New Era Energy (NUAI) Q3 2026 Earnings Call Transcript

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DATE

Nov. 12, 2026

CALL PARTICIPANTS

• Investor Relations - Lincoln Tan
• Chairman and Chief Executive Officer - Charles Nelson
• President and Chief Financial Officer - Ted Warner
• Chief Operating Officer - Jose Rodriguez
• Chief Development Officer - Evan Pierce

TAKEAWAYS

• Total Cash -- $187 million at Oct. 31, 2026, consisting of $49 million in unrestricted funds and $138 million in restricted cash.
• Restricted Cash -- $138 million, representing collateral that supports the letter of credit for the primary power purchase agreement.
• Outstanding Debt -- $20 million at Oct. 31, 2026, which management reported is fully cash-collateralized.
• Private Placement (PIPE) -- $64 million, utilized to repay Macquarie borrowings and support development activities at Texas Critical Data Centers.
• Phase 1 Power Capacity -- Up to 207 megawatts, secured through a 20-year power purchase agreement with a Vistra Corp affiliate.
• Phase 2 Planned Capacity -- Approximately 550 megawatts, which the company intends to serve using new islanded on-site generation.
• Total Planned Capacity -- 757 megawatts gross for the first two phases of the Texas Critical Data Centers project.
• Power Availability Timeline -- Q3 2027, utilizing a grandfathered private use network exempt from the ERCOT Batch Zero process.
• Ready-for-Service Target -- Q4 2027, following the expected availability of power in the third quarter.
• Build Cost Efficiency -- Less than 50% of a comparable traditional development, reflecting the company's proposed modular construction approach.
• Land Holdings -- 493 acres owned, with an additional 99 acres under contract for acquisition to facilitate utility build-out.
• Project Financing Option -- Up to $200 million, available under the Macquarie facility following the execution of a Phase 1 lease.
• Letter of Credit -- $118 million, posted as cash collateral to secure the Phase 1 power position.
• Vistra Equity Stake -- 5% nonvoting interest in Phase 1 power, to be issued to Vistra upon the commencement of power delivery.
• Turbine Delivery Schedule -- Q4 2027 to Q1 2028, supporting the development of Phase 2 on-site generation facilities.
• Site Preparation Progress -- Grading and clearing are currently underway, including the removal of thousands of feet of existing pipeline.
• Modular Delivery Timeline -- September 2027, representing the target for lighting up the first modular compute components on the site.

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RISKS

• Nelson stated, "The capital markets have been volatile, and investors are asking harder and harder questions about how data center projects will be funded and delivered," reflecting broader industry financing challenges.
• Rodriguez noted that the company is using a modular approach to "manage the risk of labor shortages as competition for skilled data center workers remains elevated."

SUMMARY

New Era Energy & Digital, Inc. (NASDAQ:NUAI) reported progress on its flagship Texas Critical Data Centers project, transitioning to a self-execution model for Phase 1 delivery. Management stated that the company has secured power outside the standard ERCOT Batch Zero process, providing a path to service by late 2027. The company entered into a nonbinding letter of intent with a global technology firm for both Phase 1 and Phase 2, while concurrently strengthening its balance sheet through a private placement. The development strategy emphasizes modular construction to reduce capital outlays and an islanded power solution for future phases to mitigate grid-related constraints.

• COO Jose Rodriguez stated, "Modular means completing more work offsite while site preparation progresses in parallel. That gives us better visibility of our production schedules and can shorten the path to commissioning."
• Evan Pierce noted that Phase 1 power is part of a registered private use network exempt from batch process constraints, which makes the project "particularly relevant to those customers" facing power delays elsewhere.
• CEO Charles Nelson stated that the shift to a self-execution model was a strategic choice as a tenant "sees something rare that points to lower execution risk" in a team solely focused on one large-scale project.
• The company is evaluating the reuse of produced water from Permian Basin oil and gas operations for industrial cooling to reduce demand on local freshwater supplies.
• Nelson stated that Phase 1 development can proceed independently of the Phase 2 documentation, as the two leases are being negotiated separately.
• Management confirmed that site approvals for Phase 1 are in hand and that they continue to engage with Ector County and the City of Odessa regarding local jobs and infrastructure.

INDUSTRY GLOSSARY

• Batch Zero: A regulatory queue process within the Electric Reliability Council of Texas for new power interconnection requests.
• Behind-the-meter: A power arrangement where electricity is generated or used on-site without passing through a utility meter on the distribution or transmission grid.
• ERCOT: Electric Reliability Council of Texas, the organization that operates the state's electrical grid.
• PPA: Power Purchase Agreement, a long-term contract for the purchase of electricity.
• PIPE: Private Investment in Public Equity, a mechanism for public companies to raise capital from private investors.
• PSA: Purchase and Sale Agreement, a legal contract for the acquisition of assets or property.
• RFS: Ready-for-Service, the date a facility is prepared to begin operations for a tenant.
• TCDC: Texas Critical Data Centers, the flagship development project of New Era Energy & Digital.
• TCEQ: Texas Commission on Environmental Quality, the state's environmental agency.
• Permian Basin: A large sedimentary basin in the southwestern United States known for significant oil and natural gas production.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the NUAI's Third Quarter 2026 Business Update Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lincoln Tan, Investor Relations at New Era. Please go ahead.

Lincoln Tan: Thank you, operator, and good morning. My name is Lincoln Tan, Investor Relations for New Era. Thank you for joining our third quarter fiscal 2026 business update call. Joining me today are Charlie Nelson, Chairman and CEO; Ted Warner, President and CFO; Jose Rodriguez, Chief Operating Officer; and Evan Pierce, Chief Development Officer. Before we begin, I'd like to remind everyone that today's call is being recorded and will be available on the investor relations section of our website. [Operator Instructions] Certain statements made on this call that are not historical facts, including those related to our future plans, objectives, and expected performance, are forward-looking statements.

These forward-looking statements represent our outlook only as of the date of this conference call. While we believe any forward-looking statements made on this call are reasonable, actual results may differ materially because these statements are based on our current expectations and subject to risks and uncertainties. These risks and uncertainties are discussed in our filings with the SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q. You should refer to and consider these factors when relying on such forward-looking information.

Any forward-looking statement made speaks only as of the date on which it is made, and we do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. So with that, I'll now turn the call over to Charlie Nelson.

Charles Nelson: And thank you, Lincoln. And again, thanks everyone for making the time here. So we're going to go over everything to date at TCDC and where we are as a company during this call. We've made a lot of important progress at TCDC during Q3 and into Q4. We've secured the power in our own name, we're rapidly progressing lease negotiations, and strengthening the team and balance sheet really needed to move this project towards final delivery. That progress comes against a challenging backdrop. We've had multiple black swan events, the capital markets have been volatile, and investors are asking harder and harder questions about how data center projects will be funded and delivered.

And communities want to understand what these developments mean for their electricity supply, the water resources, local infrastructure, and essentially a social license to operate in these different communities that we're in. And we believe that environment makes the quality of our power position and our development approach and contracting approach increasingly important. And so since our last update, we've signed a 20-year PPA for up to 207 megawatts. In conjunction with that, we posted a $118 million cash collateralized letter of credit to be able to hold that power, which we have already completed. The power availability is expected in Q3 of '27.

And this power, again, just to remind everyone, is through an existing grandfathered private use network, which is not subject to Batch Zero constraints within Texas, and it allows us to have this ready-for-service date in Q4 of '27. And we believe that we have one of the more valuable power positions at a time when customers have kind of limited alternatives on that time line. Additionally, there are many of those in the Batch Zero process who are facing uncertainty around the magnitude and the timing of their power.

And so we're just looking at the rest of the market adding and compounding risk with these countless data center projects that are up for permitting, and we're sitting here relatively insulated here. And so with our permits pertaining to Phase 1 in hand, an adjacent generation plant and Phase 1 power as part of an existing and seasoned private use network outside of the batch process, we believe the timing and certainty of our project have made TCDC an even more attractive asset going forward. And so the task now is to translate our position into a definitive lease, and we can go through what we're doing there.

Look, but this is a financial development plan, and ultimately we want to communicate what this means in terms of earnings to our shareholders. So shortly after the PPA announcement that we made in September, we signed a non-binding LOI that covers both TCDC's Phase 1 and Phase 2 with the same prospective tenants. We are now in advanced negotiations with the Phase 1 lease, and the Phase 2 lease documentation is being worked on concurrently but separately. And it's important to note that Phase 1 can proceed without Phase 2 documentation being fully complete. So they are not -- those are mutually exclusive; they're not reliant on each other.

And so for Phase 1, we believe that the proposed modular approach will have -- that we've referenced in our business updates, historically speaking will offer a substantially lower build cost as well as an accelerated timeframe. And we've added -- since then, we've added experienced development and construction professionals that will go over the whole new team to what we believe is already a best-in-class team to support our work on both phases. We also strengthened our balance sheet. Recently, we did a $64 million PIPE, and that was used to pay down debt and support leasing and development activities.

So now we sit here with a clean balance sheet and a project that we believe is arguably one of the most favorable in the country in the current market and beyond. And we believe that what we have done has given us a strategic advantage heading into the next phase of the company. So today, we want to connect all these pieces for everyone because a lot has been going on. And the power that we've secured, how we plan to deliver the project, our partnership model, how we intend to fund it.

And our immediate priority is completing the lease, obviously, and putting the financing and delivery arrangements around it, giving shareholders a clearer view of the capital required and ultimately what the potential returns are. And so before going into this project detail, I'm going to hand it over to Evan right now to address directly our approach to responsible development and how we're approaching power, the water stewardship, and giving the local community a seat at the table, which is really what's the world that we've been planning and living in, and we're excited to just talk through this. So with that, I'll hand it over to Evan real quick. And Evan, go ahead.

Evan Pierce: Thanks, Charlie. I was born in Texas, I was raised in Texas, and my family lives in Texas. So these issues are important to me. Our team has deep experience in both data center development and sustainability. That experience has reinforced how critical it is to strategically address power, water and community needs at all stages of development, including site selection, land development, design, construction, and operations. New Era's approach to TCDC is aligned with Governor Abbott and Governor-elect Hinojosa's priorities and concerns for utility ratepayers, water, and local communities. This is not reactionary; this is how we approach TCDC from the outset.

Stewardship was core to our development philosophy well before these issues became a prominent part of the data center debate. Regarding power, our strategy is designed to avoid increasing transmission costs for Texas ratepayers. Phase 1 uses an existing utility connection via behind-the-meter private use network. For Phase 2, we plan to bring new islanded on-site generation to power the rest of the site. Addressing water, we simply plan on deploying closed-loop cooling to limit consumption at TCDC. That being said, I want to highlight a unique and underappreciated feature of the Permian Basin.

This region generates a significant amount of produced water from the oil and gas industry, and we're partnering with Texas regulators and the University of Texas to evaluate how that water can be treated and reused for industrial cooling. With the aim of reducing demand on local freshwater supplies while also lowering the volume sent to disposal wells. Finally, we agree that Texans should have a seat at the table. New Era continues to engage directly with Ector County, the City of Odessa, as well as local businesses and community organizations. We're aiming for maximum transparency, want residents to understand the development, and provide opportunities to raise questions as our plans take shape.

Our project is supporting local jobs, and we want to continue to work with local suppliers and contractors whenever that makes sense. These principles will continue to guide us as we develop TCDC. Now, let me explain Phase 1 power in more detail. Phase 1 will be served via an executed PPA for up to 207 megawatts. This power is part of an existing registered private use network supplied by Vistra's adjacent Odessa-Ector Generating Station. It's essentially a behind-the-meter arrangement with front-of-the-meter reliability, and Phase 1 power is not contingent on progressing through ERCOT's Batch Zero process.

During Texas Senate Bill 6 implementation, the Texas Public Utility Regulatory Act, or PURA, was amended and exempts net metering arrangements registered with ERCOT prior to 2025 from the batch process. This is why we feel that TCDC is both unique and valuable. Our recent commercial discussions continue to reinforce the value of near-term power. Across the United States, new data center capacity in '27 is extremely constrained due to power. We believe the combination of contracted supply, scale, and expected Q3 2027 availability makes TCDC particularly relevant to those customers. Additionally, our partnership with Vistra supports future power development, and there's an alignment of interest here.

Vistra has been a great partner, and once power delivery begins, they will receive a 5% non-voting stake in Phase 1 power. Our goals are aligned, and they have a direct interest in the long-term success of development. Customers understand this, and it is a relevant consideration for how they could expand their footprint at the campus over time. And of course, delivering on that opportunity takes an experienced team. Charlie, over to you.

Charles Nelson: Thanks, Evan. At our Q2 update, we introduced several of the new senior leaders who had joined the team here at New Era. Since then, we've continued to add technical depth around them. The roles span everything from development, engineering, construction, power, operations, et cetera. These are people who understand firsthand what needs to happen between just securing a site and bringing a facility into full service, and these are obviously giant projects. So just to highlight a few examples, we brought on Erin Henderson, she's our Senior Vice President of Energy and Policy, who joins us from Microsoft, where she was the Director of Data Center Flexibility and Energy Infrastructure.

We've got Marlon Millington, our new Vice President of Engineering and Operations, who joins us from Meta, where he was a Critical Operations Manager. We have Morgan O'Connor, our new VP of Construction, who joins us from AWS, where she was Senior Manager of Construction, running a lot along their critical Eastern Seaboard. We have Doug Hofmockel and Maria Rodriguez, our Mechanical and Electrical Engineering leads bringing experience from Meta, ByteDance, Amazon, and Microsoft; and Dana Herrick, our Director of Physical Security, who previously led Global Security Operations at CyrusOne, who's obviously a fantastic legacy operator.

And finally, just this week, we're excited to announce Ashlie Alaman, our new General Counsel, who joins our executive leadership team from CleanArc Data Centers, who has also had previous roles at CyrusOne and Vistra. So just a whole ton of relevant experience here. And look, we need this collective experience as a company throughout project planning, site preparation, construction and commissioning. And our team needs to fully understand the detail and nuance around delivery obligations that we are taking on. And really, for the intent, this is to test whether the proposed schedule is achievable and to coordinate with many of the other parties that are involved to aid in this seamless execution.

And we're building these capabilities obviously for TCDC, but it's not exclusively for TCDC. We're building this platform, and I know we've talked about it before, but we're building a platform that enables us to continue to execute confidently with our counterparties and tenants that will not require us to rebuild the team every single process. And so just to talk through some of the Phase 1 delivery approach, I'm going to hand this over to Jose, and then he can cover some of that.

Jose Rodriguez: Thanks, Charlie. The team you just introduced brings direct experience building and operating large data center campuses. Let me explain how we're applying that experience to our own delivery approach. We are in advanced negotiations on a definitive Phase 1 lease around our proposed modular approach, which we think makes sense for a number of reasons. From a physical construction perspective, modular means completing more work offsite while site preparation progresses in parallel. That gives us better visibility of our production schedules and can shorten the path to commissioning. It also reduces our reliance on large on-site construction crews, helping us manage the risk of labor shortages as competition for skilled data center workers remains elevated.

We're working with multiple vendors across various parts of the supply chain and designing for flexibility as customer hardware requirements evolve. We're also working through long lead equipment requirements, including transformers and other enabling electrical infrastructure. The networking and physical security specialists we have onboarded are also involved in the design, and we're planning for testing and commissioning from the outset. The aim is to identify and manage dependencies early on to reduce the risk of late changes impacting delivery time lines. Ted, over to you on the economics and capital requirements.

Ted Warner: Thanks, Jose. Based on our initial estimates, we expect Phase 1 build costs to be less than half that of a comparable traditional development. At the same time, we're negotiating what we believe are attractive lease economics that reflect the value of our near-term power and the current state of the market from a cost of capital perspective, focusing on maximizing our return on equity dollars. Alongside the build cost and lease economics, we're also seeking to negotiate favorable timing for capital outlays, leveraging tenant relationships for design and supply chain, all with the aim of limiting the funding New Era needs to provide, even in the near term post-signing of a Phase 1 lease.

Ultimately, the overall funding requirement will depend on our agreed scope, payment timetable, and allocation of delivery responsibilities. Once the agreements are finalized, we'll be able to explain these commitments and the economics in far more detail. What we can say now is we are working tirelessly to get all the details finalized for Phase 1 lease execution. Evan, over to you for an update on the site itself.

Evan Pierce: Thanks, Ted. Alongside the commercial work, we're making tangible progress on site and continue to de-risk the asset. We own 493 acres and are under contract with Grow Odessa to acquire another 99 acres. We have an executed PSA, we've paid the deposit, and expect to close in the coming weeks. That acquisition is expected to reduce easement constraints and increase the site's capacity potential. We've secured key site approvals, and site preparation is already underway, including clearing and grading. The team has also carried out significant cleanup remediation and removed thousands of feet of pipeline. The photographs on this page show some of that progress.

Our next major commercial milestone remains the definitive Phase 1 lease, and we are in advanced negotiations on that documentation alongside the financing and delivery work streams. Our timing remains unchanged. Power availability is expected in Q3 2027 with initial ready-for-service targeted for Q4 2027. That brings us to the expansion opportunity alongside Phase 1. Turning to Phase 2, we're planning for approximately 550 megawatts of new on-site generation with Thunderhead Energy Solutions. The intention is to create an islanded solution supplying power directly to the campus that is not subject to the risk associated with the ERCOT batch process. Together with Phase 1, that would take planned capacity across the first two phases to approximately 757 megawatts gross.

A Thunderhead subsidiary has filed the standard air permit application with the Texas Commission on Environmental Quality, and we still believe that permit will be approved. From a timing perspective, we expect turbine deliveries in Q4 2027 and Q1 2028. Commercial negotiations continue to progress with the same prospective tenant as Phase 1, and we're working through separate lease documentation for Phase 2. We anticipate a similar build cost for Phase 2, which, as Charlie mentioned, would be substantially lower compared to a traditional development. Beyond the first two phases, we're evaluating the campus layout as a whole to maximize the capacity the site could support.

Phase 3 remains in design, and its ultimate capacity will depend on the layout and the density we can achieve. Our immediate focus remains on Phases 1 and 2. Now I'll hand it back to Ted to discuss our financial position and approach to funding development.

Ted Warner: Thanks, Evan. How we fund TCDC will have a direct bearing on the value we create for shareholders. In a volatile market, we have to balance the capital needed to move the project forward with the cost and risk of raising it. A couple of weeks ago, we closed a $64 million PIPE to repay Macquarie borrowings that helped fund the credit support for our Vistra PPA, preserve cash for the next stage of development, and ultimately support our leasing work streams. Turning to the balance sheet, we believe we're in a strong cash position post capital raise, giving us ample flexibility as we work toward lease execution and arrange project financing.

As of October 31, we had a total of $187 million in cash, comprising $49 million of unrestricted cash and $138 million of restricted cash, including collateral supporting the PPA letter of credit. We also have $20 million outstanding debt on our Macquarie facility, which is fully cash-collateralized. After lease execution, we believe we will have various options to restructure the LC arrangements with the aim of releasing some of our restricted cash while maintaining the required credit support, allowing us to put more of our existing cash to work on development. On project funding, we retain the option for up to $200 million of financing under the Macquarie facility following lease execution, subject to the applicable conditions.

We are also in discussions with other potential lenders on larger pre- and post-lease debt funding partnerships with the aim of getting credit instruments in place that fit the agreed development scope and timing of both Phase 1 and Phase 2. That covers our financial update. Operator, let's open the line for questions.

Operator: [Operator Instructions] Our first question comes from Mike Grondahl with Northland.

Mike Grondahl: It was highlighted that you expect Phase 1 build cost to be about 50% below traditional builds, and that the timing of capital outlays was kind of limited up front. With that, this color kind of alludes to a similar structure that Riot and Anthropic had with a powered land lease we saw 1 week or 2 ago. Can you just walk us through how we should think about that commentary for Phase 1. And if this is a structure we should expect to be replicated across Phase 2 and potentially Phase 3?

Ted Warner: Yes. Mike, thanks for the question. Yes, I mean, the short answer is yes, it's a similar -- seems to be a similar-looking structure, right? We saw that announcement, a modular build with a cost per megawatt that was half of the low end of a traditional build, and we're in the same place. We're seeing a lot of the leading global technology companies, like the one we're working with, that are trying this modular approach because speed to compute is becoming the most important thing. With the capital markets where they are, they're getting more creative.

And yes, we feel that the returns that we're going to get off of a project like this are great given what's happening in the credit markets. And as for Phase 1 versus Phase 2, yes, we're still trying to figure out what we'd like Phase 2 to look like. We're working closely with the client, but I think as Evan alluded to earlier, yes, there's a good chance that Phase 2 looks remarkably similar to Phase 1, but that hasn't been completely ironed out yet. We're far more focused, as Charlie said, on just finalizing Phase 1.

Mike Grondahl: Got it. And then one more with Phase 1. Can you just clarify, are there any remaining approvals, permits, regulatory issues? And then can you give us a little bit of insight into any Phase 2 approvals or how TCEQ air permitting is progressing?

Ted Warner: Yes. I'll let Evan to answer that.

Charles Nelson: And actually, I might chime in here real quick, and then Evan. But one thing to kind of state, when our team sort of took over development a few months ago, we really just started knocking down every single outstanding item and really taking all of the risk off the table in terms of the development and constructability of this, that was reflected in the permits that we talked about in the last call, as well as securing the power in the manner that we did secure it as well, and the quality of that power. And so -- but yes, I'll let Evan kind of chime in a little more on detail.

Evan Pierce: Thanks, Charlie. No, great question. We're fully permitted. We have been for a while. I mean, we included the pictures. We've already started site work. For Phase 1, there's nothing in between us and delivering the project at this point. As far as the question about standard air permits, as I stated in the last call, we still anticipate that's going to be approved by end of year. It does appear like TCEQ is open for business again. They are accepting new permits. And so we did file that permit rather early. I wish I had filed maybe a week earlier, we would not be having this discussion, but we don't anticipate that's going to impact our project at all.

Mike Grondahl: Okay. And then just lastly, it looks like you picked up an incremental 99 acres. Where are those 99 acres? And what was the reason for the acquisition?

Evan Pierce: Sure. So we picked up...

Charles Nelson: Yes. I mean, it was just one of these little pieces of land that's contiguous to the property that we have. We've done this once before, picked up an extra 50-some acres just to -- it essentially creates an ease of utility build-out. And so, we worked with the City of Odessa on this, which was who we bought the original acreage from to begin with. And so basically, it's some connective tissue. It's usable, and so it just bolsters the position and makes all the execution of getting powered A to B even easier.

Operator: Our next question comes from Nick Giles with B. Riley Securities.

Nick Giles: Just was curious, you mentioned you're in advanced negotiations on Phase 1 at this stage. And so what would you say is really still being worked through? Is this more of a technical or design nature? Is it economics? Just curious on anything more you might be able to say on kind of where things stand?

Ted Warner: Yes. I think we've got a full agreement on what the economics are going to look like, so we're really excited about that. And these modular builds are fairly simple from an SLA perspective. But yes, you're right, I mean, there are a few more technical things to work out. And yes, I mean, we feel really good about where we are at the moment.

Nick Giles: Ted, I guess it sounds like you've already made a lot of progress in de-risking the supply chain. I just -- I struggled to catch it all. Can you just walk us through kind of what remaining long-lead time items still need to be secured for Phase 1, and what kind of -- if there's any deposits you might need to make on that? And then how are you thinking about reserving capacity for Phase 2?

Ted Warner: Yes, maybe I'll let either Evan or Jose touch on the long-lead time items, but what I can say is, the tenant has been -- the prospective tenant has been extremely helpful, as it relates to procurement of any long-lead time items that we may not have on hand. Leveraging their supply chain has been something that we've really wanted to do. But Evan, Jose, I'll let one of you go.

Jose Rodriguez: Yes, Nick. And as we're working to finalize the design of what it looks like, which not to put the cart before the horse, we have to finish the lease in order to understand that technical specifications completely. We are talking in parallel to various equipment providers to understand the supply chain to make reservations. We know the electrical equipment that is going to enable the delivery. We're working on that to secure that. And there are no blockers for us to be able to execute once our final design is complete.

Charles Nelson: Yes. I think it's important just to note, how the -- like the voltages that we operate under, what the power is being delivered under, and frankly, the scope of the type of modules that are going in. A lot of that is being handled externally that we aren't exposed to. So a vast majority of -- because these are long-lead time items, a lot of that's 345 kV step-down transformers, stuff like that, that's traditionally taking from, like transmission-level voltages down into usable voltages. We are already down in that usable voltage range.

So it is a little bit different, easier, and we're not exposed to the same kind of constraints that you would typically see in that type of execution.

Nick Giles: I appreciate all that color. And then just last one for me. You mentioned some of the new hires. It's impressive to see you guys add this amount of talent. I guess, given that Phase 1 is already in late stages, Phase 2 a little further down the road, what is the team really working on here and now? Are you looking at new sites? What are some of the key criteria in the pipeline? Just any more color on kind of that ongoing work.

Charles Nelson: Yes. I mean, I'll say this, our ability to take on this development ourselves is largely attributed to the team that we have. When we talked to the tenant, they looked at our team and said, "Wow, you've got world-class execution capability here, and you're solely focused on executing this one project." That actually became an attractant that led us into what we're doing right now, which is self-execution. So I mean, look, every member of the team is busy doing different aspects, preparing for execution for this project. And so really, building the team the way that we did was largely a function that allowed us to get to this self-execution model.

And so going forward, look, right now I think it's best for our shareholders and everyone that we execute on our deal, we get to RFS, and there's a whole lot that can be done afterwards. Like everyone else, I mean, look, we see a ton of projects. We also look at the markets and say, "Well, what makes sense right now?" Like, there's a whole series of evolutions that we can do as a company once we get to execute on this Phase 1 properly, and even into Phase 2. And so, yes, I mean, like, of course we have a whole bunch of pipeline. It's just where do we allocate resources right now?

And I think the best thing for ourselves, our shareholders, et cetera, is to get this one done finally and then evaluate the world after that.

Operator: Our next question comes from Bryan Baratian with ROTH Capital Partners.

Bryan Baratian: Great news on all the progress in the quarter. I have a couple of quick questions. Last week or 2 weeks ago, Cipher was -- you guys were mentioned on Cipher's earnings call, and what they mentioned was that they see monetization value in the Odessa site, pointing to speed of site access and scarce long-lead equipment. Can you guys provide any color on the source of that claim? And does that have anything to do with you guys and how you're structured now, whether it's getting equipment delivered to the site or whether it's doing a potential JV? My read is that's not the case.

I mean, you guys have your whole -- you've built a really strong team and you can do this yourselves. Can you provide any color on that?

Ted Warner: Yes. Sure. I mean, I can't comment as to what they mean from a monetization standpoint there. I can only say what we said in the presentation, which is, what we're looking at right now in our current Phase 1 plan is delivery in the September time frame for this first modular deployment on the 207 on our acreage. What that will require is spending a little bit of money to get that power over to our site versus where it's going to right now, which is theirs. And that's simple.

And then the existing PPA between them and Vistra has a clause in it where the substation they have right there and all the electrical equipment needs to be bought back by Vistra or, in this case, us. What we've agreed to in our PPA is to execute this PSA, which says, we will pay for a new line run from their plant to our acreage, and we'll also take on that obligation to purchase their substation and all the electrical equipment, which, like you said, that helps as far as long-lead time items go, right? Just an existing substation -- everything we need is right there.

And the mechanism for the pricing there is just that they've already got a baseball appraisal mechanism that's built into their documentation, which I think is publicly filed. So that's -- I mean, that would be definitely the one thing that we would be purchasing from them ultimately or purchasing from Vistra. I'm not really sure exactly how that mechanic will work, but that is a part of the transfer of the power from them to us. And purchasing all that equipment, which is, we find that to be really convenient.

Bryan Baratian: Ted, my next question is, with the elections now done and Governor Hinojosa taking office in January, there was a New York Times report that happened a couple of days ago, where she mentioned we're looking to stop projects that have already begun construction but still need certain permits. What I found interesting about that was originally my take was, if you were under construction and a lot of capacity was being delivered and there were large sums of capital being invested, especially to grow these areas. I thought it was interesting that it was the whole thing on permits. Can you give -- and I may have missed this on the call back, I'm sorry.

But can you give a little bit more color on -- I saw the TCEQ website is now up and running. They're accepting new permits. Can you give a little bit more color on why you guys feel de-risked in achieving that air permit and some color on timing on that?

Charles Nelson: Yes. And I'll chime in here real quick. Look, the objective here that they're trying to do is make sure that -- yes, and she's been very clear about this, to make sure that projects that are being permitted now, or filing permits post-election are -- or ones that are in the batch process, follow a certain set of criteria that take care of the local communities and a whole bunch of social license to operate types of things. Given the fact that we already have the permits, I think we're insulated from that. And so, the objective isn't to pull back permits that are already issued. That is not something that they want to do.

But I mean, furthermore, we looked at how we intend to operate, like from a thesis-wise, and there's actually a fair bit of alignment between what everyone's been asking for and what we've just been electively doing as a company. And it's built into the ethos of what we do. So talking about our risks on Phase 1, I mean, that's one thing, we've kind of already covered that. On Phase 2, as it relates to the air permits, this is a standard air permit. It's not like we're going to stop like country or Texas or anyone's going to stop allowing air permits to be issued.

I think just as it relates to the specific application of this industry, they just want to see a few things checked off, making sure that there is a -- the social license to operate aspect of these developments that are considered, which, again, has been built into our operating thesis before anyone ever asked for it. So to the extent that these permits are now kind of dislodged and the processes are moving, they're going to get issued when they get issued, but I don't think the intention of the new government whatsoever is to stop these developments. I think it's just to make sure that communities are taken care of.

And we've spoken pretty aggressively about making sure that community engagement is a core tenet of what we do. And so as far as Phase 2, beyond even additional projects, I think the way that we operate our company is pretty well suited for kind of the new world that everyone found themselves in last Tuesday. So yes.

Bryan Baratian: Great. Last one for me is, as we think about the language in the release and in the presentation about deliberately using the word tenant. I don't know if I'm reading too much into it, because previous things -- previous releases were using the word hyperscaler. Can you talk a little bit about, I know that you're in conversations with this one tenant under a non-binding LOI for both phases, Phase 1 is moving ahead. Can you talk about demand for the site? Like, are you still speaking with other prospective parties? Are you seeing the same strong inbound demand from a range of both hyperscaler and other tenants? Could you give color on that?

Ted Warner: I can say that we are under that LOI that Charlie referenced. It's with a leading global technology company is what I would use as the description here, and they are under exclusivity. So our other conversations that we were having with a wide range of high-quality potential tenants, those have all ceased as we are trying to get to the finish line.

Bryan Baratian: Perfect. But the main thing I'm getting at is there is still like -- I guess that means that there is a lot of demand from a series of diverse counterparties for power like this that's available before.

Ted Warner: Absolutely. I mean, just pointing back to the reason why it was so hard for us to begin conversations with a lot of these entities is they were also trying to get a hold of that power once it became available back in July, right? So they were first our competitors, and then they became our prospective tenants once we were able to secure the power. So tough to fight against some trillion-dollar companies out there, but we were able to do that executing that DFA framework that we've laid out, where Vistra has -- they're aligned with us. They've got that 5% ownership stake in anything they supply power to and a ROFR on that entire Phase 3.

And that to them, being utilities, is a very valuable thing. So that was how we ended up with it. And then immediately once that question was settled of who's getting this power, we were able to have conversations with numerous tenants, and over the last 3 months with what's happening with the uncertainty in the Batch Zero process, has our power become more valuable commodity? Absolutely. There was a ton of interest, and we chose to work with the party that we felt was going to give us the best chance for success and a really high-quality lease in the current market.

Operator: Our next question comes from Kevin Pimental with Alliance Global Partners.

Kevin Pimental: Just one for me. Could you help us bridge the timing between power availability in Q3 '27 and initial ready-for-service in Q4 '27? What needs to happen kind of during that period before the first tenant can begin operations?

Ted Warner: I think I'll let Evan speak to this. I know that the timing that we're talking about for trying to start lighting up some of this modular compute is September. But I'll let Evan talk about what we actually have to do between now and then.

Evan Pierce: Thanks, Ted. I mean, generally, the way I look at it, there's really 2 kind of barriers to landing capacity for customers. The first one is getting to the point where you can start construction, and the second is data center commissioning, which requires power. And so we're clear for construction right now. So that's -- the question really is about when is power availability. And so if you go to Google Earth, you look at the location of where the substation is now and our site, you can see it's a relatively short run for distribution lines from that substation to our site.

So basically what needs to happen is, once the current PPA owner is no longer has the PPA, in the interim is the build-out with Vistra of the distribution infrastructure from their site to our site, which is a pretty simple matter. And then bringing it to our switching station on our site. And due to the nature of how we're building this site out with the modular solution, it's not like a standard stick-built in the sense that the -- that's going to take a long time to do.

And so really, there's just some final site work preparing the site for delivery of those modules, and then that rather short distribution run from their site to our site, and then our on-site switching station, which will include metal-clad switchgear, and then the delivery of the assets from the customer, and then commissioning. That's kind of it. It's not super complicated. Did that answer your question, Kevin?

Kevin Pimental: Yes, yes. That was great.

Operator: This concludes the question-and-answer session. I would now like to turn it back to Charlie Nelson for closing remarks.

Charles Nelson: Yes. And look, thanks everyone. And honestly, thanks for the questions. And just to reiterate, our focus now is squarely on completing this lease and putting the financing and delivery arrangements around it. Our non-binding LOI covers Phases 1 and 2 at TCDC with the same tenants, which is, as Ted mentioned, a leading global technology company. Just to summarize what we've been doing. I mean, we've contracted this very valuable Phase 1 power. We've posted our initial credit support, so we're safe there. We've made really good strides on this leasing since we've taken the reins here. We've strengthened our balance sheet. We continue to add the technical depth to be able to execute.

And look, I believe it's important to address the evolution of our partnership strategy in these closing remarks as this asset has been developed. We've made the election. And again, this is not at the request of the tenant to proceed with executing and delivering this project by ourselves. And there were several factors that played into this decision, but it's important to note that only until recently, when we controlled the PPA that we were we able to take control of this leasing processes ourselves and not rely on other parties. And since then, the contracting phase has significantly accelerated to the place it is today.

And look, we're only able to do that because of the strength of the team, the position of the power contract. Moving away from our potential JV was not a function of contention. We love those folks, but it was merely a decision that controlling our own destiny was deemed the lower-risk path forward by both us and the prospective tenant. And in today's market, when a tenant sees a team of our caliber who is not being pulled in numerous directions by numerous, like, large-scale projects, they see something rare that points to lower execution risk, which is how we ended up here.

And so in summary, that was not a decision that was taken lightly, but we believe that it will provide significantly higher value to our shareholders long term. And so we believe owning all of the current Phase 1 and whatnot is -- put us -- and leaves us in a similar CapEx position, and I think that the outcome of this whole process and the evolution that got us here is really going to produce the best value for all of our shareholders. And with that, I'll just say we appreciate your time, we appreciate your support, and our team is always available if you'd like to follow up. So thank you very much.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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