Net Power outlines strategy to expedite deployment of clean, reliable power solutions as demand surges for AI and data centers, targeting competitive LCOE below $80/MWh.

Greetings welcome to the Net Power third quarter 2025 earnings call. At this time, all participants are in a listen only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press Star0 on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to Bryce Mendez, 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 Mark 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 those handy and follow along. And then after our prepared remarks, we will open the line for questions from the analysts. So let us start on Slide 3, talking about our mission. So back in 2021, the team at Rice Acquisition Corp. 2, 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 three 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 US 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 is 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 are going to be in a little bit of trouble. Unfortunately, that is the situation we find ourselves in here in North America. For the first time in a long time, we are seeing unprecedented demand growth for power, primarily driven by artificial intelligence and data centers, but also from reinsuring of US 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 will 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 believed 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 two. 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 if this power can also be clean, that is the icing on the cake with all things power. You cannot 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 you 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 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 will 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 five to seven to 10 years for new generation. We need to get building now for the benefit of our shareholders, our prospective customers in 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 in data center buildouts. 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 US 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 US does not 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 is 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 us. If the US 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 is about to begin playing out as such. So the signals they're 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 timeline to meet accelerated need for 24.7Power. So let us flip to slide 5 and talk about the steps we are 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 is 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, 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 three 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 is 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 years, we've assembled a couple 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've 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 are 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, or 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 cannot 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 is 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 is uneconomic to transport and sequester or the underlying power project does not operate at sufficient uptime to justify the capital investment in pcc. In those instances, it is 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 24.7Power 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 US 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 is been running for a few years now. They've fine tuned their solvent mixture for carbon capture from natural gas. In between our two companies, we recognized an opportunity to combine Net Powers power generation inside origination skill set with theirs on PCC to accelerate the deployment of clean gas power projects in the US 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 Mysore 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 zero 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 co location. 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 prize for this partnership is building high quality clean firm power projects in markets that value 24. 7 clean power on an accelerated timeline. And over the course of the next several months, we will be working several work streams in parallel with the Entropy team. First, we will be finalizing definitive documents of the loi. Second, we will wrap up technical diligence to fully confirm this is the right path, as well as complete design work around our first project, which Mark will talk about in some detail. It's worth flagging that if we choose to complete this transaction, we will 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 1Q26 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 are 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 two. And in a market that is operating with a very near term focus on 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 six, we wanted to briefly summarize the landscape of our new product portfolio which has really evolved to prioritize speed to market 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 2000-30s and LCOE in the mid-1100s with a pathway to sub $100 LCOE or lower with an extremely low environmental impact. We are keeping that technology in our arsenal and will methodically advance itself development on the right timeline. But then skipping down to the bottom of the slide is where we will 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 break even 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 solution for the build out of clean firm power in the US 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 is 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, a TRL9 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 is 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 Mark Horstman, Netpower's Chief Operating officer.

Thanks Danny. Slide 8 details how we will be leveraging the existing infrastructure that has been established through our project permitting efforts to develop our first clean power hub where we are 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 position near Midland, Odessa. Phase one 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 one 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 turns with Oxy to purchase 30 megawatts and 100% of the Cat Food CO2 under long term agreements, and we are 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 and paired with Entropy's PCC technology. This approach enables a faster development timeline of 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 would 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 buildout 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 6 sequestration for long term CO2 storage. Our partner currently holds two Class 6 well applications and both are on track for permitting in the second half of 2028. Similar to the Permian, we are designing phase one 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 an active dialogue with strategic offtakers for the power at this site. Overall, Northern MYSO is moving forward as an anchor site for our next phase of growth, complementing the Permian program and reinforcing the scalability of of our Clean Power product platform. Slide 10 shows that Project Permian remains on track for its first power in 2028. Phase one 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 Internet connect. With Internet 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 phages phases Moving to the right hand side of this slide, we will 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 are 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 and A. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press Star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment please, while we poll for your questions. Our first questions come from the line of Nate Pendleton with Texas Capital. Please proceed with your questions.

Good morning. Thanks for taking my questions. 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.

Yeah. 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 is not just about the skills, but it is about the resources and assets that we possess today. I think it starts with having a fundamental understanding of both power, really the above ground piece, along with a really, really solid understanding on the subsurface. And I think, you know, when we take a step back and you just ask yourselves like, why hasn't like gas for CCS really taken off in the past? I think it is because, you know, when you look at all of these potential projects that have really been proposed on the CCS side for pcc, it is always been through like a power first sort of approach. Where's the best place to put a power plant? And then secondarily is, well, can we do Post Combustion Carbon Capture (PCC) here? And if you are not close enough to the sink, if you are not close enough to a high quality reservoir, the Post Combustion Carbon Capture (PCC) economics fall apart pretty quickly. So it is all about 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 like 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 Post Combustion Carbon Capture (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 timelines 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 are kind of sitting in this unique position where over the last several years we have started to originate high quality sites to put these net power plants in. These sites work just as well for Post Combustion Carbon Capture (PCC) as they do for Net Power because it is 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 Post Combustion Carbon Capture (PCC) Net Power is sitting here today with a couple 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 have 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 are going to have rig 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 are 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, you know, when, when Mark's talking about, you know, getting to FID in 26 and coding 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, of 28 through 2030, 2031, if we do this right, we are 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 competitors clean gas project comes online, we are going to have three to four years of operational runtime as well as three to four 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.

Yeah, seems like a compelling opportunity. So thanks for laying that out. And then if I may. Looking at. Entropy, you know, they're seems like a phenomenal partner from what I understand about their history and what they've been able to achieve with their 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 THIN and what you see in that technology that may make post combustion carbon capture truly competitive economically?

Yeah, I'll start and then Mark 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 is 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 are able to fine tune the technology, you are able to fine tune the, the assets to optimize for performance. And so being able to have three years of runtime on their facility, they have been able to optimize and improve the performance of their technology, which is both the infrastructure but also the solvent technology. And so they have been able to optimize 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 ways to measure it. It's the amount of energy it takes to separate the solvent from the CO2. It's the CAPT efficiency of the CO2. It's the degradation of rate of how long does it take before that solvent breaks down. And then it is also the inhibition of that, that solvent or the amines to become nitrosamines, which, which is not good. And the entropy solvent, they have, they have, they have done a phenomenal job, you know, essentially like building what is a peer leading sort of technology. And so that's really where this whole synergy comes in, is they have what we would Say is a TRL9 product that should and can be deployed in the power markets that need clean power the fastest. That happens to be the US 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 US 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. Got it.

I really appreciate the detail and thanks. For taking my questions. Yeah, thanks, Nate.

Thank you. Our next question has come from the line of Martin Malloy with Johnson Rice. Please proceed with your question.

Good morning. I wanted to ask if you could. Maybe talk broadly about the financing strategy with phase one and then follow on projects. It sounds like from Mark's comments, with phase one, you've got the, you've got potentially all the power you've got an offtake for and as well as the CO2 going to oxygen. 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.

Yeah, no, Marty, great to hear from you. Those are really awesome questions. Yeah, I think starting on just like the financing of these projects, I think, you know, 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, you know, 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 are 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 finance because there's no, you know, quote unquote bankable technology within that plant. And that's okay. And that's. That's sort of common across new first of a kind technologies. I think you contrast that against what we are doing here with Entropy with the gas turbines and the pcc. Like I mentioned before, you know, half of that facility is, is. Is existing, proven bankable technologies. The gas turbines, steam turbine, the, the, the hrsg. That's. That's all stuff that is, that is financible 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, that becomes very financeable on the project financing side. And so the way we kind of look at it is we know we are going in with at least half of the capex, very, very bankable with just project financing. So it is not going to require equity financing. I think you kind of wrap this whole thing within long term contracted cash flows. And, you know, we are 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 are targeting in terms of how competitive is this from an LCP perspective. I think LC 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, you know, mid single, mid double digit sort of IRRs, you know, 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, you know, this isn't going to be Net power is going to have to put up 3 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 are 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 is sort of like a perfect setup where it is, we are able to deliver clean from power sooner, it is more accretive to our equity dollars that we are investing on an accelerated timeline in terms of speed to market with new power generation.

Great, that was very helpful. And then for a follow up question, just wanted to see if you could share with us maybe any anecdotes of conversations that you have had with potential off takers in the data center market, you know, 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.

Yeah, I mean it is quite interesting. I mean today's 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 timeline 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 is 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 eons. 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 100 times less valuable than the same project if it could come online in 27 or 28. And so these conversations that we can now start having with strategic off takers, they become a lot more real and a lot more interesting because we are talking about projects on a very accelerated timeline than the conversations we've been having with them on in the past about projects starting in 2031 or 2032. And that, that, that is 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 onto 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 timeline. And I think this certainly partnership with entropy allows us to do that.

Great, thank you. That was very helpful. Yep, thanks, Marty.

Thank you. Our next questions come from the line of Betty Jung with Barclays. Please proceed with your questions.

Hello, good morning. I want to ask about the slide 10 and then just 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.

Yeah, no, that's a great question, Betty. And I think this is an important one for everybody to understand. It really comes down to two 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 is 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 scribe 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 permanently sequester it. And so that comes out of the 45Q proceeds that you get. So in a place like Northern Myso, we are 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, 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 a 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 kind of think it about, you can kind of think about it as like carbon stacking, where you're getting paid the $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 is specifically because of the low cost nature of natural gas. There's. And then I think if you take it a step further and you say, okay, well where's 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 you know, we, we kind of recognize this way back in the day with net power and 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 are going to be doing with entropy on the PCC side of things. So it is 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 that project permitting site is going to be a great place to be able to demonstrate that on a very accelerated timeline with the entropy folks.

Got it. That makes a lot of sense. My second question, a big, 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 plans. And now since 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?

Yeah, no, it's a great question, and I think that's one of the.