Right. Everybody could please take their seats. We'll get going. I'm John Hodulik. I'm the Telecom Media and Data Center Analyst here at UBS. I'm very pleased to announce our next speaker from Fermi Energy, the co-founder and CEO, Toby Neugebauer. Toby, thanks for being here.
I appreciate the invite. It's been a beautiful day. It's good to be here.
Awesome.
Godzelle.
So again, thanks for joining us. I think Fermi is obviously new to the capital markets, and a lot of people aren't familiar with the story. Why don't you start off by giving a brief overview of the company?
Can I show the map?
Please do.
Okay. I'm sorry. I have a rule at Fermi America to all my teams. Don't go anywhere without the big, beautiful map, and do you mind helping me?
For sure.
OK. So many of you may know of the high school football movie called "Friday Night Lights." And everything important in the world is happening in that high school football district. And you say, oh, Toby, you're full of crap. Well, actually not. If you think of one of the most significant economic events of the last 25 years, it is the fact that America added 13 million barrels a day of oil supply and became an exporter of energy. Well, that happened in Odessa and Midland, obviously the home of "Friday Night Lights." And so you have just an incredible, and then everyone would say, "Stargate." That's one of the most important things happening on the planet right now. And that happens in Abilene, just right outside of the resource corridor.
Again, District 35A, you might remember they flipped the coin to decide who went to the state championship in Abilene. Obviously, you can tell by my sophistication, I'm from the cultural head of this high school football district, Lubbock, because we're the home of Texas Tech University. And then we go up to Amarillo, Texas. And actually, Amarillo is one of the most important places and has been one of the most important places for a very long time. It's been one of the most important places in a very long time for two reasons. Number one, every nuclear weapon in Western civilization is made there at this site. One site, one site only. When you're dealing with a nuclear-powered submarine, the weapons on board are made by the 4,600 people that are here at this site. So it's the most important nuclear site on planet Earth.
Number two, it looks small, this little Hugoton Basin here, but that has been the baseload heat for the Northeast United States for the last 70 years. But when you put it all together, this corridor right here in and around Amarillo is the most energy-rich province on planet Earth. There's not a close first, second. There's not a close third. There's not a close fourth. And it's not just the amount of hydrocarbons that are in this area. It's the infrastructure in and around it. Because Amarillo was the base place for the Hugoton Basin, all of the other hydrocarbon basins in and around Amarillo pipe their gas, kind of like Heathrow Airport or Hartsfield Airport or JFK. They pipe their gas to Amarillo before it would be shipped to the Northeast United States. So we're not just talking about the quantity of hydrocarbons.
We're talking about the infrastructure related to delivering those hydrocarbons. And we're very, very fortunate that all of that happened in and around one site owned by the state of Texas. So again, this is the Pantex facility. Texas Tech owned right up into here since prior to World War II. And what most people didn't know, luckily for me and my family, that Texas Tech had a lease every other year, with no one ever thought someone was going to go to the DOE and try to lease half of the most important nuclear site on planet Earth.
We went to the regents at Texas Tech and said to them, when you look at the amount of gas, the biggest pipelines in America, the largest fiber infrastructure sitting on a Black Sea in terms of water, with a ready-to-permit nuclear site, this is the best place to do what is obviously fixing to happen. The grid is over. It's over. I can't even believe it lasted this long. Why would the consumers of America subsidize the world's most profitable, highest market cap companies? At the same time, America is at war. China is building 33 of the reactors we have the only applications for. So America faces a choice as it relates to this. We have the highest concentration of natural gas. We can easily do 11GW of natural gas generation at this site. But we're also. I'll let you sit down. I'm sorry.
I love that big beautiful map. I love that big beautiful map[Cross talk], and so that's where we came to this. We're from here. Governor Perry, you can see this site. This isn't a PowerPoint. This is the largest energy construction project other than the dam at the high elevations in China in the world today, and the gas pipeline is about 70% in, the water pipeline is 90% in, and we have a bunch of. We're doing the rumors out. We've got a $4.5 billion project financing out maybe in the market, and they're all coming this week. We welcome you to come to Amarillo because we are doing something at a speed, we just took this over in July, and we're not fretting. We're deciding. This week, I'm sorry. Let me say one more thing.
Please.
If y'all don't think we're passionate, then y'all should go to the next meeting next door. Preliminary approval of a 6-gigawatt air permit. Let's put that into context. The largest gas power generation is in the Emirates. That's 9.45 gigs. Unfortunately, my advisors told me only to apply for six. I will immediately apply for the 11. But our final hearing is this week. The second largest permit in the world is in Russia, 5.4. When all these people have been talking to y'all about, well, I got a 3GW, poor Jeff Skilling. And he did it. I believe it. But the point is, to be able to produce energy at this scale takes an extraordinary site, takes the ability to permit. We're on the state of Texas land. And you can see this is all what was happening this week at the site. I'm sorry.
No, that's perfect.
You give me a soliloquy and I'll take one.
Yeah. Why don't we start with sort of the time frame, so obviously, we're watching some of the construction here in the video, so what are the big milestones you've got coming? It sounds like the financing's coming, but maybe we could start with what kicks things into a new gear, or what are you guys, what's the next step we should be waiting for?
I think people would like us to have a tenant afterward.
Right. That is the question I've got.
Again, pre-IPO, we announced that we had an LOI with, not Oracle. And I only say that because we love Oracle in that this is not a company, a tenant that is credit-constrained in any way, shape, or form. There's not too much paper out in its name. That tenant then subsequently agreed to put up $150 million because they wanted to begin construction immediately. I would almost make you get out the big, beautiful map. In fact, I'm going to get out the big, beautiful map as we can show you exactly where tenant number one is because we're building the sites for this isn't a two-man. I'll do this by myself. But if you'll notice, these are the standard on the other campuses in NVIDIA design. But you'll notice these aren't the standard in NVIDIA designs. So these four buildings are already under construction.
These gensets are already under construction. These are a step-down gen.
Substations.
Substations are under construction. Sorry. So welcome to tenant number one. And this is under construction today. And this is why they sent us and committed to put $150 million is that we do have to go raise $4.5 billion. But they wanted us to deliver them a gigawatt of power in 2026. And in order to meet that objective, we had to begin construction immediately. When you put it into context, those are 12 buildings. I just flew over Stargate the other day. We'll be bigger than Stargate by the end of 2026. And we're a relatively young company.
Absolutely. One thing I noticed in the map that I hadn't seen before is the South and the West campus.
Well tenant number one has gotten some negative press as it relates to water and usage there, and their air cooling. And so they wanted more space.
All within the first gigawatt, still that first gigawatt.
No tenant wants just a gigawatt. I tell my team all the time, when you say, what have we done wrong? I know everyone tells me what we did. We got so myopically focused on delivering that 1GW . We have to realize we're building way more than 1GW , 11-17 times more than that. And it's such a big space. It feels like you have all the space in the world. But when you're producing this amount of power, every square inch is going to matter. And so we bought land directly to the west of us and directly to the south of us. Sorry. I do know my directions. And so now we're basically about 55% of Manhattan in terms of when you think about the scale of the property that we're operating under.
Got it. And can you give us the timeline for how the gigawatts come on? I know that you guys are shooting for the first gigawatt by the end of 2026.
We're actually obligated to do that.
OK. Got it.
The answer is yes on that one.
So where are you in terms of setting up? Or where are the assets and the sort of generation sort of piece parts right now to get you to that first gig?
I think as you remember from the roadshow, we already had secured 2.4GW of power. When we started this endeavor, they were like, you'll be lucky to get 200MW . I love naysayers. So everyone's like, it'll be a big win if you get 200MW for 2026. Obviously, we have significantly more than that. Frankly, my team back there will tell you is that he's not done yet in terms of what we anticipate our 2027 power exit power number. Clearly, we've told y'all it will be 2GW . At Fermi, we never just settle. We're always pushing. Notice that we have a 6GW permit. We are actively, if you went back to where I won't make you do it again. The big, beautiful map is all a specific Siemens unit, which corresponds exactly to the permit.
And we fully intend to fulfill the obligations attached to that permit. My partner and I, Rick Perry, was the keynote speaker at the Siemens event. Several of y'all stopped me who were there last week. We are highly confident in our delivery of the 6GW attached permit number one, air permit number one. And as always at Fermi, we're pushing, pushing, pushing because our competitive advantage is our ability to deliver power at scale, at reliability, and at speeds unmatched any place on the planet.
And then, correct me if I'm wrong, but the first gigawatt is a combination of some power gen assets that I believe might be on site and a.
They're getting their spa treatment. They're here.
Okay
They're on their way. They're getting an extreme makeover in Houston. But yes, they're on their way to the site. We did the Xcel deal.
Right.
That's 200MW . I was with Excel yesterday in Amarillo. Everybody is fired up to get that power online. The Excel partnership is a fantastic relationship. Can't be happier with that relationship.
Got it. On the call, could you discuss the sort of demand environment that you've seen from the hyperscalers and other since the IPO? We all knew we got a taste of it talking to you over the course of that week. But what have you seen since then in terms of demand?
Yeah. I think the interesting thing is, obviously, we've had direct conversations with the hyperscalers, which I'll answer here. What's astonishing is when we got involved in Fermi almost a year ago, everybody was like, Toby, there's plenty of grid powers. The biggest data center operator CEOs have been coming to see me a lot, and they fully get that the grid power is over, so when I see some of the most successful developers of prior AI data centers coming to see us, they get that it's over. The only debate we have with them is, is it in 24 months, 12 months, or 12 days, and so we're already seeing it from the people who've been building the centers, and then, obviously, from the customers themselves. What I would say is we've been hyper-focused on hyperscaler number one they don't like to be called customer number one.
But when we think about our offering for our 2027 power, which, again, we hope is ambitious, we hope people are surprised by what we're going to offer to the market for 2027 power, we are highly confident that not one Fermi electron is going to be left behind.
Got it. So what do you see for the full 11 GW? I mean, how many customers do you think you'll eventually have? So how big will the deployments be? And then how quickly do you believe that you could sort of do you expect to sell out this capacity?
I think the right thing, and you and I have had this conversation before, is that we shouldn't have sold any. Neil, I'm going straight there, my evil investment banker. I've got to have my same jokes, Neil. I mean, I don't have many new jokes. But the bottom line is, when everybody's just now realizing that there's no grid electrons, that means it was just now time to start pricing off. We're not behind the meter. We're one of the most sophisticated utilities on the planet. OK? There will not be a more sophisticated utility. When you look at redundancy, when you look at technology, there won't be another one. I hate the word behind the meter. We'll be one of the world's most sophisticated utility. I'm trying to make sure I don't get in trouble.
Yeah.
I'm known to overshare. Yeah. You're like a shareholder. Like, please do not. Bottom line is the pace that was presented is unacceptable to me. But I presented it to the world. And that, to me, would be a disappointment in terms of the deployment of power and execution speed.
Got it. And do you think that future tenants, first of all, it sounds like you think the economics for each gigawatt as we go along is better than sort of what was suggested during the IPO for tenant number one? And then that's my first question. And number two, do you think that you'll just keep adding tenants at a gigawatt? [ cross talks]
I didn't answer your question properly. I was trying to not get in trouble. So what I believe is the power will be spoken for in less than two years. And it will not be our choice.
The full 11GW .
If that's all it is, that's not my goal, but the point is, our customers want 3 and 5s. We do not have anyone asking us for 500 megawatts, and I think the pressure from the customers will be so overwhelming, so what do I picture? Two non-government clients and a third, as y'all know, this is an important military site, I can't imagine that the military and the United States government moved off this site so quickly before their lease expired if they didn't want some power from this site, so I would rather wait and price it out over five years, but I don't think the customers are going to give me that luxury. I didn't answer your question. I was trying not to get in trouble.
That's good. When you talk about 3 and 5, 3 - 5 GW, one thing we've been covering the data centers for a number of years, about a year or so ago, tenants started paying a premium for more space. So is that something you think will translate into at Fermi? In other words, 1GW , sure. These are what the economics are. But if you want 3 or 5GW , we're talking a different level in terms of economics.
I'd like to wave to tenant number one because I'm sure they're watching this live stream. So that's why I'm trying to be somewhat measured. Here is the bottom line: power at scale, power at speed is one of the most valuable assets on planet Earth, or the most powerful, most valuable asset on planet Earth. I like to say out of tenant number one. That's why I was realizing that we have a wonderful franchise because we have a wonderful asset. And we have a wonderful set of relationships with the people that create these assets that took decades to build. And it just happened to be an appropriate time for us to put this all together.
Excellent. So obviously, we had the CRUCIO guys here a little bit earlier talking about some of their projects. We're obviously in an AI compute infrastructure boom. Can you talk a little bit about the supply chain? I mean, is labor an issue? Or we talked about the substation you guys are building. I mean, how's the visibility in terms of getting all the components for the hypergrid in place on the time frame?
I think it's a big differentiator. And we're not real estate guys. We're not crypto guys. We're energy guys and girls. And so our relationships with the supply chain are not weeks old. They're not months old. They're decades old. And they know over decades that when we say we're going to do something, that we do it. And so I think that that is how we're winning the supply chain is because we're not new to any of those people. Right? I mean, these are people we've been doing business with for decades. And I think that's a big Fermi differentiator.
Right. And what about labor? I mean, presumably, as the site expands and the construction ramps up, you'll need thousands of workers on the site every day.
Absolutely. And again, our friends in Friday Night Lights just added 13 million barrels a day. That infrastructure in the Delaware, that infrastructure in the Permian, is the build-out of it. I'm not saying it's over. I'm saying the build-out of that infrastructure is complete. The pipelines, the wells, you're going to refrac those wells. But pretty much the big initial build-up to create the world's most successful energy story. I hope ours is, at the end of the day, as successful as the Delaware and Permian build-out. That's our goal. Those people don't have to change high school football districts. And culturally, we're the fit for them. We're from here. Do not overestimate or underestimate, excuse me, the Texas Tech phenomenon, the Texas Tech partnership.
Every one of the people in that District 35A who just built out that 13 million barrels a day and 75 trillion cu ft of gas reserves is most likely a Texas Tech Red Raider fan. And we have already seen the power of that network. So while we appreciate that as a challenge for others who've tried to move into District 35A, that's not one of the concerns that we have.
Right. And in the couple of minutes that we have left, I want to talk a little bit about nuclear and the access to the water you have. So the government just signed an $80 billion deal with Westinghouse and Brookfield. Can that be? Somehow, does that play into Fermi's plans? And can that help their efforts to rejuvenate the supply chain? Can that help Fermi?
We had the CEO of Westinghouse and his two co-presidents for dinner, not this Monday, but Monday back. We're headed to Washington together next week. Bottom line is there is no one further ahead in nuclear. Westinghouse made it crystal clear. I'm sure they're on here as well. When you look at what we've done with the supply chain, when you look at the fact that Hyundai is moving people to Amarillo already, Hyundai, absolutely on the record to New York Times, as well as Doosan, as well as KHNP, confirmed that the Korean government wanted the investment in our site to be part of their trade deal with the United States. The anxiousness that Westinghouse wants to get some reactors started. I don't feel near as Don Quixote-ish as I did maybe a year ago when people thought I was just jousting at windmills.
I don't think by the next year when we're at this conference, people will say we're jousting at windmills.
Then talk about the importance of water to the project. I mean, obviously, there's a lot of AI infrastructure companies here. NVIDIA spoke earlier. I mean, the Ogallala Aquifer, which I have to admit I had not heard of before.
You never watched Lonesome Dove? You're one of those people.
I read the book.
OK, good. I mean, he went up to see her before he died up in Ogallala.
Got it. So talk about your access to water. And is that, well, I hate to bring out the big beautiful map, but you might see some circles there, and there's 3,125-ish crop circles in and around our site. Each one of those are 2 and 1/2 million gallons a day. When you think of corn, it's 95 parts water and 5 parts God. When you think of a cow, which is where we feed all the cattle, the beef that you'll be enjoying here, they're basically water and a little bit of corn, which is water, and so you're sitting on what's roughly a Black Sea. What we're super cool at what we're doing, we've just announced a deal with MDM in Hungary, who has been using hybrid cooling for not only nuclear reactors, but for coal and gas-powered reactors.
And I think we're fixing to set a new precedent. Our friends at Westinghouse and the government were like, oh, this hybrid cooling is Don Quixote-ish. And now they're all adopting our strategy. But we can reduce the water consumption by about 85%. And the way to think about it is we only use the water versus cycling it nonstop. We only use the water when we need it. And it dramatically reduces it. And it's going to make the site look cool because it's those big towers like you normally think of for nuclear. Even for our gas fire, they're going to get the cool towers. So it'll make it branding cool.
Got it. So I'd like to finish the way I started. What can we expect to hear from Fermi over the next, say, three months? What are the sort of main milestones that we can expect to hear from you guys?
Keep coming back to that.
Obviously, people want to see us finish the conversations with tenant number one. I think that you will absolutely hear about that, dear Ward, before Christmas so that we can have a break. We've had a pretty busy year. I think the second thing you're going to hear about is the largest gas air permit in Western civilization. That is what I would hope to hear. What I would also like to lock down is a path to the gen set where we can provide our customers certainty on the power delivery that is unmatched, a reliability that's unmatched. I think that's exciting. Those are kind of my three big things that I'm excited about. I hope it doesn't take three months. We have bigger ambitions in three months than what we have here today.
Sounds good. Toby, thanks for joining us today. Appreciate it.