New Era Energy & Digital Q3 Earnings Call Highlights

Key Points

• New Era Energy & Digital is negotiating exclusively with a global technology company on a Phase 1 data-center lease; the parties have agreed on economics, but technical details remain, and Phase 1 can proceed without a Phase 2 agreement.
• Phase 1 is backed by a 20-year power agreement for up to 207 MW, with power expected in Q3 2027 and initial service targeted for Q4. The company is considering modular construction and estimates the build could cost less than half as much as a comparable traditional development.
• New Era reported $187 million in cash as of Oct. 31, including $138 million restricted, after closing a $64 million PIPE. It plans about 550 MW of on-site generation for Phase 2, bringing planned capacity across the first two phases to roughly 757 MW.

New Era Energy & Digital NASDAQ: NUAI is in advanced negotiations on a lease for the first phase of its TCDC data center project, as the company seeks to turn a secured power agreement into a financed and deliverable development.

During its third-quarter fiscal 2026 business update, management said a nonbinding letter of intent covers the first two phases of the project with the same prospective tenant. President and Chief Financial Officer Ted Warner described the party as a leading global technology company and said New Era was negotiating with it exclusively.

Warner said the parties had reached agreement on the economics of the Phase 1 lease, but some technical matters remained. The company is working on separate documentation for Phase 2, and Chairman and Chief Executive Officer Charlie Nelson said Phase 1 can proceed without a completed Phase 2 agreement.

Power and delivery plans

New Era has signed a 20-year power purchase agreement for up to 207 megawatts for Phase 1 and posted a $118 million cash-collateralized letter of credit to secure the power. Management expects power availability in the third quarter of 2027 and is targeting initial readiness for service in the fourth quarter.

Chief Development Officer Evan Pierce said the power will come through an existing registered private-use network supplied by Vistra’s adjacent Odessa Ector Generating Station. He said the arrangement is not contingent on progressing through the Electric Reliability Council of Texas’ Batch Zero process.

Management is negotiating a modular construction approach for Phase 1. Chief Operating Officer José Rodriguez said completing more work off-site while site preparation proceeds could shorten the path to commissioning and reduce reliance on large on-site construction crews.

Warner said initial estimates put the Phase 1 build cost at less than half that of a comparable traditional development. He said New Era is also negotiating the timing of capital outlays and seeking to use the prospective tenant’s design and supply-chain relationships to limit the company’s funding needs. The final requirement will depend on the agreed scope, payment schedule and division of delivery responsibilities.

New Era plans to execute and deliver the project itself rather than pursue a potential joint venture, Nelson said. He said the decision followed a request from the prospective tenant and was supported by the company’s expanded development team and control of the power agreement.

Expansion and permitting

For Phase 2, New Era is planning approximately 550 megawatts of new on-site generation with Thunderhead Energy Solutions. Combined with Phase 1, that would bring planned gross capacity across the first two phases to about 757 megawatts.

A Thunderhead subsidiary has applied for a standard air permit with the Texas Commission on Environmental Quality. Pierce said he expects approval by year-end and does not anticipate the permit affecting the project. Turbine deliveries are expected in the fourth quarter of 2027 and first quarter of 2028.

Pierce said Phase 1 is fully permitted and site work has begun. New Era owns 493 acres and has an agreement to acquire another 99 acres from Grow Odessa, with closing expected in the coming weeks. Management said the additional land should reduce easement constraints and ease utility construction.

The company is also designing a third phase, though its capacity has not been determined. Pierce said New Era plans to use closed-loop cooling and is evaluating whether treated water produced by the oil and gas industry could be reused for industrial cooling.

Cash position and financing

New Era recently closed a $64 million private investment in public equity, or PIPE, which Warner said helped repay Macquarie borrowings and preserve cash for development and leasing work.

As of Oct. 31, the company had $187 million in cash, including $49 million of unrestricted cash and $138 million of restricted cash. It also had $20 million outstanding under its Macquarie facility, fully backed by cash collateral.

After a lease is executed, New Era expects to have options to restructure its letter-of-credit arrangements and potentially release some restricted cash, Warner said. The company retains an option for up to $200 million in financing under the Macquarie facility following lease execution, subject to conditions, and is also discussing larger debt funding arrangements with other potential lenders.

About New Era Energy & Digital (NASDAQ:NUAI)

New Era Energy & Digital, Inc. develops energy and digital infrastructure, with a strategic focus on data center projects supported by power generation and related energy resources. Its plans are aimed at serving the electricity and infrastructure needs of data-intensive computing, including artificial intelligence and high-performance computing. The company's roots are in New Era Helium, which pursued helium and natural gas exploration and development in the Permian Basin of Texas. It has since shifted its emphasis toward integrating energy development with large-scale digital infrastructure.

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