NET Power Reports First Quarter 2024 Results and Provides Business Update

Rhea-AI Summary

NET Power (NYSE: NPWR) reported Q1 2024 results, highlighting progress at La Porte demonstration facility, FEED work for Project Permian, and MISO interconnection application for OP1. The company continues to focus on technology development, project backlog, and supply chain preparation. Cash flow used in operations was $3 million, investing activities $106 million. NET Power ended Q1 2024 with $625 million cash and investments, no debt.

Positive

• Progress at La Porte facility for equipment validation campaigns with Baker Hughes

• FEED work advancing for Project Permian in Texas

• Successful submission of MISO interconnection application for OP1

• NET Power ended Q1 2024 with $625 million cash and investments

Negative

• Cash flow used in operations was approximately $3 million in Q1 2024

• Cash flow used in investing activities was approximately $106 million in Q1 2024

Insights

Financial Analyst

NET Power Inc.'s recent financial communications highlight their developmental progress and ambitious plans for clean energy technology. From a financial perspective, the fact that the company sustained operational cash outflows of around $3 million alongside $106 million in investing activities signals aggressive reinvestment into the business which is pivotal for a company in the growth phase. Notably, their investment in securities and capital expenditures is consistent with a strategy geared towards expanding their project pipeline and securing assets ahead of future revenue generation. With $625 million in cash and investments and zero debt, the balance sheet remains robust, providing a cushion for the company's continued investment in technology and infrastructure. The conclusion of the FEED for Project Permian could be a significant inflection point, as it paves the way for a standardized plant design, potentially reducing future capital costs and streamlining expansion. Investors should remain cognizant of the company's hefty spending and long-term horizon to profitability. The anticipated first fire for Project Permian, being several years away, underlines the extended timeline which may test investor patience. However, for the clean energy sector, this is a common theme, where substantial upfront investments precede long-term payoff.

Energy Sector Analyst

Evaluating NET Power's operational update, one can discern their strategic focus on de-risking technology for utility-scale deployment—a significant undertaking in the energy sector. The collaboration with Baker Hughes for equipment validation at the La Porte facility touches upon one of the most critical aspects of technology development: reliability and scalability. The phases outlined delineate a methodical approach to achieving utility-scale readiness, which is important in an industry where the stakes of technological failure are high. Furthermore, the filing of the interconnection application with MISO is indicative of NET Power's proactive steps towards integration into the power grid, a non-trivial factor when assessing the feasibility and timeline of energy projects. The company's progression in FEED work and the initiation of orders for long-lead components suggest that NET Power is transitioning from a purely developmental phase into a more execution-focused stage. This pivot is typically accompanied by heightened risk as the company encounters the logistical challenges inherent to constructing and operating new energy infrastructure. The strategic partnership with Occidental Petroleum, through the site land lease agreement, adds another dimension—a potential symbiosis with established energy players which could facilitate the transition to commercialization, while also diversifying the technology's application scope and market access.

Environmental Impact Analyst

NET Power's commitment to decarbonizing baseload power generation is an ambitious target that resonates deeply with current environmental goals and market trends. As an Environmental Impact Analyst, it is essential to point out that baseload power has been traditionally provided by high-emission sources like coal and natural gas, thus NET Power's technology holds potential for significant environmental benefits. The long-term impact of successfully deploying clean energy technology cannot be understated—an essential step towards achieving emission reduction goals. The early involvement with an air separation unit (ASU) provider for Project Permian merits attention as it indicates a holistic approach to the entire cycle of clean energy production. By focusing on the entire supply chain and operational framework required for their technology, NET Power seems to be addressing the commonly cited shortfalls in renewable energy projects such as intermittency and scalability. While the environmental benefits are promising, investors should be aware that the regulatory landscape surrounding clean energy can be volatile, with policy changes posing potential risk or reward for companies like NET Power. Additionally, the clear cut technological milestones and multi-year testing and deployment timeline suggest a commitment to thoroughness, but also imply long lead times before environmental benefits can be realized on a larger scale.

• Continued site work at La Porte demonstration facility in preparation for upcoming equipment validation campaigns with Baker Hughes
• Progressed Front-End Engineering and Design (FEED) work for Project Permian, the Company’s first utility-scale project in West Texas
• Filed interconnection application with Midcontinent Independent System Operator (MISO) for OP1, the Company’s first originated project

DURHAM, N.C.--(BUSINESS WIRE)-- NET Power Inc. (NYSE: NPWR) (“NET Power” or the “Company”) today reported results for the first quarter of 2024.

Danny Rice, Chief Executive Officer of NET Power, commented, “The urgent need for clean, reliable and affordable energy requires game-changing, innovative solutions like NET Power. We believe our technology can play a critical role in decarbonizing baseload power generation without sacrificing affordability.

As I’ve highlighted in the past, we measure our progress towards commercialization through three strategic pillars: developing and proving the technology at the utility scale, building out our project backlog, and standing up our supply chain to prepare for manufacturing mode. The NET Power team continues to diligently work against these pillars.”

Business Update

Baker Hughes equipment validation at La Porte demonstration facility – The Company continues modifications at its La Porte facility to prepare for upcoming equipment validation campaigns with Baker Hughes. The process will follow four phases: (i) oxy-fuel burner configuration selection, (ii) single demonstrator combustor can validation, (iii) single utility-scale combustor can validation, and (iv) full demonstrator turboexpander validation. The demonstrator turboexpander has a reduced-size flow path with the same design philosophy as the utility-scale turboexpander. Phase one is set to begin in the fourth quarter of 2024 and subsequent phases are expected to continue through 2026. These equipment validation test campaigns at La Porte are intended to de-risk the utility-scale turboexpander, which will be deployed to Project Permian and future projects.

Project Permian – At NET Power’s first Texas-based project located near Midland-Odessa, FEED continues with licensed EPC partner Zachry Group. FEED is expected to conclude in the fourth quarter of 2024 and will form the basis for NET Power’s standardized utility-scale plant design. Orders for long-lead components have commenced and are expected to continue throughout 2024.

During the quarter, engineering work began with the Company’s selected Air Separation Unit (ASU) provider for Project Permian, and a site land lease agreement was executed with Occidental Petroleum. These achievements position NET Power to remain on target with the Project Permian development schedule with a first fire between second half of 2027 and first half of 2028.

Origination – In April 2024, NET Power submitted a MISO interconnection application for OP1, the Company’s first originated project. NET Power’s origination strategy is designed to accelerate large-scale, economic deployments of NET Power plants across competitive power markets in North America.

Financial Updates

During the first quarter, cash flow used in operations was approximately $3 million and cash flow used in investing activities was approximately $106 million, which includes approximately $96 million of purchases of available-for-sale securities and $10 million of capital expenditures primarily for La Porte and Project Permian. The Company ended the first quarter of 2024 with approximately $625 million of cash and investments and no debt, as compared to approximately $637 million in cash and investments at the end of the fourth quarter of 2023.

Conference Call

NET Power will host a conference call to discuss first quarter 2024 financial results beginning at 8:30 AM ET on Monday, May 13. To access the live audio webcast of the conference call, please visit NET Power’s investor relations website at ir.netpower.com. To participate by phone, dial 877-407-8014 (domestic) or +1 201-689-8053 (international).

An archived webcast will be available following the call.

About NET Power

NET Power (NYSE: NPWR) is a clean energy technology company developing its proprietary NET Power Cycle, which transforms natural gas into clean, reliable, and affordable power. The Company is on a mission to deploy its utility-scale plants across the world by partnering with power producers, energy producers, technology providers, local communities and other stakeholders. NET Power was founded in 2010 and has offices in Durham, North Carolina (HQ) and Houston, Texas.

Cautionary Note Regarding Forward-Looking Statements and Projections

Certain statements in this release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, each as amended. Forward-looking statements provide current expectations of future events and include any statement that does not directly relate to any historical or current fact. Words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “projects,” or other similar expressions may identify such forward-looking statements. Forward-looking statements may relate to the development of NET Power’s technology, the anticipated demand for NET Power’s technology and the markets in which NET Power operates, the timing of the deployment of plant deliveries, and NET Power’s business strategies, capital requirements, potential growth opportunities and expectations for future performance (financial or otherwise). Forward-looking statements are based on current expectations, estimates, projections, targets, opinions and/or beliefs of the Company, and such statements involve known and unknown risks, uncertainties and other factors. Actual results may differ materially from those discussed in forward-looking statements as a result of factors, risks and uncertainties over which NET Power has no control. These factors, risks and uncertainties include, but are not limited to, those described under the headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, its subsequent annual reports on Form 10-K and quarterly reports on Form 10-Q, and in its other filings made with the SEC from time to time, which are available via the SEC’s website at www.sec.gov. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and NET Power assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. NET Power does not give any assurance that it will achieve its expectations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240513285632/en/

Investor Relations Contact:

investors@netpower.com

NET Power Media Contact:

Sam Fabens

netpower@voxglobal.com

Source: NET Power Inc.

FAQ

What were NET Power's key achievements in Q1 2024?

NET Power made progress at La Porte facility, advanced FEED work for Project Permian, and submitted a MISO interconnection application for OP1.

How much cash did NET Power use in operations in Q1 2024?

NET Power used approximately $3 million in operations in Q1 2024.

What was NET Power's cash position at the end of Q1 2024?

NET Power ended Q1 2024 with approximately $625 million in cash and investments.