Net Power’s stock is hovering near its all-time low in the two weeks after the Durham-based clean energy technology company disclosed higher estimates for building its first power plant.
The cost for developing Project Permian in Texas is now projected at $1.7 billion to $2 billion, Net Power said in a presentation on March 10. That’s roughly double the initial estimates, requiring the company to raise $600 million to $900 million to close the funding gap, according to a GuruFocus.com post.
The company also pushed back the earliest start date for the Midland/Odessa, Texas, operations until 2029. That’s a delay from last September’s projection of second-half 2027 and first-half 2028.
In an investor’s presentation last fall, Net Power estimated capital expenditures of about $805 million for the plant. Market inflation, supply chain constraints and other factors have pushed costs higher, leading to a site plan reduction of 25% in an “optimization and value engineering process” started in January.
Net Power’s shares have lost almost two-thirds of their value in the six months since CEO Danny Rice spoke to investors. They’ve slumped 73% in the last year.
Since its start 15 years ago, Net Power has been trying to commercialize the generation of emissions-free power from conventional fossil fuels. It described Project Permian as “the first-of-its-kind, large-scale, fully integrated clean gas power plant.”
Net Power ended 2024’s fourth quarter with cash and investments totaling $533 million, down $47 million from the earlier quarter. The reduction illustrated what the company described as a “prudent deployment of capital.”
Citing “a challenging yet opportunity-rich market,” the company said its liquidity provides “significant financial resources to optimize its technology and establish strategic partnerships to fund its first utility-scale project and future multi-unit deployments.”
While the company “does have a solid cash runway, its cash burn trajectory may have some shareholders thinking ahead to when the company may need to raise more cash,” Simply Wall St wrote after Net Power’s fourth-quarter earnings report. “Commonly, a business will sell new shares in itself to raise cash and drive growth.”
Last September, Net Power described its investors as a “supportive long-term strategic shareholder group led by Oxy,’’ referring to Oxy Low Carbon Ventures, which reached an investment agreement with Net Power in 2018.
As of March 7, 2024, the subsidiary of Occidential Petroleum owned 41.9% of Net Power shares as the company’s largest investor, according to Net Power’s April 2024 proxy statement.
Occidental “provides guidance, oversight and support via board and deep bench of subject matter experts,” Net Power told investors last fall. Its board is chaired by Jeff Bennett, president of U.S. Onshore Resources and Carbon Management, Commercial Development of Occidental.
Houston-based Occidental had revenue of $27 billion last year. Warren Buffett’s Berkshire Hathaway owns nearly 30% of Occidental’s shares.
