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Greetings, and welcome to NET Power Inc. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bryce Mendes, Director, Investor Relations. Thank you. Please go ahead.

Thank you. Good morning, everyone, and welcome to NET Power's Second Quarter 2026 Earnings Conference Call. With me on the call today, we have our Chief Executive Officer, Danny Rice; our President and Chief Operating Officer, Marc Horstman; and our Chief Financial Officer, Lee Shuman.

Yesterday, we issued our earnings release for the second quarter ended June 30, 2026, which is available on our Investor Relations website at ir.netpower.com. During today's call, our remarks will include forward-looking statements. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business, which are discussed in our SEC filings. We assume no obligation to update any forward-looking statements. A full description of these risks is available in the company's most recent annual report on Form 10-K and the quarterly report on Form 10-Q for the quarter ended June 30, 2026, each filed with the SEC.

With that, I'll turn the call over to Danny Rice, NET Power's Chief Executive Officer.

Thanks, Bryce, and good morning, everyone. We appreciate you joining us this morning. We spent the last 4 months in an intensive customer engagement and marketing process. We talked to a broad set of prospective power buyers, the hyperscalers, the data center developers, general industrial companies looking to procure power, and what we heard was unambiguous. The market needs speed, scale and reliability, and it's going to pay a fair price for it. And given the shortage of having speed to reliable power at scale, which I think we'd all agree is mission-critical to the U.S. winning the AI race, the tech industry needs to see as much capital pointed directly at solving that problem today. So in our case, I think NET Power is unique because underneath our clean gas technology layer is a fundamental understanding of all things gas power generation, both the equipment and the know-how for where these projects make good sense to site for end customers.

So the market told us that our 80-megawatt clean gas is very credible, but what they really need is a lot more power and they need it sooner. We believe the clean piece is important, but just as it's always been, will only come at scale once society's basic energy pillars of reliable and affordable power are fully in place. And power demand is outstripping supply today, so it's incumbent upon us to take a step back and reassess our allocation of our capital and our skills to help meet these basic energy needs while preserving the ability to do what we originally came here to do, which is to transform natural gas into the lowest cost form of clean firm power, that's still our North Star, so this transition to leading with unabated power, first is simply a more actionable and likely lower risk pathway to eventually get to a cleaner energy future.

Now that isn't a judgment about the long-term importance of CCS. We believe in it, and it works. Just several weeks ago, the Entropy team commissioned the world's first clean gas power plant in Canada, and that's a huge milestone for the industry. And we're sitting here with tens of billions of tons of annual CO2 demand in the Permian Basin for EOR. And as oil prices rise, as they have been recently, the demand for CO2 just continues to grow. So I want to spend a moment to why we believe this strategic recalibration is durable. We view it as a pragmatic response to a structural market condition that we think runs for many, many years.

The grid has quickly become a binding constraint on data center growth. First, in markets like PJM and MISO, but it's quickly made its way to ERCOT as well. And it's interesting, I think a lot of folks in the industry viewed ERCOT as a safety haven for speed to power. And for a long time, that was especially true; shorter queue times, better grid reliability and access to lower-cost power. But I don't think Texas was really prepared for the onslaught of demand that's now showing up, and now ERCOT queues are getting backed up into the 2030s with no real end in sight to when new supply will catch up to meet this new demand, so it's forcing creativity to bring this power to market. And the overwhelming response that we're seeing is solutions like behind the meter, on-site generation with targeted reliability that has become the most actionable near-term solution in the market.

And we see ourselves as part of that ecosystem. We have the site, we have the Oxy land relationship, and we have the technical capabilities to deliver firm dispatchable power at scale. That's what the market really needs today, and we believe allocating our capital in this manner is the right thing for shareholders and the power industry alike.

On the point of grid constraints, it's a primary concern for local communities too. Over the past several months, we've listened closely to the local and national conversations around data center development. The Texas legislative activity, the moratorium discussions, the scrutiny on water consumption and grid impact, the broad and diverse community questions around this new kind of infrastructure. These are real concerns from real communities, and they deserve real solutions.

The pressure emerging around conventional data center development is, if anything, accelerating the demand for what we aspire to build, behind the meter and completely off-grid power solutions that don't strain the grid, don't sit in an interconnection queue and are sited and designed so that carbon capture can be added over time. That's not just commercially attractive, it's the kind of project that has a credible answer for a regulator or a community asking hard questions.

Through every step of Project Permian's development and evolution, our focus has been to be a good neighbor who endeavors to add long-term value to the communities where we live and work. We think the direction of the concerns point toward our recalibrated model, not away from it. So with that as the backdrop, our commercial strategy is now organized around what today's power customers are actually prioritizing: speed to power, reliability and scale. Natural gas power generation colocated with customer load and deployable in a fast time line is how we meet that demand.

We are redirecting near-term capital and execution focus towards the development of unabated natural gas power generation capacity with carbon capture retained as an option, a credible, meaningful preserved option to be layered into projects over time as customer requirements, project economics and financing support it. We actually think this will be a very differentiating strategy as time moves on, particularly once power supply catches up to demand and the focus begins to ship back to finding low-cost ways to decarbonize our country's newly installed power generation asset base. The key will be possessing the skills to do it, which we will retain, but also having projects in the right areas where it's technically and geologically feasible to do carbon capture.

So let me expand on what this means for our projects and our partnerships. Project Permian, our site in West Texas, is being redesigned for colocated demand. Based on current market feedback, we do not expect to deploy post-combustion carbon capture in the initial phase of deployment. The project is being designed to preserve the ability to add capture in later phases, the siting is right and the Oxy relationship for CO2 offtake via enhanced oil recovery remains intact as a future pathway. What we are not doing is requiring customers to pay for clean power before they've asked for it. The site's capacity for approximately 1 to 1.5 gigawatts of power generation across multiple phases and the initial phase is being sized to meet where -- what the market will actually contract for it today.

On our relationship with Entropy, we're discussing our revised framework under which the parties may pursue deployment of Entropy's post-combustion capture technology in later phases of NET Power's projects as and when supported by customer demand, economics and financing. But today, it just wouldn't make sense for us to commit capital for something that isn't actionable yet. So we're going to try to preserve the relationship and the great work our teams have already done together, that work has shed a lot of insight on project design to accommodate carbon capture so that the retrofit option is a consideration in broader power site design.

Clean power remains a long-term destination. The North Star for us hasn't changed, but what has changed is the order of operations. We build the power first, a lot of it on an accelerated time line to meet customers' needs now and we capture when it makes sense.

So I'll pass it over to Marc to give you a brief operational update and then Lee will cover the financials. Marc?

Thanks, Danny. Good morning, everyone. I'll keep this brief. We're reorienting our project execution around unabated, behind-the-meter power generation, which means firm power at three 9s reliability, and that is 99.9% uptime, which corresponds to the plant being down for only a handful of hours a year. This co-located with customer loads on the 2028 time line this market is asking for. The configuration we're developing for Project Permian and other sites pairs battery energy storage, reciprocating engines and gas turbines to build in redundancy, so single units outage or scheduled maintenance doesn't take down power for which the customer desperately needs and requires. Our modeling to date shows a single large unit can't meet a three 9s target on its own since planned maintenance alone would exceed the outage budget. Multiplying smaller units is what gets you there, and it's the direction the broader market has moved.

On the commercial side, we're going direct to hyperscalers and their data center developers, leading with speed to power and land access, pairing our power development with the customer's campus build-out as coordinated parallel work streams with the design preserving the option to add post-combustion capture later.

In concert with a potential customer, we're working to secure an additional 120 megawatts of gas power equipment with early delivery, which combined with our already secured gas turbines would bring our total secured capacity to nearly 200 megawatts for the first phase of this larger project. Our relationship with Oxy remains an important differentiator. A multi-site land footprint across West Texas is the kind of scalability the largest data center operators are asking for. We're actively working with Oxy to advance land rights for our power development, and that is a near-term priority for us.

With that, I'll hand it over to Lee.

Thank you, Marc. Good morning. Here's a quick financial update. We ended the second quarter with approximately $310 million in cash, cash equivalents and investments and no debt. Our current cash position is sufficient to support ongoing operations and development activities in Project Permian, plus portions of the equipment for the project, funding for the project through construction to commercial operations will require project level financing, partner capital, additional equity or some combination of those sources. We remain optimistic about our ability to secure capital to complete the project.

Our balance sheet gives us the runway to be deliberate about this process. We are measuring every dollar we spend against what it takes to get to a fundable project, and we remain -- and we are managing the business accordingly.

With that, I'll hand it over to the operator for Q&A.

[Operator Instructions] Today's first question is coming from Nate Pendleton of Texas Capital Bank.

Can you build on your prepared remarks a bit on how you view the longer-term strategic positioning for NET Power, with this new focus? Specifically, how do you think about where NET Power wins against other developers that are also trying to put power on the grid in West Texas?

Yes, Nate, it's a good question. Look, I think if you just look at -- if you take a step back and you look at the market right now, I think we really have these two potential phases. And I think the phase that we're in right now is we're definitely in a shortage situation. And by that, I mean there's not enough power generation being built. And I think one of the questions we always ask ourselves is what's our competitive advantage, what's the differentiating feature of us versus everybody else.

I think when markets eventually get to like stabilization and markets are at equilibrium, I think you definitely need to have like a strategic differentiator versus your peers, but we're not in that market. We're in a very, very supply constrained market. And value creation doesn't necessarily have to come from differentiation. It has to come from just capabilities to be able to meet the market's demand. And I think that's one of the things that we heard sort of loud and clear over the last few months is, yes, the clean piece is really interesting, but what we really need is just we need a lot more power and we need it faster, and if you guys have the capital, both the intellectual human capital as well as the financial capital and the wherewithal to be able to do that, that's where we want to see you allocate your capital.

And so I think from where we are right now, it's -- the market is extremely short power. And if you have the capability to be able to do that, that is value additive, that's value creative. And I think as we think about long term, once the market actually gets to stabilization, and by that, it's once supply has been built up to be able to restore reliability to the grid, once everybody's basic power needs are being met, which we would argue they -- we're on the precipice of that happening, I think once you get to that sort of parity, I think that's where you really have to take a hard look at what's your strategic differentiator versus everybody else.

And so as we sort of think about just this transition from the market being short powered today, us being able to install the unabated powered gives us the opportunity to create a ton of value because of the shortage. And then as we transition into the market in, call it, 10, 15 years, where the market's at equilibrium, I think that's where like this core strength of decarbonizing the gas power generation really becomes that differentiator. And so that's why it's important for us that we're continuing to hold on to that -- continue to preserve that.

And the easiest way for us to be able to preserve that is really making sure that we're putting our projects in the areas where sequestration is possible. So I don't think you'll necessarily find us going into areas where the ability to capture and sequester the CO2 is impossible. But I think the nice part about West Texas, especially as you're not compromising on the merits of the unabated gas power, the abundance of the natural gas, the land availability are second to none out there. So as you're thinking about places to be able to put just unabated gas power generation, West Texas is incredible. And when you kind of layer on what's going to happen in 5 or 10 or 15 years when the clean piece starts to come into focus again, you're going to want to be in those places where you can take your existing assets and decarbonize them.

So for us, this West Texas location really sort of fits into both those buckets of we can use these assets that we have to meet the market's needs today to create value while still preserving the optionality, and really like the intent and the ability to be able to decarbonize and really flex the differentiated skill set that we possess versus the broader market.

Got it. That makes complete sense. And then you just alluded to the customer conversations that drove the change. Maybe how should we think about the path and timing from here to assigned offtake on the back of so many conversations that you've had already?

Yes. I mean those conversations are in progress today. As Marc kind of noted in his comments, we're in the middle of securing additional power equipment to meet these power needs of the customers. So we're not necessarily going out there on spec the way we did for the first power generation units that we secured last year. That was really to get our foot in the door to do the PTC, but we're now able to take that asset and use that as part of the starting block of the first phase of the Project Permian site. So this next tranche of megawatts that we're securing is really at the behest of one of these prospective customers that we hope to work with.

So it's not speculation on our side. It's really just in coordination with them. So hopefully, in the next couple of months, we'll have more to share. But I think like the reality is the ultimate success of this project is making sure that all potential stakeholders are aligned, and so the community point is going to be a big one and so we want to make sure that we're doing things on the appropriate time line and disclosing things appropriately as it moves along.

[Operator Instructions] The next question is coming from Noel Parks of Tuohy Brothers.

I was just curious, in the discussions you've had with potential off-takers to a degree that data center development is a huge part of the incremental demand, are the parties you're talking with more in a project origination stage, would you say? Or are they generally sort of well in progress down the development pathway where maybe when they start -- set the process in motion, the interconnect delays, et cetera, weren't as glaring an issue as they are now?

Yes. Noel, are you talking about like our project specifically? Or are you talking about the potential customers' projects in general?

Potential customers' projects.

Yes. I mean I think if you look at just like the site that we have in West Texas, it's fairly uniquely positioned. It's not just the one site, I mean we were originally contemplating this would be a grid connected project, but I think as everybody is starting to have real concerns around just the reliability of the grid, it's been pretty incredible even in a place like Texas, like Texas has been a safe haven for folks for a few years now, and that's why you've seen such an influx of demand for interconnect into the ERCOT grid. But now that the ERCOT grid is starting to indicate that new supply isn't showing up fast enough, I think it's causing people to have some pause around having grid connected projects, and I think everybody is now starting to really just take matters into their own hands, saying, if we can't depend on the grid, we have to be fairly self-sufficient.

And so that really lends itself to the behind-the-meter, off-grid sort of model. And this is more of just a coincidence, but it actually like fairly aligns with what we were actually doing on the PCC piece, which was start on the smaller gas turbine units, let's not go after the big ones to start. And so we were really designing this sort of site around smaller gas turbine units, which when you -- like Marc said in his prepared remarks, when you aggregate a bunch of smaller units, you're able to get a much higher reliability factor that is a lot more conducive to sort of this behind the meter application. And if we had one large frame turbine producing 400 megawatts, you're going to have to have so much redundancy there because you have a massive, massive single point of failure risk.

So we've sort of been designing this for the PCC, but it's also very conducive to removing the PCC and have the reliability in this behind-the-meter sort of application. So I think the design that we had been working on really for the PCC piece actually works incredibly well in the unabated version. The only real difference is rather than spending an extra 2x on the PCC piece, we can take that capital and allocate it to essentially double the amount of installed megawatts for the behind-the-meter off-grid application.

So that's been like the biggest piece of the feedback for the market, it's like the feedback has really been like, you guys have like the gas skill set, you're kind of doing it the hard way by also doing the PCC, take that capital and allocate it to what we need right now, which is we need as much firm reliable power generation on an accelerated time line as you can give us. So we've taken that market feedback, we're running with the market feedback in concert with this potential customer, we're securing additional turbines to -- or additional power equipment to be able to meet their power needs on an accelerated time line. So I think everybody from the NET Power side is fairly aligned with the strategy. The important part for us is making sure that we preserve this optionality to do the carbon capture because we are quite confident it's going to come back at some time in the future, and we need to be ready for it for when it does happen.

Great. And as you're looking at scenarios going forward, how long we might be in the shortage situation before utilities and the grid catch up on their interconnectabilities? I heard some people say maybe 5 years out and/or before sort of global production of gas turbines, ramps could be more in alignment with kind of near-term needs. As you were looking at this, did you have sort of like a range of how long you thought the shortage situation might last? And I was just wondering kind of if you have sort of a nearer-term scenario, longer-term scenario, just as what that period might look like?

Yes. I think on like the short end of the range, you're talking about early 2030s, so I mean -- and that's just to get like new generation or new load onto the grid, you're talking about early 2030s. And that's in a market like ERCOT, which is probably the fastest to market. I think if you're looking at MISO and PJM, you're talking about even longer time frames. And that's not to solve the problem, that's just like start to solve the problem, which I think is like the scary part. And so I think it all comes down to, are we going to continue to see the advancement of AI cause new demand for new power generation, right?

And I think as the world quickly starts to adopt AI and embrace it, I think it becomes a fixture in everybody's lives, and it becomes a fixture in terms of just load in demand for power, so the way we kind of -- the way I kind of see it is in like the most conservative sort of scenario, you're talking about a lot of these grid constraints and power constraints being resolved by the middle of next decade. And then there's the scenario where it doesn't get solved until like the 2040s or beyond.

But I think like in any case, when you're designing these behind-the-meter sort of applications or off-grid applications, there's always the expectation or intent that eventually it will become grid connected. So as we look at like potentially siting these projects, we want to be able to have that sort of optionality in the same way we have the optionality on the carbon capture. And that means we're going to be smart about where we site these potential projects, right?

So like this Project Permian site that we have, we're fairly close to a couple of really high -- large high-voltage power lines that we can connect into at some point in the future once the grid is reliable enough for us to connect into it. And so then, you'll have essentially a behind-the-meter sort of application, so I think that's like one of, I think, like the key traits that you'll sort of see with our project is future proofing, right? Future proof on being able to connect into the grid, but also future proof in terms of if society changes its view on how aggressive we need to be on reducing emissions, we're going to be in a place where we can retrofit very, very quickly.

And a lot of that's in part due to the great work that Marc and our team have done with Sanjay and the Entropy team over the course of the last 12 months to really understand the PCC piece inside and out, and making sure that these projects are in an area where if we do have the ability to capture the CO2, we have a place close by to be able to transport and sequester it, and that sort of partnership with Oxy continues on being able to have that option, to be able to sell on the CO2 for utilization in their enhanced oil recovery operations.

So I think there's a ton of optionality you're going to -- your customers are going to be able to get with NET Power projects. And that's really what we're designing this for is customer success because the success of the customer is really going to dictate the success of our shareholders, and I think we certainly have those priorities straight today.

The next question is coming from Betty Jiang of Barclays.

Danny, I just want to get a better sense, just given the strategy shift, how you're thinking about sizing the first project because you could still do the initial design, but is there any appetite to do recip engines like sort of things that we have seen from other companies in the space?

Yes. No, that's a great question. Yes, we're looking at it, we're evaluating it. We're pursuing it. I think the nice thing with us, and hopefully, the market sort of has -- understands us with this by now, we're fairly technology agnostic. We originally started off on the oxy combustion, and I think one of the things we really learned is if you're sort of pigeonholed into a single technology with a single supply chain, it puts your business at risk, like you lose so much flexibility to be able to adapt and capitalize on the market. And so I think we've really taken a step back as we think about just power generation, as we think about power generation solutions I think like one of the key features of us is being very agnostic to give us as much flexibility as possible to design the right solution for what the customer needs.

And so yes, and Marc kind of said in his prepared remarks, as we think about just what this first project is going to look like it's going to be a combination of turbines, recips, battery storage. It's going to be whatever enables us to deliver the lowest cost three 9s reliability for the customer on the time line that they want. So we're not beholden to any single OEM on the equipment. I think you're going to see us be very, very opportunistic and very creative with what these sort of projects look like. And I think that's going to become one of the hallmarks of this company is our adaptive ability to be able to get the customer what they want.

And I think like one of the key pieces that really makes that happen is us having like this fundamental understanding of all things gas power generation. And I think that's probably one of the things that's like underestimated about us is we -- this company has spent like the last decade working on probably one of the hardest, if not the hardest technological challenges around gas power generation, this oxy combustion cycle. And so to be able to take folks that have historically come from like a traditional gas power generation skill set, they've spent the last 10 years working on the hardest technological challenges, and now going back to where they originally came from, the gas power generation, is a very, very easy, I would say, fairly easy transition back to the basics.

And so with that, we kind of have this power generation acumen to be able to assess and understand the pros and cons of all potential power generation solutions to come up with the right one for the customers, and I think that sort of skill set and experience certainly has been resonating with the folks that we've been talking to recently.

That's great. That's helpful. My follow-up, can you just speak to how you're thinking about timing of this project, the first one? And I know there's negotiation ongoing, but just how you think about deploying -- initial deployment. And then tied on to that is the sort of the trade-off that we're seeing in the market where in order to derisk the project and then come to an agreement, developers are being asked to front the CapEx and you have to pay money for long lead time items, so there's a certain level of spending that's needed in order to derisk enough to get to the final PPA agreement, are you seeing that dynamic? And then for NET Power, what does it mean for you guys for your appetite to front the capital to get to a project?

Yes. I think it's a great question. It's one of the things that we kick around internally a lot is how do we put our capital -- how do we invest our capital without having too much of that capital at risk, and I think that's one of the things that us having $300 million on the balance sheet affords us the patience to be able to come up with the right structures that we don't have to put all of our capital at risk and really toe the line on having too much of our dollars committed to equipment without having sort of a contract in hand.

I think part of that is getting alignment with potential customers, before you've secured the equipment and trying to work out creative solutions to be able to secure the equipment, and that's sort of what we're working on right now. So I think we're going to be -- I think what you guys are going to see from us over the course of the next couple of months is a very thoughtful, pragmatic sort of approach to being able to secure the equipment for these projects without us having to really lean in on speculation any much more.

I think we've always tried to be very judicious around our spending. The most aggressive we've been has been securing those turbines last year, which has ended up -- I would say it ended up being like a very economic decision just because the market for really all power generation equipment has just continued to go up, so that was sort of an accretive commitment on that part, we think. But as we think about securing more equipment, I think it's really going to be done in concert with a potential customer and working out a creative solution to be able to help finance the acquisition of it. So more to come there, Betty, but I think what you really see from us is we're going to be very, very thoughtful and pragmatic about how we put more capital at risk.

The next question is coming from Wade Suki of Capital One.

Just maybe to sort of dovetail off of the previous question, just curious if and how possible conversations are going with potential partners, how you guys are exploring, potentially bringing in someone else to help develop or fund or whatever, how those kind of conversations might be progressing, if at all? And then any update on cost would be helpful.

Yes. I mean, so on the second point, I think the cost is really going to be a function around what's like the ultimate project profile is going to look like in terms of generation solutions. I think as everybody seems like the cost of equipment just continues to rise because the market is still tight, so that's not really a surprise to anybody. And so for us on like the project side, it's really just making sure that the PPA price delivers a commensurate sort of return for that capital invested and the operating costs associated with operating that facility.

I think on your first point, I think we're in like a very unique position where we possess sufficient capital to move this project along. I think at the end of the day, I think we're going to be very, very humble about what our skill sets are. I think companies can get into trouble where they bite off more than they can chew. And so I think for us, it's really making sure that at the end of the day, we want to make sure that this project is successful.

I think we certainly possess the skill set and the confidence to be able to do this alone. But is that ultimately what's going to enable us to scale this thing up to achieve like the full potential of what these projects could be in West Texas, because I think the way we kind of think about it is, success with this first project leads to a second project, and leads to a third project and leads to a fourth project. And so being able to like really improve the confidence and success of that first project if that means bringing in other strategic partners to really complement our skill sets than we definitely will.

We started to head down that path with Entropy on the PCC piece. So I think we've demonstrated if there are folks out there that have skill sets that are additive to ours and just make the project better, we will definitely want to bring them to the table. But we're sitting here today with a great skill set, with a great foundation that we can build from and we have sort of a little bit of time and patience and certainly, the capital on our balance sheet, that we should be able to get pretty far doing it alone. So we'll certainly report back to everybody as that continues to evolve. But I think with where we are today and what we know good looks like, we're in a fairly good place just continuing to go about it alone in partnership with Oxy on the land side.

Got it. Just kind of one technical question, I guess, if I could. Just on the Entropy kind of related conversation, just thinking about the technology. I was sort of under the impression that was something that sort of needed to be integrated with the facility during the build, but you -- is the technology, I guess, capable for retrofit later once -- or are there other potential technologies that you're looking at as well?

No, it's -- yes. I mean, Marc, if you want to take that one, that would be great.

Yes, that's fine. Wade, Marc here. With respect to the technology especially around Entropy, but also in general with the PCC, the post-combustion capture, it does need to be integrated, but it's not integrated to the point where it prevents you from adding it on as the second step. So it actually goes quite well with the current strategy from the standpoint of the power mix that we end up with most likely putting that power mix in the simple cycle, and then depending upon, call it, the ramp-up that Danny was mentioning earlier on what that drives, you could either bring it in a combined cycle for the benefits of the power or you could also bring it into a combined cycle configuration at the same time of adding the post-combustion capture as well.

So I think that as we've looked at what we've learned over the last 6, 7 months with the Entropy team, the Entropy team has been great, and it's been able to -- going back to some of Danny's prerecorded comments from the standpoint of -- or the remarks from the standpoint of understanding that post-combustion capture element, understanding what that total plant looks like, so as we look at the layout of the power now, having that in mind allows us to lay out to where we really have a legitimate path forward on providing the clean energy that we think folks are going to want in the future.

Thank you. This brings us to the end of the Q&A session. I'd like to turn the floor back over to Mr. Rice for closing comments.

Okay. Thanks, everybody. We appreciate the questions from everyone. I know there's a lot to digest on this update, so I kind of want to leave you all with three things. First, this for us is really -- it's a change in sequencing, not a change in conviction. We're building unabated power first because that's what the market is telling us it will pay for today on the time line that it needs. Carbon capture, it remains the long-term destination. The Entropy relationship, the Oxy EOR pathway, the site design itself all preserves that option. So we're not walking away from it, we're just being honest about when it gets built.

Second, I think this makes us more investable, not less. A contracted natural gas plant with a creditworthy offtaker, one of the most financeable assets and infrastructure, and that's the asset we're building towards as fast as we can. And third, patience here is a feature, it's not a bug. And Lee laid it out that we have a balance sheet that lets us run a disciplined commercial process instead of a rushed one. We'd rather take the time to get the right offtaker and the right structure, then force a deal that doesn't hold up.

So we know the market will judge us on execution from here, and that's the right standard. So we look forward to updating you as these conversations progress. So thank you again for joining us this morning, and thanks for your continued interest in NET Power. Have a good day.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.

Greetings, and welcome to the NET Power Inc. First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Bryce Mendes, Director of Investor Relations. You may begin.

Thank you. Good morning, everyone, and welcome to NET Power's first quarter 2026 earnings conference call. With me on the call today, we have our Chief Executive Officer, Danny Rice; our President and Chief Operating Officer, Marc Horstman; and our Chief Financial Officer, Lee Shuman.

Yesterday, we issued our earnings release for the first quarter ended March 31, 2026, along with an updated investor presentation. Both are available on our Investor Relations website at ir.netpower.com.

During today's call, our remarks will include forward-looking statements. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business, which are discussed in our SEC filings. We assume no obligation to update any forward-looking statements.

With that, I'll turn the call over to Danny Rice, NET Power's Chief Executive Officer.

Thank you, Bryce, and good morning, everyone. I'm here today with Marc Horstman, our President and Chief Operating Officer; and Lee Shuman, who recently joined us as our new Chief Financial Officer. Lee brings a strong track record in energy project finance, and we're glad to have him on board for this pivotal period in our company's history. Let me tee things up for Marc and Lee with some comments on the macro, and then we'll open the line for questions.

Demand for power continues to grow, and I think everyone at this point understands the primary source of new power generation for the foreseeable future will come from natural gas-powered equipment. The availability, the reliability and scalability is unmatched. The thing that's different with AI versus other forms of load is the cost of power is very inconsequential to AI economics. That's mostly because the cost of power is only 10% of the total cost of AI. The lion's share of the cost are the GPUs, the networking costs and data center shell. AI has become a race and will be decided by speed and scale, governed by availability of power, not the cost of power. Power projects, they've evolved quickly from waiting on the grid to now pursuing behind-the-meter power now. Generation mixes have evolved from large frame turbines to hundreds of reciprocating engines strung together to get the same gross power output.

Heat rate, overnight cost and geography, they've all become far less important. In this market, speed, scale and community acceptance matter most of all. Fortunately, the U.S. energy industry, particularly the one that revolves around natural gas, is ready to meet this demand. We are part of that ecosystem with a very specific mission to transform natural gas into the lowest cost form of clean firm power.

Clean power is moving down the list in terms of importance, but that's not to say if clean, reliable power was available on the same time line and scale as the innovated options, there's a good chance it should be selected. So that's where we find ourselves today. We've put ourselves in an excellent position to deliver a clean firm solution that can deliver first power this decade at a compelling price point with a pathway to under $100 a megawatt hour.

This can be achieved in West Texas, where there's abundant low-cost gas to power generation and sufficient storage capacity for captured CO2 by pairing it with enhanced oil recovery. This proven application can underwrite the development of over 10 gigawatts of clean firm power generation for less than $100 a megawatt hour. Trying to do this elsewhere would be 20% to 30% higher cost of power, but the greatest cost would be longer time lines, greater risks and less scale.

What it will come down to, for us, is if we can deliver at speed and scale to attract demand today and is the market willing to accept EOR as a viable pathway for carbon capture. The importance of energy availability is no more pronounced than it is today. As I just mentioned, we need as much natural gas for power generation as we can. Fortunately, we're in a great spot there. But separately, the global energy shock caused by the Iran war has cast a spotlight on the importance of energy security for natural gas and oil.

The U.S. as the largest producer of both commodities, is mostly insulated from the supply shock so far. However, the situation has become an important lesson to people that the oil ecosystem isn't contained to just gasoline for cars. It's jet fuel, it's plastics, it's fertilizer, all irreplaceable at the scale and cost the world needs. So if modern civilization and quality of life is indispensable, then so too is oil, which sort of leads me back to the mousetrap that we're designing.

We're designing a circular energy ecosystem that leverages the 2 most important energy sources we have on this planet, utilizing low-cost, reliable natural gas to produce reliable, low-cost power at massive scale and using technology to capture nearly all of its produced CO2 and then using this CO2 to help produce oil that wouldn't otherwise be recoverable. What stays behind in the reservoir forever is our captured CO2. We think that's the right solution for what the U.S. needs for the foreseeable future, more natural gas power generation, more domestic oil production, lower emissions overall.

On the life cycle emissions point, our third-party validated life cycle emissions analysis calculation, or LCA, is estimated at roughly 210 grams of CO2 equivalent per kilowatt hour, which compares extremely favorably versus an unabated combined cycle of around 440 grams of CO2 equivalent per kilowatt hour and coal at north of 900 grams per kilowatt hour. So if improving the environment is important to you, this product checks that box.

We'll continue our public pushing campaign to move the buyer ecosystem toward our vision of clean firm power. The good news is we expect to have answers to this in the coming months. As Marc will talk about in a second, we've done everything we can from an engineering and technology standpoint to design a derisked clean firm power solution. Before we move forward with committing any substantial amounts of capital to securing additional equipment, we need to ensure the customer demand is not just there, but is committed to our projects.

So we're going through this process right now with our strategic adviser to help determine which prospective customers are aligned with our time line and our vision. I can tell you, not everyone wants to be associated with oil production, and that's okay. But if no one wants to be associated with EOR, even in spite of the environmental and social benefits that come from this ecosystem we're creating, it's better that we learn that before we commit any additional capital to it.

The projects we're advancing help make the world a better, cleaner and safer place. But market acceptance, we think, will come down to 3 things. First, are we doing it fast enough? Speed really matters in this market. Second, are we doing it big enough? Scale also really matters in this market. And third, is it clean enough? And more importantly, are customers aligned with our energy ecosystem of using natural gas to create [ pain from ] power and using the CO2 to produce more oil to help support the quality of life of modern society. To us, it's a no-brainer. But again, we're not the customer. We're only the creator of these solutions.

So in the background, we're advancing detailed engineering and project financing, understanding they come together as a finish line with the commercial offtake. We're progressing all 3 simultaneously.

So with that, I'll turn it over to Marc to update you on the great progress we've made bringing the solution to the doorstep of FID and commercialization. Marc?

Thank you, Danny. Good morning, everyone. I want to walk through 3 areas this morning: the commercial offtake structure, project execution for Permian Phase 1 and an update on our progress with our key technology partner, Entropy.

Let me start with offtake. Turning to Slide 5. We have engaged a strategic adviser to lead the formal offtake process for Project Permian Phase 1. The offtake agreement is the gating condition for project financing, and it is the primary commercial proof point that a durable market exists for our clean power product.

This slide shows commercial structure we have designed around NET Power's deployment offering. The flexibility here is deliberate. The first deployment is 80 megawatts, grid connected via Oncor and ERCOT, pursuing a fixed price long-term PPA as the offtake structure and CO2 sequestration through Oxy's EOR infrastructure. The second and third deployments introduce optionality, either continued grid delivery or behind-the-meter colocation at a larger scale. All 3 phases use Oxy EOR infrastructure for sequestration.

Slide 6 shows the full picture of what we're building and the time line to get there. Project Permian Phase 1 is the commercial deployment of the clean power product, 80 megawatts net output, greater than 90% CO2 capture sited on leased acreage from Oxy near Midland, Texas. We continue to target FID in the second half of 2026 with commercial operation in early 2029. Project pairs a natural gas combined cycle configuration with Entropy's post-combustion carbon capture technology. Power delivery is grid connected at 80 megawatts. CO2 is 100% offtake to Oxy under indicative terms, which we are advancing towards definitive agreement.

As mentioned, the site has the potential to scale to 800 megawatts, 10 units on the same acreage, which is a meaningful part of the commercial story we are telling to offtakers who want volume certainty over time. On the gas supply front, we're targeting an MOU with a major supplier in Q2 with definitive agreements negotiations to follow. On procurement and long lead equipment, we're executing a methodical release program running in parallel with our offtake and financing work streams.

The Siemens RPS gas turbine packages, approximately $77 million is contracted and represents the first executed equipment commitment. The switchyard and gen tie line and generated [indiscernible] are targeted for the June timeframe. HRSGs, steam turbine generator and air cooled condenser are targeted for July. And most likely PCC equipment, absorber towers and amine regen systems follows in the August through September window.

Finally, I want to highlight our product breakdown structure work underlying all of this. We have defined 8 to 10 equipment packages plus 10 to 20 discrete skids. This is the foundation of our repeatable clean power product design once, order and build many. Every decision we make on this project reduces non-recurring engineering costs for future deployments.

Turning to Slide 7. A few updates on our Entropy relationship and the technology foundation beneath it. The joint development agreement with Entropy is the most critical near-term corporate deliverable. The JDA governs the commercial terms under which NET Power will license and commercialize Entropy's amine-based PCC solvent technology for U.S. power generation through 2032 on an exclusive basis. Entropy can commit up to 49% equity contributions for future deployment, beginning with Project Permian Phase 1. We are aligned on the commercial structure and intend to finalize this agreement in Q2.

Entropy has a proven track record. Glacier Phase 1 has been running for more than 3 years, demonstrating capture from gas compressors at a commercial scale. Glacier Phase 2 is expected to come online in Q2 2026. This is at the same site but expands with more compressors and integrates a gas turbine with CCS at commercial scale, capturing 160,000 tons per annum. When that comes online, it further validates the core technology integration that Project Permian is being built on. This is a significant derisking event for our project and for the offtake conversation.

Project Permian is the next direct scale-up of the PCC tech. Two 35-megawatt turbines, 380,000 tons per year of CO2 capture, TRL 8 to 9. This is not a novel configuration. It is a disciplined scaling of a demonstrated design and technology.

With that, I'll turn it over to Lee for the financial update.

Thank you, Marc, and good morning, everyone. I'll keep this brief. I'm pleased to be on my first quarterly call as NET Power's CFO. I look forward to getting to know many of you over the coming quarters. I spent the better part of 25 years developing, financing and restructuring power infrastructure, thermal, renewable distributed across a range of structures and market cycles. In total, I've been involved in power transactions valued north of $10 billion.

Most recently, I led power financing at Javelin Global Commodities. Before that, I was CFO at WattBridge Energy, where we raised just over $2 billion to develop a 2.4 gigawatt portfolio of natural gas peaking plant in Texas. Prior to that, I held roles at [indiscernible] Mirant, which later became GenOn and was subsequently acquired by NRG, developing, financing, optimizing, restructuring and selling power assets domestically and internationally.

I've also worked with start-up renewable developers to successfully develop projects and execute bankable deals in a very different framework from larger, more established organizations. This is an important context because NET Power's situation is one I recognize, an asset with potential for contractable cash flows, proven underlying technology and a capital structure that needs to be built from the ground up. That's the work I know how to do, and it's why I'm excited to step into this role.

Additionally, based on my experience with NET Power over the last month, it is clear to me that the team has the expertise and the drive to do the hard work to deliver on Project Permian and beyond.

Turning to our financials. We ended the first quarter with approximately $319 million in cash and cash equivalents and no debt. We incurred a few onetime costs associated with pausing the Oxy combustion program, and we expect go-forward spend to be more for the PCC program. Our G&A burn is fairly low, roughly $8 million to $9 million per quarter, giving us fairly long runway to reach FID. We expect the spend to ramp up in the coming months as we release critical long leads to maintain our project schedule.

As Danny mentioned in his remarks, we remain prudent in committing capital to this first project, positive indications for the first project and future projects will give us confidence to risk release long lead items and potentially secure additional equipment. On project economics, the TIC target remains in the $475 million to $575 million range. On the financing side, we're targeting an equity investment from NET Power in the $125 million to $175 million range, with the balance of capital coming in the form of debt and equity participation from Entropy. We have the capital on the balance sheet to fund that today and sufficient dry powder to begin working on the next phases of the first project or the next project elsewhere in West Texas.

As Danny mentioned, the commercial offtake process is the most consequential near-term event, a target of $100 per megawatt hour or better supports project bankability and an appropriate return profile. This price point is markedly below other clean firm options, which is in part due to EOR application and access to low-cost natural gas.

I look forward to providing more updates in quarters to come. Let's open the line for questions.

[Operator Instructions] Your first question comes from the line of Ryan Levine from Citi.

You mentioned $8 million to $9 million of burn before some of these long lead time items need to be procured. What milestones would be needed to procure those long lead time items? Any color around how that burn rate would evolve as you progress through different development milestones?

I'll turn it over to Marc to answer.

Can you guys hear me?

Yes, we can hear you.

All right. Excellent. Sorry about that. I had mute issues as well, Ryan. Ryan, Marc Horstman. Predominantly around the long lead equipment, it's really referring back to what Danny mentioned in his opening comments. Through the offtake process that we have ongoing right now, we need to see significant, call it, activity and alignment with potential offtakers that would support call it the next step in releasing those long lead or pre-FID purchase orders.

And from that standpoint on, our team is actively working with our potential EPC and GCs on further detailing our construction schedule. As you can imagine, the lead times that we're seeing on certain equipment is moving around based around -- or based on the activity in the marketplace. So it's really a month-to-month look at what equipment we need to release as we continue to keep pulse with those vendors in order to maintain that first half 2029 COD schedule.

But the first and foremost, call it, evidence information that we're looking for is really that, again, is there a market there for the clean power? Is there a path forward for our product on the expansion from the 80 megawatts to something larger at the project site.

And then assuming you're able to achieve commercial interest to advance the lease that component of the development cycle, when you -- in terms of regulatory approvals, would this have to go through their batch study process? Or how are you looking around the regulatory elements to achieve commerciality.

From the standpoint of deploying the first 80 megawatts, we're going through our air permitting process now, which looks like based on our recent discussions and meetings with the Texas permitting office, looks like that we would have an air permit towards the second half of this year. So that proceeds quite well. The remaining permits that we would need in order to bring the project through commercial operation are planned, and we see very little risk on those moving forward.

So from that perspective, everything seems to be moving along. Obviously, we stay close to it as we evolve because this is the first time this technology is going through the permitting process. But thus far, between interaction between Entropy ourselves and the Texas Environmental Commission, everything seems to be quite aligned and call it, permitting levels are within the acceptable limits.

And then last question for me. In terms of the equity check from NET Power to fund the project, there cited a range. Have those commercial terms been negotiated? Or what are the factors that would lead to where you fall in that range?

Hi Ryan, this is Danny. I think the range is really a function of what the rest of the capital stack looks like. As Marc sort of mentioned in his remarks, the JV with Entropy they'll have participation rights alongside us for 49% of the equity. There's certainly flexibility on both sides as to what each respective party's activity check is going to look like. Really, the balance of the plan is going to be financed with debt in some form or fashion.

And I think that's one of the things that Lee and I will really be figuring out over the next couple of months sort of in parallel with the offtake process is the financing going to be in the form of equipment financing? Or is it going to be more in standard sort of project financing that's sort of underpinned by the contracted cash flows of the project? So the commercial process that we're going through is really going to be very instructive in terms of what forms of credit is going to be available to this facility. And so I think a combination of the form of credit and the entry participation is sort of what gets us back to that $125 million to $175 million range.

And even at the high end of that range, the $175 million, we're sitting with a little over $300 million of cash and cash equivalents on the balance sheet today. So we'll have pretty sufficient dry powder to get working on either the next phase of this specific projects or assuming, obviously, the commercial demand is there, an additional project elsewhere within the Permian Basin.

There are no additional questions at this time. I would like to turn the floor back over to Danny Rice, CEO, for closing comments.

Yes. Thanks, everyone, for the time this morning, and Ryan, thanks for the questions. Yes, I mean, we're at an interesting moment for NET Power. The macro environment has continued to move in our direction. Power demand is accelerating. The case for a clean firm power, it is still there. There's just no other solutions being deployed. And our solution in West Texas is as well positioned as it's ever been.

We've done the hard work on the technology and the engineering side. And what's in front of us now is the commercial process, which I think is the right place for us to be. So we feel good about where we are. The offtake process is active. The Entropy JDA is closed. The equipment program is moving and Lee is already adding real value on assisting me on the financial architecture.

So none of these work streams are waiting on each other. They're sort of advancing in parallel and they'll come together at FID. But as I sort of mentioned in the comments, we'll be measured in how we commit capital, but we're genuinely optimistic about what the next few months will show us. And we expect to have meaningful updates to share with you all, and we look forward to having those conversations.

So thanks again for your interest in NET Power, and have a great day.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Greetings, and welcome to NET Power, Inc. Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bryce Mendes, Director, Investor Relations. Thank you. Please go ahead.

Thank you. Good morning, everyone, and welcome to NET Power's Fourth Quarter and Full Year 2025 Earnings Conference Call. With me on the call today, we have our Chief Executive Officer, Danny Rice; and our President and Chief Operating Officer, Marc Horstman. Yesterday, we issued our earnings release for the fourth quarter and full year ended December 31, 2025, along with an updated investor presentation. Both are available on our Investor Relations website at ir.netpower.com.

During today's call, our remarks will include forward-looking statements. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business, which are discussed in our SEC filings. We assume no obligation to update any forward-looking statements. With that, I'll turn the call over to Danny Rice, NET Power's Chief Executive Officer.

Thanks, Bryce, and thanks, everyone, for joining us this morning. Marc and I are glad to be here, and we have quite a bit of ground to cover. So I'd ask you to pull up the investor presentation and follow along as we walk through it. After our prepared remarks, we'll open the line for questions.

So let's start on Slide 3, and I want to set the stage with a bit of framing before we get into the specifics. When we look at the executive summary on Slide 3, what you're seeing is a company that made a decisive strategic call at the end of last year and is now executing against it. We pivoted away from oxy-combustion as our primary near-term commercial vehicle, and we did so deliberately. Oxy-combustion is a remarkable technology, and we're preserving that work carefully. Meanwhile, there's a pathway to the same destination, natural gas power with greater than 90% carbon capture that can be executed with equipment that exists today on a timeline that matches the urgency of the market. That path is a combined cycle gas turbine paired with post-combustion carbon capture, GT plus PCC.

Proven turbines, proven solvent-based capture technology and with the right partner, Entropy, the integration of these two proven systems into a single bankable project is now within reach. So this is not a retreat from our mission. NET Power's mission has always been to transform natural gas into the lowest-cost form of clean firm power. That mission is unchanged. What changed is we found a more direct route to get there in the intellectual honesty required by us to take it.

Now let me turn to Slide 4, which covers the macro backdrop because I think this context is essential to understanding why we believe the timing of this decision is exactly right. We're in the early innings of what may be the most significant build-out of power generation infrastructure in American history. AI data centers are the proximate cause, but it's bigger than that. You have AI-driven hyperscale compute demand. You have industrial re-onshoring, you have electrification of transportation and industry. All of this converging simultaneously on a grid that hasn't had meaningful baseload capacity in decades.

In ERCOT, the Texas grid, it's ground zero for this collision. The load growth being projected in West Texas alone over the next 5 to 10 years is staggering. It's not a theoretical forecast. You can see it in the permitting activity, in the interconnection queues and in the conversations we're having. And what every one of those conversations comes back to is the same thing: speed and reliability. Power buyers are not sitting around waiting for the perfect clean solution. They are racing to secure any electrons they can trust to show up 24 hours a day, 7 days a week, 365 days a year. What we're seeing is a pragmatic reordering of priorities. Environmental idealism hasn't gone away, but it's being subordinated to an immediate physical reality. You cannot run a hyperscale data center on intermittent power. You cannot build a $10 billion compute campus and hope the wind is blowing or that new nuclear can be built at a price never achieved before and certainly not in this hyperinflationary cost environment for new infrastructure.

But natural gas is different. The U.S. has among the lowest-cost natural gas reserves on earth. 50-plus years of supply in proven basins from Appalachia to West Texas. The honest question is whether we can advance technology that reduces the environmental impact of natural gas combustion because natural gas is what we have and is what we need right now. That's where we live. And if there was any doubt about how central domestic oil and natural gas are to this country's economic security and physical safety, the last 3 months have been about as clear a reminder as you could ask for. We just came through one of the harshest winters on record, and the U.S. kept the lights on without missing a beat, not because of solar, not because of wind, but because we have an abundant, reliable supply of natural gas in the generation in this infrastructure to dispatch it on demand.

At the same time, we are actively engaged militarily and diplomatically to ensure that global oil supply chains remain in reliable hands because the world does run on oil and the U.S. understands the consequences of that supply falling under the control of adversarial actors. These are not abstract geopolitical concerns. They are a direct expression of how important domestically produced fossil fuels remain to our national security and economic prosperity. And they reinforce in the starkest possible terms why the answer to our energy challenge is not to wish away natural gas or oil, but to figure out how to produce more of it domestically and use it more responsibly and more cleanly. That is what we are doing.

The good news is that the policy environment is beginning to confirm this view. The 45Q tax credit now provides parity between CO2 sequestration and CO2 utilization for enhanced oil recovery, and that's significant for us. EOR or enhanced oil recovery is the process by which captured CO2 is injected into oil formations to recover additional oil. Beyond the incremental production benefit, the CO2 stays underground permanently. You get a direct economic credit for the carbon capture. It supports domestic oil production and U.S. energy security, and it enables a meaningful reduction in the cost of clean power. In West Texas, where we have both the Permian Basin's vast oil formations and abundant low-cost gas, EOR is what makes the economics of our first project genuinely compelling. It's not a workaround. It's an integral part of the value chain.

The bottom line in the macro is this. The need for clean firm baseload power has never been greater. The policy support for CCS has never been stronger and the geography we're developing in West Texas, is exactly where load growth and energy resources are converging the fastest. We believe NET Power is in the right place with the right solution at the right time. So with that, let me turn it over to Marc to walk you through what we've been building.

Thanks, Danny. Good morning, everyone. I'm going to take you through the business progress across three areas: the status of our product development, where we stand on Project Permian and how our commercial pipeline is developing. So let's start with Slide 5. The foundation of everything we're building is the integrated Clean Power product, 2 Siemens SGT-A35 gas turbines prepackaged by Relevant Power Solutions paired with Entropy's post-combustion capture system designed for greater than 90% CO2 capture. Our integrated clean power product represents something the market hasn't seen before, a fully pre-engineered power plant that combines a natural gas combined cycle with post-combustion carbon capture into a single standardized design.

By working directly with Entropy, WSP, and our OEM partners to deliver modular pre-engineered components, we will have systematically reduced the execution risk that has historically plagued first-of-kind projects. The plant is entirely air cooled, eliminating water dependency, which dramatically expands the addressable geography and significantly relaxes a traditional siting constraint. Because our product is built on commercially proven technology configured to a repeatable standard, we enter Project Permian with high confidence in performance, reliability and availability. And with each deployment, our design matures, our procurement leverage grows and our cost curve improves. We're not building one plant, we're building a product.

This is the product that will be deployed at our first project called Project Permian in West Texas. We passed our conceptual design review, CDR, and we're now working with WSP Engineering to advance the detailed design. Major equipment packages are progressing as well. We have the 2 modular gas turbine packages on order. Delivery is targeted for early 2028, and we're working through the commercial selection and structure of our EPC. The product design CDR milestone is a meaningful derisking event because it confirms that the integrated system can be engineered to specification and that our cost assumptions are grounded in real engineering, not just estimates.

On the Entropy partnership, this is a critical work stream. Entropy is a global leader in solvent-based post-combustion carbon capture. Their technology has been deployed commercially in Canada at their Glacier facility, and we expect the Glacier Phase 2 commissioning this summer to provide real-world validation data for the performance assumptions underlying our clean power product.

We are in the final stages of completing our joint development agreement with Entropy. We expect to finalize definitive agreements in Q2. Upon signing, NET Power will make a strategic equity investment in Entropy, and we will structure a joint venture for Project Permian with Entropy co-investor. Securing Entropy as an equity partner, not just a technology licensor is an important structural element of how we design this partnership because it aligns their incentives and performance directly with ours.

I also want to spend a moment on product economics because this is an area where I think the market may still be underappreciating what we put together. When you benchmark our integrated GT plus PCC solution in West Texas against every other clean firm power alternative, nuclear, geothermal, solar plus storage, our product is cost competitive across a wide range of capital cost and gas price assumptions.

That's not a promotional statement. It's the output of rigorous independent benchmarking we've done. With West Texas gas prices and utilizing the 45Q EOR credit pathway, the LCOE of this plant is in a range that makes sense for power buyers and delivers returns that make sense for equity investors. That's a combination that, frankly, we weren't sure we'd be able to demonstrate when we started this process. We're much more confident in it now.

On that note, I want to flag an important upgrade to the plant design that occurred through fourth quarter. When we last spoke with you in November, the plant was configured for approximately 60 megawatts of net electrical output. Through our design efforts and product engineering with Entropy, we restructured the configuration and now approximately have 80 megawatts of net electrical output, a roughly 33% increase in generation capacity from the same site footprint and roughly the same capital envelope. Equally important, the redesign also reduced performance risk on the carbon capture side. We now have higher confidence in the capture rate assumptions underlying the project economics. That's a meaningful step forward on both the revenue side and the risk profile of the project.

Turning to Slide 6 and path to our financial investment decision, our FID target is the second half of 2026 with a targeted commercial operations date of early 2029. If we hit that date, Project Permian will be the first commercial natural gas plus CCUS project in the United States. That's a milestone that the industry and our customers will notice. To get to FID, there are four major work streams running in parallel right now. First, product and project engineering. We need to advance the detailed design to a point where we can execute our EPC contract and provide lenders with an independent engineering report. they can stand behind. Second, long lead equipment commitments. There are line items that require commitments well before FID in order to protect the COD timeline. We're targeting approximately $50 million in pre-FID long lead commitments by midyear, and we'll be coming back to update you on that as the year progresses.

Third, project financing. We are in the process of selecting a financial adviser to run the project finance process, and we have engaged with prospective lenders and co-equity investors. The project economics are strong, and we believe Project Permian is financeable. The project is designed to meet the return thresholds required by institutional infrastructure investors. Fourth, offtake, which I'll cover on the next slide. And it is important to note, site control is in place. We have an executed ground lease with oxy. Grid interconnection is progressing with Oncor with a targeted interconnection date of 4Q 2028. The basic project infrastructure is established.

Turning to Slide 7, the commercial picture. Securing offtake is the most important thing we'll do this year. Let me give you a sense of where we stand. Our most advanced discussion is with Oxy, our site landlord and a natural commercial partner. Oxy takes the CO2 offtake for enhanced oil recovery. That's the core of the EOR economics Danny described. And we are in active negotiation on the power purchase structure as well. Beyond Oxy, we have a growing pipeline of prospective offtake relationships across industrial, utility and data center verticals.

There are discussions progressing with a hyperscale data center developer in West Texas for a potential behind-the-meter arrangement that could be significantly larger than Permian Phase 1 on the order of 300 megawatts. The breadth of this pipeline validates the thesis that our market for clean firm dispatchable power is real and growing. The conversations we're having today are categorically different from the conversations we were having even a year ago. Customers are not asking us whether they need clean baseload power, they're asking us how fast we can deliver it. Our goal for this year is to have a signed offtake agreement or MOU at pricing at or above $100 per megawatt hour, which is the level that supports project bankability and delivers returns we believe are appropriate for the risk profile of a first-of-a-kind project. We're working hard to get there, and we expect to be able to share more on this front in coming quarters.

Before I hand it back to Danny, I want to make one more point that I think is important context for how we've been thinking about the longer-term value of this site. Permian Phase 1 is an 80-megawatt project, but this is not an 80-megawatt site. This location with its land, its gas access, its CO2 offtake infrastructure with Oxy and its interconnection has the capacity to support a much larger power complex. We believe this single site can scale to approximately 800 megawatts as we replicate and expand the plant configuration. That means the infrastructure we're building, the relationships we're establishing and the operational knowledge we're accumulating with Permian Phase 1 are not just the foundation for one project. They're the foundation for what could become one of the largest clean firm power campuses in the country. That scale potential is a meaningful part of how prospective customers and co-investors are evaluating this opportunity.

Danny will say more about it. I'll hand it back to Danny.

Thanks, Marc. So I want to cover two things before we open for questions. First is our financial position and second is how we're thinking about the financing of Project Permian, and then we'll close with a few broader thoughts. So we ended the fourth quarter with approximately $379 million in cash, cash equivalents and investments, which came in above our internal targets for the quarter. I think that really reflects the disciplined capital management through the transition. We wound down work streams that were no longer core. We rightsized our cost structure, and we kept our powder dry. So we have the financial runway to execute the Permian Phase 1 FID process deliberately, and that matters when you're making a first-of-its-kind investment decision.

On project financing, I want to give investors a clear picture of how we're thinking about this because it's an important dimension of the Project Permian story. There are essentially three ways to fund a project like this. The first is 100% equity, which is we and our co-investors write the full check, no external debt, simple, but it's very capital intensive. The second option is equipment financing. A meaningful portion of this plant's components, particularly the power island, the gas turbines, the HRSG, the steam turbine, the electric equipment. These are proven commercially marketable assets that lenders understand well. You can finance against them much like you'd finance a fleet of industrial equipment without requiring a full project finance structure. That gets the equity requirement down to roughly $0.75 to $0.80 on the dollar, better, but we think we can do better still.

The third path is full project financing, nonrecourse debt secured against the project's long-term contracted cash flows. And that's really what we're pursuing. And if done right, project financing gets the equity requirement down to roughly $0.25 to $0.35 on the dollar. The difference in capital efficiency between option 1, 100% equity financed and option 3, the project finance is enormous. And it's the difference between Project Permian Phase 1 being a use of our balance sheet and being the launch of a capital-efficient, scalable platform.

Now I'll be direct about where the work is. Post-combustion carbon capture at this scale on a U.S. natural gas power project is new. PCC, it's a bit like the Loch Ness Monster. Everyone heard about it, but project finance lenders haven't seen it operating in the wild in the U.S. power sector before. Entropy has been doing this commercially in Canada for years, so the technology itself is not speculative. But getting infrastructure lenders fully comfortable with PCC performance assumptions requires education, it requires data and it requires some handholding. So that's part of the work ahead of us. And it's precisely why the Glacier 2 Phase 2 commissioning that Entropy is doing this summer matters so much. Real operating data from a live commercial plant accelerates that conversation dramatically.

The other piece that unlocks project financing is strong offtake. Creditworthy long-term power purchase agreements are what give lenders the cash flow certainty to underwrite the debt, which is why, as Marc said, signing offtake is our single highest priority for the year. And Marc's point about scale, it is really worth reinforcing because it directly informs the financing strategy. When a prospective lender or equity partner looks at project Permian Phase 1 is the anchor of a 500 to 800-megawatt campus. They're not just evaluating a small first-of-its-kind project, they're evaluating the first chapter of a major clean power platform in the fastest-growing power market in the U.S. That framing changes the risk/reward conversation meaningfully. Every major data center developer we speak to is thinking in terms of gigawatts, not megawatts. The fact that we have a site that can grow into that demand with established infrastructure and a proven operational model is genuinely differentiating.

So to close, the mission is clear, the strategy is decided and the execution is underway. This year's milestones, the Entropy JDA, long-lead equipment commitments, signed offtake and project financing are what stands between us and FID. We're working every one of those work streams with urgency. We look forward to updating you on our progress in the quarters ahead. So with that, let's open the line for questions. Turn it over to the operator.

[Operator Instructions] Our first question is coming from Martin Malloy of Johnson Rice.

Just on the pricing on the offtake, I think you mentioned $100 a megawatt hour. Can you maybe give us some perspective for out in that area, what the competitive landscape looks like?

Marty, it's Dan. Good to hear from you. Yes, I think -- I mean, it's really interesting. If you look at just kind of what's transpired over the course of the last few years, we've certainly seen prices start to move up, not just on the merchant side of ERCOT. I think if you go back a couple of years or you go back 12 months and you look at what's the forward curve sort of suggesting power prices in ERCOT are going to be, if you went back last year, the year before last and you looked at the strip for '28, '29, 2030, that forward curve was at $40, $45 per megawatt hour. And if you look at that curve with where it is now, you're talking about $65 to $70. And this is just merchant unabated. This is just power from the grid. So you've seen almost an 80% increase in just wholesale power prices in West Texas towards the end of this decade, which is when this plant is going to come online. So that's sort of like what's actually there on the commercial merchant side. I think where things are really interesting is you're looking at -- if you're looking at where power prices are for new contracted capacity for firm delivery, which means potential co-located and ignoring the clean piece, we're hearing chatter of those conversations north of $100 per megawatt hour if you're trying to get new capacity online before the end of this decade. I think that really reflects the importance of reliability of speed and I think equally important of the scale piece. I think what we haven't seen in the market is what are people willing to pay if it's fast, if it's scalable, if it's reliable and it's lower carbon intensity. That's a market that just hasn't yet been established. And I think we're going to be the first solution out there that establishes what that market is. I think the really compelling piece for us is compared to where we were at on the AX combustion and you needed a power price well north of $130, $150 per megawatt hour to be able to make the math pencil out. That's not a price point we need before this clean gas solution with entropy. So I to say like I think we're going to be in that ZIP code where it's a compelling price for the counterparty, and it's a compelling price for us that pencils out on project economics, both on the equity side, but also on being able to support project finance on the debt side.

Okay. That's helpful. And then for my follow-up question, I just wanted to ask about the potential for government support on the financing side. Anything to maybe mention there regarding the DOE?

Yes. I mean I won't get into any of the specifics, but I think if you look at what this administration is really pushing for and what they're really encouraging, it's really shoring up domestic energy supply, and that goes across the board. That's not just for fossil, -- that's for anything from rare earth metals. But certainly, as you look at just oil and gas and the importance that they both play in terms of just national energy security, those 2 are at the top of the list. And so if you look at solutions that align with this administration, solutions that can utilize domestic energy supply, unlock new domestic energy supply, help firm up the grid, help bring down grid prices from where they're trending and can do so in a responsible way for the environment, that's ultimately something that this administration is highly supportive of. And I think everybody on the call would agree with that. The interesting thing about this solution where we're using domestic natural gas, super low-cost natural gas to firm up the grid in a really, really scalable way that enables both the AI build-out that is an existential threat if we don't win, while at the same time, boosting domestic oil production. There's very few solutions. Actually, there's 0 solutions in the world that are trying to do that right now. We are trying to do that right now because we think it's the right thing for the country. We think it's the right thing for the consumers, and we think it's the right thing for the shareholders. And so this solution really does align with this administration. And so certainly, that does become something that I would say the government is not just potentially supportive of on a verbal piece, but I think potentially on a financial piece, whether it's grants, whether it's loans, it's going to be a pathway that we pursue because this is probably one of the few solutions that fully aligns in a very comprehensive way across all of the energy solutions that this administration wants to see succeed.

Our next question is coming from Wade Suki of Capital One.

Just real quickly on -- just to expand a little bit on Marty's question on Project Permian. Could you give us an updated sense for project costs, total project costs there?

Yes. We can give you some like rough numbers on sort of what we're seeing right now, Wade, I'll turn it over to Marc to give you some of his approach to it.

Marc Horstman. So just a little bit of background. In the last couple of months, we've gone from, call it, the conceptual through the conceptual design of the product. And as we continue to work with Entropy, we've worked with the EPCs and also major OEM vendors to really spec out and understand the overall plant design. So as we -- as you know, there's a lot of -- many, many factors that go into play relative to the TIC itself and then also relative to the, call it, the competitiveness of the LCOE right now, we're sitting in -- and we just, as I stated, passed through the conceptual design phase, we're sitting from a range of, call it, the upper 400s to the lower or to the upper 500. So call it, 475 to 575 is what we're looking for as a range. And that range supports, obviously, the economics that we talked about in the presentation today. I think it's worthwhile noting as we advance through the design ahead of FID, this will allow us to achieve that pre-engineered project, which will give us a, call it, a firmer view on cost as we move forward. I can tell you that as we look at our overall design and our product, solution, the risk around that product solution, at least the risks that are out of our control is, as Danny has mentioned around the AI race and around the speed to power, those risks around OEM pricing and what that does or what it doesn't do is something that we're going to be looking at closely. As we stated, we're in a pretty good position right now because we've secured the gas turbines and the gas turbine packages, and we look to begin to secure some of the other long lead equipment this summer, even in advance of FID.

To add a little bit to that on the CapEx piece. The CapEx is a little bit higher than what we were projecting before. I think some of that is inflationary in nature where I think people are expecting. I think some of it is design changes. Marc talked about us being able to boost the capacity of the facility from 60 megawatts to 80 megawatts. So there's CapEx associated with that, but all of that at the end of the day is really intended to really drive down the LCOE. So I think when we look at things on an LCV basis, they're sort of still in that same range. I think what's really helpful to understand is how does CapEx of the facility translate into equity needs of the project? Because I think at the end of the day, that's where the rubber really meets the road is what is our equity share of the capital spend going to be. And so if you're in that, call it, like $550 million range, and you're able to do -- we're able to get this thing fully contracted on the PPA side on the offtake, we should be in a really good position to be able to secure project financing, which would be around 65% of the total capital spend. So that's around $350 million of debt. And so that leaves an equity plug of $200 million, and that's a $200 million equity check that would be assuming Entropy and Brookfield participate alongside us for their equity share of the project, we would be at around $100 million, $105 million for our equity share of that first project. we certainly have the capital on the balance sheet to be able to fund that. So we're sitting in a pretty good position. But again, it requires those 2 things to come into place, the PPA and certainly securing the project financing as we get through this year.

That's really helpful. The second question, I might have missed it in the presentation. Just I always ask you about kind of the commercial pipeline. I might have missed it, but is there any update on the MISO project or even beyond MISO? Or are you just focused on Project Permian for now?

Yes. I think we really have the horse blenders on a little bit on West Texas, West Texas in general with a specific focus on the first project on that one site that I think when you look at the slide, the first phase of that is this 80-megawatt project that Marc described in pretty good detail. As you can see on the slide, that's a site that can accommodate 800 megawatts. So that's a pretty sizable block for clean firm power. So that area is the focus right now. I think when you look at just the economics and where we can generate the lowest cost clean firm power, that is ground zero for it, certainly more so than MISO. We still have optionality around that MISO site. I think everybody saw we disclosed -- we pulled out of the MISO queue late last year because of just rising costs of what the interconnect was going to be. It just didn't make sense for us to put that capital into MISO when we continue to see such great opportunities to reallocate those money to West Texas. So the focus really for the foreseeable future is going to be on the West Texas opportunity. And I would say a lot of it is economic driven. And I would say like the other part is it's just opportunity driven. The opportunities that we're going to see in West Texas that we're seeing right now are worthy of us spending as much of our time there as possible.

The next question is coming from Noel Parks of Tuohy Brothers.

One thing I was interested in was just, you've been talking with these different potential customers around uptake. I'm just wondering if you could kind of characterize the parties you're talking with around why they are particularly interested in the NET Power solution as opposed to the handful of other often also gas-related type generation options they might have.

Yes. Noel, it's Danny. I'll take a first crack at that, and Marc can certainly fill in all the holes. I think the reality of just the situation that we have at hand today is -- and it's worth stepping back and sort of just reviewing kind of what's transpired over the last 3 to 4 years. 3, 4 years ago, I think the world and certainly, the broader tech community was thinking we don't need new natural gas power generation. We'll be able to go to nuclear. We'll be able to go to renewables. We're going to have battery storage. We don't need to build new natural gas power generation. We'll eventually be able to find a way to decarbonize without it. I think NET Power's singular mission has always been the best way to decarbonize is actually just to capture the CO2, not to try to move away from natural gas, but continue to lean into natural gas and just with new technologies, find ways to capture it. just given how low-cost natural gas power generation is. So that mission has always been there. I think the thing that's really interesting now as you fast forward to where we are today, and I think everybody has just accepted that there's no way we're going to be able to meet this load growth without new natural gas power generation. So it is a little bit of a conflict in a way of we don't -- there's maybe some reluctancy to be able to use natural gas, but they need to embrace it. Otherwise, they're not going to win. They're not going to be able to build the data centers. They're not going to win the AI race. They're not going to be relevant because somebody else will do it. And so I think everybody has fully embraced natural gas for what it is, which is the most reliable, most scalable, most affordable form of energy for power generation in history. And so everybody sees natural gas as the foundation of being able to win the AI race to be able to meet the load growth that we're seeing across the entire electricity system. And so how do you view that in a way while still not totally conceding your environmental goals? You need to find ways to be able to introduce new technologies that decarbonize. And I think it is quite remarkable. Well, I think there is this absolute focus on speed to power that is absolutely paramount. I think the opportunity that we see is can we introduce decarbonizing natural gas solutions that don't compromise on speed to power and to a certain extent, don't compromise on affordability of the power while still giving them the reliability that they come to expect from natural gas power generation. So those sort of 3 key characteristics is what Marc and the team have been designing around. It's the speed piece, it's the reliability piece, and it's the certainty of capture. And that's certainly one of the reasons why we partnered up with the entry piece folks is they're really the only proven PCC solution that's been operating in the wild for the last few years. And they have great experience there. They understand how to do it. And when you pair that up with the availability of gas turbines, which they are available, and I think we've demonstrated that because we've secured a handful of them so far for the first project. All of a sudden, you're in a place where we can deliver the same sort of speed that you'd come to expect from anybody else that was going to build an unabated gas power plant. So I think the proposition is fairly straightforward. You can have the speed to power. You can have the reliability of the power on the same timeline you would from an unabated gas power plant, but now you can do it with 90% carbon capture, which essentially means 90% lower emissions than you would get from the unabated version. So I think there's going to be places where you won't be able to do the capture, which is most of the United States. But when you're in a place like West Texas where we are, and we have a strategic partnership with oxy, who has been a leader in CO2 sequestration for the last couple of decades and needs as much CO2 as they can possibly get their hands on for EOR. -- it creates a pretty compelling setup where this isn't just a pathway to do a single project, a one-off project. It really is the project that becomes the cornerstone of many gigawatts of potential clean gas power that we can install in West Texas over the next 5 to 7 years. So the speed piece, the scale piece, the reliability piece, all of it is there. You just get the added benefit of the clean piece that I think everybody at the end of the day is trying to figure out how are we going to do that, knowing that we're going to have to build a lot of natural gas power generation over the next decade.

Great. And what you were assessing this now sort of brings to mind something I have heard some of the other alternative generation technology vendors talk about. And that's regarding contract terms with, for example, data center or hyperscaler customers, they are saying that issues of timeliness, of course, are top of mind, issues of price. There's so much urgency that it's not that that's totally in the back burner, but certainly, it's the urgency does seem to be swapping price to some degree. But one wrinkle I've heard a company talk about is that as far as agreement duration that they are seeing some focus on -- in the event that a behind-the-meter project for power project for data center, in the event that an interconnection becomes available, say, 5 years down the road, that the customers are giving a lot of thought to what would that look like, the opportunity to connect to the grid with the technology that they have, of course, the stability and interruptibility issues that gas addresses will still be very much a high priority, but that there is possibly sort of a transition point ahead looking out to that horizon. So I just wondering if that's something that had up in your discussions.

Yes. You're talking about the transition from behind the meter or fully islanded to eventually being grid connected, right?

Yes. The option emerging of -- they've been in the queue for half a decade. And finally, it's within sight that the interconnect may be possible and they're just thinking about how to -- how and to what degree to sort of integrate into the grid then.

Yes. No, I think -- yes, I think it's fairly widely known that the sort of reliability that a lot of these large comp campuses need, like the reliabilities need to be extremely high. You're talking about whether it's 39 or 9s reliability. That's something you can typically get from the grid, which is why the grid becomes an ideal place to want to get your power from. I think a lot of these behind-the-meter solutions, if you're designing it right, you can achieve the same sort of 39 or 9s reliability. You certainly cannot do it with like a single large frame gas turbine or 2 large frame gas turbines, you won't be able to get there. You really need to fill in all the holes. But this is something that's really in Marc's swim lane. So maybe I'll let Marc talk a little bit about sort of what that behind-the-meter sort of configuration looks like. I would just say what we're designing is really compatible with both sort of applications. Like we can put this power onto the grid and sell it on to a virtual PPA or in front-of-the-meter PPA. We can also do the behind-the-meter solution, which is sort of the fastest go-to-market for a lot of the potential customers today who want to get the interconnect altogether. Marc, do you want to add some color to that one?

Yes. Thanks, Danny. And I think it goes back to our overall product design and design philosophy. We selected gas turbines that are known and reliable. They're able to load follow, couple that with the PCC technology that Danny spoke to before that is proven. It allows us to meet the initial needs of speed to power, but also clean power in the time frame that folks are looking for. And what's key with that is the product selection puts us in a, call it, 80 to 90-megawatt block, which is a really nice block that most of our customers are looking for when they build data center applications and look at growing their data center demand. So you're able to phase that sort of growth with the data center construction as well, which allows it to also -- if a grid connection becomes available, this solution is excellent from the standpoint of being able to provide either that firming power or the load following that's needed when you have the intermittent renewables that are on the grid. So I think we've got the right product mix that threads the needle, if you will, from the needs of the current demand, but then also supplies the power and the firming that's needed for the grid based on where the project is located.

Our next question is coming from Betty Jiang of Barclays.

I want to first ask about the offtake conversations, just given it so important. Marc, you characterized it as conversation looks -- is very different now than even a year ago. Can you just give some more color on what specifically the hyperscalers are looking for? Or what's perhaps holding them back? Is it the confidence in the technology? Is the scalability, timing? Or what is it that you guys need to address in the subsequent months to get them comfortable?

Yes. Betty, this is Marc, and then certainly, Danny can jump in and add some color. I think it's a lot of the things that you just hit on. I think it's from the -- and I'll add a couple to it. I think from the standpoint of the actuality of folks being the projects to bear for the -- either the behind-the-meter solutions that they're looking for or the grid connections. The realities of bringing all the different aspects of the projects together are quite difficult. And I think that NET Power, we sit in a unique position with the relationships that we have with the land and the work that we've done relative to our site that we're able to bring those solutions together. And with what I just spoke to before, the technology being existing technology that we're able to meet their speed to power demand, they certainly see this as a solution that truly makes sense and something that is viable that is -- that provides firm clean power. I think also from the standpoint of being in West Texas, the abundance of gas and the ability to price the gas so competitively allows our solution to really fit in to provide that power and then also the clean power. And I think as we continue to work with those hyperscalers and again, the product size, the ability to match their data center, their growth demand from the initial, call it, the initial phases, but then able to supply the 0.5 gig or gig or solution that meets their overall demand, whether it be behind the meter or a physical PPA has and will continue to change the conversation. And then I think as we progress the conversations, the overall acceptance or discussions around the use of EOR. And as Danny alluded to, our solution along with our partners, which really fits in with the, call it, the narrative of shoring up the U.S. grid capacity in the power and enabling gas supplied power generation is really providing a unique solution that there's only a few that are able to provide.

Okay. And just on Slide 7, the different phases, is that just the first part -- is that for that single project? Is it an extension of the Project Permian...

Yes. So what it is, that's exactly right. So right now, we're calling that Top rose Project Permian Phase 1. That's the, call it, first of kind, first of type proof of concept. And then as we look at deployments 2 and 3, they could really be in whatever size range fits ultimately whatever offtaker that we would sign. So whether they need the 320 megawatts in deployment 2 or deployment 3, then we would size that accordingly based -- typically, it's based on the data center construction schedule. And the fact that our solution is gas turbine agnostic allows us to be really flexible from the standpoint of selecting gas turbines that are available in order to meet that time frame.

Great. Sorry, one more follow-up, if I may. Danny, just on the equity financing comment you made earlier, sort of assuming 55% of the project being financed. That's a bit higher than the earlier comment, a best scenario of closer to 25%, 30%. Maybe just what's the risking that you took there? And what do you think could happen for that equity component to be even lower?

Yes. And Betty, maybe I misspoke, but we're targeting on project financing, we're targeting 65% debt, so 35% equity. And I think before, I was talking about the equity portion would be 25% to 35%. So yes, we're targeting 65% debt, 35% equity, which on a $550 million headline CapEx number, you're talking about $100 million of equity to NET Power. So that's sort of what we're targeting. It could certainly be higher if you get a solid PPA where you can support a higher debt service coverage ratio, which is sort of just like the primary metric to utilize to sort of rightsize the debt capacity. You could certainly see the equity portion be a little bit lower than that. But we feel like that 65% debt coverage is sort of like the middle of the fairway sort of target that we're going after.

Our next question is coming from Nate Pendleton of Texas Capital Bank.

Perhaps for Marc, going back to Slide 7 on the larger deployments. When your team is designing these modular plants, can you talk about the potential for cost reductions in these potential larger deployments? Would it just be on the front end with the site? Or could there be material cost reductions with any integration possible between the modules?

Yes. Thanks, Nate. It's actually both. Certainly, from the standpoint of the designing and developing a product allows us to have minimal engineering. And when you're at the same site, you really have reduced engineering because you're redeploying that same product over and over again as the phases are needed. And that was a part of the key selection of the megawatt block that we were targeting to make sure that we hit that, call it, the construction phase or the power-on phase that hyperscalers want for their data center growth. And then as you kind of hit the nail on the head, as you deploy more and more of the same product, your leverage with supply chain just continues to increase as well as you're gaining productivity in the field. So your EPC or your general contractor that's doing the installation just continually gets better at the installation. And then that also continues on through the start-up and commissioning process. So as a part of the looking at this as a product as a product solution, it allows us to capture lessons learned from the very first implementation of Project Permian Phase 1. And then we will ruthlessly apply those lessons learned prior to deploying the next phase so that we can continue to drive cost down as we advance.

Got it. And I wanted to touch just for a moment on oxy-combustion. Given the prior partnership with Baker Hughes and their pursuit of the industrial scale oxy-combustion plant designs, can you provide some detail around if that use case is still being pursued and maybe what the suspension of the JDA means in the context of future development of the oxy-combustion plants?

Yes. I think the -- I think the best way to sum it up is that both both partners have suspended as we continue and we'll continue to evaluate the viability of the industrial product. We continue to work that and support that as much as we can. And once we have that determination, we'll certainly communicate it as necessary.

At this time, I'd like to turn the floor back over to Danny Rice for closing comments.

All right. Thanks, everybody. Yes, we just want to say thank you for the questions, for the support, for the trust you guys place in this team. What we are doing, which is commercializing natural gas power with full carbon capture at scale, it's never been done before. And it's -- we're doing it in a market that's grown faster than anyone anticipated. So I think everybody appreciates there are challenges. There will be challenges ahead, but we want you to know that this team comes to work every day with a deep sense of purpose because if we get this right, we'll have helped solve one of the most important problems facing our country in the world, which is how do we keep the lights on affordably and reliably while leaving a cleaner planet for the next generation. So that is important to us. That's worth every ounce of our efforts, and we are grateful to have partners and shareholders who believe in that mission alongside us. So we will talk soon. Thanks again.

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.

Greetings. Welcome to the NET Power Third Quarter 2025 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to Bryce Mendes, Director, Investor Relations. Thank you. You may begin.

Thank you. Good morning, and welcome to NET Power's Third Quarter 2025 Earnings Conference Call. With me on the call today, we have our Chief Executive Officer, Danny Rice; and our Chief Operating Officer, Marc Horstman. Yesterday, we issued our earnings release for the third quarter of 2025, along with an updated presentation, both of which can be found on our Investor Relations website at ir.netpower.com. During this call, our remarks may include forward-looking statements. Actual results may differ materially from those stated or implied by forward-looking statements due to risks and uncertainties associated with our business. These risks and uncertainties are discussed in our SEC filings. Please note that we assume no obligation to update any forward-looking statements. With that, I'll now pass it over to Danny Rice, NET Power's Chief Executive Officer.

Thanks, Bryce, and thanks, everyone, for joining our call today. We're going to reference some slides in our latest investor presentation, so I'd ask you to have this handy and follow along. And then after our prepared remarks, we'll open the line for questions from the analysts. So let's start on Slide 3, talking about our mission. So back in 2021, the team at Rice Acquisition Corp. II, which included myself, noted there had been a major underinvestment in baseload power generation for the better part of the prior decade. This is really driven by a confluence of 3 things: first, a broad social desire to decarbonize. Second, very healthy subsidies for renewables, which made these intermittent forms of power highly economic to deploy. And third, we had a very healthy grid system that didn't appear to need additional baseload power generation capacity. Load growth was flat. We could supplant the existing baseload capacity with intermittent renewables, and we'd be okay.

However, what was really missing from this viewpoint was the reality that at some point, we'd eventually need to replace our nation's aging fleet of baseload facilities. In the U.S., the average active coal, gas and nuclear plant is over 40 years old. And we ascertained that if we experience a load growth scenario, one that suddenly forces an industry that's been dormant for the last decade to have to begin building again and doing so in a regulatory environment that is increasingly making it harder, more expensive and longer to get things built, we're going to be in a little bit of trouble. Unfortunately, that's the situation we find ourselves in here in North America. For the first time in a long time, we're seeing unprecedented demand growth for power, primarily driven by artificial intelligence and data centers, but also from re-onshoring of U.S. manufacturing and growing residential demand for power.

So it really begs the question, how do we balance the desire of society to reduce emissions without compromising access to affordable, reliable energy? The answer to that question will come from the companies that are innovating supply-side decarbonization solutions that don't compromise energy affordability or reliability. When most people think of clean power, they think of nuclear, they think of hydro, geothermal, wind and solar. But the metrics that really matter are carbon intensity, land intensity, water intensity and air quality. Those are measurable and more importantly, they are energy agnostic. So we took a somewhat contrarian view, one grounded in science and economics that said the lowest cost form of clean, reliable power can and should come from natural gas.

Yes, we'll need to advance technologies to make it happen, but so too does every other form of energy in order to deliver the energy trifecta of clean, affordable, reliable power. We believe that back then, and we still believe today that the lowest cost form of clean, reliable, affordable power will come from natural gas. And NET Power has stood out in its singular mission to transform natural gas into the lowest cost form of clean firm power. And we decided it was important that we pursue this mission in the public spotlight to educate and to help inform the paradigm-shifting narrative of natural gas as the cleanest, lowest cost source of baseload power. So the industry today is at a really pivotal point as are we at NET Power. We can choose to continue to allocate our scarce resources, namely our financial capital and our human capital towards what we've all been doing for the last decade or 2, or we could take a step back and reassess an allocation of those resources towards solutions for what the world really needs looking ahead.

The market is saying the highest value solutions are those that are reliable, scalable power that can be deployed as quickly as possible. This isn't just the hyperscaler saying it. It's local communities and grid operators who understand if we don't build new generation fast enough, the cost of power for ordinary Americans and small businesses will go way up. It's also the federal government who sees losing the AI race as an existential threat to America. The common denominator here across these cases is our ability to build reliable, scalable power as quickly as we can. And this power can also be clean, that's the icing on the cake. With all things power, you can't have icing without the cake. Reliable, affordable power is that proverbial cake. I believe this is becoming an arms race for AI, and this really is a call-to-arms moment for the energy industry.

If you're a company that possesses the ability to design, build and operate power plants safely and in a timely manner, you should do it. If you have access to the natural resource inputs and outputs for power generation, I think you should find ways to utilize them towards power. And if we know where and how to do this in a way that minimizes the impact on the environment, those resources should certainly be prioritized. That is the pivotal moment we really find ourselves at NET Power. We have a choice to singularly keep our heads down the path of proving our oxy-combustion technology, which I would say is a very noble path and one that we believe is the right power solution in the long term or we can take our differentiated and valuable resources and skill sets and prepare to allocate them towards more pressing and more valuable near-term opportunities, ones that have proved to be successful, will help fund our long-term ambitions in a more accretive way to our shareholders.

The pivot that we'll discuss with you all today is one that stays true to our mission to transform natural gas into the lowest cost form of clean, reliable power at a cost that people can afford with reliability that we cannot afford to lose. And as I mentioned above, speed to market is paramount. We, as an industry, cannot afford to wait 5 to 7 to 10 years for new generation. We need to get building now for the benefit of our shareholders, our prospective customers and the communities where power demand is increasing. That's what we intend to do responsibly, but with conviction.

So turning to Slide 4. As we've noted on previous calls, the power sector faces unprecedented load growth through the end of this decade to support AI and data center build-outs. The market has shifted dramatically in favor of natural gas for all the reasons I've mentioned. Conventional gas turbines, reciprocating gas engines, all of them are being deployed as quickly as they can to meet data center demand. The U.S. is in a very fortunate place where we have over 50 years of ultra-low-cost natural gas reserves. In fact, we in the states have essentially stopped exploring for new gas many years ago simply because we possess a very deep inventory of proven reserves across the major sedimentary basins from Northeast Appalachia to Texas and everywhere in between. Our energy resources are totally different than any other country on earth.

Unlike places like China, India and most of Europe, the U.S. doesn't necessarily need to pursue new forms of energy today. We have the lowest cost energy to last us for many, many decades. So what we really need to ask ourselves, are we advancing these other forms of energy because we need the energy? Or are we doing it to reduce emissions? Nuclear is probably the greatest example. It holds great long-term promise, but it's not necessarily needed to meet our energy needs today. Nuclear is more competitive in places that are short energy today and more so ones that are short natural gas. Europe comes to mind, but not here in the U.S. If the U.S. has sufficient low-cost gas to supply the AI industry, can we advance the technologies that reduce natural gas' environmental impact. Now if you thought we weren't going to need to build new gas power generation, you probably wouldn't think about CCS. But here we are at the beginning stages of a natural gas power super cycle. And I think folks are just now beginning to see the relevance and the importance of CCS.

For example, Google just signed the industry's first power offtake for a gas plus CCS project in Illinois. And we think with the right projects in the right areas, there should be a lot more to come. Gas plus CCS can be meaningfully lower cost than any other scalable clean firm power solution. That's always been our thesis, and we think it's about to begin playing out as such. So the signals are beginning to form that natural gas with CCS is being embraced simply because natural gas power generation is quickly being accepted as the only scalable power solution that can be deployed on the hyper accelerated time line to meet accelerated need for 24/7 power.

So let's flip to Slide 5 and talk about the steps we're taking to best position our company for success. So we can call this an expansion of our business. We can call it a pivot. But at the end of the day, it's really focusing our resources on actionable opportunities to transform natural gas into clean, affordable, reliable power. And over the past decade, we at NET Power have built an incredible team of technical leaders to develop our oxy-combustion power generation technology, which is arguably one of the most challenging and promising technologies in the energy sector, second, probably only to nuclear fusion in both complexity and potential. And while the team has been diligently working to design, develop and improve our technology, both in the lab and at our pilot plant in La Porte, Texas, we've been assembling a small portfolio of ideal locations to site these NET Power projects.

And you can really see that on the bottom of the slide. We really consider this setting the table for successful future commercial deployments. So within NET Power, we possess a very good understanding of where our projects, where these NET Power projects make really, really good economic sense and also where they don't. And in most cases, for them to make economic sense, you really need 3 things. You need access to gas, the lower the cost the better. You need proximity to a high-quality carbon sink, the lower the cost to transport and sequester, the better it is for the power economics. And if you can find someone to purchase the CO2 for an industrial use, that's even better. That just means lower power prices at the end of the day.

And then there's proximity to high-capacity transmission lines. And in North America, the optimal combination of these features that I just mentioned are predominantly within deregulated competitive power markets where anyone with the capability to build, own and operate a power plant can do so. So for the last couple of years, we've assembled a couple of high-quality locations that were really meant to prove and commercialize our initial NET Power deployments. Because we had always been planning to license our oxy-combustion technology, we didn't really see the rationale to continue to secure additional high-quality locations in these and other areas. But I'll come back to the bottom of this page in a second.

One of the setbacks we faced at NET Power is the rising cost for our first facility and learning it was going to be much more expensive than we previously anticipated. And we've come to that hard realization that trying to fund and then build a $1.7 billion 200-megawatt first-of-a-kind facility before completing all of our testing is a low probability event. So in a best case scenario, we'd be looking at a COD of that first plant in 2030 or 2031. But just given the persistent inflation that we're seeing in the industry sector, in the energy industry sector, those costs could be higher in a few years. So we can either keep our heads down and continue investing 100% of our capital to advance our oxy-combustion technology, which we have great confidence, can be the right long-term solution or we can slow down that spending in order to free up some of our resources for near-term accretive opportunities.

We strive to allocate our capital in a responsible manner that maximizes shareholder value and is aligned with our mission. The day that we can't do that will be the day we return that capital to shareholders, but today is not that day. I'm really excited to talk about the right side of this page for a few reasons. Conventional gas power with post-combustion carbon capture technology or PCC for short. The conventional power side of the facility, gas turbines and gas engines are proven bankable technologies. The other half of that configuration, the PCC side, has also been proven, but it hasn't been widely deployed or as quickly as it should. And it's not necessarily a technology issue. It's been an economic and timing issue. It could take a long time to permit sequestration wells.

It could take a long time to permit new CO2 pipelines. And if you're in areas where it's uneconomic to transport and sequester or the underlying power project doesn't operate at sufficient uptime to justify the capital investment in PCC. In those instances, it's just not economic to install PCC versus just doing a simple cycle or combined cycle facility. But as we all begin to see the tangible support for adding new 24/7 power and the differentiated value the market is willing to pay for clean firm power, PCC becomes very interesting in the right geographies. So for us and everyone else in the power and data center space these days, speed is everything, and we believe gas turbines with PCC can and should be the fastest to market and most cost-competitive clean firm solution for our prospective customers.

So we connected with the Entropy team over the summer and discussed ways we could work together to accelerate the deployment of clean gas projects together in the U.S. Entropy, which I'll cover on the next slide, is a Canadian-based company. They're a bit under the radar here in the States, but they have the only operational natural gas CCS facility in North America, and it's been running for a few years now. They've fine-tuned their solvent mixture for carbon capture from natural gas. And between our 2 companies, we recognized an opportunity to combine NET Power's Power generation and site origination skill set with theirs on PCC to accelerate the deployment of clean gas power projects in the U.S., which takes me back to the bottom of the page.

One of the immediate commercial synergies we can realize with Entropy is the ability to accelerate deployment of their technology at NET Power sites, specifically starting with our project Permian site in West Texas and our second originated site in Northern MISO region. I think each of these locations is great in their own right. Our West Texas project has real potential to be the lowest cost clean firm power project in North America. We're targeting a below $80 LCOE for the first phase of this project and below $70 per megawatt hour as we scale to 300 megawatts and beyond. And our Northern MISO project can add much needed 24/7 power to a grid system that is not seeing enough new baseload power showing up in the queue, not to mention 0 new clean firm baseload showing up.

So by utilizing our existing sites, we have the instant ability to deploy up to 600 megawatts into these key power markets with the ability to do even more through additional interconnect upgrades or behind-the-meter colocation. And through this exclusive partnership, both us and Entropy will have the ability to co-invest in the equity of the projects we develop. So the price for this partnership is building high-quality clean firm power projects in markets that value 24/7 clean power on an accelerated time line. And over the course of the next several months, we'll be working several work streams in parallel with the Entropy team. First, we'll be finalizing definitive documents of the LOI. Second, we'll wrap up technical diligence to fully confirm this is the right path as well as complete design work around our first project, which Marc will talk about in some detail.

It's worth flagging that if we choose to complete this transaction, we'll be making a small strategic investment into Entropy to help fund their ongoing business and technical work supporting our joint development. I have to mention there's no binding obligation on the part of either of us or Entropy to consummate the transaction. But sitting here today, assuming everything continues to track the progress we've made to date, we expect to finalize the JV in the first quarter of '26 in conjunction with preparations to FID, the first phase of our West Texas project.

So when we take a step back and we think about what NET Power is becoming, we're still a company with a singular mission to transform gas into the lowest cost form of clean firm power. But instead of just having one solution to do it, we now can have 2. And in a market that's operating with a very near-term focus on scalable, reliable power, but still thinking about a cleaner end state, we think us having a high-impact deployable solution today to complement our game-changing long-term patented product is the optimal setup for our business, our shareholders and our future power customers.

Turning to Slide 6. We wanted to briefly summarize the landscape of our new product portfolio, which has really evolved to prioritize speed to market and technology readiness. In summary, we have a technology in the oxy-combustion, the top line that looks a lot like new nuclear, ready in the 2030s and LCOE in the mid-100s with a pathway to sub-$100 LCOE or lower with an extremely low environmental impact. We are keeping that technology in our arsenal and we will methodically advance its development on the right time line. And then skipping down to the bottom of the slide is where we'll be with Entropy today, conventional turbines with capture, proven technologies ready to be deployed today in the right areas, areas that we control with very compelling breakeven economics. We think this can be the most competitive near-term solution that the market needs now.

So turning briefly to Slide 7. I wanted to provide a brief overview of Entropy. As I mentioned before, we've signed an LOI to partner with them to deploy its proprietary amine-based solvent PCC solutions for the build-out of clean firm power in the U.S. Entropy is based in Calgary and has a world-class ownership group that includes Advantage Energy, Brookfield and the Canada Growth Fund. They operate the world's first, and I believe it's the only natural gas facility equipped with post-combustion carbon capture and sequestration at the Glacier Gas Plant in Alberta, which has been operating consistently since 2022. Entropy solution is designed to capture more than 90% of the CO2 emissions associated with gas power generation. We put it at the highest level of technology readiness at TRL 9, which enables us to develop and deliver clean power hubs before the end of this decade.

We're really excited to work with the Entropy team and get these clean firm power projects off the ground quickly because that's what the market wants. The Entropy solution, coupled with our power generation knowledge and product approach, allows us to deploy a clean natural gas-fired solution meeting the current market demands. I think it would be helpful if we could share some of the early work we've already been doing around this program and these projects. So with that, I'd like to turn the call over to Marc Horstman, NET Power's Chief Operating Officer.

Thanks, Danny. Slide 8 details how we'll be leveraging the existing infrastructure that has been established through our project Permian, efforts to develop our first clean power hub, where we're preparing to deploy gas turbines with post-combustion capture in a modular, scalable configuration. This site represents a pathway to ultimately deliver up to 1 gigawatt of capacity as we expand over time. We are leveraging the existing project Permian land procession near Midland-Odessa. Phase 1 is being structured around a 60-megawatt module and a clear expansion path to 1 gigawatt as demand and offtake agreements mature.

Our gas turbines for Phase 1 are being prepared by Relevant Power Solutions, or RPS, and carbon capture will be delivered through Entropy's proprietary amine solvent technology, which is designed to achieve greater than 90% CO2 capture. On the commercial side, we have already begun to set this project up for a successful FID in 2026. We've reached indicative terms with Oxy to purchase 30 megawatts and 100% of the captured CO2 under long-term agreements, and we're in advanced discussions with another major oil and gas offtaker for the remaining capacity. One of the core advantages of this project is the ability to use the existing Permian infrastructure, land, interconnect, gas supply and offtake. With that foundation in place, we can deliver our clean firm power by utilizing gas turbines prepared by RPS paired with Entropy's PCC technology.

This approach enables a faster development time line and lower cost relative to greenfield alternatives, strengthening Project Permian's position as a repeatable, scalable build-out platform. Our current schedule targets a financial decision in first half of 2026. Assuming that is achieved, construction will begin in second half of 2026 with commercial operation expected second half of 2028 or first half of 2029. This project is structured to demonstrate speed, repeatability and long-term commercial durability of our clean power product, key steps in building a gigawatt scale footprint in the Permian.

Turning to Slide 9. Slide 9 focuses on our development pipeline. I want to provide an update on our Northern MISO project, which represents our next major clean firm power build-out alongside our Permian project. This project continues to progress on schedule. We're targeting commercial operations between 2029 and 2030. We secured the project site and are actively working with a local carbon capture and sequestration development partner. This partnership is central to our plan as the project is expected to utilize Class VI sequestration for long-term CO2 storage. Our partner currently holds 2 Class VI well applications and both are on track for permitting in the second half of 2028.

Similar to the Permian, we're designing Phase 1 of this project to utilize gas turbines paired with Entropy's PCC technology. FID is targeted for 2027, and we expect commercial operations to come as soon as 2029. NET Power is in active dialogue with strategic offtakers for the power at this site. Overall, Northern MISO is moving forward as an anchor site for our next phase of growth, complementing the Permian program and reinforcing the scalability of our clean power product platform. Slide 10 shows that Project Permian remains on track for its first power in 2028. Phase 1 is designed around a 60-megawatt module with more than 90% carbon capture and target availability of 95% plus. Our current estimates point to a levelized cost of energy or LCOE under $80 per megawatt hour. With inter-connect capacity secured at 300 megawatts, we see a clear path to more than 750 megawatts of future expansion at this site.

Our MISO project is progressing with first power targeted for 2029. The project features similar performance expectations, 95% availability and greater than 90% carbon capture with a projected LCOE of roughly $100 per megawatt hour. This site also holds 300 megawatts of internet capacity and supports more than 400 megawatts of future phases. Moving to the right-hand side of the slide, we'll continue to leverage our people and skill sets to build a robust project pipeline, following the same blueprint we have thus far, finding the bright spots, securing interconnect spots, securing the poor space to sequester CO2, negotiating long-term supply and offtake agreements and leveraging our strategic owners to establish clean firm power hubs that can scale into large multi-gigawatt campuses in the early part of the decade.

These actions set the foundations for scalable, repeatable project execution. Big picture, we're designing these clean firm power hubs to come online beginning 2028 through 2030 with the potential to expand into multi-gigawatt campuses by the early to mid-2030s. We're excited for this next stage of our story and look forward to sharing updates on our progress in future quarters. With that, I'll pass it back to the operator to open up the line for Q&A.

[Operator Instructions] Our first questions come from the line of Nate Pendleton with Texas Capital.

With the pivot you announced here, can you provide your perspective on what makes NET Power uniquely positioned to take advantage of this opportunity compared to some of the others, given your prior focus on the Oxy combustion cycle?

Yes. Good to hear from you, Nate. That's a great opening question. I think when you really get down to it and you look at the skill set that NET Power has, it's not just about the skills, but it's about like the resources and assets that we possess today. I think it starts with having like a fundamental understanding of both power, really the aboveground piece, along with a really, really solid understanding on the subsurface. And I think when we take a step back and you just ask yourselves like why hasn't like gas with CCS really taken off in the past, I think it's because when you look at all of these potential projects that have really been proposed on the CCS side for PCC, it's always been through like a power first sort of approach.

Where is the best place to put a power plant? And then secondarily is, well, can we do PCC here? And if you're not close enough to the sink, if you're not close enough to a high-quality reservoir, the PCC economics fall apart pretty quickly. So it's all about like location, location, location and finding the best place to be able to put these sites. You kind of pair that up with, as I mentioned in the prepared remarks, how long it takes to actually permit a lot of this stuff. This isn't something where you can just wake up tomorrow and say, let's start doing PCC here. It takes years to be able to permit the wells -- years to be able to permit the pipelines.

I think that will be changing over time as you see permit reforms start to accelerate and shorten those time lines to get this infrastructure built. But sitting here today, I think the biggest differentiator, who has actionable projects in the right areas to be able to deploy. And so I think one of the unique synergies that I sort of mentioned earlier was we're kind of sitting in this unique position where over the last several years, we've started to originate high-quality sites to put these NET Power plants.

And these sites work just as well for PCC as they do for NET Power because it's the same exact inputs and outputs, the same quality of natural gas comes in and the same amount of high-quality, high-purity CO2 comes out. And so as we think about the best places to be able to put PCC, NET Power is sitting here today with a couple of high-quality sites to put these projects. And so part of just the obvious synergies that we saw with the Entropy folks is, hey, we've assembled like really great sites to be able to put our NET Power plants. The deployment and commercialization of those NET Power plants is many years away. And so we're going to have grid connect ready for 300 megawatts in West Texas, 300 megawatts ready in Northern MISO that could potentially sit there unutilized if all we said was we're going to wait to deploy NET Power.

So this opportunity that we see in front of us is we can actually accelerate the deployment of a clean gas technology on these sites much sooner than we would if we just waited for NET Power. And so you kind of end up in this place where when Marc is talking about getting to FID in '26 and COD in that first plant in 2028, that positions us to have the first clean firm gas power plant online in the United States years ahead of the next guide. And that's really just the first phase, right? I think over the course of '28 through 2030, 2031, if we do this right, we're going to have the ability to scale and develop multiple phases across both West Texas and Northern MISO. And so I think when you get to 2031, 2032, when the next competitor's clean gas project comes online, we're going to have 3 to 4 years of operational run time as well as 3 to 4 years of multiple deployments under our belts by the time the next project comes online. But the key to all of this is having the right locations in the right areas that are really conducive to clean gas power and NET Power just coincidentally possesses those today.

Yes. It seems like a compelling opportunity. thanks for laying that out. And then if I may, looking at Entropy, there seems like a phenomenal partner from what I understand about their history and what they've been able to achieve. So with the Glacier project and their Entropy 23 solvent, it does seem quite a bit better than what's in the market today on an array of metrics. So can you maybe elaborate on why specifically you chose to partner with them? And what you see in that technology that may make post-combustion carbon capture truly competitive economically?

Yes. I'll start and then Marc can certainly fill in the holes. I mean, first and foremost, I think they're just a great group of people. And I think like one of the things I've learned over my career is it's always better to work with great people. It makes the experience a lot more fun. And I think that ultimately is what leads to like the best potential economic outcome at the end of the day is partnering with good people. And the Entropy guys are top of the class. I think what is really differentiating about the Entropy folks is their operational experience with the solvent technology.

I think because the industry as a whole hasn't really gotten off the ground, the real differentiators are the ones that have actionable real projects in the ground today and the Entropy guys have done that. And as a result of being able to have like real projects, you're able to fine-tune the technology, you're able to fine-tune the assets to optimize for performance. And so being able to have 3 years of run time on the facility, they've been able to optimize and improve the performance of their technology, which is both the infrastructure, but also the solvent technology. And so they've been able to optimize the essentially their cocktail for capture.

And I think when you take a step back and you say what differentiates one solvent from the next, there's a couple of ways to measure it. It's the amount of energy it takes to separate the solvent from the CO2. It's the capture efficiency of the CO2. It's the degradation of rate of how long does it take before that solvent breaks down. And then it's also the inhibition of that solvent or the amines to become nitrosamines, which is not good. And the entropy solvent -- they've done a phenomenal job essentially like building what is a peer-leading sort of technology. And so that's really where this whole synergy comes in as they have what we would say is a TRL 9 product that should and can be deployed in the power markets that need clean power the fastest. That happens to be the U.S. and we have these sites that are ready for clean power projects.

So this sort of coming together of us enables them to accelerate the deployment of their technology in the largest market in the world, the U.S. power market. And for us, it allows us to accelerate the deployment of clean power projects that stays true to our mission. And I think where we both sort of win is we both will be participating in the equity in the investment of these projects side by side. So the goal here is let's stand up and develop, build, own and operate high-quality, clean firm power projects, leveraging Entropy's solvent and PCC expertise, combine that with our power generation and site development expertise. And what you end up with is a win-win situation for both of our firms.

Our next questions come from the line of Martin Malloy with Johnson Rice.

I wanted to ask if you could maybe talk broadly about the financing strategy with Phase 1 and then follow-on projects. It sounds like from Marc's comments with Phase 1, you've got potentially all the power, you've got an offtake for and as well as the CO2 going to Oxy. Maybe if you could talk about just broad terms, the financing strategy in terms of being able to put debt on these projects. And also I did see on Entropy's website that Brookfield is an investor in them, if that plays a role here at all?

Yes. No, Marty, great to hear from you. Those are really awesome questions. Yes, I think starting on just like the financing of these projects. I think when you take a step back and you look at just what we were planning to do on the NET Power side, because NET Power's oxy-combustion technology was going to be a first-of-a-kind sort of facility. One of the things we told the market is, hey, we're most likely going to have to equity finance the entirety of that first facility. So you're talking about $1.7 billion of what would most likely need to be 100% equity financed because there's no "bankable" technology within that plant. And that's okay. And that's sort of common across new first-of-a-kind technologies.

I think you contrast that against what we're doing here with Entropy with the gas turbines and the PCC. Like I mentioned before, half of that facility is existing proven bankable technologies, the gas turbine, steam turbine, the HRSG. That's all stuff that is financeable because these are -- this is proven equipment that has real value in the market. So you buy the equipment, it maintains its asset value if you want to transfer or sell it. So that becomes very financeable on the project financing side. And so the way we kind of look at it is we know we're going in with at least half of the CapEx very, very bankable with just project financing. So it's not going to require equity financing.

I think you kind of wrap this whole thing within long-term contracted cash flows, and we're talking 10 to 15 years contracted cash flows. And you get to a place where you could probably project finance a good chunk of the total CapEx spend of this project. And that is really just because like sort of what we're targeting in terms of how competitive is this from an LCOE perspective. I think LCOE isn't the end all be all in what project economics are. But knowing if you're on like the low end of the LCOE range and you're able to command a higher price for that power, that implicitly says these are going to be mid-single -- mid-double-digit sort of IRRs, 10% to 15% on a levered after-tax basis that provides sufficient capacity to be able to have project financing on the whole thing. And so as we look at the financing piece, this isn't going to be -- NET Power is going to have to put up $300 million or $400 million of equity dollars for the first project.

It's going to be a much smaller portion of that. And then one of the arrangements that we have with Entropy is their ability to participate alongside us in these projects. And that certainly becomes really interested for Entropy's investors for Brookfield and CGF and Advantage and potentially for other Entropy investors to be able to participate through Entropy in these projects alongside us. So the equity capital burden that we're going to be looking at on West Texas Phase 1, but also on the future phases as we expand this thing, the equity capital needs are going to be a whole lot less intensive on a per megawatt basis, on a per dollar of CapEx basis than we would have otherwise seen with NET Power projects. So it's sort of like a perfect setup where it's we're -- we're able to deliver clean firm power sooner. It's more accretive to our equity dollars that we're investing on an accelerated time line in terms of speed to market with new power generation.

Great. That was very helpful. And then for a follow-up question, I just wanted to see if you could share with us maybe any anecdotes of conversations that you have had with potential offtakers in the data center market that are looking for this type of solution for their power needs and might be willing to enter into a longer-term offtake agreement, how they're viewing this? And I know you mentioned the Google announcement recently.

Yes. I mean it's quite interesting. I mean today is really like us like -- this is sort of like our coming out party as far as starting to say, these are the projects. This is the time line for the projects. This is the carbon intensity profile. This is the reliability profile of us doing this in both West Texas and in Northern MISO on these sites that we control. It's really -- so yes, we've been having conversations with the hyperscalers. I think the conversations have historically been around the NET Power technology, which is a great technology. But I think the one just challenge on the NET Power piece is you're talking about projects that would start in 2030 or 2031 and then the second plant in 2033 or 2034. And I think when you think about the urgency of power for the hyperscalers for these data centers for AI 2030, 2031 is -- I mean, in dog years or cat years or pick any other animal that has a really short shelf life, like the way they think about time value is totally different than we do through like a traditional financial lens where we think of time value as like a 10% or 12% cost of capital from year-to-year.

I think they're thinking about things like multiples, multiples, multiples of that. And a project that comes online in 2031 is 100x less valuable than the same project that could come online in '27 or '28. And so these conversations that we can now start having with strategic offtakers, they've become a lot more real and a lot more interesting because we're talking about projects on a very accelerated time line than the conversations we've been having with them in the past about projects starting in 2031 or 2032. And that all plays into like why this sort of partnership with Entropy makes a whole lot of sense. It accelerates not just the deployment of these projects, but it really starts to bring forward a lot of the strategic conversations around strategic offtake with folks that are in dire need for as much clean, reliable power coming on to these grids or behind the meters as soon as realistically possible.

So I think this really sets us up to have much more constructive, much more tangible and real conversations. But at the end of the day, it all depends on our ability to continue to progress these projects and deliver the right solutions on the right time line. And I think this certainly partnership with Entropy allows us to do that.

Our next questions come from the line of Betty Jiang with Barclays.

I want to ask about the Slide 10. And then just thinking -- unpacking the economics of the project, what enables the sub-$80 LCOE in the Permian compared to roughly $100 in MISO? And if you could just speak to maybe how you're thinking about the CapEx cost and then some of the other credit stacking attributes on the Permian project.

Yes. No, that's a great question, Betty. And I think this is an important one for everybody to understand. It really comes down to like 2 simple things that makes a clean firm power project in West Texas, lower cost than anywhere else, I would say, almost in the world. And it comes down to the cost of the energy feedstock for the power generation. And in our case, it's natural gas. It's just -- it happens to be lower cost in West Texas than just about anywhere else in the country. And that's really thanks to the oil and gas industry that's been able to unlock the shale gas potential out there. So there's that factor. And then the other really, really important differentiating one, and this gets into the subsurface side of things is you have the ability to utilize that CO2 versus having to just permanently sequester. And so what that really means is we have active buyers of that CO2 that are able to ascribe real value for the CO2 because it has an industrial use.

So in most other places where you're just permanently sequestering the CO2 and there's no industrial value, you're having to pay somebody to take the CO2, transport it and formally sequester it. And so that comes out of the 45Q proceeds that you get. So in a place like Northern MISO, we're going to collect the $85. And then from the $85, you'll pay a certain fee per ton to transport and sequester the CO2. And that's the way it works in most of these applications for CCS. West Texas is a totally different animal. West Texas is an area that's been purchasing 10 million, 15 million tons of CO2 per year for industrial use for enhanced oil recovery specifically. And so that's a market where they can ascribe the value to purchase the CO2 without you having to then pay to transport and sequester it because they have real industrial value there.

And so in a place like West Texas, the plant is going to get paid the $85 per ton, but rather than paying somebody $20 or $30 or $40 or if you're in a bad area, $50 or $60 per ton out of that $85 that you're getting paid from the 45Q, you're actually getting paid on top of the $85. So you can think about -- you can kind of think about it as like carbon stacking, where you're getting paid to $85 in the 45Q and then you're collecting another amount per ton to sell the CO2 to an industrial user. And the biggest industrial user of that CO2 in West Texas is Oxy. They have been pioneers in enhanced oil recovery for a long, long time. We're going to be using oil in this country and in the world for a long, long time. And so there's real industrial value that then gets valued back to these plants.

And so what that really means is the more value that we can capture on the CO2 side of this facility, the lower the power price can be. And so that's really like the really interesting setup that we see in West Texas is this is arguably the lowest cost place to do clean gas power. And so I think a lot of people are now starting to see a lot more power projects pop up in West Texas, more so than anywhere else in the United States. And it's specifically because of the low-cost nature of natural gas there. And then I think if you take it a step further and you say, okay, well, where is the most economic place to do clean gas power projects? It also happens to be in West Texas because of the utilization of the CO2.

So we kind of recognized this way back in the day with NET Power, we said, hey, the absolute best place to do our first NET Power oxy-combustion project is West Texas. And so that's why we already have the infrastructure in progress with the interconnect, with the site, with the offtake stuff for the CO2 is because we've been working on it for the oxy-combustion, but the same thing applies to what we're going to be doing with Entropy on the PCC side of things. So it's a great place to be able to demonstrate that clean, reliable, affordable power can come from natural gas in the right areas. And so that Project Permian site is going to be a great place to be able to demonstrate that on a very accelerated time line with the Entropy folks.

Got it. That makes a lot of sense. My second question, a bigger picture. So if I think about your business model now or prior, it was capital light, it was licensing model and others spend the money on the big capital dollars to build these plants. And now it seems you're pivoting to a more capital-heavy model where in order to scale, you have to grow and spend that money to build these plants. So how are you thinking about the project financing or just the longer-term capital needed to scale this business?

Yes. No, it's a great question. And I think that's one of like the exciting parts about what we're trying to do here. And it all comes down to making sure that we're sizing these things appropriately for what NET Power can accommodate with its balance sheet and its access to capital. I think one of the things you're seeing with what we're doing on Phase 1, we can just as easily say, hey, let's go do a 300-megawatt facility right out of the gates. There's really not going to be any technology scale-up risk because we're deploying this PCC technology in a very modular small-scale fashion. So we could do 4 or 5 of what we're doing in Phase 1, we could just replicate that to do the full 300 megawatts right out of the gate. But in doing that, you're going to get to a really large CapEx number, which is going to require a lot more equity capital than NET Power has access to today. And that's a position we don't want to put our balance sheet or our shareholders in that position.

So what we're really doing is we're really rightsizing the scale of these facilities to be able to accommodate NET Power's ability to participate to its fullest in the economics of these projects to be able to participate for our full economic potential without it being dilutive to the balance sheet or to our share count. And so Phase 1 of that project is going to be smaller, but it's smaller by design, to both prove this modular concept, which isn't really a concept that we have to prove because this is what the Entropy folks have been doing up on their Glacier facility, but it's really sizing in a way that we can establish a commercial project that requires only a small portion of our existing cash on hand.

And so we're in this unique position where we're going to exit the year with around $390 million to $400 million of cash. And one of the capital allocation decisions that we're actively assessing today is, okay, how do we slow down some of the spending that we're doing on the oxy-combustion side because that frees up capital that we can then allocate to an equity investment into economic commercial projects on the turbine and PCC side on an accelerated time line.

And so we're in this unique position where we're going to be able to get project financing. We expect to be able to get project financing for a good chunk of the capital spend on this first project. But because we're doing it at such a smaller scale compared to what we ultimately could be able to do it at, it makes the equity requirements on our side a lot more manageable and a lot more palatable knowing that what we really need to do is establish clean firm power generation prudently and then prepare to scale quickly to the 300 megawatts and above. And that sort of strategy is really like what we're running with at both West Texas and at the Northern MISO site, where we're going to start smaller, but these are going to be sites that are expandable up to 1 gigawatt or larger.

And so we're going to do that very prudently using our available capital on our balance sheet. But we know that if we do it right, and we're able to demonstrate that these are highly economic, highly strategic and differentiated projects, that will really open up the door on our access to additional capital because the real prize for us is if we could put billions of dollars to work in projects that generate 15% to 20% after-tax returns to us, access to capital becomes a lot easier to get. So the first key piece for us is being able to demonstrate economic differentiated projects at a small scale, and that's ultimately what we're going to be doing with the first phase of this West Texas project.

Our next questions come from the line of Wade Suki with Capital One.

I might have missed it, but maybe just to dovetail on, I think, the Betty and Marty's questions. Can you give us a sense for what Phase 1 might cost in West Texas or MISO for that matter, sort of including the carbon capture component. Again, I might have missed it, but I wonder if you could kind of clarify that for us.

Yes, absolutely. Yes, we didn't really provide any specifics, but I think we're still going through a lot of the final preliminary engineering work over like the scope of the facility. The rough number, just to put it out there for everybody is total installed CapEx on that facility will be between, call it, $375 million and $425 million. And then when you just kind of go through the math weight in terms of what that could be on an equity piece to NET Power, if we're doing 50% or 51% of the equity and Entropy is doing the balance, if we can get project financing for 50% to 70% of the total CapEx, that leaves you with around $200 million -- $150 million to $200 million of total equity.

And so if NET Power is taking 50% of that, you're talking about $75 million to $90 million on the equity side. Now it could be a little bit more, it could be a little bit less depending on where things shake out on total CapEx and total financeability. But that's probably a good rule of thumb of where we're going to be in terms of potential capital invested in that project. And that's like a pretty compelling setup in my mind because we're sitting here with $400 million at the end of the year, $390 million, $400 million. And so you kind of have 2026 capital spend allocated to this of $80 million to $90 million. That leaves sufficient capital for us for any projects that we want to FID at the end of '26 or the beginning of '27, whether it's West Texas Phase 2 or whether it's MISO Phase 1.

I think the real timing of being able to FID those phases, it's probably less on like availability of the real key stuff, which is like the turbomachinery. I think Marc has done a good job -- an excellent job, not just with securing these turbines for the first phase of West Texas, but really designing this facility so we've become very turbine agnostic. This isn't going to be one where we can only convert -- we can only fix this thing with one sort of turbomachinery. This is going to be one where if we want to do this with recips, we can. If we want to do it with small-scale turbines, we can. If we want to do it with larger-scale turbines, we can. So the product design that we're doing on this integrated plant is going to be a lot different than how people have thought about PCC in the past, which is every single plant is bespoke on the PCC and power side.

This is going to be very customized to be flexible to accommodate any which number of turbines. And so as we think about the supply chain, looking forward for Phase 2 in West Texas, Phase 1 in Michigan, it's not going to be about the availability of the turbo machinery. It's really going to come down to our ability to be able to contract the offtake for the power, to be able to secure the gas supply, the inputs and the outputs, knowing that a good chunk of the economics is already spoken for, the 45Q. And that's $85 per ton for each ton that you're capturing. And that really is helpful to being able to like have like a fully contracted cash flow for -- I mean, that's 12 years.

So that really helps underwrite a lot of the upfront investment and the financing that we can get in place for these facilities. So we're pretty excited about what the setup could be on the timing, the cadence and really like how accelerated this thing could take off. But the key thing that we're really focused on is, let's make sure we have a highly successful FID on this first phase in West Texas.

That's very helpful. Appreciate it. Would you mind just expanding a little bit on the Entropy investment to the extent you can at this point?

Our investment in Entropy?

Yes, exactly.

It will be a small investment. I mean the Entropy team, fantastic organization. As we look at collaborating with them on this program, it's going to require technical resources from both our side and their side to make this happen. Really, it's not so much on like the project side, but it's on like if you think about the product and the product road map and the program that product is within, it's going to require engineering resources from both their side and ours. And so we said, hey, we'll make an investment on your behalf into your business. So it's a small equity investment. But it's an important one because it gives them the resources to be able to contribute their people and their skill set to ensure that we deliver the right product on this accelerated time line.

One last one, if I could. I apologize, I don't mean to [indiscernible] here. But look, just kind of taking a step back, and you and I might have discussed this in the previous conversation. But as I look at the business now, kind of new strategy, I guess what's the rationale for being a public entity? And again, hate to ask -- don't mean to be a [indiscernible] but just kind of curious how you think about that, the current pivot, I guess.

Yes. I think -- no, it's a totally fair question. It's a question I ask myself every day. And it's not because we don't like being a public company. I think it's really important that we're a public company. The access to capital as a public company is unparalleled. But I think it's really important that if you're a public company, you have the ability to access that capital, and that is really a function of do you have places to invest that capital, right? And I think on the NET Power side, for the stand-alone oxy combustion, it is pretty hard to justify why do you need to be a public company if you have all the dollars you need to advance the technology and the capital needs you're going to need for that first project are way more than you'll be able to capture as a public company. It becomes a harder proposition for stand-alone oxy-combustion.

I think when you now introduce a business that has real actionable projects that can use capital sooner rather than later and use capital not for the sake of being able to spend money, but invest money into economic projects, that becomes a lot more compelling setup for us to be a public company. And then I think like the other part of it is there's no other clean firm public power company in the space today that's going to have projects online this decade. Yes, you have the nuclear folks that are out there, but they're in like a 2030, 2040 sort of time frame. And so this new sort of net power, I think, is really differentiated for public market investors, both the institutional crowd, but also for the retail crowd of, hey, we're at the beginning of a natural gas super cycle. What is the absolute best way to be able to play this thesis is clean firm power coming from natural gas is going to be the prevailing source of clean firm power for the next decade.

Right now, there's really no -- the only way to play that really is NET Power. But NET Power, you're making a huge technology bet on a technology that's going to be commercialized in 2030 and beyond. Now we really bring a whole lot of that actionability forward with projects that can come online in '28, years ahead of the competition. And so I think NET Power now becomes in a really interesting position where we have the ability to be not just the premier clean firm power company, but the one that's actually able to put more capital to work in a very accretive manner, both at the project level, but also on behalf of our shareholders. So I think all of a sudden, we're now in a much more compelling place to be able to demonstrate why it makes sense for us to be a public company.

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Danny Rice for any closing comments.

Yes. Thanks, everybody, for joining us today. I know the world is quickly evolving. The market is changing. Power demand is exploding. And it's an exciting, exciting time to be in power. And I think what you really see from us here today is the ability for our team to proactively and at the same time, responsibly adapt to this quickly changing market. And I think when we look forward a couple of years and look back on today, I think everybody -- hopefully, everybody says, wow, that was a really, really smart expansion of your business to be able to capture this market faster than everybody else while still preserving not just the mission, but preserving this really differentiated oxy-combustion technology that, combined with our ability to become experts on all things clean gas, really sets NET Power up for long-term success.

So this is the beginning of it, and we're really excited for your support, and we're really excited to come back and visit with you all in a few months and show the progress that this team is going to make. So thank you again for your time today, and we will always be available to answer any additional questions or comments you all have. Thank you.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Enjoy the rest of your day.