Summary

  • NET Power’s US$193.7 million impairment reduced its Developed Technology Asset Group to zero carrying value. That was an accounting conclusion, not a sale or cancellation of the intellectual property.
  • The September agreements indefinitely suspend the joint development and commercial arrangements and end Baker Hughes’ rights at the La Porte facility. They nevertheless preserve Nuovo Pignone’s exclusive licence to manufacture and sell utility-scale equipment packages using the licensed technology.
  • Industrial products may be manufactured and sold royalty-free. A royalty attaches only when a plant enters commercial operation; its amount is still unagreed, can go to an independent expert after 180 days, and does not stop licence use while the price is being set.

A zero on a balance sheet can look like a clean ending. A live exclusive licence is the opposite: it is a rule about who may act next. NET Power now has both.

In its 11 September Form 8-K, the company describes three agreements signed with Baker Hughes affiliates as one integrated transaction. Two agreements put the joint development and commercial programmes into indefinite suspension. A third rewrites the licence. The package stops current utility-scale Oxy-Combustion work, removes Baker Hughes’ access to and exclusivity over the La Porte Demonstration Facility, and leaves NET Power with no present plan to fund further development of the cycle.

But it does not give NET Power an unencumbered technology portfolio. Nuovo Pignone, or NP, keeps its exclusive utility-scale equipment licence. It also receives broad industrial licences, including a royalty-free product right and a separate, royalty-bearing plant-operation right whose price has not been agreed. Meanwhile, past Baker Hughes work remains payable and the two sides have released many claims relating to the period before the reset.

The economic question is not whether the old programme ended. It is how much optionality remains after operating expenditure stops, and which party controls the gates to using it.

Three contracts changed in three different ways

The words chosen by the parties matter. The amended and restated joint development agreement, or A&R JDA, is suspended rather than terminated. The commercial agreement is also suspended rather than terminated. The 2022 licence agreement is amended and ratified, not replaced.

The JDA suspension is retroactive to 1 January 2026 and has no fixed expiry. It ends only if both sides agree in writing to reinstate or terminate it. Even reinstatement requires prior agreement on amendments to specified provisions, including the combustor and turboexpander statements of work. No new performance or payment obligation accrues during suspension apart from preserved matters.

The commercial agreement follows a similar mutual-control design. Its operative rights and duties stop, its term is tolled, and neither side can unilaterally restart or terminate it. Provisions governing confidentiality, export controls, dispute resolution, governing law and parts of the liability regime continue to bind the parties.

That is not dormancy by accident. It is a negotiated holding pattern with two vetoes. NET Power avoids new programme spend; Baker Hughes avoids losing the agreements through the mere passage of time. Neither receives a unilateral route back to the old bargain.

La Porte is freer; the utility-scale supply route is not

The most visible release occurs at the physical asset. From 8 September, Baker Hughes no longer has the access and exclusivity rights it held over La Porte under the JDA, licence and commercial agreement. The facility warranty in the JDA no longer applies there. NET Power can consider continued use, sale or decommissioning without those specific facility rights restricting the choice.

That freedom should not be projected onto the equipment market. NP’s exclusive licence to manufacture and sell utility-scale equipment packages using the licensed IP remains in force. More unusually, the provision through which that exclusivity could be lost is itself suspended. The 8-K says it would not automatically revive if the JDA were reinstated, and the amendment does not explain how it would work after a termination of the JDA.

NET Power retains a limited right to solicit other utility-scale suppliers. Such a solicitation may use only specified technical information that existed on 3 February 2022. It does not authorise a third party to manufacture or sell a package while NP’s exclusivity remains. This is market testing without a complete right to transact.

NET Power also keeps ownership of its licensed IP and can assign, license or dispose of it. Any acquirer, however, takes subject to NP’s licences and exclusivity; a transfer does not erase them. Ownership is therefore real, but the commercial field attached to it is already occupied.

The industrial licence separates the machine from the operating toll

The revised industrial arrangement has two layers. NP and its affiliates receive a worldwide, perpetual, irrevocable, transferable and sublicensable licence to make, import, market, sell and distribute industrial products. That product licence is royalty-free. NET Power keeps certain research, development and promotional rights, but NP’s industrial product right is exclusive within the stated field.

A second licence permits installation and commercial operation of industrial plants. This is where the royalty attaches. No royalty accrues merely because a product is manufactured or sold; it begins when a plant incorporating the product reaches commercial operation.

The amount is not in the filing. For each plant, the parties are meant to agree commercially reasonable terms that support the customer’s value proposition, a competitive cost of electricity and reasonable compensation for NET Power. If they have not agreed within 180 days after either party puts a proposal in writing, either can refer the issue to an independent expert in process-technology licensing for power generation.

That process resolves price, but it does not create a deployment commitment. NP and its affiliates have no obligation to build a plant. Nor does the unresolved price pause their licence. NP may continue exercising it while an expert process runs, and the final determination applies from first commercial operation.

If NP sells equipment for a plant that a third party will operate, the sale terms must include a sublicense requiring that operator to pay. NET Power can pursue the operator directly for non-payment. NP is not the operator’s guarantor. The royalty claim therefore travels to the operating entity, along with its credit risk.

The arrangement resembles an option more than a contracted revenue stream. NP holds a durable right to deploy. NET Power holds a contingent toll on operation. Without a plant, there is no royalty; without an agreed price, the licence still works.

Zero carrying value removes neither ownership nor obligations

NET Power’s second-quarter Form 10-Q recorded a US$193.7 million non-cash impairment of the Developed Technology Asset Group. The group included Oxy-Combustion developed technology, the La Porte facility and related assets. US$17.4 million of the charge was allocated to property, plant and equipment. The whole group was reduced to zero carrying value.

Management reached that conclusion after deciding that development under the JDA would not resume, having no current plan to continue its own Oxy-Combustion development and facing uncertainty over a disposal. Accounting rules required it to test the recoverability of recorded cost. They did not auction the patents, cancel the licences or establish a market price of zero.

The later 8-K makes the boundary explicit: the impairment did not transfer or extinguish NET Power’s IP. Continued ownership, in turn, does not alter the zero carrying amount or guarantee value. Both halves are necessary. Treating the impairment as proof of worthlessness ignores the live rights; treating the live rights as proof of recoverable value ignores the company’s own accounting and strategy conclusions.

Old liabilities also survive. Amounts for Baker Hughes work performed through 31 December 2025 remain payable through cash and paired Class B shares and operating-company units. Final invoices and contractual calculations will determine the sum. Broad mutual releases cover many claims through the suspension date, but carve out those payment and wind-down matters and rights under the new agreements.

The September reset thus closes some future spending while preserving a settlement tail. It changes the timing and locus of risk; it does not make the historical programme costless.

The company has changed markets faster than it has cleared the old control map

NET Power now describes itself differently. Its August results release prioritises fast-to-deploy, unabated natural-gas generation for large loads, with carbon capture possibly added later if customers, economics, technology agreements and finance support it. At 30 June, the company reported US$310 million of cash, cash equivalents and investments. It was still pre-revenue and had no committed project-level finance, customer deposits or partner capital for Project Permian.

Cost movement shows how sharp the pivot has been. Second-quarter research and development expense fell US$22.4 million, or 84%, year on year, mainly because the JDA suspension reduced spending by US$20.3 million. La Porte plant expense fell by US$3 million. Project-development expense fell US$26.1 million, or 96%, after work on the first Oxy-Combustion utility-scale plant ceased.

Those reductions protect liquidity, but they do not value the residual option. Project Permian is expressly outside the September transaction. The new gas-power strategy, a possible future carbon-capture layer and the old Oxy-Combustion licences should be modelled as separate contractual and capital pathways.

The residual Oxy-Combustion asset can now generate value through a constrained disposition, an NP-led industrial deployment or some later renegotiation. Every route requires another party, another agreement or another observable action. The balance sheet no longer gives the asset a carrying value; the contract map still gives it an owner, a licensee and several veto points.

The next filing matters more than a royalty estimate

The full September agreements were not exhibits to the 8-K. NET Power says it expects to file them, with permitted confidential omissions, with its Form 10-Q for the quarter ending 30 September. Until then, the market has management’s detailed summary rather than the operative documents.

That limits what can be priced. Investors do not yet have a royalty number, a plant proposal, a deployment obligation, final legacy invoices or the full drafting around post-termination exclusivity. The 180-day mechanism has no public start date unless a written plant proposal is made. No commercial operation has been disclosed.

The clean conclusion is narrower than either optimism or abandonment. NET Power has stopped carrying and funding the old programme as before. Baker Hughes has surrendered the facility gate, not the utility-scale equipment gate. The industrial option is live, but its toll is unpriced and its exercise is voluntary. Zero is the book value; it is not the contract map.