NET Power Inc. Q4 FY2024 earnings call

• 2024 was a year of significant progress for Net Power, including completing FEED for Project Permian (SN1), a major milestone for a utility-scale clean gas power plant. • Kicked off equipment validation program with Baker Hughes at La Porte demonstration facility, achieving successful ignition on demand with over 140 fired hours. • 2024 faced inflationary pressures in the energy sector, with FEED for Project Permian revealing cost increases. Preliminary CapEx estimate for SN1 went from $950 million to an estimated $1.7 billion to $2 billion. • Focus for 2025 includes value engineering for Project Permian, completing feasibility studies for multi-unit projects along Gulf Coast, and securing sites for modular deployments. • Operational updates on Project Permian: shifted to post-FEED optimization and value engineering, aiming to reduce total installed cost. Also, progress on La Porte demonstration facility with over 140 fired hours and ongoing burner testing with Baker Hughes.

No detailed product segment financial performance with revenue contribution % provided in the transcript.

• Revised CapEx estimate for Project Permian to $1.7 billion to $2 billion due to inflation and site-specific costs. • Timeline for Project Permian: best case groundbreaking in 2027 and in-service date in 2029, depending on securing capital. • Focus on 2025 priorities: continue value engineering for Project Permian, complete feasibility studies for multi-unit projects, and secure Gulf Coast sites. • Funding needs: approximately $600 million to $900 million in new capital needed to fully fund Project Permian, with active exploration of strategic partnerships and capital solutions.

• Inflationary pressures impacting the energy sector, increasing costs for Project Permian. • Tight global energy supply chain, with CCGT deliveries delayed to 2030 and beyond. • Challenges in getting Project Permian financed due to higher costs in West Texas and site-specific issues. • Uncertainty in the availability and extent of government support like the 45Q tax credit.

Q: Could you break out labor costs, labor productivity assumptions within the FEED and raw materials impact?

A: Brian Allen stated they can't provide a breakdown at that point but mentioned it's a combination of market supply-demand imbalance, escalation in the industry, first-of-a-kind issues for Project Permian, and Permian-specific items.

Q: How do you see thermal CapEx declining over the next several years and how data center operators view cost increases?

A: Danny Rice said they don't expect CapEx deflation soon. Cost reduction will come from multi-pack deployments, modularization, and coastal applications. Akash Patel mentioned funding avenues include project-level capital, Topco-level capital, government support, and commercial partnerships.

Q: Talk about milestones or timelines for modularization?

A: Brian Allen said they're working on maxing out modularization at Project Permian and have kicked off work on coastal and mega module feasibility, with work to quantify in 2025.

Q: Change in discussions with DOE or support for the project with new administration?

A: Danny Rice said Net Power aligns with Trump administration goals, and uncertainty around 45Q tax credit, with potential for increased support to benefit the project.

Q: Thoughts on AI-driven power demand and whether power end users are realistic about the crunch?

A: Danny Rice said the market isn't fully aware of the tightness, and Net Power is in a unique position to bring a clean gas technology to market this decade if done right.

Q: Details on industrial-scale Net Power platform, total addressable market, and royalties?

A: Brian Allen said it's a new market, size not nailed down yet. Akash Patel said Net Power is a pure licensor in the industrial-scale platform, earning revenue from licenses with minimal capital outflow.

Q: Resources and human resources pursuing the opportunity?

A: Akash Patel and Brian Allen said the team has grown, with key technical roles added, and partnerships with many entities working on the technology.

Q: Focus on US Gulf Coast opportunities vs North MISO?

A: Danny Rice said focus is on lowest cost first, with Gulf Coast attractive due to natural gas infrastructure, CO2 infrastructure, etc., but North MISO is still being considered.

Q: Commercial activities and opportunities in Alberta?

A: Danny Rice said prefeasibility in Alberta is progressing, with insights from Project Permian and multi-pack pre-FEED to shape projects. Also, talking to big tech and focusing on long-term economics.