NET Power Inc. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. NET Power Inc. is an energy technology company transitioning its strategy from its proprietary Oxy-Combustion Cycle to a "Clean Gas Product" utilizing licensed post-combustion carbon capture (PCC) technology from Entropy, Inc. The company is currently developing its first commercial project, Project Permian, in West Texas, with a target capacity of up to 1 GW. Development of the Oxy-Combustion Cycle has been paused to focus resources on the new strategy.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss (Attributable to NET Power) | $(9.9) million | $(119.4) million |
| Operating Loss | $(34.2) million | $(474.6) million |
| Cash and Cash Equivalents | $133.1 million | $300.0 million (Q1 2025) |
| Total Liquidity (Cash + Investments) | $318.3 million | $376.1 million (Dec 31, 2025) |
| Net Cash Used in Operating Activities | $(51.1) million | $(20.4) million |
| Current Liabilities | $13.1 million | $47.5 million (Dec 31, 2025) |
Note: The company has no revenue and operates at a loss. Margins are not applicable.
Material Changes vs. Prior Period
- Significant Reduction in Loss: Net loss attributable to NET Power decreased by approximately 92% compared to Q1 2025. This improvement is primarily due to the absence of a $415.9 million impairment charge recognized in Q1 2025 (related to goodwill and construction-in-progress for the SN1 project).
- Operating Expenses: Total operating expenses dropped from $474.6 million in Q1 2025 to $34.2 million in Q1 2026.
- R&D Expenses: Decreased by 13% ($2.9 million) due to the suspension of the BHES Joint Development Agreement (JDA) and testing at the La Porte Demonstration Facility.
- Project Development: Decreased by 78% ($3.5 million) as work on the SN1 utility-scale plant was paused.
- Depreciation/Amortization: Decreased by 84% ($18.3 million) following asset impairments in the prior year.
- One-Time Costs: The company recognized $4.6 million in employee termination costs in Q1 2026, including severance and accelerated share-based compensation.
- Liquidity: Cash and cash equivalents decreased by approximately $66 million from the beginning of the period, driven by operating cash outflows and net investing activities.
Outlook, Risks, and Management Commentary
- Strategic Pivot: Management is focusing on the "Clean Gas Product" (gas turbines + Entropy PCC). The Oxy-Combustion Cycle development is paused.
- Project Permian: Phase I is expected to utilize two 30 MW gas turbines. Final Investment Decision (FID) is targeted for the second half of 2026, with commercial operations by early 2029.
- BHES JDA Status: Development activities under the Baker Hughes Energy Solutions (BHES) JDA were suspended in late 2025 and extended through May 30, 2026, while negotiations regarding future commercialization continue. The company remains obligated to pay certain costs up to a $3.0 million cap during the suspension.
- Liquidity Outlook: Management believes current liquidity ($318.3 million) is sufficient to fund operations for the next 12 months. However, additional funding will be required to successfully develop and fund future projects.
- Legal Proceedings: The company is defending against a putative securities class action and a derivative suit filed in 2025 alleging false statements regarding Project Permian's timing and costs. No financial loss estimate can be made at this time.
- Risks: Key risks include the ability to license Entropy's technology, supply chain disruptions, regulatory challenges, and the capital-intensive nature of the business requiring future fundraising.
Investor Verification Checklist
- Capital Requirements: Verify the timeline and sufficiency of current cash reserves against the projected costs for Project Permian Phase I and the need for future equity raises.
- Entropy Partnership: Confirm the status of the definitive licensing agreement with Entropy, Inc. for the PCC technology, which is critical to the new business model.
- BHES JDA Resolution: Monitor the outcome of negotiations with Baker Hughes regarding the JDA suspension and potential amendments, as this impacts future R&D costs and equity dilution.
- Legal Exposure: Track developments in the securities class action and derivative litigation regarding Project Permian disclosures.
- Project Permian Milestones: Validate the feasibility of the targeted FID in H2 2026 and commercial operations in early 2029 given current supply chain and regulatory environments.