026.
During the call, Kalnin said BKV continues to evaluate inorganic and portfolio optimization opportunities, including possible monetization of non-core assets to redeploy capital into higher-return opportunities.
Asked by Barclays analyst Betty Jiang whether that could include the Marcellus, Kalnin said the company’s base case has been to “hold for cash and manage it,” but added that BKV will evaluate whether assets can be monetized and capital redeployed into other parts of the business.
Kalnin said BKV’s ability to combine natural gas supply, power generation and carbon capture creates a differentiated position for customers seeking reliable and lower-carbon energy solutions.
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.
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The article "BKV Q1 Earnings Call Highlights" was originally published by MarketBeat.
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