BKV, BKV Corporation

Will it survive?

• Can it pay its interest? —
  Interest expense not tagged in the data
  What this means

  No usable interest-expense line was tagged in the filing data, but the balance sheet carries real net debt — so the interest burden here is unknown, not absent. Read the debt on the net-debt check below.

• How heavy is the debt, net of cash? $287M · 1.3× operating profit
  Modest net debt
  Cash $199M − debt $487M
  What this means

  Netting $199M of cash and short-term investments against $487M of debt leaves $287M owed, about 1.3× a year's operating profit (2.2× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

Is it a good business?

• Return on invested capital 7%
  Below average through the cycle
  4-yr median, range -7%–30%; 8% latest = NOPAT $181M ÷ invested capital $2.3B
  Industry peers: median 7%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 4 years (it ran 8% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin -2%
  Consumes cash through the cycle
  4-yr median margin, range -9%–21%; latest ($57M) = operating cash $243M − maintenance capex $300M
  Industry peers: median 23%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's -6% of revenue this year, a -2% median across 4 years. Treating stock comp as the real expense it is (less $13M of SBC) leaves ($70M).

• Are earnings backed by cash? 1.40×
  Cash-backed
  Cash from ops $243M ÷ net income $173M
  What this means

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

• Investing or harvesting? 1.89×
  Expanding
  Capex $300M ÷ depreciation & amortization as filed $159M
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

The promise and the pay packet

• Is the buyback buying ownership, or mopping up? 1.4%
  The count is rising
  Stock compensation $13M (fiscal 2025), 1.4% of revenue · no repurchases · diluted shares +40.1% since 2022
  What this means

  Stock handed to employees is a real cost paid in the owner's own currency: it is charged against profit, but the shares it creates are permanent. Many companies repurchase stock at the same time, which looks like a return of capital and often is not — if the count barely moves, the cash merely cancelled the pay packet and bought the owner nothing. The three states worth telling apart are a count genuinely shrinking, a count standing still despite large repurchases, and a count rising because the issuance was never offset at all.

The reserves, and what it costs to keep them

• How many years of production are left? 19.4 years
  A long runway
  Proved reserves ÷ the year's production, both as the filer reports them
  What this means

  Proved reserves divided by a year of production. It is not a prediction and not a life expectancy: reserves are added every year and this figure moves with the price deck the SEC mandates for booking them. Read it as the runway the company is currently operating on. A short one means the drill bit has to keep working merely to stand still; a very long one is worth a question, since reserves booked far into the future carry the most estimating and the least certainty.

• Did it replace what it sold? 764%
  Added well beyond production
  Discoveries and extensions, plus revisions to earlier estimates, ÷ the year's production
  What this means

  Every barrel produced is a barrel gone, so a producer is only durable if it finds more than it sells. This counts what the drill bit added, discoveries and extensions, together with revisions to earlier estimates. The revisions belong here even when they are negative: a company that quietly marks down last year's bookings has told an owner something about how those bookings were made, and a figure that showed only the additions would flatter exactly the companies that most need watching. Reserves bought from another company are a different act and are not counted here, because paying a market price for barrels is not the same skill as finding them cheaply.

• How much of it is still only a plan? 29%
  A normal share awaiting capital
  Proved undeveloped reserves ÷ total proved reserves
  What this means

  Proved reserves come in two kinds and the difference matters. Developed reserves sit behind wells that already exist. Undeveloped reserves are booked on management's intent to drill them within five years, and turning them into production requires capital the company has not yet spent. A high share is not by itself a fault, since a company with a long drilling inventory has somewhere to put its money, but it does mean the reserve figure describes a plan as much as an asset, and the plan can be revised away.

Graham’s defensive tests · 0 of 3 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Miss
  Revenue ≥ $2B · $894M
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Near
  Current ratio ≥ 2× · 1.78×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Conservative debt Miss
  Debt ≤ working capital · $487M vs $170M WC
  What this means

  Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $0.45/share (latest year $1.58), the averaged base the calculator's gate runs on, and book value is $18.63/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2022–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 3 of 4
  What this means

  Lost money in 1 year(s), look at what happened there before trusting the average.

• Return on capital ≥ 15% 0 of 3 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 20% → −1% (2-yr avg ends)
  What this means

  The recent-years average (−1%) sits below the early years (20%), but the latest year (24%) is back near the early level: a cyclical trough dragging the window down, not a one-way slide. The through-cycle median is 18% — read it across the cycle, not on the dip.

• Reinvestment, incremental ROIC returns capital
  What this means

  The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.

• Worst year 2024 · −25.6% op. margin
  What this means

  Operations went underwater in 2024, understand why before trusting the good years.

• Share count +11.9%/yr
  What this means

  The share count is rising, dilution works against you on a per-share basis.