NET Power Inc. (NPWR) Earnings

Management highlights

### Strategic Recalibration Rationale • Market feedback from large power buyers (hyperscalers, data center developers, industrial users) prioritizes speed, scale, and reliable power far more than immediate carbon capture, amid widespread structural power shortages and grid interconnection delays across major U.S. power markets including ERCOT, PJM, and MISO. • Grid constraints for new data center development and community scrutiny of grid strain and water usage have accelerated demand for behind-the-meter, off-grid power solutions that do not require interconnection queue access. • This is a change in project sequencing, not a change in long-term vision: the company's North Star remains delivering low-cost clean firm gas power with carbon capture, but will deliver unabated power first to meet current market needs, with carbon capture retained as a future add-on option. ### Operational Updates for Project Permian • The 1-1.5 GW West Texas Project Permian site is being redesigned for co-located customer demand, with no post-combustion carbon capture (PCC) planned for the initial development phase, while retaining full design optionality to add PCC later. • The project will target 99.9% (three nines) uptime reliability, achieved via a mix of battery energy storage, reciprocating engines, and multiple smaller gas turbines (a single large unit cannot meet the reliability target due to planned maintenance outage requirements). • The company is securing an additional 120 MW of early-delivery gas power equipment in coordination with a prospective customer, bringing total secured capacity for the first project phase to nearly 200 MW, on track for a 2028 commercial delivery timeline matching customer demand. • NetPower continues its strategic land partnership with Oxy for multi-site development in West Texas, which remains a key competitive differentiator for large-scale demand; the existing Oxy CO2 offtake agreement for enhanced oil recovery (EOR) is retained as a future pathway for captured carbon. • The company is in discussions with Entropy to revise their partnership framework, preserving the relationship and optionality to deploy Entropy's PCC technology in future project phases once supported by customer demand, economics, and financing. • The company is technology-agnostic regarding power generation equipment, and will combine solutions to meet customer reliability and timeline requirements rather than being tied to a single original equipment manufacturer.

Guidance

• Management did not issue formal numerical revenue or earnings guidance for 2026 or future periods, but provided directional forward guidance on market conditions and project timelines. • Management estimates current grid interconnection and power supply constraints will persist through at least the mid-2030s, and potentially through the 2040s if AI-driven power demand growth continues to outpace new generation buildout. • The company expects to provide an update on a potential signed offtake agreement for the first phase of Project Permian within the next few months, with commercial operations targeted for 2028. • The existing balance sheet provides sufficient runway to advance ongoing operations, development activities, and initial equipment procurement for Project Permian without immediate pressure; full construction and commercial operations will require project-level financing, partner capital, additional equity, or a combination of these sources, and management remains optimistic about securing required funding.

Segment performance

NetPower is a single-segment project development company focused on natural gas power generation. No separate product segment financial performance is provided in the transcript. As of the end of Q2 2026, the company held $310 million in cash, cash equivalents, and investments, with no outstanding debt.

Risks & headwinds

• Current power generation equipment market tightness has driven continued increases in equipment costs, which creates upward pressure on overall project capital expenditures. • The company must front spending on long-lead equipment to de-risk projects and secure offtake agreements, which creates upfront capital risk that the company is managing judiciously to avoid overexposure. • Persistent power shortages and grid constraints that extend longer than expected could create broader market volatility, though the company's current strategic shift is positioned to benefit from this conditions. • Tying the company to a single technology or single supply chain creates business risk by limiting flexibility to adapt to market conditions, which the company is addressing by maintaining technology agnosticism. • Community acceptance of new data center and power development is a key consideration that could impact project timelines.

Analyst Q&A

• Q: How does NetPower gain a competitive advantage with this new strategic focus compared to other power developers in West Texas, and what is the long-term positioning? /

  A: Management notes the market is currently extremely supply-constrained, so value creation comes from the ability to deliver the large volume of fast power that customers need immediately, rather than requiring immediate differentiation. Once the market reaches equilibrium (estimated to be 10-15 years out), NetPower's preserved optionality to decarbonize existing generation in a region with accessible CO2 sequestration/EOR will become its key long-term differentiator. West Texas is ideal for both near-term unabated generation (abundant natural gas, available land) and future decarbonization, fitting the company's dual-phase strategy.

• Q: Is current data center customer demand from projects still in early origination, or from well-advanced projects that are now facing unanticipated grid constraints? /

  A: Most prospective customers have existing in-progress data center development that is now facing unexpected grid reliability and interconnection delays, even in Texas which was previously seen as a fast-to-market market. This has pushed customers to pursue self-sufficient behind-the-meter/off-grid solutions, which aligns well with NetPower's redesigned project model. The company's original PCC-focused design already relied on multiple smaller units, which works perfectly for the reliability needs of unabated behind-the-meter projects, and allows reallocating PCC capital to double initial installed capacity to meet immediate customer demand.

• Q: Will the first project include reciprocating engines, and how is NetPower approaching capital spending to de-risk the project before signing a PPA? /

  A: NetPower is technology-agnostic, so the first project will use a mix of gas turbines, reciprocating engines, and battery storage to deliver the required three nines reliability at the lowest cost on customer timelines, with no commitment to any single OEM. The company's $310 million balance sheet allows it to be thoughtful about upfront capital spending; most new equipment procurement is being done in coordination with prospective customers rather than pure speculation, and the company will work on creative co-financing for equipment to limit NetPower's risk exposure. Prior turbine purchases made last year have already proven accretive as equipment prices have risen.

• Q: Is NetPower pursuing strategic partners to help fund or develop Project Permian, and can PCC technology actually be retrofitted later instead of being built into the initial project? /

  A: NetPower currently has sufficient capital and expertise to advance the first project on its own in partnership with Oxy for land, but is open to adding strategic partners if their skills improve project success and enable faster scaling, consistent with the company's prior partnership with Entropy. For PCC, while integration with the facility is required, it can easily be added as a retrofit in a later phase. The current project layout is already designed with this future addition in mind, and PCC can be added alongside a conversion from simple to combined cycle if needed in the future.