Darren Barbee, interim editorial director, Hart Energy: Hi, my name is Darren Barbee. I'm here at DUG Gas and I'm joined by Eric Jacobson. He's the president of upstream for BKV Corp. It's the largest natural gas producer in the Barnett.

Eric, thanks very much for joining us. We really do appreciate it. Really interesting presentation just now. I know you guys did your IPO back in September of last year, and for people who don't know about BKV and what you're offering, can you describe what is an integrated gas company? Because it's not just an upstream company, it's not just midstream. It's got a lot of components.

Eric Jacobson, president of upstream, BKV Corp.: Sure Darren, and thank you and Hart Energy for having us and the opportunity to sit with you here.

Yeah. BKV is a unique company. We're about 10 years old, as you said. We went to public and IPO’ed on the New York Stock Exchange in September of last year, 2024. And we are an energy solutions leader with a closed loop strategy and an integrated value chain of businesses. Sitting at the core of the company and that anchors our company is our natural gas production, predominantly in the Barnett where we're the largest operator in the Barnett and producer by a considerable margin. But we also have nice complimentary upstream assets in NEPA and the Marcellus. Also within that integrated value chain, we have two additional business vectors that allow us to deliver products to end customers, and that's our midstream business and our power generation business. And then finally, in the integrated chain and sort of closing figuratively that closed loop, is our carbon capture and sequestration business where we're profitably capturing CO2 injecting and sequestering it into the ground for all time. And in doing so, generating blockchain certified carbon credits that then we can staple to our gas and create a net carbon neutral or a net zero gas product or even a net neutral green electricity when we burn a net neutral gas in a power plant.

So we believe Darren, that it is important for each one of the business vectors itself to generate a handsome return in profit, but that the combined value is even greater than the sum of the individual parts because of this offering that we have.

DB: And that sequestered gas basically makes it cleaner and you're actually able to capture premium off that. Is that right?

EJ: That is the idea. And we have a contract in place where we are capturing premium from carbon sequestered gas for those end users for whom a net neutral or a carbon-free product is important. And we think there's a nice market for LNG end users, over the water for certain industrials who either have internal or regulatory mandates for carbon neutrality for data centers. Some data center companies believe have a belief that the carbon neutral products is very important. And we have the one contract you mentioned in place local to the DFW area where we're selling carbon sequestered gas, certified blockchain for a very nice and healthy premium. And we think that there is much more of this to come where we are able to generate a profit on our CO2 injection business itself through 45Q tax credits. And then on top of that, generate carbon credit value through our CSG.

DB: So in terms of activity, I heard you say on stage that right now you have, I think a single rig up and a single frac crew, but you guys really refrac, you do lots of refracs. Talk to me a little bit about how profitable that is and the productivity you're able to recapture from those older mature wells.

EJ: Sure. Yeah, great question. We do have the one rig running in the Barnett now in one steady refrac crew in addition to a new drill frac crew for those new drills. And as you mentioned Darren, we have been the refrac leader in the United States the last four years. We've done nearly 400 refracs. And the reason refracs are differential and advantage for us in the Barnett is because the Barnett being the grandfather of all shale plays, the early pioneers left major meat on the bone on those early wells, 3, 4, 500 feet between perf clusters. Where today we do 30, 40, 50 feet between perf clusters.

So swaths of unstimulated rock. That's why refracs are so differential and [advantageous] in the Barnett. We have 2100 remaining. As I mentioned, we've done close to 400 to date and we really enjoy the total return picture of the refracs. We're able to do it those with quick cycle time, low costs, roughly $500,000 per well with a bullhead design throughout the whole lateral. And then refracturing in a staged approach up the heel and into the curve of almost entirely unstimulated wellbores in that section. And we're able to generate really strong returns because we've negotiated midstream incentive rates for frefracs, infrastructure's bought and paid for, the well is already there, no midstream constraints coming out of the Barnett. So all told we've generated some very handsome and competitive returns with new drills in Barnett and anywhere from our estimation. And for us, it's all about that kind of return picture, all those ingredients’ equal ability to bake some nice returns.

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DB:  So one of the thing you said on stage was that BKV considers itself a natural consolidator in the Barnett. Can you talk a little bit about the M&A targets that you're generally looking for? Obviously you can't get into specifics probably, but what are you looking for? What's the ideal assets [for] more refrac possibilities or something else, maybe midstream.

EJ: Sure, yeah. Great. Thank you, Darren. I think really it's the eight or so opportunities I showed on the screen of almost like-size, like-producing assets, 80 to 120 million cubic feet. Most of them are private companies, a couple of public. But any and all of those allow us to put our playbook and action in the Barnett, which is consolidate acreage, take advantage of midstream capacity, lower costs dramatically, use our data-driven and AI approach to flattening base decline in production and generating returns, and then capitalizing on inventory opportunity like refracs and generating even longer laterals from more contiguous, consolidated acreage.

So any and all of those where the bid ask spread is reasonable and the right priced allow us an opportunity to go apply that same playbook in the Barnett that we've been very successful at generating cash flow. We generated 15% free cash flow margin last year in a very poor gas price environment; 19% if you take out what we invested in our growth business like carbon capture. So it's a cashflow engine through cycles and that playbook applies, and I think it could apply any of those assets with the right bid ask spread at the right price.

DB: Great. Great. Well, we really, really appreciate you being here. Thank you very much, Eric. For your time and for more information, please visit hartenergy.com.

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