NET Power Inc. (NPWR) Earnings Call Transcript

Thanks. Morning, everybody, and thanks for joining NET Power's first quarter 2026 earnings conference call. Joining me today are Danny Rice, our Chief Executive Officer; Marc Horstman, our President and Chief Operating Officer; and Lee Shuman, our Chief Financial Officer. Our earnings release for the first quarter ended March 31, 2026, came out yesterday, together with an updated investor presentation. You can find both on our Investor Relations website at ir.netpower.com. On this call, we'll be making forward-looking statements. Because of risks and uncertainties tied to our business, which get discussed in our SEC filings, actual results could differ materially from what those forward-looking statements state or imply. We're under no obligation to update any forward-looking statements; with that, I'll hand things over to Danny Rice, NET Power's Chief Executive Officer.

Thanks, Bryce, and hello everybody on this call. Joining me are Marc Horstman, our President and Chief Operating Officer, plus Lee Shuman, who came aboard not long ago as our new Chief Financial Officer. Lee has an impressive background in financing energy projects, and we're pleased he's here during such a critical stretch for this company. I'll set the stage for Marc and Lee by sharing a few thoughts on the broader environment, after which we'll take your questions. Power demand keeps rising, and by now I believe it's clear to all that natural gas-fired equipment will supply the bulk of new generation capacity for as far out as anyone can see. Nothing else matches it for availability, dependability, or the ability to scale. What sets AI apart from other loads is that electricity expense barely affects AI's economics. The reason is that power accounts for just 10% of what AI costs overall. Most of the expense sits in GPUs, networking, and the data center shell. AI has turned into a competition, and speed together with scale will determine the winners, with power availability rather than power price calling the shots. Power projects have shifted fast — no longer waiting on the grid, they now go after behind-the-meter supply. Generation configurations have moved from large frame turbines toward hundreds of reciprocating engines linked together to produce equivalent gross output. Heat rate, overnight cost, and geography have all dropped sharply in significance. What counts most in today's market is speed, scale, and community acceptance. Luckily, the U.S. energy sector, especially the natural gas side of it, stands ready to serve this demand. We belong to that ecosystem, with a sharply defined mission: turn natural gas into the cheapest form of clean firm power. Cleanliness is sliding down the priority list, though that doesn't mean that if clean, dependable power could be had on the same schedule and at the same scale as the innovated alternatives, it wouldn't stand a strong chance of being chosen; that's the situation we're in right now. We've positioned ourselves well to provide a clean firm answer capable of delivering first power within this decade at an attractive price, with a route to below $100 per megawatt hour. That's achievable in West Texas, where low-cost gas for generation is plentiful and there's enough storage capacity for captured CO2 when combined with enhanced oil recovery. This demonstrated approach can support building more than 10 gigawatts of clean firm generation at under $100 per megawatt hour. Attempting this in other locations would raise power costs by 20% to 30%, yet the bigger penalty would be stretched-out schedules, added risk, and diminished scale. For us, everything hinges on whether we can deliver quickly and at scale to draw demand now, and on whether the market will embrace EOR as a workable carbon capture route. Energy availability matters more right now than it ever has. Like I said a moment ago, we can't get enough natural gas for generating power. Luckily, that puts us in an excellent position. On a different note, though, the worldwide energy crisis stemming from the war with Iran has highlighted how crucial energy security is when it comes to natural gas and oil. Since the U.S. produces more of both than anyone else, we've largely been shielded from the supply disruption up to this point. That said, this whole situation has taught people something valuable: the oil ecosystem doesn't stop at gasoline for vehicles — it also includes jet fuel, plastics, and fertilizer, none of which can be replaced at the scale and price the world requires. So, if a modern civilization and a good quality of life are essential, then oil is essential too, which brings me back around to the mousetrap we're building. What we're building is a circular energy ecosystem that takes advantage of the 2 most critical energy sources available on this planet, using inexpensive, dependable natural gas to generate dependable, inexpensive power on an enormous scale, and applying technology to capture virtually all of the CO2 it produces, then putting that CO2 to work helping extract oil that could not be recovered otherwise. Our captured CO2 is what remains in the reservoir permanently; we believe that's the correct answer for what the U.S. requires going forward, more natural gas power generation, more oil produced domestically, and lower emissions overall. Regarding life cycle emissions, our third-party validated life cycle emissions analysis calculation, or LCA, comes in at an estimated roughly 210 grams of CO2 equivalent per kilowatt hour, which stacks up very well against an unabated combined cycle at around 440 grams of CO2 equivalent per kilowatt hour and coal at more than 900 grams per kilowatt hour. So if you care about bettering the environment, this product delivers on that; we'll keep up our public pushing campaign to shift the buyer ecosystem toward our vision of clean firm power. The encouraging part is that we anticipate having answers on this within the next few months. As Marc will discuss shortly, from an engineering and technology perspective, we've done all we can to design a derisked clean firm power solution. Before we proceed with putting any significant capital toward locking down additional equipment, we have to make sure customer demand isn't merely present, but is committed to our projects; so right now we're working through that process alongside our strategic adviser to figure out which prospective customers match up with our time line and our vision. I can tell you that not everybody wants to be tied to oil production, and that's fine. But should nobody want to be tied to EOR, even with the environmental and social benefits this ecosystem we're creating would bring, it's preferable to find that out before we put any more capital into it. The initiatives we're pushing forward contribute to a better, cleaner, and safer world, but in our view, whether the market embraces them hinges on three factors. Number one: are we moving quickly enough? In this market, speed is genuinely critical. Number two: are we operating at sufficient scale? Size is also truly important here. And number three: is it clean enough? Even more crucially, do customers share our vision for an energy ecosystem that uses natural gas to generate power and then utilizes the CO2 to extract additional oil, thereby helping sustain the quality of life in modern society. From our perspective, that's an obvious choice. That said, we aren't the customer—we merely develop these solutions. So behind the scenes, we're pushing ahead with detailed engineering and project financing, recognizing that these converge at the finish line alongside commercial offtake. All 3 are moving forward at the same time. With that, I'll hand things over to Marc, who can share the tremendous strides we've made in getting this solution to the verge of FID and commercialization. Marc?

Thanks, Danny. Morning, everybody. There are three things I'd like to cover today: how the commercial offtake is structured, how we're executing on Permian Phase 1, and where things stand with Entropy, our key technology partner. Starting with offtake. If you go to Slide 5, a strategic adviser has been brought on to run the formal offtake process for Project Permian Phase 1. Project financing can't move forward without the offtake agreement — it's the gating condition — and it's the main commercial evidence that a lasting market exists for our clean power product. On this slide you can see the commercial structure designed around NET Power's deployment offering. That flexibility is intentional. The first deployment, at 80 megawatts, connects to the grid via Oncor and ERCOT; for offtake we're pursuing a long-term fixed-price PPA, and CO2 sequestration is taken care of through Oxy's EOR infrastructure. With deployments two and three, optionality comes into play — we can either keep delivering to the grid or move to behind-the-meter colocation on a bigger scale. Across all 3 phases, sequestration depends on Oxy EOR infrastructure. The complete picture of what we're building, along with the time line for getting there, is laid out on Slide 6. Our commercial deployment of the clean power product is Project Permian Phase 1: net output of 80 megawatts, CO2 capture above 90%, located on acreage leased from Oxy close to Midland, Texas. We still have FID slated for the latter six months of 2026, and we expect commercial operation to kick off in early 2029. What this project does is combine a natural gas combined cycle setup with Entropy's technology for capturing carbon after combustion. The power we deliver is grid connected, at 80 megawatts. Based on indicative terms, Oxy takes 100% of the CO2, and we're moving toward a definitive agreement. Like I mentioned, the site has room to grow to 800 megawatts, 10 units on that same acreage — which is a significant part of the commercial narrative we're sharing with offtakers who are looking for certainty on volume over time. When it comes to gas supply, our goal is an MOU with a major supplier in Q2, and then we'll move into negotiations on definitive agreements. Regarding procurement and long-lead equipment, we're executing a disciplined release schedule alongside our offtake and financing efforts. The Siemens RPS gas turbine packages, at approximately $77 million, are under contract — our initial equipment commitment to be executed. For the switchyard, gen tie line, and generated < >, we're aiming at the June timeframe. HRSGs, the steam turbine generator, and air cooled condenser are slated for July; then in all likelihood PCC equipment, absorber towers, and amine regen systems will come during the August through September period. Finally, I'd like to call attention to our product breakdown structure effort that supports everything here. We've identified 8 to 10 equipment packages along with 10 to 20 discrete skids. This is the basis of a clean power product approach we can repeat: design it once, then order and build in volume. Each choice we make on this project lowers non-recurring engineering expenses for later deployments. Moving to Slide 7. Here are some updates regarding our relationship with Entropy and the technology base supporting it. The joint development agreement we have with Entropy is the single most important near-term corporate item we need to deliver. Through this JDA, we lay out commercial terms that let NET Power license and bring to market Entropy's amine-based PCC solvent technology for U.S. power generation exclusively until 2032. Entropy can pledge equity contributions reaching as much as 49% for upcoming deployments, beginning with Project Permian Phase 1. We've reached a shared understanding regarding the commercial terms, and our goal is to get this agreement signed during Q2. Entropy brings a demonstrated history of success. For over three years now, Glacier Phase 1 has been operational, showing that carbon capture from gas compressors works at commercial scale. Glacier Phase 2 should begin operations in Q2 2026. It's located at the same facility, but it grows with additional compressors and brings in a gas turbine equipped with CCS at commercial scale, which will capture 160,000 tons per annum. Once that unit is up and running, it provides further proof of the key technology integration underlying Project Permian; for both our project and the offtake discussions, this represents a major derisking milestone. Our PCC technology's next direct expansion is Project Permian. It involves a pair of 35-megawatt turbines, capturing 380,000 tons of CO2 annually, at TRL 8 to 9. What we're doing isn't some new configuration; it's a careful scale-up of a design and technology already proven. Lee will now provide the financial update.

Thanks, Marc, and hello everybody. I'll keep my remarks short. It's a pleasure to join my first quarterly call in the CFO seat at NET Power. Over the next several quarters, I'm eager to get acquainted with many of you. Roughly 25 years of my career went into developing, financing and restructuring power infrastructure — thermal, renewable distributed — across many structures and market cycles; all told, power transactions I've participated in exceed $10 billion in value. Before my current role, I oversaw power financing for Javelin Global Commodities. Earlier still, I served as CFO of WattBridge Energy, where we brought in slightly more than $2 billion to build a 2.4 gigawatt portfolio of natural gas peaking plant in Texas. Even earlier, I worked at < > Mirant, which eventually turned into GenOn and was later bought by NRG, handling development, financing, optimization, restructuring and divestiture of power assets both at home and abroad. I've likewise partnered with start-up renewable developers to get projects successfully developed and bankable deals executed within a framework quite unlike that of bigger, more entrenched companies. Why does this matter? Because I know the kind of situation NET Power is in — an asset whose cash flows can be contracted, whose underlying technology is proven, and whose capital structure must be assembled from scratch. That is precisely the work I'm equipped to do, and it's the reason I'm eager to take on this position. What's more, after spending the past month with NET Power, I can plainly see that this team possesses both the know-how and the determination needed to put in the hard work required to deliver Project Permian and more. Now to the financials: the first quarter closed with about $319 million in cash and cash equivalents and zero debt; pausing the Oxy combustion program produced a handful of onetime costs, and we anticipate that go-forward spending will be greater for the PCC program. Our G&A burn stays fairly modest, at approximately $8 million to $9 million each quarter, which affords us a fairly lengthy runway to reach FID; spending should step up over the coming months as we release critical long leads so our project schedule holds. As Danny noted in his remarks, we stay prudent about committing capital to this first project, and encouraging signs for both the first project and those that follow will give us the confidence to risk release long lead items and perhaps lock in additional equipment. Regarding project economics, the TIC target is still in the $475 million to $575 million range. When it comes to financing, we aim for an equity investment from NET Power between $125 million and $175 million, with the remaining capital supplied through debt and equity participation from Entropy. We currently hold the capital on our balance sheet to fund that, plus enough dry powder to start on the next phases of the first project — or the next project somewhere else in West Texas. Like Danny said, the commercial offtake process is the near-term event that matters most, and a goal of $100 per megawatt hour or higher makes project bankability and a suitable return profile possible; that price level sits well under other clean firm alternatives, partly because of EOR application and availability of low-cost natural gas. I'm eager to share further updates in the quarters ahead. Let's open the line for questions.

Before certain long lead time items have to be procured, you brought up $8 million to $9 million of burn. To get those long lead time items procured, which milestones would be required? As you move through various development milestones, any color on how that burn rate would evolve?

Marc is going to take that one.

Is this coming through for everybody?

Yeah, you're coming through fine.