- NET Power’s proven technology generates near zero-emissions
utility-scale power, delivering the world’s first scalable solution
that achieves the energy trifecta: clean, reliable, low-cost
power.
- Implied pro forma enterprise value of $1.459 billion and will
be publicly listed under the ticker symbol “NPWR”.
- $235 million of committed investments -- with participation
from the Rice family, Occidental, Constellation, 8 Rivers, HITE
Hedge, and NGP -- are expected to fund corporate operations through
planned commercialization in 2026.
- Experienced energy executive Danny Rice will join NET Power as
its new CEO upon closing of the transaction. Mr. Rice led Rice
Energy and Rice Midstream Partners to over $10 billion of
exits.
- Growing project pipeline and planned utility-scale plant
deliveries starting in 2026 position NET Power to capture
substantial market share and reduce global emissions on a gigatonne
scale.
Rice Acquisition Corp. II (NYSE: RONI) (“RAC II”), a special
purpose acquisition company focused on supply-side decarbonization
solutions, and NET Power, LLC (“NET Power”) today announced a
definitive agreement to enter into a business combination (the
“transaction”) to accelerate deployment of NET Power’s proprietary
technology that delivers clean, reliable, and low-cost power from
natural gas. After the business combination, the company will be
named NET Power Inc. (the “combined Company”). The transaction is
expected to close in the second quarter of 2023 and the combined
Company will be listed on the NYSE under the ticker symbol
“NPWR”.
Upon closing of the transaction, Ron DeGregorio, current CEO of
NET Power and 40-year power and energy veteran who successfully led
NET Power through technology validation and establishment of key
supplier partnerships, will be succeeded by Danny Rice, current
director of RAC II and former CEO of Rice Energy, Inc., to lead NET
Power through commercialization and beyond. The leadership team and
board of directors of the combined Company have decades of
experience in operations, engineering, management, and investment
in energy and power generation.
“We have long believed that if you can use natural gas, generate
reliable electricity, and capture the resulting emissions, you
would change the world. For over a decade, NET Power has worked
tirelessly to prove its game-changing technology, which we did
through our demonstration facility in La Porte, Texas. Following
the strategic investment and partnership with Baker Hughes to
deliver key turbomachinery for future NET Power plants, this
transaction properly capitalizes NET Power and enables the company
to commercialize this revolutionary technology. The Rice Group is a
logical strategic partner, and I am excited to hand the reins to
Danny to lead NET Power,” said retiring CEO Ron DeGregorio.
Incoming CEO Danny Rice said, “Today, around 60% of global power
generation comes from coal and natural gas-fired power plants that
produce reliable and low-cost power. However, these plants
collectively emit nearly 14 billion tonnes of CO2 per year,
accounting for approximately 37% of total global emissions. By
replacing these plants with NET Power’s proven technology, we can
eliminate nearly 100% of these emissions while providing reliable
and low-cost power that people deserve. I’m excited to help NET
Power deliver the energy trifecta and become the global leader in
clean power generation.”
Vicki Hollub, President and CEO of Occidental, said, “We are
excited to support this transaction, which will further NET Power’s
commercialization plans and help achieve decarbonization goals
globally. We first invested in NET Power because we believe the
technology can accelerate Oxy’s efforts to reduce emissions in our
existing operations and ultimately supply emissions-free power to
the Direct Air Capture (“DAC”) sites and sequestration hubs we are
developing.”
Occidental is advancing feasibility studies to incorporate NET
Power plants into DAC hubs being developed by its 1PointFive
subsidiary, where approximately 30 – 40 plants could provide enough
clean power for a DAC program capturing 100 – 135 million tonnes of
CO2 per year.
Rod Christie, Executive Vice President of Industrial &
Energy Technology at Baker Hughes, said, “Our strategic partnership
focused on technology development and accelerating market
positioning and deployment of the NET Power solution presents a
clear path to commercialize near-zero emission natural gas power
around the world. The combination of NET Power with Rice
Acquisition Corp. II further reinforces the path towards making
that progress a reality.”
Cam Hosie, CEO of 8 Rivers, said, “This transaction enables NET
Power’s technology to become a cornerstone of the clean energy
future. 8 Rivers is proud to have supported NET Power from the
beginning, and we will continue to support NET Power’s global
deployment by leveraging our commercial and project management
expertise while driving deployments through our net-zero solutions
business, Zero Degrees.”
Investment Highlights
- Opportunity: Power generation is the largest source of
global emissions, totaling approximately 14 billion tonnes
annually, primarily from coal and natural gas-fired power plants.
Global decarbonization requires lower-carbon power generation
solutions but today’s lower-carbon solutions are unreliable,
unaffordable, or limited by scale. NET Power was designed with the
operational flexibility to complement wind and solar in markets
with high renewable penetration and the baseload reliability to
meaningfully decarbonize markets predominantly powered by
carbon-emitting coal and natural gas-fired power plants. Replacing
retiring power plants and meeting new demand from electrification
would equate to approximately 17,000 NET Power plants globally with
over 1,300 plants in the U.S. alone.
- Technology: NET Power’s proprietary process combines
oxy-combustion (combustion of natural gas with pure oxygen) with a
supercritical CO2 power generation cycle to generate electricity.
This patented, high-efficiency cycle inherently captures over 97%
of CO2 which can then be utilized or sequestered, transforming
natural gas into clean baseload power. NET Power is designed to
generate reliable power with a carbon intensity similar to solar or
wind coupled with a short-duration battery at a levelized cost of
electricity of approximately $21-$40 per megawatt hour. A single
utility-scale 300 MW NET Power plant would generate enough
electricity for over 220,000 homes per year in the U.S. Learn more
about the technology at: https://netpower.com/technology.
- Business: NET Power is an asset-light technology
licensor with rights to a substantial and growing intellectual
property portfolio. Each technology license is expected to generate
approximately $65 million of present value (PV10) net to NET
Power.
- Momentum: The company realized several key milestones
over the past year, including:
- Proving the Technology: In November 2021, the company’s
demonstration facility in La Porte, Texas synchronized to the grid,
proving the oxy-combustion and supercritical CO2 process.
- Preparing for Commercialization: In early 2022, the
company formed a strategic partnership with Baker Hughes to design
and manufacture key plant equipment including turboexpanders.
- Compelling Economics: Passage of the Inflation Reduction
Act in 2022 increased the 45Q tax credit for CO2 sequestration.
Under the revised 45Q, a NET Power plant, which is designed to
capture up to 820,000 tonnes of CO2 per year, becomes more economic
to deploy than carbon-emitting coal and natural gas-fired
alternatives.
- De-risking Commercialization: In November, NET Power
announced its plan to develop and build its first utility-scale
project (Serial Number 1, or “SN1”) with the support of its
strategic shareholders. The project, located at an Occidental
hosted site near Odessa, Texas, targets 300 MW of near
zero-emissions power and is designed to significantly de-risk the
commercialization of NET Power’s technology. Learn more about the
project at:
https://www.prnewswire.com/news-releases/net-power-announces-its-first-utility-scale-clean-energy-power-plant-integrated-with-co2-sequestration-301669970.html.
- Industry-leading Strategic Partners: NET Power’s
shareholders, representing approximately 70% of pro forma ownership
(assuming no redemptions), are leaders in the energy industry, with
deep experience across energy production, energy transportation,
power generation, manufacturing, operations, sales, services, and
CO2.
- Occidental (NYSE: OXY), NET Power’s largest shareholder, is an
international energy company with 50 years of experience in
large-scale CO2 transportation, use and storage. Occidental is
applying its carbon management experience to advance new low carbon
initiatives to help achieve net-zero emissions in its operations
and help others do the same. As previously announced, Occidental
will host NET Power’s first utility-scale plant (SN1) at its
operations near Odessa, Texas in the Permian Basin.
- Baker Hughes (NASDAQ: BKR) is an energy technology company and
is jointly developing and marketing NET Power’s suite of integrated
equipment and technologies, including supercritical CO2
turboexpanders.
- Constellation (NASDAQ: CEG) is the largest provider of
carbon-free power in the U.S. with more than 32,000 MW of
generating capacity. Constellation has operational and market
experience with large scale generation assets.
- 8 Rivers Capital, LLC is a full-service net zero solutions
provider leading the invention and commercialization of
sustainable, infrastructure-scale technologies for the global
energy transition. 8 Rivers invented NET Power’s oxy-combustion
thermodynamic cycle and now provides project development support
for NET Power.
Transaction Highlights
- Business combination of RAC II and NET Power at pro forma
enterprise value of $1.459 billion.
- Assuming no redemptions, the transaction is expected to provide
NET Power with approximately $535 million of cash net of
transaction fees, consisting of $347 million of cash in trust of
which $10 million is subject to a non-redemption agreement, and
$225 million of PIPE commitments. Total committed investment of
$235 million is comprised of $100 million from the Rice Family and
affiliates through a $90 million PIPE commitment and $10 million
non-redemption agreement, and PIPE commitments of $100 million from
Occidental, $5 million from 8 Rivers, $5 million from
Constellation, and $25 million from other investors.
- Net proceeds of $200 million secured through the committed
investments are expected to fully fund corporate operations through
commercialization of SN1 with expected commissioning in 2026. Net
proceeds above $200 million are expected to advance and support
commercialization, including funding of SN1.
- Existing NET Power shareholders are rolling 100% of their
equity into the combined Company and will own approximately 70% of
the pro forma equity assuming no redemptions.
- The business combination, which was recommended to RAC II’s
board of directors (the “RAC II Board”) by RAC II’s management
team, has been unanimously approved by the RAC II Board and is
expected to close in the second quarter of 2023, subject to certain
closing conditions, including receipt of approval by holders of a
majority of the shares held by RAC II’s shareholders. The business
combination was also recommended to NET Power’s board of directors
(the “NET Power Board”) by NET Power’s management team and has been
unanimously approved by the NET Power Board.
Advisors
Guggenheim Securities, LLC acted as lead financial advisor to
RAC II. Barclays Capital Inc. also served as financial advisor to
RAC II. Kirkland & Ellis LLP served as legal counsel to RAC II.
Credit Suisse Securities (USA) LLC acted as financial advisor and
capital markets advisor to NET Power. Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C. served as legal counsel to NET Power.
Barclays Capital Inc. and Citigroup Global Markets Inc. acted as
capital markets advisors to RAC II. Barclays Capital Inc. and
Citigroup Global Markets Inc. acted as lead placement agents and
Credit Suisse Securities (USA) LLC acted as co-placement agent on
the PIPE. Vinson & Elkins L.L.P. served as legal counsel to the
capital markets advisors and placement agents.
Investor Presentation
For more information, please view the investor presentation on
the NET Power website at https://netpower.com/investor-relations/.
A recorded presentation from management discussing the business
combination will also be available here on December 14th at 7:03 am
Eastern Time and a transcript of this webcast will be filed by RAC
II with the SEC.
About NET Power
NET Power is a clean energy technology company with a mission to
globally deliver the “Energy Trifecta”: Reliable, Clean, and
Low-Cost power. The company invents, develops and intends to
license technology that provides reliable, on-demand natural gas
power with life cycle emissions that are approximately 90% below
today’s combined cycle natural gas systems and in line with
renewables coupled with batteries. The technology also delivers a
levelized cost of energy that is below both combined cycle gas
turbines with carbon capture and renewables coupled with batteries.
Founded in 2010 and headquartered in Durham, North Carolina, NET
Power has received strategic investments from key industry partners
including Occidental, Baker Hughes, Constellation, and 8
Rivers.
About Rice Acquisition Corp. II
RAC II is led by Daniel Rice IV and Kyle Derham, former
executives of Rice Energy, Inc. (“RICE”) and Rice Midstream
Partners (“RMP”). In 2018 and 2019, RICE and RMP merged with EQT
Corporation (NYSE: EQT) and EQT’s midstream affiliates for over $10
billion to become the largest U.S. natural gas producer. Rice
Acquisition Corp. led a 2021 business combination with Archaea
Energy LLC and Aria Energy LLC to create Archaea Energy, Inc.
(NYSE: LFG), an industry-leading renewable natural gas platform
that BP p.l.c. (NYSE: BP) agreed to acquire for a cash
consideration of $4.1 billion in October 2022, generating a 2.6x
return on investment for LFG PIPE investors in approximately one
year. Daniel Rice currently serves on the board of EQT and Archaea
Energy, Inc. The RAC II website is
https://ricespac.com/rac-ii/.
Forward-Looking Statements
This communication may contain certain forward-looking
statements within the meaning of the federal securities laws with
respect to the combined Company and the proposed transaction
between NET Power and RAC II. These forward-looking statements
generally are identified by the words “believe,” “project,”
“expect,” “seek,” “anticipate,” “estimate,” “intend,” “strategy,”
“future,” “opportunity,” “plan,” “may,” “should,” “could,” “will,”
“would,” “will be,” “will continue,” “will likely result” and
similar expressions. Forward-looking statements are predictions,
projections and other statements about future events that are based
on current expectations and assumptions and, as a result, are
subject to risks and uncertainties. Many factors could cause actual
future events to differ materially from the forward-looking
statements in this communication, including but not limited to: (i)
conditions to the completion of the proposed business combination
and PIPE investment, including shareholder approval of the business
combination, may not be satisfied or the regulatory approvals
required for the proposed business combination may not be obtained
on the terms expected or on the anticipated schedule; (ii) the
occurrence of any event, change or other circumstance that could
give rise to the termination of the business combination agreement
between the parties or the termination of any PIPE investor’s
subscription agreement; (iii) the effect of the announcement or
pendency of the proposed business combination on NET Power’s
business relationships, operating results, and business generally;
(iv) risks that the proposed business combination disrupts NET
Power’s current plans and operations; (v) risks related to
diverting management’s attention from NET Power’s ongoing business
operations; (vi) potential litigation that may be instituted
against RAC II or NET Power or their respective directors or
officers related to the proposed transaction or the business
combination agreement or in relation to NET Power’s business; (vii)
the amount of the costs, fees, expenses and other charges related
to the proposed business combination and PIPE investment; (viii)
risks relating to the uncertainty of the projected financial
information with respect to NET Power or the combined Company; (ix)
NET Power’s history of significant losses; (x) the combined
Company’s ability to manage future growth effectively; (xi) the
combined Company’s ability to utilize its net operating loss and
tax credit carryforwards effectively; (xii) NET Power’s ability to
continue as a going concern if the transactions contemplated herein
are not completed; (xiii) the capital-intensive nature of NET
Power’s business model, which may require the combined Company to
raise additional capital in the future; (xiv) barriers the combined
Company may face in its attempts to deploy and commercialize its
technology; (xv) the complexity of the machinery NET Power relies
on for its operations and development; (xvi) the combined Company’s
ability to establish and maintain supply relationships; (xvii)
risks related to NET Power’s arrangements with third parties for
the development, commercialization and deployment of technology
associated with NET Power’s technology; (xviii) risks related to
NET Power’s other strategic investors and partners; (xix) the
combined Company’s ability to successfully commercialize its
operations; (xx) the availability and cost of raw materials; (xxi)
the ability of NET Power’s supply base to scale to meet the
combined Company’s anticipated growth; (xxii) risks related to NET
Power’s or the combined Company’s ability to meet its projections;
(xxiii) the combined Company’s ability to expand internationally;
(xxiv) the combined Company’s ability to update the design,
construction and operations of the NET Power technology; (xxv) the
impact of potential delays in discovering manufacturing and
construction issues; (xxvi) the possibility of damage to NET
Power’s Texas facilities as a result of natural disasters; (xxvii)
the ability of commercial plants using NET Power’s technology to
efficiently provide net power output; (xxviii) the combined
Company’s ability to obtain and retain licenses; (xxix) the
combined Company’s ability to establish an initial commercial scale
plant; (xxx) the combined Company’s ability to license to large
customers; (xxxi) the combined Company’s or NET Power’s ability to
accurately estimate future commercial demand; (xxxii) the combined
Company’s ability to adapt to the rapidly evolving and competitive
natural and renewable power industry; (xxxiii) the combined
Company’s ability to comply with all applicable laws and
regulations; (xxxiv) the impact of public perception of fossil fuel
derived energy on the combined Company’s business; (xxxv) any
political or other disruptions in gas producing nations; (xxxvi)
the combined Company’s ability to protect its intellectual property
and the intellectual property it licenses; (xxxvii) the ability to
meet stock exchange listing standards following the consummation of
the proposed business combination; (xxxviii) changes to the
proposed structure of the proposed business combination that may be
required or appropriate as a result of applicable laws or
regulations, including recent proposals by the U.S. Securities and
Exchange Commission (the “SEC”) or as a condition to obtaining
regulatory approval of the proposed business combination; (xxxix)
the impact of the global COVID-19 pandemic on any of the foregoing
risks; and (xl) such other factors as are set forth in RAC II’s
periodic public filings with the SEC, including but not limited to
those described under the headings “Risk Factors” and “Cautionary
Note Regarding Forward-Looking Statements” in its Annual Report on
Form 10-K for the fiscal year ended December 31, 2021, its
subsequent quarterly reports on Form 10-Q, and in its other filings
made with the SEC from time to time, which are available via the
SEC’s website at www.sec.gov. These filings identify and address
other important risks and uncertainties that could cause actual
events and results to differ materially from those contained in the
forward-looking statements. Forward-looking statements speak only
as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and NET Power and RAC
II assume no obligation and do not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise. Neither NET Power nor RAC II gives any
assurance that either NET Power or RAC II, or the combined Company,
will achieve its expectations.
Important Information about the Transaction and Where to Find
It
This press release relates to a proposed business combination
transaction involving NET Power and RAC II. In connection with the
transaction, RAC II intends to file with the SEC a registration
statement on Form S-4 that will include a proxy statement and
prospectus (the “Proxy Statement/Prospectus”). This document is not
a substitute for the Proxy Statement/Prospectus. The definitive
Proxy Statement/Prospectus (if and when available) will be
delivered to RAC II’s shareholders. RAC II may also file other
relevant documents regarding the proposed transaction with the SEC.
BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, SECURITY HOLDERS
OF RAC II AND OTHER INTERESTED PARTIES ARE URGED TO READ THE
REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ALL OTHER
RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC IN
CONNECTION WITH THE TRANSACTION, INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT RAC II, NET POWER, THE TRANSACTION AND RELATED
MATTERS.
Investors and security holders of RAC II may obtain free copies
of the Proxy Statement/Prospectus, when available, and other
documents that are filed or will be filed with the SEC by RAC II
through the website maintained by the SEC at www.sec.gov or at RAC
II’s website at www.ricespac.com/rac-ii.
Participants in the Solicitation
RAC II and NET Power and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from RAC II’s shareholders in connection
with the transaction. A list of the names of such directors and
executive officers and information regarding their interests in the
proposed transaction between RAC II and NET Power will be contained
in the Proxy Statement/Prospectus, when available. You may obtain
free copies of these documents as described in the preceding
paragraph.
No Offer or Solicitation
This press release shall not constitute a solicitation of a
proxy, consent or authorization with respect to any securities or
in respect of the business combination. This press release shall
also not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of
securities in any states or jurisdictions in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, or an exemption therefrom.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221214005397/en/
Investor Relations: Kyle Derham kyle@riceinvestmentgroup.com
Media Relations: Amy Rosenberg amy.rosenberg@fleishman.com
917-439-9309
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