Nissa Darbonne, executive editor-at-large, Hart Energy: Hi, thank you for joining us. We're visiting with Chris Kalnin, the CEO of BKV Corp. BKV is the largest Barnett Shale producer today. Chris, thank you for joining us.

Chris Kalnin, CEO, BKV: Thank you, Nissa. I’m very happy to be here.

ND: As part of your Barnett operations, you're doing work towards carbon capture. You have an entire net zero strategy.

CK: We're absolutely thrilled about our net zero strategy and it's really simple. It's about taking the amount of CO2 that when you burn methane, you generate CO2. If you burn it in a power plant or if you burn it in a home, taking that equivalent amount of CO2 and injecting it into the ground and making sure that you're completely offsetting the amount of CO2 that you've combusted. And we think you can do that with natural gas. We think you can do the carbon capture business profitably under IRA with the 45Q that you can get, then you can sell natural gas profitably and the combination creates alpha.

ND: You're also a retail electricity provider, and in Texas, which has "power to choose" [an electricity provider by the individual consumer]. So I've actually seen your ads on YouTube, soliciting myself, soliciting me and others to switch to BKV. How are you enjoying being in the retail power business?

CK: We've learned a lot. I would say the whole strategy behind retail is about reaching customers, getting to customers in a way that they can interface with BKV. Our belief is that ultimately the people that value the ability to be net zero are end customers. That's where we're going to extract value by reaching those end customers, providing retail electricity allows us to sell to hopefully you someday Nissa, but we're enjoying it. We have over 40,000 customers in one year after starting the business. We hope to get to a couple hundred thousand customers in the next few years and be able to really give them access to clean natural gas that combines with electrons that ultimately create sustainable, wonderful power for Texas. That's our goal.

ND: And Texas again, you're a gas producer. Texas, we saw it a few years back with Storm Uri and this past summer daily request from ERCOT to curtail power consumption, particularly in the evenings. Texas had to pass a constitutional amendment to permit the state to provide grants to build dispatchable power in the state, which confounded me. I mean, I understand why, but I don't understand why. Tell us about it.

CK: Well, so I think Texas is a classic case study in where the country is trying to go: Heavy renewable investments; no combined cycle new investments since early 2014. And so what happens is the power grid has been growing. More data centers, more factories, more jobs, more people moving to Texas and that just increases the load combined with hotter summers. So rather than getting to the root of the problem, they're trying to work around the current setup, which is use the renewables, but then try to create some incentives for people to come in and do some additional [dispatchable power]. The core issue is [that] when you have a renewable grid, you need more combined cycle power -- because combined cycle power combines with renewables to augment the fluctuations, and it's the only power source that we have today that can turn up or down the electricity in almost literally lightspeed ways. We can turn up or down our power plant at 45 megawatts/min. There is no power source today that can do that — not coal, not nuclear. They have to be base loaded. So that's the beauty of natural gas, and I think it points to the fact that in Texas we need more combined cycle natural gas plants and that's the root of the problem. And you have to incentivize people to come to the market and build them.

ND: I understand this is a problem. It's not just a Texas thing anymore. This is being encountered by ISOs across the Lower 48, at least. The E&P aspect of BKV and the Barnett being the largest producer, so many Barnett wells, I mean they are vintage wells, they are beta, they're like "dev" wells. How are you increasing production from the wells that you have? Or are you finding that you need to just go in and start over with a circa 2024 model?

CK: So existing wells, a lot of them have refrac potential. They were drilled with Generation 1 drilling technology ... and fracked with Generation 1 frac technology. We are able to use the long history set of data and use our AI systems that we have built. And by the way, we have an in-house data science team. We've had that since almost the formation of the company. I've always believed that this is the way to really win. So we're using that technology to identify candidates to go in and to stimulate that rock that was left behind basically on the real Generation 1 fracs and generate more hydrocarbons out of them. So that's one massive way. We have over 2,000 refrac candidates in the Barnett -- wells that we can go [into] and do this. And then we have areas that just weren't drilled. So we've got 400 well locations that we can go [into and] drill longer laterals, [do a] more efficient frac and just harness the Barnett. That's just within our acreage. Then there's another whole tier of play called the Upper Barnett, which has not even been really drilled that you can go in. So we think there's tremendous resource, as you can imagine, the stack pays that are in the Barnett that have not been harnessed. We control all that acreage. We're very excited about the long game that you can play in the Barnett for the future and develop that resource.

ND: It's come up at times in the past when natural gas prices were really low to go ahead and liken a basin or a play like the Hayesville or the Barnett or others as one of the world's largest natural gas "storage" fields. I suppose though, once all of this additional demand comes online, even from EVs [electric vehicles], from power gen, AI data centers and again, electric power gen. Would that possibly provide the price to economically incent going after the Upper Barnett?

CK: Yeah, I believe so. It is exactly what you said, Nissa. As we look at the Barnett, we have huge amounts of reserves above and beyond our 1P reserves -- resources that we can go after. And we are going to do that when the price is justified. What price is that? Once you get above $3, you start to get interested and then once you hit $4, you're very interested. And so I think it's that $3 [to] $4 range that we will start to really develop and you'll see the production in the Barnett actually increase over time to serve the massive amounts of LNG. Remember, the Barnett was built for 5 Bcf/d-plus and so there is huge headroom on the pipes to get to the Gulf Coast. That's one massive advantage. There's huge headroom in the gathering and processing around the Barnett. We have, unlike a lot of plays, a lot of headroom of bought and paid for infrastructure that we can just build [production] and feed right into. I think that's where we see us in the next 10 years, kind of growing that production gently -- not aggressively, because it's a mature play -- but growing that production into the LNG demand at the right price points and generating huge amounts of free cash along the way.

ND: And then you have an active S-1 out there with the SEC [Securities and Exchange Commission], a filing to go public, an IPO, what's the status of this? Could that be [2024] or is it a reflection of natural gas prices?

CK: Yeah, we're keeping our S-1 active as you can go on Edgar and pull down BKV Corp.’s S-1. We are at the ready. And if there's a moment in time that [2024] makes sense, we'll be ready. If [2024] doesn't make sense, we'll continue to be ready and just kind of look at [2025]. But we believe that there is definitely appetite in the market for No. 1 gas players. I think as you look at where LNG is going, can you double your money by buying one of the big players? Probably not. But if you take an IPO stock that's really weighted towards Gulf Coast gas, you've got a good shot at doing that. And then when you put in the carbon capture angle that BKV brings in -- our net zero gas -- that is really exciting to potential investors. And so we think if the markets line up correctly that we could have a window here in [2024]. We're looking at a lot of factors. We hope to be the first sizable E&P-based type of IPO since I think Vine [Energy], and it would be very exciting for the industry to kind of lead that charge.

ND: We're looking forward to it. Again, I wanted to just [touch again on] retail power before we wrap up. As a retail power provider, you probably have, I guess it's called a cat seat, into seeing surges in power demand. There's potential for enormous energy intensive AI data centers. I feel like the Barnett could be a really great location for that in-basin — just use the gas in-basin.

CK: Well, you bring up a great point. You think about where our field is, rarely do you have the combination of localized demand underneath a massive resource. And so when you think about our position in the Barnett and all the development that's going on right around us, you're exactly right. We see huge amounts of energy in demand. Forget LNG to some extent, just locally in our backyard where we can serve that demand, whether it be gas fired or converted to electrons. And so we are actively looking at opportunities. We've been approached by potential data center clients that want to buy power directly from us. We have a retail arm that can do that. So we're very, very excited about the future. And we think this combination of gas and power that we can offer the market, particularly in Texas, really differentiates us in our ability to push into the value chain and get value for our green credentials. Because if you think about those data center providers, who are they selling to? Amazon, Google, Microsoft. These companies are very sensitive around their carbon footprint. And we can provide very low carbon, if not zero carbon solution to those providers. And we think that makes us very positioned for huge amounts of growth in our energy portfolio.

ND: Thank you, Chris.

CK: Thank you, Nissa.

ND: And thank you for joining us. For more energy industry intelligence, you'll find it here at