Big Sky Industrial Inc. Common Stock NASDAQ: BSIN reported second-quarter results alongside updates on construction of its Phase 1 industrial gas and carbon management project in Montana, saying commercial operations remain targeted for March 2027.
President and Chief Executive Officer Ryan Smith said the company changed its name from U.S. Energy Corp. to Big Sky Industrial on June 8, with its shares beginning to trade under the BSIN ticker. Smith said the rebranding did not alter the company’s structure or strategy, describing it instead as a reflection of its transition from a legacy oil-and-gas producer to an integrated industrial gas and carbon management platform.
Phase 1 construction and operating timeline
Smith said the company made a final investment decision on its Phase 1 processing facility in March after completing engineering and permitting, securing a fixed-scope EPC contract with CANUSA EPC, and arranging funding. The company subsequently signed a helium offtake agreement in April.
The plant is designed for up to 8 million cubic feet per day of inlet capacity, which management said would support more than 14 million cubic feet of contained helium and approximately 125,000 metric tons of captured carbon dioxide annually. Producing wells and two Class II injection wells are in place, while gathering-system installation is underway.
Long-lead equipment is moving through fabrication, Smith said. During the question-and-answer session, he identified power generators, compression equipment and membranes as key early execution considerations. The company has acquired and deployed its Caterpillar 2-megawatt natural-gas generators, which Smith characterized as the largest long-lead equipment concern.
Facility commissioning is planned for later in 2026, followed by first gas and commercial operations in March 2027. Smith said the modular design of the plant supports management’s confidence in maintaining the project’s schedule and budget.
Helium contract and carbon-credit plans
In April, Big Sky signed a five-year helium offtake agreement with an investment-grade global industrial gas counterparty. The agreement covers 100% of helium produced from Phase 1 on a take-or-pay basis, according to management.
The contract calls for 1.2 million cubic feet per month at a fixed plant-gate price of $285 per Mcf, with CPI-linked escalation beginning March 1, 2028. It also includes a price redetermination in the third year. Smith said transportation and tolling costs will be borne by the counterparty.
The company’s monitoring, reporting and verification plans for its Big Rose and Cut Bank sites are under active review by the Environmental Protection Agency. Smith said management expects approvals ahead of commercial operations, though he noted the timing is controlled by the agency.
Management estimates that Phase 1 could generate roughly $130 million in Section 45Q carbon-capture tax-credit value over its first 12 years. Smith said that estimate uses the current $85-per-ton credit rate and does not assume further upside from CPI-linked annual escalators.
The company is exploring monetization of the credit stream through a transferability transaction or structured credit sale. Smith said such a transaction could accelerate the receipt of non-dilutive cash and potentially become the primary funding source for Phase 2, although it is not included in the company’s base case. In response to an analyst question, Smith said management is considering structures involving all or a portion of the credit stream, but he currently envisions monetizing all of the Phase 1 credits to pull cash forward.
Smith also said a delay in MRV approval would not prevent the company from commencing helium operations. The company could still capture, sequester and utilize CO2 using its existing injection and disposal assets, he said, but would not receive Section 45Q credits until approval is received.
Second-quarter financial results and liquidity
Chief Financial Officer Mark Zajac said second-quarter revenue was $2.1 million, essentially unchanged from the prior-year period. Stronger realized oil prices offset lower production volumes following the company’s divestiture program, he said.
- Cash general and administrative expense was $1.8 million, down from $2.6 million in the first quarter.
- Adjusted EBITDA was negative $0.9 million, compared with negative $1.3 million a year earlier.
- Industrial gas capital investment totaled $9.6 million in the first half of 2026, versus $2.5 million in the comparable prior-year period.
Zajac said the company’s March equity offering provided capital for development and balance-sheet support. In April, Big Sky amended its senior secured credit agreement, doubling the borrowing base to $20 million, fixing the interest margin at 200 basis points, and suspending quarterly financial covenant testing through the quarter ending March 31, 2027.
The facility matures in May 2029 and carries no prepayment penalties. Big Sky ended the quarter with $21.5 million of total liquidity, Zajac said. As of Aug. 4, liquidity was $16.4 million after a $4 million construction-related draw.
Phase 2 considerations
Management said its acreage, permitted wells and geology could support two to three times Phase 1 capacity without new land or approvals. Smith said the company’s three producing wells were test-flowed at a combined 17 million cubic feet per day and are being choked back to supply the initial plant.
For a second phase, the company expects it may need to expand the gathering system, though Smith described that as a relatively low-cost requirement. He said the principal variable in determining Phase 2 size will be available capital, including the ultimate value and execution of any Section 45Q monetization and a potential modest amount of leverage.
Smith said management is currently considering a Phase 2 facility sized at roughly two to three times Phase 1, while emphasizing that Phase 2 is excluded from the company’s base-case model.
About Big Sky Industrial Inc. Common Stock (NASDAQ:BSIN)
U.S. Energy Corp. NASDAQ: USEG is an independent oil and natural gas exploration and production company that acquires, develops and operates hydrocarbon properties across onshore regions in the United States. The company's activities encompass geological evaluation, drilling, completion and working-interest management, with an emphasis on cost-efficient development of discovered reserves and maximizing production from existing assets.
Over time, U.S. Energy has pursued growth through disciplined lease acquisitions, joint-venture partnerships and targeted drilling programs.
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