Bkv Corporation(BKV) - 2024 Q3 - Quarterly Report

Financial Performance - The company reported a net income of $12.9 million for the three months ended September 30, 2024, contrasting with a net loss of$85.4 million for the nine months ended September 30, 2024 [113]. - Total revenues for the nine months ended September 30, 2024 were $461.2 million, a decrease from$678.0 million in the same period of 2023 [150]. - Total revenues decreased to $173.1 million for the three months ended September 30, 2024, from$191.4 million for the same period in 2023 [125]. - Natural gas revenues decreased by approximately $112.0 million, or 30$267.1 million for the nine months ended September 30, 2024, from $379.0 million in the same period of 2023 [151]. - Natural gas revenues decreased by approximately$34.1 million, or 28%, to $87.9 million for the three months ended September 30, 2024, compared to$122.0 million for the same period in 2023 [126]. - NGL revenues decreased by approximately $12.8 million, or 25$37.5 million for the three months ended September 30, 2024, from $50.2 million for the same period in 2023 [127]. - Oil revenues decreased by approximately$0.6 million, or 27%, to $1.6 million for the three months ended September 30, 2024, from$2.2 million for the same period in 2023 [128]. - Midstream revenues decreased by approximately $1.1 million, or 30$2.7 million for the three months ended September 30, 2024, from $3.8 million for the same period in 2023 [130]. - Total operating expenses decreased to$559.7 million for the nine months ended September 30, 2024, down from $578.8 million in the prior year, reflecting a 3$194.1 million for the three months ended September 30, 2024, from $196.7 million for the same period in 2023 [135]. Capital and Financing - The company completed its initial public offering (IPO) on September 27, 2024, selling 15,000,000 shares at$18.00 per share, resulting in net proceeds of $253.8 million after underwriting discounts [106]. - The RBL Credit Agreement has a maximum credit commitment of$1.5 billion, with an outstanding balance of $190.0 million as of September 30, 2024 [110]. - The RBL Credit Agreement has a maximum credit commitment of$1.5 billion, with a borrowing base of $800.0 million and an elected commitment of$600.0 million as of September 30, 2024 [180]. - Net cash provided by investing activities was $80.6 million for the nine months ended September 30, 2024, compared to a net cash used of$156.3 million in the same period of 2023, primarily due to proceeds from the sale of Chaffee and Chelsea totaling $131.7 million [176]. - Net cash used in financing activities was$289.2 million for the nine months ended September 30, 2024, which included net payments on debt of $468.0 million and payments for taxes related to net share settlement of restricted stock units of$53.2 million [177]. - As of September 30, 2024, the company had cash and cash equivalents of $31.3 million, an increase from$25.4 million as of December 31, 2023, while the net working capital deficit improved to $13.3 million from$100.1 million [179]. Production and Operations - For the three months ended September 30, 2024, natural gas production was 55,456 MMcf, down from 61,792 MMcf in the same period of 2023, representing a decrease of approximately 3.0% [120]. - Production revenues for the three months ended September 30, 2024, were $127.0 million, while midstream revenues were$2.7 million [112]. - Lease operating expenses for the three months ended September 30, 2024, were $32.8 million, or$0.47 per Mcfe [113]. - Lease operating and workover expenses were $102.2 million, or$0.47 per Mcfe, for the nine months ended September 30, 2024, a decrease of 10% from $114.2 million, or$0.48 per Mcfe, in 2023 [162]. - Gathering and transportation expenses were $54.7 million, or$0.78 per Mcfe, a decrease of 12% from $62.5 million, or$0.80 per Mcfe, in Q3 2023 [139]. - Gathering and transportation expenses were $167.8 million, or$0.77 per Mcfe, for the nine months ended September 30, 2024, an 8% decrease from $183.1 million in the same period of 2023 [164]. Environmental and Sustainability Initiatives - The company expects to achieve net zero Scope 1 and Scope 2 emissions by the early 2030s and net zero Scope 1, 2, and 3 emissions by the late 2030s [105]. - The company commenced sequestration operations at its first CCUS project in November 2023, with a second project expected to start in the first half of 2026 [105]. - The company expects to fund up to 50$3.1 million, compared to a net asset of $102.5 million as of December 31, 2023 [199]. - A hypothetical increase or decrease of$0.10 per Mcf in NYMEX would have resulted in a $7.0 million change in natural gas hedge revenues, while a$1.00 per Bbl change in NGL purity product price would have resulted in a $5.0 million change in NGL hedge revenues [196]. - The company had$190.0 million of outstanding borrowings under the RBL Credit Agreement as of September 30, 2024, with an average annualized interest rate of approximately 9.4% [203].