FRVO

Greetings, and welcome to Fervo Energy's second quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the prepared remarks. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paxton Bentzinger, Senior Director of Corporate Development and Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to Fervo Energy's Q2 2026 earnings call. Joining us today are Tim Latimer, Co-founder and Chief Executive Officer, and David Ulrey, Chief Financial Officer. Before we begin, I'd like to remind everyone that today's discussion will contain forward-looking statements within the meaning of applicable securities laws. These statements reflect management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results to differ materially. Please refer to the forward-looking statements and risk factors disclosed in today's earnings release and in our filings with the SEC. Additionally, today's discussion may include certain non-GAAP financial measures. Reconciliation tables are provided in the appendix of the earnings release as applicable. Now over to Tim to kick things off.

Thanks, Paxton, and hello to everyone listening in. When we last spoke, I emphasized Fervo's founding conviction, which bears repeating. The same drilling technologies that catalyze the shale revolution can unlock clean, always-on geothermal energy at enormous scale. As you know, we are in the midst of a once-in-a-generation surge in power demand that is likely to dictate the outcome of the American success story in both artificial intelligence and industrial growth, but also the extent to which people have access to affordable, reliable power. The stakes have never been higher, and I've never been more convinced that Fervo is uniquely positioned to meet this moment. In my opinion, this is about Fervo's ability to demonstrate success across four key criteria.

One, does Fervo have sufficient pipeline to meet this historic call for power, and is the scalability of our EGS technology able to capitalize on that pipeline? Two, does Fervo's modular approach to enhanced geothermal energy match the demand profile and reliability that our customers seek? Three, does Fervo's approach to local stakeholder outreach, development, and sustainability ensure we honor our partner communities and sustain our license to operate in those communities? Four, can Fervo execute in the field, putting gigawatts on the grid while simultaneously bringing down costs with seamless execution despite the numerous complexities of deploying large-scale infrastructure? The updates we have for you today will demonstrate our progress across these criteria, but simply put, we're drilling faster, going deeper and hotter, and negotiating hundreds of megawatts of commercial agreements, all while continuing to execute at Cape Station.

Before we dive in, I'll start with an update on safety. In Q2, our trailing 12-month total recordable incident rate sit at 0.34. These results reflect our unrelenting focus on safety, backed by best-in-class operational management and commitment to community and environmental stewardship. When I began my career, I worked as a well site supervisor for drilling operations. It left me with a deep appreciation for leadership surrounding safety. When we founded Fervo, we set out to prove that you could be at the forefront of innovation and still maintain the highest standards of health, safety, and the environment. Our strong performance is validation of that thesis, and we are proud of Fervo's leadership in introducing the geothermal industry to ideas like Safe Seven and the life-saving rules. These programs have directly driven our results.

With that, let's turn to recent updates. First, on our pipeline. This quarter, we moved eight GeoBlocks, representing 400 megawatts of capacity from early development into advanced development. We moved 10.5 gigawatts across two geoclusters from land holdings into early development, and we expanded our total geothermal mineral rights position to over 650,000 acres. To bring these moves to life, we have eight GeoBlocks where our internal teams achieved the key commercial resource characterization, permitting, and deliverability milestones required to move from early development to advanced development. More specifically, for these eight GeoBlocks, we have now submitted an interconnection queue application, completed geological surveys, and secured the permits required for appraisal well drilling. These GeoBlocks are on the development path to ready to build.

We're now working toward the definitive agreements and remaining regulatory approvals that will get them there. On the two geoclusters that moved from land holdings into early development, DeGolyer and MacNaughton completed the heat initially in place studies confirming 10.5 gigawatts of development potential, which was the basis for moving that capacity into early development. To give that number context, that's more than double the current four-gigawatt development potential at Cape Station, where we're under construction on 500 megawatts. It also supports Fervo's multi-gigawatt geocluster model, unlocking economies of scale that reduce costs and de-risk future GeoBlocks. Looking ahead, we've laid out intentional appraisal plans across our geocluster portfolio, beginning in Q4, aimed at sharpening our characterization of the resource and accelerating the pipeline as it advances through development.

Before I go further, it's worth discussing the scale of power demand we're seeing across the market today. The U.S. grid is facing a level of load growth we haven't seen in decades, driven by the build-out of AI and data center infrastructure, the reshoring of domestic manufacturing, and broader economy-wide electrification. This spike presents a generational opportunity for clean, firm power development. While there have been some questions about the robustness of power demand coming from AI and other industrial users on the grid, Fervo's 24/7 carbon-free energy continues to be highly sought after by all categories of buyers. Our current total of 658 megawatts of signed binding PPAs with $7.2 billion of revenue backlog is evidence of that demand.

In addition to those fully contracted megawatts, we have gigawatts of demand at various stages of RFP, term sheet, and contract negotiations across a multitude of our geoclusters. To give you a sense of how diverse the need for firm power is, approximately 35% of our future capacity negotiations are with utility buyers, 50% are with hyperscalers, and 15% are with non-hyperscaler industrial customers. Fervo's GeoBlock development strategy is a direct fit for what those buyers are looking for. Our approach of building independent modular 50 MW GeoBlocks means that our systems come with a level of redundancy, resiliency, and stability that is critical to our customers' needs. If one GeoBlock needs maintenance, that specific GeoBlock comes down while the remainder continue generating power. Speed and resilience are only part of what it takes to actually get infrastructure built.

Our power developments are also clean, bringing with them a level of environmental stewardship, power density, and responsible land use that is difficult to replicate with any other form of power generation. This is critically important to Fervo, and it is central to who we are. Fervo builds things that last, which is why Fervo is a founding signatory of the Geothermal Sustainable Development Pact, a 100% voluntary pledge coordinated with key NGOs such as Sierra Club and the NW Energy Coalition to achieve the highest standards of responsible development across six pillars: community engagement, workforce development, land use, water conservation and well integrity, induced seismicity, and emissions. We will not develop in any other way. The high standards included in the Geothermal Sustainable Development Pact are Fervo's base standard.

In water-constrained areas, Fervo will only develop using air-cooled condensers, meaning that we will never expose our power plants to evaporative losses that cause strain on local water supplies. We will always monitor, evaluate, and respond to seismic activity around our sites. More importantly, we will work closely with our regulators and the local communities to provide transparent data, analysis, and education around the key risks of our developments. Moreover, Fervo will only work with customers and partners who are also willing to hold themselves to a similar high standard of responsible development. As we move co-located and behind the meter GeoBlocks through our development pipeline, we are especially selective in vetting and choosing these partners.

On this point, lately, there has been pushback across the data center development ecosystem from local communities that are justifiably concerned with the impact these data centers may have on their communities if not developed responsibly. At Fervo, we see this as an opportunity to exemplify for others how we believe infrastructure assets should be developed, which is responsibly, transparently, and in close coordination with a host of local and regional stakeholders. This model of development is not new to Fervo. If you have been to the Cape Station site, you have felt our passion for the community and our desire to be their long-term partners, collaborators, and advocates for their causes. What has changed is the extent to which this approach makes Fervo unique relative to other developers developing similar infrastructure assets.

As increasingly, we believe our style of prudent development will be fundamental to reliably building geothermal energy at scale. Next, I would like to spend a few minutes on behind the meter development more broadly, because we believe this is becoming a critically important element of bridging between the transmission grid we have in place today and the immediate call for power to support data center build-out across the U.S. Speed to power, the ability to bring capacity online without waiting on lengthy grid interconnection queues, is becoming one of the most important factors our customers weigh when choosing a power partner, especially as hyperscale data centers and large industrial loads look to come online faster than the traditional grid can respond.

Fervo's GeoBlock and geocluster approach bridges the gap between generating power today and connecting to the grid in the future, giving us and our customers optionality as grid timelines evolve. The same modularity that gives our systems embedded reliability and redundancy lets us site an initial phase of power development behind the meter, then scale capacity seamlessly to meet our partners' medium and long-term growth. Because our power output fluctuates slightly with ambient temperature by season and by time of day, EGS production profile is a perfect match for solar, storage, and other forms of generation. Our fuel is geothermal heat, drawn continuously from our own wells on site, which means a behind the meter development with EGS is insulated from fuel supply disruptions.

As we pair EGS with solar and batteries, we believe our customers will reach an incredibly high level of reliability at a competitive all-in cost that, if needed, can be further bolstered by a modest amount of on-site gas generation to account for tail end events. Fervo's EGS power provides the right modularity, reliability, and output for behind the meter development, and our customers are quickly realizing the same. Despite behind the meter being important to go-forward business, 100% of Fervo's geoclusters are constructed with a long-term plan of grid interconnection. We continue to submit interconnection queue positions and execute interconnection agreements. Behind the meter is a means to deliver power to our customers when transmission timelines lag our customers' need for power.

This hybrid behind the meter and front of the meter strategy is exactly what's accelerating our growth. As has been our approach, we will only disclose PPAs once they're signed and binding, and we won't get ahead of that process. What I can say is that our behind the meter pipeline has real momentum, and we're optimistic that we'll have an announcement before year end. Of course, execution is what makes any of this possible. So let's turn to updates at Cape Station. As a reminder, we're currently building 500 MW at the Cape geocluster, which at last study measured over 4 GW of total resource potential. Our first installation, Cape Phase I, is approximately 100 MW, made up of three 33 MW GeoBlocks, and it's fully contracted under two PPAs.

This is the first multi-GeoBlock EGS development in the world. And we're doing two things that have never been done before. First, we're drilling horizontal wells and leveraging multi-stage hydraulic fracturing. Fervo was the first to take this approach in geothermal history at our Project Red pilot, and now we're the first to do this at large scale development. Second, we're using in-house engineers alongside trusted industry partners for equipment design and construction. As a demonstration of the efficacy of this approach, in less than two years, we have gone from a patch of dirt to a fully constructed power unit that is just around the corner from utility scale generation today. This is the speed to power our customers are looking for.

Right now at Cape Phase I, the team remains focused on execution, prioritizing late stage commissioning and the ramp to promote production, targeting first power from Geoblock 1 in Q4 2026, and then adding power from Geoblocks 2 and 3 by early 2027. We have achieved the key milestone of mechanical completion on Geoblocks 1 and 2, and expect to achieve mechanical completion on Geoblock 3 over the next several months, in line with our construction timeline. For Geoblock 1, commissioning is progressing in stages to allow for robust data collection, safety management, and incremental learning. Our first set of wells has already been connected to the power plant, moving geothermal brine through the heat exchangers and spinning the turbines, and we are testing pressure, flow, and safety systems at each step before bringing the next wells online.

We will continue bringing the wells online in sequence, confirming each flows properly from wellhead through the power plant and back to the well pad, a process that gradually increases output over several months before we reach full production. Geoblocks 2 and 3 are identical in design, and we expect to apply the learnings from Geoblock 1 commissioning process to continue optimizing production ramp at subsequent geoblocks. Our second phase of development at Cape Station comprises eight 50-megawatt geoblocks, our standard design going forward, with startup planned for 2028. In keeping with our standardized manufacturing model, Phase II builds on learnings from Phase I to optimize subsurface performance. Phase I relied on our Fervo 2.0 well design, with 5,000-foot laterals and 7-inch diameter casing at roughly 400 degrees Fahrenheit.

Phase II, by contrast, leverages our 3.0 well design with 7,500-foot laterals, larger 8 and 5/8 inch casing, and an average temperature of 430 degrees Fahrenheit. Last month, we announced results from our Sawtooth 7 well, our ninth Fervo 3.0 well. This is our most complex well design to date, reaching a measured depth of nearly 19,500 feet at 460 degrees Fahrenheit. Despite the added complexity and the added drilling depth, spud to total depth took only 21 days, a new company record for drilling pace and a similar spud to total depth time as our shorter, shallower Cape 1 wells. We expect these design and reservoir temperature changes, coupled with our ability to drill more quickly, to significantly increase power output per well at a lower cost per kilowatt.

As a simple example, an increase from 400 to the 430 degree Fahrenheit target temperature of Cape Phase II increases power output by approximately 27% for the same amount of steel in the power generation system and the same flow for the wells. In practice, that means we expect to generate 27% more power at Cape 2 than Cape 1 for roughly the same surface CapEx. We expect to continue reaching increasingly hotter geology at Cape, as evidenced by the Sawtooth 7 well reaching 460 degrees Fahrenheit, despite the Cape 2 design point being only 430 degrees Fahrenheit. This makes us confident in our ability both to bring down costs and to realize a durable production profile.

Said differently, based on our performance improvement thus far, we continue to believe the learnings and innovations we've implemented in Cape Phase II have us positioned to hit an all-in cost of $5,500 per kilowatt, with our long-term target of $3,000 per kilowatt still firmly in view. Lastly, on the topic of progress at Cape Station, we're proud to announce that we recently expanded our rig fleet, adding a third Helmerich & Payne rig to Cape Station on time with our broader Cape Phase II development timeline. With this, we are increasing the number of megawatts Fervo can drill per year. As an illustrative example, if at steady state each of our three rigs drills an average of 1.5 wells per month, our three rigs combined could drill approximately 54 wells per year.

If each production well generates approximately 15 megawatts of power, and if our ratio of injection and production well remains the same, then our three rigs can drill over 400 megawatts of capacity per year. Before I hand the call over to David, I want to spend a few minutes on our technology and specifically how rapid improvements in drilling performance provide fundamental de-risking to our projects. From the very beginning, our approach at Fervo has been to learn by doing. Project Red, our first pilot, wasn't designed to be the final version of our technology. It was a minimum viable product built to prove out the core elements of our design as quickly and cheaply as possible.

That we could drill horizontal wells in geothermal rock, create fractures in the reservoir, connect offset wells through those fractures, and flow commercially relevant rates of geothermal brine through the system reliably over time. It succeeded on every one of those fronts. Since then, we've iterated fast. As I just walked through, each generation of our well design, from Fervo 1.0 at Project Red to the Fervo 2.0 and 3.0 designs we're now drilling at Cape Station, has gone longer, hotter, and deeper than the last and delivered a meaningful step up in performance. Our published flow test data showed Fervo 2.0 wells at Cape Phase I deliver a three times increase in power output relative to the original Project Red wells.

The Sawtooth 7 results I just walked you through are a good example of just how much that improvement continues to compound. Compare that pace and performance to our very first well at Project Red, which took us over 70 days to drill roughly 11,000 feet at 350 degrees Fahrenheit. In the span of about three years, we've cut drilling time dramatically while substantially increasing performance per well. Sometimes we get the question of how we have so much confidence in the long-term thermal performance of our system. The answer is that we have proven over several years in dozens of wells that Fervo is a company that embodies continuous improvement, mitigating future uncertainty while delivering dramatically better, cheaper operational performance.

Longer laterals and better field designs mean more stimulated reservoir volume per well, which means more thermal resource in place and a more gradual decline profile. Each time we access hotter rock, each unit of flow from those wells carries a step change more energy than any well drilled before it. Every new generation of well we have drilled benefits from the cumulative learning that led us to this point. To be clear, the production temperatures of our wells will decline. That is simply how the physics works. The relevant question is whether we can learn enough to mitigate the impacts to our projects by drilling makeup wells in the future that benefit from the cumulative learnings we have gained, making those makeup wells bigger, hotter, cheaper, and far more productive than those we drill today.

This is how we and every other resource-based business manage decline, and the data already shows that the wells we will drill in the future are likely to be far more productive than the wells we are drilling today. This approach is what ultimately unlocks our biggest long-term goal, making geothermal the cheapest, most reliable power source anywhere on the planet. We have already generated the largest body of hard rock drilling data and analysis in the world, and we continue to add to it every single day. We are proud of the pace of that progress, and we look forward to sharing more of it with you in the quarters ahead. Lastly, given the pace of progress we have just walked through, it is worth addressing where Fervo sits relative to the broader landscape.

It is no surprise that the tremendous demand for firm power has resulted in a wave of new technology approaches entering the power space with a host of claimed benefits and at various levels of technology readiness. We believe several things are true here. New technologies are coming, and some of them will work, will receive funding, and will eventually add capacity to the grid. We firmly believe the world and society need this to happen. We also believe that if offtakers need clean, firm power before 2030, Fervo will likely be one of, if not the only way to get it. From now through the end of 2030, during which time we expect to have delivered over 1 gigawatt of power capacity and solidified our position as the reliable provider of clean, firm power.

We believe Fervo will be well positioned for an astonishing period of development in the mid-2030s and beyond. With that, I will hand it over to David.

Thank you, Tim. I will kick off my remarks with a quick review of our financial highlights from the second quarter of 2026 before discussing our commercial and financing activities, and then turning to our pipeline. For the second quarter of 2026, we reported an operating loss of $28.7 million, driven primarily by G&A expenses of $27.4 million and operating lease expenses of $1.5 million. Net loss for the quarter was $55.9 million. For the six months ended June 30, 2026, net cash used in operating activities was $43.8 million. This primarily reflects our net loss for the six-month period of $87.7 million, partially offset by $61.7 million of non-cash expenses, including a $40 million loss related to the change in fair value of warrant liability, $10.8 million of stock-based compensation, and $9 million loss on extinguishment of long-term debt.

Operating cash flow is also impacted by a $17.8 million use of cash from changes in working capital. Capital expenditures in Q2 2026 were $226.5 million compared to $108 million for the same period in 2025. This reflects the intensive construction activity at Cape Station, along with increased drilling and procurement for our next wave of GeoBlock deployment in 2028. To that end, we expect capital expenditures to total approximately $850 million-$900 million in the second half of 2026, in line with previously disclosed expectations. Cash and cash equivalents as of June 30, 2026, were $2.1 billion, and current and long-term debts sit at $228.4 million. As a reminder, we completed our Nasdaq listing in mid-May, raising approximately $2.04 billion in net proceeds, significantly more capital than we had originally planned.

That raise has meaningfully strengthened our balance sheet, and we're deliberately putting it to work across three focus areas. First, additional capital toward commercial opportunities through 2030, for which we focus on ensuring access to long lead equipment and addressing other potential development constraints. Second, high return R&D that could accelerate our path to our $3,000 per kilowatt CapEx target and optimize our near-term asset performance. Third, positioning Fervo for growth in 2030 and beyond. You're already seeing that capital show up directly in the pipeline results Tim walked you through earlier. The appraisal drilling program we're preparing to execute later this year is enabled by this raise. The through line is simple. The IPO capitalized our business in a way that will materially accelerate our growth and performance.

Finally, our contracted backlog stood at $7.2 billion as of the end of the quarter, representing 658 megawatts of contracted capacity. We continue to see a healthy and growing pipeline of commercial conversations, as Tim mentioned. Next, I'd like to level set on how we think about the next few months at Cape Phase I as the first 100 megawatts begins initial production and then ramps to full production in early 2027. There are a few distinctions worth clarifying. Ramp-up is a sequence of milestones and not a single moment. We've already hit mechanical completion on GeoBlocks 1 and 2, and we expect to achieve mechanical completion of GeoBlock 3 on time, as Tim mentioned.

After achieving mechanical completion, the units progress through a series of tests, verifications, and optimizations, beginning with cold commissioning, where the power plants and electrical equipment are tested without the presence of geothermal brine. Then we move to hot commissioning, where we actually flow geothermal brine from the wellhead to the power plant to ensure the heat transfer system, the turbines, and the air-cooled condensers are operating as intended. When this is verified, we move on to grid synchronization performance testing, during which time we may generate some amounts of test power. Cash realized from this test power can be unpredictable as it is typically subject to market pricing, unlike revenue generated under our contracts.

As with any new industrial asset, it's also normal to encounter early operational adjustments, brief maintenance events, or periods of curtailment as we optimize performance across units. We factor this into our ramp expectations, and it's a normal part of bringing a first-of-its-kind commercial development online. Then, upon achieving a host of administrative and contractual requirements, we declare commercial operation under our contract as we ramp into steady state generation. We expect Geoblock 1 to achieve full power generation towards the end of Q4, with Geoblocks 2 and 3 following a similar sequence with initial power in early 2027, ramping to full power over the ensuing months. Third-party analysts currently anticipate us to generate a mid-single digit amount of revenue in Q4 2026, and we continue to believe this is achievable.

We will be honest, there are still things that need to happen over the next several months in order for this to materialize. For example, we need to complete the last bit of work at the substation and successfully coordinate with several different grid counterparties to achieve grid synchronization. We also have to finish the hot commissioning phase of work on Geoblock 1, and while we do not expect anything unique to come from this process, first-time startups are notorious for having small, correctable issues here and there. Like I said a moment ago, we still feel like we are on track, but we always feel it better to be transparent around potential challenges that we see.

Similarly, while it is early to begin talking about 2027, we would like to provide some early thoughts to consider as we prepare for our first full year of commercial operations. The simple fact is, for our projects, there are things within our control and there are things outside our control. This is not new to power development, and it is not unique to Fervo, but it is the reality we are managing to. We feel really good about the things within our control. Our ability to drill hotter, faster, deeper, and cheaper is an enormous mitigant to a host of factors on our risk register. We have gotten to these results more quickly than we anticipated, and we believe there is still tremendous running room for even better drilling performance.

We also depend on a large number of partners, regulators, and other stakeholders, particularly around transmission, that are managing unique circumstances in 2027 that may result in Fervo being curtailed for a period of time. We are working closely with each of these partners to understand the range of outcomes for these potential events and believe these are unique to 2027 and will not recur in the future. We should state clearly that these curtailment events have nothing to do with Fervo's production, our construction, or the operation of our geoblocks. With this in mind, for 2027, we currently anticipate generating between $60 million and $80 million of revenue. This is not our formal revenue guidance.

Given the reliability of our assets and the contracted nature of our revenue, the range we are providing today is likely wider than we would ordinarily provide. But as this is our first year in commercial operations and the curtailments we may experience are somewhat unique, we feel a wider range is appropriate for now. Next, given the importance of behind-the-meter geoblocks to our business, I want to address a common misconception about the economics of behind-the-meter generation that is fundamentally more expensive for Fervo because of the incremental build required to achieve high levels of reliability. While it is true that a behind-the-meter project likely requires additional capacity to replicate the reliability the grid would otherwise provide, that does not mean Fervo bears all of that incremental cost.

In the structures we're pursuing, Fervo is responsible for delivering firm geothermal power and its associated reliability to the customer's private use network, while the customer is responsible for procuring the additional generation and storage capacity required to reach their desired overall reliability level. Fervo's cost structure to deliver our portion of firm geothermal power remains broadly consistent with what we've communicated previously about our front-of-the-meter contracts. These are incremental costs to physically deliver power on-site, but we don't expect those to have a material impact on our overall project return profile. Lastly, before I close this out, I want to return to the comments Tim made about the traction we currently have with our customers and potential customers. We have an active set of origination conversations ongoing across a diversity of customer types and across a breadth of maturity.

We also feel confident in our ability to reliably access our supply chain, obtain permits, and move GeoBlocks through our development pipeline. Taken together, we now expect to have 1.1 gigawatts installed by the end of 2030, an increase of 100 megawatts from our previous expectation of 1 gigawatt. We don't take this increase lightly, and as our confidence increases with Bridge behind-the-meter projects serving as a viable alternative to grid-connected projects from a commercial, technical, and financing perspective, we believe this will unlock additional speed to market for Fervo. We're extraordinarily proud of the progress our team has made this quarter, and we look forward to continuing to update you as this portfolio matures. Operator, you may now open up to Q&A.

Thank you. Ladies and gentlemen, to ask the question, please press star one one on your telephone, then wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of David Anderson with Barclays. Your line is open.

Hi. Good morning, Tim. Your land portfolio has now increased to 650,000 acres, and you talked about de-risking another 10.5 gigawatts into early development on top of 400 megawatts into advanced development. Has your longer-term development plan changed at all? Have any projects moved up in your timeline? If you could also expand a bit further on the appraisal drilling program starting later this year. What's sort of the target here? What are you trying to cover? Just some more details on that. Thank you.

Yeah. It's a great question, and I'd say, within each of those buckets, it's a constantly sort of a growth optimization. Where are we seeing the biggest demand for customers? It's reflected in higher pricing. Where are we seeing permit regimes that are allowing us to move forward in the project development? Where are we seeing opportunities for interconnection queue timelines that are expedient or opportunities for behind the meter that can get around the interconnection queue timeline? So, within each of those buckets, there's constantly sort of a reshuffling of those projects. Everything is in line with our expectations in terms of timeline of growth. I think what you're seeing here in terms of our increase in acreage, our movement of projects through the pipeline.

As David mentioned in his remarks, are things that are actually unlocked by the incremental extra capital we were able to secure in the IPO process, which, as David mentioned, was above our original expectations. I think we're excited about this. If you would've asked us a year ago where we would be, the maturity of this pipeline is further along than we would anticipate because the IPO proceeds enabled us to spend the time and the money on things like putting an appraisal rig program together faster, securing more acreage, particularly as we've seen acreage costs increase pretty dramatically. I would say we are moving faster than we would've initially anticipated in building out this pipeline as a combination of higher IPO proceeds unlocks that.

We continue to see robust customer demand. In terms of appraisal drilling, we're very excited about this. It'll be very similar to what we would've done in the Project Blanford prospect last year. Many of our projects have good geologic models. We are able to do surface studies, geophysical studies that allow us to unlock insights about the subsurface, but sort of the gold standard for confirming temperature at depth, which is one of the most important criteria in our techno economics, is actually to drill one of those wells down to depth. That's what we anticipate doing at our prospect later this year.

That kind of geologic information will allow us to site where we put our first laterals to inform further geologic modeling and sort of accelerate the process beyond. Again, these are things that are unlocked and sort of ahead of our prior expectations due to the IPO proceeds. So we're really excited to be ramping up an appraisal program for some of our Nevada prospects and beyond.

Great. Thank you for that. You talked about the results of the Sawtooth 7. Just following on that, can you just remind us how many of the 3.0 wells you have now drilled to date, and how many do you need to fill out the kind of drilling programs for Cape Phase II? Just wondering if you are maybe considering adding a fourth or maybe fifth rig to accelerate this. Thank you.

Yeah, it is a great question. I think we announced with the Sawtooth results that it was our ninth well, and we are continuing with the three rigs to add wells pretty regularly. One of the innovations that we have brought over to the geothermal sector for the first time that is kind of unlocked by the technology of our partner, Helmerich & Payne, with their FlexRig 3 rigs, is actually batch drilling. We are able to put multiple wells on a pad. We are able to optimize the sequencing because we can actually batch drill surface sections and intermediate sections and then production sections. As a result, actually we will it is not just every 21 days or so we deliver a new well, we actually kind of drill four or eight wells on a pad in a batch process.

We will sort of finish them all at once. That Sawtooth 7 well was the last well on the pad that it drilled. We now have these three rigs actively drilling, so we have drilled significant portions of other wells, since then as well. In terms of total wells, we anticipate that there could be anywhere up to 80 wells in the Phase II drilling program. We are very far along in that process already with about 10% of the wells fully drilled and significant portions of the remaining wells drilled out. What we continue to see is that the innovations that allowed us to come down the learning curve so quickly to achieve that fast drilling time on the Sawtooth 7 well are continuing to unlock better and better performance.

We would actually expect that trend of faster drilling and lower cost wells, despite the extreme temperatures and the greater depths we are drilling to continue throughout the entire Cape Phase II drilling program and beyond.

Great. Thank you, Tim.

Thank you. Please stand by for our next question. Our next question comes from the line of Dylan Nassano with Wolfe Research. Your line is open.

Hey. Good morning. I just wanted to go back to the commentary around 2027. Can you just provide maybe a little more granularity around the curtailments that you're kind of alluding to?

Yeah. Hey, good morning, Dylan, and thank you for the question. For 2027, I think what we said on the call is that we're looking at revenue somewhere in the range of $60 million-$80 million and tried to allude to this being a pretty wide range. Just again to confirm, this is not anything that has to do with Fervo's production or our wells or the performance of GeoBlocks. This is really due to curtailment on the transmission lines that we have going from the Cape Station site to our end customers. This is something that we've had our eye on for some time, and as we get closer to 2027, it's obviously coming into clearer picture, and so we felt like now is the right time to begin talking about it.

This is something we think is unique to 2027, where that transmission operator has another asset that is being added into its line. There is just curtailment related to bringing that asset into the network alongside it, but nothing other than that.

Okay. That is helpful. Thank you. Then just quick follow-up, on the 100 megawatts incremental by 2030, can you just give us a sense of which of your geographies maybe that could easily fit into and just how are you thinking about the economics there relative to the Cape Station kind of Phase I, Phase II economics?

Yeah. It is a great question. Obviously we will have more to say about this in the future, but I think hopefully the read here is that we are seeing enough on the origination side to be excited about and progressing these conversations that we have the confidence to increase that target from 1 gig to 1.1 gigs. In terms of geography, what we like about our portfolio is that we have a tremendous amount of optionality across the range. If you look at that funnel that we have that kind of shows how we move GeoBlocks from one level to the next, you obviously see that we are moving things pretty rapidly. That contains several different geoclusters at various stages. We think that we have got a few really high likelihood, high-quality prospects that we can go to here.

We are moving transmission and permitting across the range of those geoclusters as well. We like what we are seeing there. I think it is probably safe to say that we are more advanced in our resources in Nevada and Utah. We would expect that that is likely where those projects come from, but we do maintain kind of optionality on that. On economics, we would say that what we are seeing on these commercial negotiations is consistent with what we have seen before, which is a range of pricing from $100-$130 a megawatt hour. We think that everything that we are talking about here is going to fall down the fairway of that range.

Thank you. Please stand by for our next question. Our next question comes from the line of Chris Dendrinos with RBC Capital Markets. Your line is open.

Yeah, good morning, and thanks for taking the question. I wanted to go back to maybe just the ramp up here in production in the back half of the year. Just as far as those PPA contracts go, can you maybe just discuss a bit more detail how those work in terms of obligations for production capacity at any given point in time? There have been some concerns or debate that there might be some damage payment obligations just given when things ramp and the official start date. We are just trying to think through that. Thanks.

Yeah. Hey, Chris, and thanks for the question. It is obviously something we have our eye on here. There are a couple of different dynamics. One is that each of our PPAs is different, and so the way that these work kind of changes throughout. What we have at Cape Phase I as we ramp is actually broader than kind of an instantaneous, do you have 10 megawatts or 30 megawatts or 100 megawatts on time? We have kind of an extended timeline to true that up over the course of the year. We feel good about our ability to generate that capacity and see things there. When it comes to liquidated damages, it is something that obviously is important to us and something that we think about.

We do not think that those liquidated damages, in most cases, are material to the P&L. What we typically see is that we have some kind of trade-offs here. What we mean is that we can bring things online faster that may come at the cost that we don't go through a true commissioning phase where we explore all the options, optimize the asset. I think our management view is that that's not the appropriate decision to make. I think what you're hopefully hearing from us is that we're going to prioritize the health of the asset and demonstration of the core IP above all else. We think that that's the right trade-off against LDs that are likely immaterial in most cases.

Got it. Thank you. Maybe just as a follow-up on a separate topic here, you talked about some of the opportunities to transpose oil and gas drilling technology over to your wells. What other kind of tech unlocks are you all working on or experimenting with here, and what are the kind of expectations for when that could ultimately just work into your overall drilling program and drive more step change and cost reduction? Thanks.

Yeah, it's a great question, and we've had several significant wins in terms of upgrading oil and gas technology to deal with our more challenging geologies that are both. There's several factors we have to consider here. Our diameter of our wells are larger than the typical unconventional onshore oil and gas wells. So that's one difference from the oil and gas world. Our temperatures are higher temperature than oil and gas wells. Then obviously drilling through granite with the material properties of granite, it's a much harder rock to drill through than shale. A lot of this is upgrading the right materials, and especially as we push to greater depth.

Some things, for example, that we've implemented recently that have yielded good results, just to give one example on the completion side, is recognition that doing the deeper Phase II wells would, if we wanted to pump with the efficiency that we wanted to, would require higher pressures. So we've, for example, gone out and sourced unique equipment to deal with the temperatures, casing diameters, and pressures that we see in our operations that have actually led to an increase in stage success rate. To just give you one example of technologies that we're adapting over is the ability to do well stimulation at higher pressures. So there continues to be significant examples there.

Another technology that we've trialed out multiple times over the last couple of quarters that we're growing increasingly confident in is going to a rotary steerable system for drilling some of these deeper and more challenging wells. This is an advanced technology that allows you to maintain your drilling program in the rotating phase, where you can drill faster while still achieving the directional trajectory of our systems. There were some growing pains adapting that technology to geothermal due to the temperatures and properties of the granite. But working across our partners, we think we've kind of honed to that end, and that's just one of those examples that as that goes from trial to a more routine part of our drilling program, which is sort of the phase we're in right now with that particular technology.

It will continue to yield significant improved drilling results. There's just a long list of these kinds of innovations that we're working on right now.

Got it. Thank you very much.

Thank you. Our next question comes from the line of Ben Kallo with Baird. Your line is open.

Hey, good morning, guys. Maybe taking a step back, I know it was less than two months ago when you talked about the higher capital raise opening more opportunities. You increased the 2030 targets. You have a new rig out there, and you have a new drilling program. Should we think of that as what that allows you, the new capital, or are there additional things that we should wait and see for? Then I have a follow-up.

Hey, Ben. Great question. I would say that this is definitely part of it, and I might separate them a little bit. The third rig that we added out at Cape Station is part of the normal course of development for the Cape Phase II project. That one we kind of had planned, and so maybe would not put that in the bucket of directly tied to incremental cash. On the opposite side of that, though, the incremental 100 megawatts, we would say, is directly tied to that, as well as the appraisal drilling program that we are getting ready to embark on. When we think about what it takes to add additional megawatts before the end of 2030, appraisal is definitely part of that.

That is what allows us to go into definition and start contracting those geoclusters more specifically. Additional work streams that we will have in the mix there are permitting interconnection queues, really de-risking the development and deliverability of those megawatts. On the other side, it comes down to long-lead equipment. Our supply chain is really robust, both from an oilfield service and equipment perspective, but also the Organic Rankine Cycle turbines that we utilize. The electrical side of things is no secret in the market, is a little bit more stressed. That is where we are using some of this incremental capital to make sure that we have that equipment on time for when we need it.

In terms of additional things to come, Tim has talked about some of our opportunity register that we have on the subsurface development side. I would expect that we are identifying some really interesting ways to deploy modest amounts of capital to de-risk both our current projects but also our future pipeline.

Okay, great. Just going to behind the meter. Could you talk to us, kind of the mechanics? You mentioned that there was a discussion about higher costs. How would we expect a data center development to, the timeline to occur with your timeline of build-out? Would a data center start construction before you are completed with the power plant or after? Would you provide the auxiliary equipment needed or even additional generation or stationary storage as part of that deal? Just maybe describe a little bit more how we should expect that to evolve.

Yeah, these are great questions and some of the things that we have had to wrestle through because behind the meter is always something we say it is a simple idea to throw around. It is very challenging to implement in practice. These are all the thorny details that you actually have to work through with your partners as you get this to be done. I think one of the things we are excited about is we have really shortened our construction timelines significantly and especially relative to other technologies. Our ability to go from spud to sales in terms of producing electricity on the first couple of GeoBlocks in a prospect has gotten to be relatively quick.

As a result of that, we do expect there to be kind of concurrent development of our projects with the data center projects as well. We do not think they are generally going to wait until after our projects are online to do this, particularly in any sort of behind the meter or islanded mode. We do expect that construction to be done concurrently. This is where actually I think the GeoBlocks are a really great asset in terms of making this happen. Because what we are trying to do with our customers is align the growth of our prospects, where maybe that is bringing on four GeoBlocks initially and then adding four more six months later and four more six months after that. Just as an illustrative example about how that might work.

That means we can phase our capital deployment and growth alongside our partners' capital deployment and growth. They can build out and sort of size their powered shells to be commensurate with bringing up these assets online. I think when we work with our partners, they recognize that we have a fairly unique asset. The ability to build power plants that have no fuel supply risk, that produce 24/7 carbon-free energy at assets that can get to a gigawatt scale across many locations in the West is something that they find very attractive and very unique. A lot of them are looking to scale over multiple years to turn these into sort of marquee assets within their portfolios as well, just because that is not a mix of attributes you can find really anywhere else.

That is kind of how we are thinking about it, and we do believe it is, obviously, on a lot of ways faster than the interconnection queue position, which is why we are taking this hybrid approach of doing this, where we do not have queue positions that meet our customers' timelines. In terms of our model and higher costs, there are things, whether it's the resilience or redundancy of electrical infrastructure or different items to ensure that you have the right power quality that we would not be spending CapEx on if it was a grid-connected project. As we mentioned in our illustrative slide two, we also see benefit out to our customers of hybrid approaches of pairing our assets with things like solar and storage to meet their objectives in terms of the high reliability needs.

We are working with partners on that. When we think about this tactically, Fervo has always been a company with a pretty maniacal focus. What we believe is the one thing that we do best in the world that no one else can replicate is the rapid development of enhanced geothermal systems assets. Meanwhile, we think there's many credible players that can deal with the electrical system design, the solar development, and these other attributes that are not as unique to Fervo. We are generally scoping our work to doing what we do best, which is best in class enhanced geothermal systems development and working with partners who can handle the other parts of the supply chain to work with our customers to build out these microgrids.

That may evolve over time as we learn more, but we love focus at Fervo, and we're laser-focused on being best in class of EGS development. Even in these behind-the-meter projects, that's where our focus is as well.

Thank you, guys.

Thank you. Our next question comes from the line of Jed Dorsheimer with William Blair. Your line is open.

Hi, thanks. Thanks for taking my question. I guess, first one, maybe, Dave, if you could help on what would the cadence look like between the 60 and between the 80, and recognizing that it's out of your control in terms of interconnection. Assume that the 60 would be a front-end loaded haircut to sort of the prior expectations of that 80. Could you just help with what that cadence might look like on the lower end and the higher end?

Yeah, I'm happy to, and thanks for the question, Jed. This is really about the duration of that curtailment, which is maybe stating the obvious. We're working closely with our partners there to get a better understanding of how they evaluate the risk that this is either longer or potentially shorter than they imagine. That's kind of where that 60-80 range is coming from. The way that we would think about the 60 kind of coming to fruition is that that's maybe an extended curtailment where things aren't quite as clean from their perspective of getting that asset online as they currently anticipate. Then obviously all the way up to 80, where our contracts are structured such that we can actually exceed our target expected energy. We have some ability to recoup megawatt hours and reclaim revenue for 2027.

Those are all the kind of, that's the range of outcomes that we're evaluating. I'd say that what we think about on a constant basis is what can we do to control that and influence that? We think there might be a couple of things that we could add to the system to either limit our dependence on that or to increase production out of the asset. That's what we're going to be working on into Q4 and Q1 of 2027. Then hopefully have more to say about it then.

That's helpful. Then Tim, I was listening to Mike Rowe on a podcast the other day talk about the labor shortage and the ensuing gap that the country will face. I am just curious what you are doing to mitigate on the labor side of things as you have a pretty big ramp in front of you. How are you trying to get ahead of this issue and address that? Whether or not that would be where you rank that from a variable perspective of having an inflationary impact on the business.

Yeah, it's a great question and something we think about a lot. It's probably good to bifurcate that we do have two parts of our business that actually draw from relatively distinct labor pools, and that's the drilling side of the business and the power plant construction side of the business. So our approaches here are a little bit different. On the drilling side of the business, this is where we are blessed to be adjacent to an industry that has probably one of the most robust domestic supply chains and labor pools ever created. I talk about this a lot, given my background in drilling in oil and gas is, as we see increasing global competition and industrialization in China and other markets.

One of the few things that you can very definitively say that the U.S. has the strongest labor pool in the world on and the strongest supply chain and equipment supply chain is drilling services. We were just out on site last week with a bunch of folks, and it is incredible whenever you go to a drilling site or a completion site, the fact that the people doing that on-site supervision are people with decades of experience, and there's such a deep pool of really skilled labor there that is really exciting for us. So we don't really foresee labor challenges on the drilling side of the business at all, just because that is such a deep pool and has proven to be so robust.

As you know, the rig count today is a fraction of what it was 10 or 15 years ago. As a result, there's a lot of skilled folks that can do that work. Where we see a little bit more pressure is on the power plant construction side, and that's because often the skilled workers we are looking for are folks that are also in demand from other power generation assets, other data center build-outs, and that's where we see more stretch. But I think we have a program there where we are really excited with particularly our strategy of building deep relationships with local and regional suppliers has served us really well. We've disclosed in the past and talked about our partnership with Industrial Builders, who's the primary construction contractor for Cape Phase I with deep experience in geothermal.

We have a fantastic kind of multi-year relationship with them, and they're based in Idaho, very in close proximity to much of our project sites. We find building these long-term, deep relationships with really the right construction firms is a huge mitigant to this pressure. In addition to that, we're being very proactive, and this gets back a little bit to our community engagement strategy in building out apprenticeship programs and workforce development programs to keep filling that pipeline. We've done a significant amount of local hiring in the Southwest Utah area, and that's from everything from operators to really leveraging the partnership we now have with SUU, Southern Utah University, as part of a geothermal apprenticeship program that's become a hiring pool for us as well.

This goes back years ago when we established that program. Even before I think people were starting to talk about labor shortages or competition over labor with these construction booms, we were already proactively sort of training the workforce of tomorrow on the power plant construction side. We're very confident that our strategy of working with local and regional construction partners that see huge benefit in Fervo's multi-year investments in their communities, as well as our work on apprenticeship and other training sources with educational institutions is gonna put us in a really good position to succeed in a competitive labor market.

I think this is something that we spend a lot of time thinking about, but I think Fervo has a really fantastic strategy going forward for both the drilling side of the business and the power plant construction side of the business.

Thanks, Tim.

Thank you. Our next question comes from the line of Sunaina Ocalan with Bernstein SG. Your line is open.

Thank you. Hey, team. Thank you for taking my question. If I can go to behind the meter for just one more minute, and follow up on that. Your slide five, I think I totally appreciate the fact that you guys will only announce when you have something concrete. I love that. The one that you're working on right now, which you said on the call that you could potentially have some update before the end of the year, is that behind the meter or front of the meter, or did you provide any color on that? Then I have a follow-up on slide five.

Yeah, I think that given the level of customer demand, we have a pretty significant amount of conversations in advanced negotiation that both encompass front of the meter and behind the meter. It's also sort of depending on the unique situation of each asset. There's also hybrid approaches where there may be a portion of projects that are front of the meter and behind the meter as well. I would say that, going forward, we will have PPA announcements that encompass kind of both those contract structures, and it's a continuum where we'll have some in between. So I'm not sure if that's a satisfactory answer to your question, but, given how far along we are in advanced negotiation with multiple parties, it's kind of a blend of everything.

Okay, that's great. Thanks. Just one more follow-up. On slide five, this is your current view of the 50% data center hyperscalers, 15% large C&I, et cetera. Right? Do you have an internal view that you're working with in terms of how big the behind the meter can be, and is that changing over time? Essentially, is that 50% essentially just addressing a constrained grid right now? Any color on what you're expecting that to be over the next few years?

Yeah, I think it is a good question, Sunaina. I think what we see is a couple of different things here. One, the 50% or so that we are working with in terms of hyperscalers, I think what we are hoping to show here is that, yes, the AI hyperscaler wave is enormous and it is a huge catalyst to our business and something that we see very acutely right now. That does not mean that other sources or other users of power are not also needing firm power that we provide. Across industrial and other non-data center industrial users, we have just a good blend in our origination mix right now.

On behind the meter specifically, I think we see it as a really big opportunity. There had been questions over the last kind of 12 months or so about how people would actually contract for behind the meter in a way that was going to be financeable. I think we have seen the market start to announce several of these types of agreements that really demonstrate that, yes, behind the meter can be done, both from a technical and a contractual standpoint, but also from a financial and debt perspective, which is just important to getting these built. I think what we see is an enormous opportunity there, but that does not kind of undermine the value that the grid provides. I would say that we are huge fans of the grid and think that our customers are as well.

Where there are opportunities to leverage the grid, just like Tim Latimer talked about, we will do that and we will do both. But behind the meter is increasingly a really effective bridge between customers that candidly need power now faster than the grid can move to meet them, in the future when we would prefer, and I think they would prefer that those assets are on the grid.

Excellent. Thanks, David.

Thank you. Ladies and gentlemen, due to the interest of time, our final question will come from the line of Derek Podhaizer with Piper Sandler. Your line is open.

Hey, guys. Thanks for squeezing me in here. I guess maybe look, clearly a number of questions and kind of noise coming out there in the marketplace around maybe the technical aspects of EGS development, including well production results, water loss or usage, seismicity. Tim, you talked a little bit about this in your opening comments, so maybe help educate the public and the investor base around those technical aspects of EGS and even point to securing that $421 million of non-recourse project debt financing for Cape Phase I and the amount of due diligence gone into that. I think that just would be helpful for everyone to hear from you as far as helping to dismiss and assuage some of those concerns that are out there.

Yeah. I appreciate the opportunity, Derek, and it's a great point. I think folks often miss that we closed earlier this year that $421 million debt package. It's non-recourse project finance debt, which is sort of a milestone for enhanced geothermal systems. I think that it has been interesting for us to watch, I don't know, the keyboard warriors or other folks try to opine about different technology results when oftentimes they're not subject matter experts in geothermal, nor do they have access to the data that the independent engineers and the underwriters of a process like that had access to. I think when we looked at this, it's something we're quite proud of. First of a kind project finance is sort of like the holy grail of scaling new hardware technologies.

We crossed that finish line because of the robustness of this. The feedback we got from our banking syndicate is in terms of diligence questions fielded and scrutiny on the project is it was unlike anything that they had ever seen before, just because the complications of geothermal and new technology meant that there was an enormous amount of scrutiny on it. So this project underwent a significant amount of review from a deep bench of qualified independent engineers and underwriters that evaluate everything from scenarios on water loss to scenarios on thermal decline.

I think the results speak for themselves, that the folks with access to the data, with access to the field results, and with the right subject matter expertise to look at this, see the technology maturity and understand the things that we've talked about at length, like that thermal decline is not some binary output. That's oftentimes how we see the conversation framed, is it's either a yes or a no, but in fact, it's something that, like I stated in my opening remarks, thermal decline is something that happens because physics works. You're extracting heat, and as a result, you expect that reservoir to cool off over time.

But if you actually have time to sit with the data and build financial models, you can see that a very wide range of outcomes on an aspect like thermal decline, because we can mitigate it with drilling hotter, newer wells in our make-up well drilling program, actually is something that's quite mitigatable from a project returns standpoint. I appreciate the opportunity to reiterate this because that's what we think that means from that project finance, is the folks that had all the right subject matter experts and access to data and scrutiny determined that these were bankable projects. That, to us, means far more than any of the noise and speculation that you might see out there, and I do think speaks to the maturity of our technology.

Great. No, I think that's very helpful. I guess my follow-up, David, this might be for you, but just continuing on that thermal decline and the make-up well conversation. I guess help us understand from like an NPV per well perspective and the make-up wells leveraging the existing surface facilities that you'll already have in place, understand they'll be hotter, higher producing wells, but also just maybe from an NPV perspective, each new well leveraging what's already existing, and help us on just kind of the overall project economics.

Yeah. Thanks for that question, Derek, because I do think that's the way that we think about this internally, and we would encourage others to think about it as well. What we have the benefit here of is a couple of things, and you kind of pointed to one very accurately, which is the wells that we drill in the future are going to be a step change better than the wells that we drilled prior to COD of that asset, just because we've continued learning and we've continued drilling in those specific fields. The other thing that we have the advantage of here is just time value of money.

As we drill wells in the future, because when we think about our CapEx, the drilling and completion of wells and the associated well pad facilities is about half of our pre-COD CapEx and the CapEx associated with the power cycle, the power gen equipment on the surface is about half. We are really talking about drilling a portion of that half that is associated with the subsurface, and we are doing that obviously years in the future. Because of that, it does have a muted effect on the return profile of the projects. Often what we see is that because we have this range of outcomes, in terms of what we are able to deliver under our PPAs, and our PPA prices are attractive.

What the returns tell us is that in most scenarios, we would prefer to drill an additional well because that additional well that we are drilling is more productive than the wells that we brought on originally. That means that we can actually deliver above kind of that expected baseline of power under our PPAs. We see that as an attractive opportunity to deploy capital with a high return.

Great. Appreciate the color, guys. I will turn it back.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Thanks. Welcome to Fervo Energy's first quarter 2026 earnings conference call. At this time, all participants are on a listen-only mode. A brief question and answer session will follow the prepared remarks. As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Paxton Bentzinger, Senior Director of Corporate Development and Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to Fervo Energy's Q1 2026 earnings call. Joining us today are Tim Latimer, Co-founder and Chief Executive Officer, and David Ulrey, Chief Financial Officer. Before we begin, I'd like to remind everyone that today's discussion will contain forward-looking statements within the meaning of applicable securities laws. These statements reflect management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results to differ materially. Please refer to the forward-looking statements and risk factors disclosed in today's earnings release and in our filings with the SEC. Additionally, today's discussion may include certain non-GAAP financial measures. Reconciliation tables are provided in the appendix of the earnings release as applicable. With that, I'll turn the call over to Tim.

Thank you, Paxton, and good morning, everyone. This marks Fervo Energy's first-ever quarterly earnings call. I want to begin by recognizing what a significant milestone our recent IPO represents. In May, we raised approximately $2.2 billion in gross proceeds after upsizing the offering and pricing above the high end of the revised range, a testament to the growing role of enhanced geothermal systems in the energy sector. We understand this was one of the largest primary energy and power IPOs of all time, as well as one of the largest climate tech IPOs ever. This is something that everyone at Fervo and all who supported us along the way should be proud of. I want to thank everyone for their dedication and hard work in getting us here.

Fervo Energy was founded on the conviction that the drilling technologies that catalyzed the shale revolution do the same for geothermal energy, unlocking clean, always-on power at enormous scale. Over the past decade, we've grown from a concept into a company with more than $7 billion in contracted revenue, dozens of wells drilled, billions of dollars of capital raised, and the startup of our first utility-scale project, Cape Station, now within sight. Ringing the Nasdaq bell marked an important milestone on our journey. Our mission to transform how the world obtains its energy is just beginning. We look forward to sharing our progress on that mission today and on future calls. Before diving in, I want to stress that safety is paramount at Fervo. In order to build things that last, it is imperative that we prioritize health, safety, and the environment first.

This has been a core value of Fervo from our founding days. We are exceptionally proud that we've proven that a company can push the boundary of innovation while simultaneously being an industry leader in HSE. We have implemented many proactive measures, such as our life-saving rules and take-time talks that have led to exceptional safety outcomes. As of Q1, our trailing 12-month total recordable injury rate for TRIR stood at just 0.27. This TRIR demonstrates Fervo's commitment to industry-leading safety standards. This commitment to operational excellence is what gives us the confidence to pursue the exciting market opportunity ahead. Let me turn to that now. The energy landscape has fundamentally shifted. Surging power demand is exceeding firm supply, driven by AI, industrial reshoring, and rapid electrification.

The result is a growing clean firm capacity gap that utilities and large load customers are urgently working to address. According to projections from Rystad Energy, by 2035, the U.S. is expected to face a 98 GW accredited capacity shortfall. At Fervo, we have a purpose-built solution to meet this moment. We believe our always-on carbon-free power is uniquely positioned to serve utilities, corporate buyers, and data center customers who need reliable baseload capacity at scale. EGS is a domestic, reliable, and cost-competitive resource, attracting ever more political support. Just last month, governors from four Mountain West states, crossing party lines, launched a coordinated consortium to facilitate up to 200 GW of geothermal development through streamlined permitting, shared geologic data, and accessible project-level finance. More recently, the U.S. House approved the Geothermal Energy Advancement Act, a bipartisan package of bills to accelerate the deployment of geothermal energy with broad support.

That bipartisan momentum reinforces our confidence in the long-term runway ahead. Drilling further into our business model and how we are differentiated. Fervo is an independent power producer that builds, owns, and operates next-generation geothermal power plants using enhanced geothermal systems technology. Our EGS technology enables an innovative development approach centered on three differentiators: repeatability, enhanced production performance, and economies of scale. First, we have streamlined our core well field and power plant design to unlock learning curves and meaningfully reduce cost over time. We then harness these learnings to continuously improve our design, increasing production output and efficiency. Finally, going forward, by deploying our technology in modular 50 MW units called GeoBlocks and aggregating those into multi-gigawatt GeoClusters, we can achieve economies of scale tailor-made to meet customer demands. This is not one-off custom engineering.

It is a repeatable manufacturing process that we believe will accelerate project deployment and allow us to reinvest our cash flows into a deep pipeline designed to take full advantage of compounding efficiencies. We are able to accomplish this because we have fundamentally reimagined how to harness geothermal energy. Traditional geothermal is constrained to niche geologies with limited resource potential. Our approach sidesteps these constraints using the hallmarks of the shale revolution, horizontal drilling and hydraulic fracturing. With these tools, we believe geothermal can be developed virtually anywhere with orders of magnitude higher projected energy output. Our air-cooled, closed-loop power generation system recovers and reuses fluid continuously, aimed to drastically reduce water consumption and carbon emissions historically associated with flash geothermal plants. We believe this gives us a level of thermal consistency and predictability that conventional geothermal has never achieved.

We control thousands of design variables, including well spacing, lateral length, temperature, stimulation design, and completion architecture, allowing us to tailor our approach to a wide range of geologies, all underpinned by a robust and defensible intellectual property portfolio. Let's now turn to Cape Station, our flagship GeoCluster. Located in southwest Utah, Cape Station represents one of the world's largest EGS power projects under active construction. We are currently building 500 MW, though the site has 4.3 GW of potential capacity. Cape Station phase I is an approximately 100 MW installation comprising three 33 MW GeoBlocks. All initial phase I wells have been drilled, stimulated, and completed, meaning our initial subsurface program for phase I is done. In the first quarter of 2026, we achieved mechanical completion at our first GeoBlock. This last quarter, we conducted our largest zipper operation to date, simultaneously stimulating six wells on the Frisco pad.

The successful completion of the Frisco pad marks highlights in efficiency metrics such as stages per day and cost per foot, where we have seen continuous improvement throughout Cape phase I. Key power facility equipment has been installed and commissioning is underway. We remain on track for first power in Q4 2026, with GeoBlocks 2 and 3 expected to follow in Q1 2027. Cape Station phase II is a 400 MW expansion comprising eight 50 MW GeoBlocks, which represents our go-forward design. I am pleased to report that phase II construction commenced in the first quarter. Two Helmerich & Payne rigs are actively drilling. All four initial Fervo Generation 3.0 wells, our new upsized 7,500 ft lateral design, have been drilled on the Kings pad and are ready for completion.

Erection of power generation facilities has already begun, with structural steel being assembled to support air-cooled condenser units for the GeoBlock 4, the first GeoBlock in the Cape phase II program. The pace of this progress reflects the speed to power that our GeoBlock model enables. By standardizing the design and sequencing of each unit, we can run multiple work streams in parallel in a way that bespoke, one-of-a-kind projects simply cannot. Our active projects expand beyond Cape Station. Last year, we drilled an appraisal well at Project Blanford, a new greenfield site in Utah. The results confirmed resource temperatures exceeding 555 degrees Fahrenheit at approximately 11,200 ft, the hottest well in company history, drilled in under 11 days. This well validates that Fervo is on the forefront of pushing to even higher temperature geothermal, unlocking greater power plant efficiency over time.

An independent assessment completed by DeGolyer and MacNaughton, a leading engineering consulting firm, confirmed 10.8 GW resource potential at the Blanford site. Lastly, a successful fracture injection test validated our ability to stimulate the target formation. Blanford represents another exciting opportunity in our growing portfolio, and we look forward to sharing more as the project evolves. Let me now turn to our commercial position. Fervo has 658 MW of binding power purchase agreements, representing $7.2 billion of contracted revenue. Geothermal's value proposition, firm, carbon-free, reliable power, resonates across major buyer categories in the power market. Our counterparties today include regulated utilities, community choice aggregators, energy majors, and hyperscalers. Google, in particular, has become a core customer. We first partnered with them more than five years ago to develop our 3 MW commercial pilot, Project Red, which has been operational in Nevada since late 2023.

We continued to expand our partnership with Google through the Clean Transition Tariff, a novel offtake agreement covering 115 MW of our portfolio in Nevada. In the first quarter of 2026, we significantly expanded that relationship through a geothermal framework agreement, or GFA, which is structured as a scalable commercial framework rather than a single PPA. We believe this is one of the most significant commercial relationships in the history of geothermal. For hyperscalers like Google, reliable 24/7 clean power is a strategic imperative. AI and data center workloads require around-the-clock power that intermittent resources cannot provide. Fervo is uniquely positioned to deliver that capacity at scale, placing geothermal at the heart of next-generation digital infrastructure. Executing on this kind of commercial momentum requires a supply chain that can scale with us.

To support our accelerated development, we strengthened our supply chain through strategic partnerships with three key suppliers in Q1. First, we entered into a turbine supply agreement with Turboden, a subsidiary of Mitsubishi Heavy Industries and one of the world's leading Organic Rankine Cycle turbine manufacturers. This is a three-year framework for ORC units, the power conversion equipment at the heart of each GeoBlock. Turboden is contracted to supply up to 35 units or 1,750 MW of total power capacity. Firm delivery timelines enable predictable project execution and help eliminate equipment availability as a construction constraint. This agreement builds on our existing turbine supply agreements with both Turboden and Baker Hughes, who together are delivering 11 total ORC units for Cape Station phases I and II. Second, we finalized a strategic agreement with ABB to supply advanced motor control and electrification solutions for Cape Station.

Third, we executed a five-year supply agreement with Vallourec, providing critical tubular components needed for our substantial drilling campaigns, with products manufactured and tested in the United States. This largely domestic subsurface supply chain sets Fervo apart from other clean firm power developers more exposed to shipping tariffs and longer procurement timelines. More broadly, all of these agreements reflect the increasing scale of geothermal development, moving the industry from one-off projects toward repeatable, predictable deployment. With these anchor partnerships, Fervo has secured better pricing, better delivery terms, and supply chain partners invested in our long-term success. With operations covered, I'll now hand the call to David to walk through our financial highlights.

Thanks, Tim. I'm also excited to be here today, speaking for the first time on a Fervo earnings call. I'll start with a brief overview of our financial highlights from the first quarter of 2026 before discussing our financing activities and then turning to our pipeline. We generated an operating loss of $20.1 million in Q1 2026. The majority of the costs on our P&L today are from G&A expenses and operating leases, which totaled $17 million and $2.6 million during the period, respectively. Net loss in Q1 2026 was $31.8 million. Operating cash flow in Q1 2026 was -$9 million, starting with the net loss figure I just referenced and adding back non-cash P&L items totaling $21 million, primarily reflecting $13.1 million in non-cash expense related to warrant valuation and $1.8 million in cash generated from change in working capital.

Capital expenditures in Q1 2026 were $172.8 million, reflecting the intensive construction activity underway at Cape Station as we advanced both phase I commissioning and phase II groundbreaking simultaneously. We project total capital expenditures of approximately $1.2 billion through Q1 2027. The majority of the CapEx is going to the drilling and completion of wells and continued construction at Cape Station. Also includes some CapEx associated with early development activities at other GeoClusters. Breaking this down, approximately $1.1 billion of the CapEx relates to Cape Station, and approximately $70 million is allocated to early and advanced development activities across our portfolio, including permitting, engineering, site development, and resource characterization. These figures are broadly consistent with our expectations as disclosed in our Form S-1. Cash and cash equivalents as of March 31st, 2026, were $280.8 million, and long-term debt stood at $186.6 million.

As a reminder, these figures reflect our pre-IPO position. May 13th, we listed on Nasdaq. I echo Tim's sentiments on the significance of this milestone. It is a true testament to the vision, rigor, and determination of everyone at Fervo, the world-class partners, advisors, and investors that have supported us. The broad need for Fervo's scalable firm power across the market. In the aggregate, we issued 80.5 million shares of Class A common stock at $27 per share, generating total gross proceeds of approximately $2.2 billion. This included the full exercise of the underwriter's 30-day option. The strength of investor demand was evident throughout the process. We launched our roadshow with initial price range of $21-$24, revised the range upward to $25-$26. Priced above that revised range while issuing 26% more shares than anticipated at roadshow launch.

Let's talk about what that upsized IPO means for Fervo going forward. When we launched the roadshow, our goal was to use the IPO proceeds to fund the majority of our growth pipeline through the end of 2030, targeting 1 GW of installed capacity. We raised significantly more than we estimated is required for that, creating an excellent opportunity to expand or accelerate our strategic priorities. We are not announcing any firm revised targets today. However, we plan to evaluate the strategic deployment of this incremental capital across three focus areas. One, commercial opportunities through 2030. Should we accelerate any projects in our commercial pipeline? Two, high return research and development. Are there opportunities to invest in high return, innovative technologies that could help accelerate our learning curves and help us achieve our installed CapEx target of $3,000 per kilowatt more quickly?

Three, opportunities in 2030 and beyond. Where might there be opportunities today to better position Fervo, our team, and our pipeline for growth after 2030? Underpinning all three of these focus areas is a fundamental shift. Being a public company changes what Fervo can do and how fast we can do it. Access to the public markets broadens and diversifies our capital base, giving us greater flexibility to capitalize on surging clean firm power demand. Equally important is what this listing signals to the market. Customers, partners, and suppliers are making long-term commitments when they work with us. The transparency, governance, and accountability that came with being a public company strengthen the confidence they place in Fervo as a counterparty. We're already seeing that play out in our commercial relationships, and we expect it to continue as we execute on our growth plans.

Before moving forward, I want to circle back to another significant milestone that took place in the first quarter. In March, Fervo closed $421.4 million of non-recourse project debt for Cape Station phase I, an achievement whose significance goes beyond a single financing event. A few points worth underscoring. First, this debt is secured solely by Cape Station's assets and cash flows. Second, by funding construction through project finance rather than corporate equity, we preserve our capital for pipeline development and future growth, the financial architecture of a scaled, mature IPP. Third, the fundraise establishes a proven, replicable project finance structure for all future GeoBlock projects. With a commercial precedent, lender familiarity, and documentation framework now in place. Finally, top-tier global financial institutions underwrote a first-of-its-kind EGS project, disrupting the long-held assumption that non-recourse financing is unavailable for first-of-a-kind projects.

In effect, we believe Fervo has helped transition EGS into a new era of bankability and unlocked a structurally lower cost of capital much earlier in our growth journey than many in our industry assumed possible. It's a testament to our team's ability to demonstrate why Fervo's EGS projects are predictable, reliable, and financeable, but also to a tremendous set of lending partners that have come on the journey with us and were willing to invest the time necessary to understand our technology approach. Looking ahead, as we think about funding our growth, we have a range of tools available to us. Project finance debt, which we have now demonstrated at Cape Station, targets approximately 70% loan-to-value per asset. We can also bring in infrastructure equity at the project level, which would allow us to accelerate deployment with accretive capital while retaining ownership and operational control.

Any such arrangement would be structured thoughtfully and used to advance a real commercial opportunity, whether that is a construction commitment, an offtake agreement, or a combination of both. Now let me elaborate on Tim's comments around our pipeline and commercial backlog, because this is where you can see the full scale of what Fervo is building. As mentioned earlier, Fervo has secured 658 MW of binding power purchase agreements, representing a cumulative revenue backlog of $7.2 billion as of the end of Q1 2026. Additionally, during the quarter, we entered into a 3 GW framework agreement with Google. This commercial foundation underpins everything I'm about to describe regarding our total resource portfolio. Our development pipeline is organized across three categories of maturity: mature, pipeline, and prospects.

The mature category includes 500 MW under construction at Cape Station and 550 MW of ready-to-build across our Cape Station and Corsac GeoClusters in Utah and Nevada, respectively. These commercial opportunities are backed by a combination of contracts with creditworthy offtakers, secured permits, interconnection at capacity, and validated subsurface models. Put simply, they define our most de-risked near-term growth opportunities. Our pipeline category includes an additional 2.6 GW in advanced development across several GeoClusters in Utah and Nevada. In early development, we've secured land rights across 10 GeoClusters and commissioned an independent expert, DeGolyer and MacNaughton, to conduct heat-in-place studies reflecting over 38 GW of capacity potential.

You should think about the 40+ GW in advanced and early development as the locations where we have begun development activities, permitting work, and resource characterization, and the 2.6 GW in advanced development as those projects that we'll be evaluating for movement into ready-to-build in the future. Finally, our prospects category extends further still, with approximately 270,000 acres secured across the western United States. This total represents acreage we have leased and considered developable, but have not yet studied in detail with our independent engineering partners. All told, as of Q1 2026, we had an acreage position of approximately 610,000 net acres across seven states, with a total evaluated pipeline that exceeds 42 GW. Operator, you may now open up to Q&A.

As a reminder, if you'd like to ask a question at this time, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. In the interest of time, we ask that you limit yourself to one question and one follow-up. Our first question comes from Mark Strouse with JPMorgan.

Yes, good morning. Thank you very much for taking our questions, and welcome to the public markets. Can I start maybe just with your drilling cost? You mentioned the four initial wells on Cape 2, as well as the observation well at Blanford. Are you able to quantify what that looks like on a drilling cost per foot, how that compares to Cape 1 maybe, and how you're thinking about achieving your medium to longer term targets with bringing that down closer to $3,000 overall project costs? Thank you.

Yeah, fantastic. Thanks, Mark, for the question and the welcome to the public markets. We appreciate it. Yeah, we're really excited about the Cape phase II results. We're not going to disclose a dollar per foot metric on a individual well basis, and these are just the first handful of wells for Cape phase II, so we definitely want the data. We want to get more data points before we start disclosing what that means on a dollar per foot basis. I could tell you that we are meeting or exceeding our performance when we look at things like days of drilling and other key factors. We had successful technology trials on Cape phase II that has helped us unlock these deeper and hotter wells, things like rotary steerable systems and otherwise that we're very excited about.

I also think this is a good opportunity to talk about the different well design for Cape phase II wells, because it's not just a cost per well or a cost per foot metric that matters. As you know, we are targeting larger casing size. These are our 8 in and 5/8 in casing as opposed to the 7 in casing on Cape phase I, which accommodates significantly more flow, as well as the longer laterals of 7,500 ft and significantly higher temperature approaching 430 degrees Fahrenheit. While cost per foot is important and we continue to see that move in the direction we want to, what matters for us, for that overall dollars per kilowatt target of $3,000 is the cost per kilowatt.

That's what's exciting for us is not only are we hitting this really great performance on a drilling day standpoint, but we're doing so on wells that will produce substantively more megawatts per well because of the higher temperature, the longer lateral, and upsized casing design. I think that's the real excitement here is we've proven that we can go to a step change different well design that will produce significantly more power output per well and still have this incredibly fast drilling performance that far exceeds industry benchmarks before Fervo existed, and we continue to push to ever more extreme drilling designs with this kind of performance.

Okay, great. Thanks, Tim. Just as a follow-up, on the other side of that coin, can you talk about what you're seeing with future pricing? We're continuing to observe rising pricing for other forms of power generation. Clearly, geothermal can get a premium because you are clean, you are baseload power. Just curious, can you, as we look further out this decade, to the extent that you are having conversations with folks now, just what you're seeing with pricing trends. Thank you very much.

Yeah, it's a great question, Mark, I'd say that everything that we're seeing in the market is really constructive. We're really pleased that the projects that we have in our pipeline today are already economic, both at our cost and our revenue profile. We're certainly seeing a little bit of upward movement there, and in particular, pricing around projects that can come online in the 2030 or slightly before range have a really attractive profile for customers. I would say that, yes, we're seeing constructive pricing movement in the market. Wouldn't say that it's materially different than what we've disclosed previously in our filings, which is a range for a product like ours falling in the range of $100-$130 per megawatt hour.

Certainly, all the conversations that we're having, we think are going to lead to really, really nice economics around our project pipeline in the future.

Our next question comes from Chris Dendrinos with RBC Capital Markets.

Yeah, good morning, thanks for taking the question. Maybe just to build a bit here on Mark's question. For future PPA agreements and off-takers, at this point, what are they looking for from you all to sign up? Is the customer base wanting to see, I guess, results from Cape phase I? Or do you think you can all sign folks up before performance history is established there? Thanks.

Yeah, appreciate the question, Chris. I think the answer's pretty clear that our potential customers that we're negotiating with commercially are not waiting for any further milestones. I think in David's opening remarks, I think he covered well our project finance debt that we closed against Cape phase I, which as I'm sure you could imagine, was sort of exhaustively reviewed in order to unlock that kind of non-recourse project debt. Given the operating history of Project Red and the maturity and key milestones that have been achieved on Cape phase I, including the production test and independent engineering assessments, no one is really hedging future PPAs off of further demonstration milestones. I think all of our customers view the technology to be mature and sufficiently demonstrated.

To be frank, I mean, to echo some of David's comments about the amount of inbound customer demand we have, anyone that wants to wait around for other project results is going to find themselves in a very disadvantaged position on procuring future Fervo power because we have a huge set of customers who are certainly not waiting for any other additional milestones on top of what we've already demonstrated from a maturity standpoint.

Got it. Thank you. Maybe just as a follow-up to that, as you look out to Cape phase III, I guess, if that project were to go behind the meter with the customer, is that part of an opportunity to pull that forward somewhat? Or how do we think about the commentary around accelerating activity, just given the capital raise here and the project frameworks that you've all laid out so far? Thanks.

Yeah, I think it's a fantastic question. I can answer probably more broadly about how we think about behind the meter, is that it is an unlock for faster project development. That would be true of future project phases at Cape as well as other places in our pipeline. The whole reason to prefer to pursue behind the meter is it is an accelerator over our base case plan.

I think you're thinking about it in the right way, that subsequent behind the meter projects would be done because it unlocks faster development that goes beyond what the interconnection queue position could support, and that's what we find appealing about it, and I can guarantee you that's what our customers find appealing about it as well as speed to power continues to be the thing that dominates the procurement narrative.

Thank you.

Our next question comes from Derek Podhaizer with Piper Sandler.

Hey, good morning, guys. Just wanted to start off asking about the news out this morning with your results with NVIDIA, the EGS-Twin. Can you talk to us about what that's actually going to look like, and then how that'll help drive down the cost curve and increase time to power? Just found that very interesting, so maybe a little color on that would be helpful.

Absolutely. We've been really pleased to be able to announce this partnership that's with the Department of Energy, Pacific Northwest National Lab, as well as NVIDIA, to form the EGS-Twin Project. As you know, we've made intentional efforts at building a standardized and modularized power plant design called the GeoBlock. I think the key for this is that because it's standardized and modularized, it allows us to get on a learning curve that has historically eluded the geothermal industry, where projects were more bespoke. The correct way to actually accelerate those learnings is making sure that you're using the data from past projects to rapidly and continuously improve future projects. The challenge with geothermal historically has been that a lot of the action happens 10,000 ft or deeper below your feet, where it's very difficult to sense and measure and monitor what is occurring.

Tightening that feedback loop so you come down the learning curve faster involves processing that data, figuring out how it integrates with your power plant optimization and moving more quickly. Historically, Fervo has invested an enormous amount of money in collecting information from logging, seismic studies, distributed fiber optic sensing, and otherwise. We now have terabytes upon terabytes of data across Project Red and Project Cape that drive this performance.

What we're seeing is a huge opportunity to accelerate this through new AI workflows, and particularly resources like what PNNL has with their exascale computing, where we can actually take those terabytes and terabytes of data and build out a digital twin model that allows us to test and calibrate to actually how do you paint the full picture of when we ran a trial or drilled a new geology or changed the well spacing a little bit, what does that actually mean and how does that tie to the production performance? Our ability to work with partners like NVIDIA and PNNL to build out a digital twin, use things like the Omniverse libraries to bring computing resources to this problem that are novel and historically have never been applied to geothermal will only accelerate our ability to move faster.

I think the other benefit of this is not just in driving down the cost per kilowatt, but of course a better understanding of subsurface resources and the subsurface risks that are validated with key digital twin models, de-risk the projects, not only in our eyes, but in the eyes of potential project financiers as well. What we want to do is build something here that allows us to come down the learning curve faster by understanding our data better and driving that into future project performance, but also provide higher fidelity models that highlight the risks and performance ranges of projects that we believe will unlock a lower cost of capital and financing for our projects as well.

There's enormous benefits to working with partners like PNNL and NVIDIA to drive a more holistic understanding of what the terabytes of data that we have mean from a performance standpoint.

Great. That's very helpful. Maybe just switching over to Blanford, obviously very encouraging results with the observation well. Maybe can you help all of us understand some of the project milestones when we think about bringing Blanford towards that COD date or whenever you expect that to be? This is a huge resource for you guys. I think it's the biggest one in your portfolio at 11 GW. Maybe just help us understand how we could think about those timelines as you continue to develop Blanford.

Yeah, it's a great question. Obviously given the exciting results in terms of temperature at depth there, it quickly has jumped in terms of our pipeline, in terms of our priorities, because the temperature and depth that we observed at that resource is truly world-class. As we noted, is actually significantly hotter than Project Cape at similar temperatures. There's an enormous amount of geologic upside here. I think how we develop Project Cape is probably instructive. The next step for us usually is to move from drilling a vertical appraisal well to actually drilling our first set of horizontal wells and beginning production testing. We are not discussing the timeline for that right now, but we're actively in the planning process for that.

As you mentioned, given the results of our appraisal, this could be a huge resource for us, which is meaning it's attractive to not just us, but to our customers, and we're pursuing really advanced commercial talks around all kinds of commercial structures that would be front of the meter and behind the meter for this. I think the next steps you can see from us are going to be announcing further commercial traction on this project, which we're very excited about, as well as moving into the well testing and cross-flow testing and site construction phase, which we would plan to update you all on later this year.

Great. Well, I really appreciate the comments, and congrats on your first set of results. I'll turn it back.

Thank you.

Our next question comes from Dave Anderson with Barclays.

Hi, good morning. You mentioned all the supply agreements that you've got lined up here. I just had a question on the cost inflation component of that and wondering how you're talking or thinking about addressing some of that. You mentioned the Vallourec agreement for five years, but in terms of the pricing of that, I'm assuming that's at market cost, whereas pressure pumping and rigs also, I'm curious where you stand there in terms of contracts and how you're addressing that. I'm expecting pressure pumping probably gets a little tighter here. Rigs could as well. If there is inflation along those lines, and we're also focused on CapEx per megawatt, can you talk about how you're thinking that through over the next few years?

Yeah, I think it's worth taking a step back and looking at what is in it for us as well as our suppliers for these long-term agreements, because I think that context is very helpful to understand why we're executing them. We're really in such an interesting spot in the market because we are actively using the oil field services supply chain through our drilling and completions work, but we're not selling oil and gas. That has been something that has always been, I think, maybe historically for geothermal, as a challenge because the industry hasn't really had the scale to command the attention of service companies over the oil and gas industry. I think that now Fervo has solved that scale problem with our pace of development. What we see is the service companies are incredibly excited to work with us.

This really comes down to actually that diversification benefit where whenever we negotiate with one of our suppliers, the key thing that I always talk about with them is, if there were to be a huge oil price crash again, which of your customers would keep calling you out for work? The answer, of course, is Fervo, because we sell a product that is under long-term power purchase agreements, where our volume of activity doesn't fluctuate with the price of oil. That creates an interesting alignment where we want price stability on our services because we already understand what our PPA prices are going to be, and our suppliers want to have a diversification that actually provides a revenue stream from them that is decoupled from the fluctuating price of oil.

This creates an interesting opportunity where we can price five-year-plus agreements with different pricing structures that protect both parties, where it's a win-win for both. Broadly to your point about there may being some pressure on inflationary costs, on pressure pumping or otherwise, which as always is hard to predict. We and our suppliers are both actually motivated to get longer term agreements so that we're more insulated from that. I think some of the agreements we've announced this last quarter and in past years, are great examples of how we can create win-win long-term pricing agreements with our suppliers.

Makes a lot of sense. Thanks a lot, Tim. I was wondering if you could just clarify something around transmission capacity that you have. If I'm not mistaken, I think Cape 1 has full transmission capacity and part of Cape 2. Can you talk about what you have right now able to get on the grid, and then availability beyond that? Where do you go from there? I think there's some more availability in the Cape area, how do you get access to that?

That's right, David. I think you have those numbers correct on the Cape resource specifically. All of Cape phase I, which is 100 MW, we have the transmission fully contracted. On phase II, which is 400 MW, we have 300 MW of that fully contracted and are working to close the gap there. In addition to that, we have several hundred megawatts fully contracted across several of our Nevada resources, and we're actively adding to that queue every day. As you know, the transmission queue is one of these things where megawatts go into the interconnection queue. They come out as studies are performed and as securities are posted, things are reevaluated, so that number is constantly changing. We'll say that is something that we're adding to consistently, and we do view that grid connection as a primary tier of our deliverability pathway.

We also look at behind the meter as another element of that deliverability pathway and think these two things are going to be highly complementary. In addition to that, where there are medium or longer term opportunities to consider the build-out of new transmission, that is something that we certainly think that the scale of what we're doing in EGS has an enormous benefit. It may not be worth it to build out a dedicated transmission line for something in a sub 500 MW scale, as you talk about gigawatt scale of firm power that the market desperately needs, we think that could be a compelling business opportunity for transmission developers to meet us where we are.

When we think about how to get this power to market, we look at all three of these things and certainly as we look to accelerate, Tim talked about this a bit earlier, behind the meter is really a fantastic avenue to do that. We do add to the interconnection queue and to our position broadly on a regular basis.

Thank you, David.

Our next question comes from Julien Dumoulin-Smith with Jefferies.

Hey, good morning. It's Hannah Velásquez on for Julien. Congrats on the successful IPO and thank you for the update. As others have said, welcome to the public equity market. Can we talk a bit more about behind the meter, more specifically on timing, how you're thinking about that? I know we talk about it as an enabler of accelerating the project pipeline, does that really imply more so post-2030, or could we see something more near term in terms of an announcement?

Yeah. Hannah, thanks for the welcome and good to chat with you again. I think that, as I mentioned, the purpose of behind the meter is to potentially accelerate our pipeline even ahead of what we've prior disclosed. The real market opportunity that we're seeing is for pre-2030 projects. I think that's what we're really looking at for behind the meter.

Okay, got it. Thank you. Just as my follow-up question on Blanford, you mentioned that the temperatures that you're seeing there are significantly higher. Would that imply that you would see a better CapEx rate, the dollar per kilowatt beyond what you announced, I believe, for phase II at 5,500?

It directionally is positive for the cost of capital for the resource. Temperature at depth is just one of the factors that we evaluate, though. It's not something that in and of itself would potentially drive a structurally different CapEx profile. It is one thing that means that geologic resource, all else being equal, is more attractive than the Project Cape resource or otherwise. It is just one factor in the study. What it really means for us is we can achieve our target temperature for the power plant with shallower drilling, which translates into a lower cost per well. I think you would see that show up in the CapEx, but it is just one of many factors that drives the overall cost structure.

Okay, I'll leave it there. Thank you.

Our next question comes from Jed Dorsheimer with William Blair.

Hey, thanks for taking my questions. Yeah, I'll echo the sentiments. Congratulations, welcome to the public markets. Also, congrats on Blanford. I guess, Tim, maybe you're not prepared to do this at this point, but given the heat that you're seeing at that depth, I suspect there's a calculation in terms of the cost to drill the depth of that hole and the heat versus the output. I assume that this means that by my calculations, you could actually get the same output with two less wells drilled or four, I guess, for injection and extraction based on that heat. Is there a cost metric where you're looking at the balance of, do you continue to optimize for a higher output versus the cost and as we compare it to Cape? Then I have a follow-up.

Yeah, it's a fantastic question. Actually, it gives me an opportunity to maybe address something that is commonly misunderstood in the geothermal sector. Sometimes I see companies divided by like, well, these companies are going after medium temperature, these other companies are going after high temperature, these other companies are going after super hot temperature. I think that is not how Fervo thinks about it at all, just to be clear. What we think about is that there's a certain benefit of going hotter, which is that you can produce more megawatt hours of electricity per unit of flow from higher temperature resources. There's a very clear revenue benefit. There's also a clear cost of going hotter because of two reasons. By definition, going hotter requires you to drill a deeper depth compared to shallower, lower temperature wells.

Also, drilling costs can increase as you go to higher temperatures as well because it's just more wear and tear on the equipment, harsher environment. What I think Fervo has done from our beginning is try to balance the revenue benefits and the costs of going to deeper and hotter resources. What we try to do is at a snapshot in time, make the NPV maximizing decision of the temperature and depth that we pursue. That is not a static number because, as I mentioned, we've gone from an average lateral temperature of 350 degrees Fahrenheit at Project Red to 400 degrees Fahrenheit at Cape phase I to 430 degrees Fahrenheit at Cape phase II. The reason we've made that move is we've implemented drilling improvements that mean the cost of going to higher temperature or greater depths drops.

The NPV optimizing number shifts to deeper and hotter resources over time. We are currently very excited about the GeoBlocks that we're developing at Cape phase II, which are targeted for that 430-degree Fahrenheit temperature range. At a resource like Blanford, or even as we continue to improve the drilling technology, what I would expect to see from us is that we'll actually continue that direction of moving the temperature higher. What we would like to see in the future, for example, is if we can drill a 500-degree Fahrenheit well for the same cost of drilling a 400-degree Fahrenheit well today, even though the cost per well would be the same, the power output would be substantively higher, that's a huge part of our tech roadmap.

I think some of these artificial distinctions between, oh, this company's only doing medium and this company's doing high temp or otherwise, I think it's a false dichotomy when really what you're talking about is a continuum where there's an, at any point in time, given certain technology assumptions, there's an NPV maximizing point of what temperature that you drill. As the technology improves, we expect that NPV maximizing temperature to increase. That could happen at future projects at the phases at Cape, or it could happen at a categorically different resource like Blanford, where you don't have to drill as deep to get to those higher temperatures that would lead to more output per well.

Super helpful. Thank you. Just as my follow-up, I think it was reported that you had some blowouts in Cape, and I know that's part of the process. Could you just maybe talk a little bit about what the learnings were? Has that changed anything? Was this just an anomaly? Whether or not as you're continuing to continuous process improvement, has that shifted strategically in terms as you think about Cape phase II in that project? Thanks.

Sure. Yeah, you're correct. There was a report of a blowout that occurred in a single well at our Cape resource a few weeks ago. Per regular procedures and protocol, we addressed the issue. We were able to conduct a procedure to contain the well within just a few days, and we worked well with the regulator. I think we were excited about, obviously, you don't want to see those kinds of incidents happen, but I was very proud of how our team responded to it, and we got high praise from the regulator and otherwise. We were able to contain the situation quickly enough that it really had no impact on the project at all. Of course, there's learnings from it.

There's things that we have updated in our work over rig procedures, which is the phase of operation that occurred in, so that we can implement and take lesson learned from that project going forward. I also think it's an interesting point to maybe provide some education where the term blowout is a very charged term, particularly because like a lot of our business things terminology that is common in the oil and gas industry is oftentimes just borrowed to apply to things in the geothermal industry, and sometimes that can lead to major misconceptions.

The use of this word is one of those, which I think the term blowout means something quite specific and potentially dangerous in the oil and gas industry. It can be true of the geothermal industry as well, but it's important to realize that the Project Cape resource, this is a sub-hydrostatic reservoir that doesn't have the over-pressured hydrocarbon zones that you'd find in a hydrocarbon resource. Also when there's a fluid release in our system, it's the geothermal brine that's being released, not a flammable or explosive gas or hydrocarbon. I think it is an education point that, of course, that we were excited about our response working with the regulator.

We were excited we were able to resolve the issue rapidly and safely with no personnel injuries or environmental damage and have no impact on the Project Cape resource. We're going to apply some lessons learned to ensure that these operations are less likely to occur in the future. It's also something that I think generated an enormous amount of misunderstanding due to the reporting around it. I do think it's an educational opportunity to talk about how many of the inherent risks of development while drilling a resource are structurally lower in geothermal because of the lack of hydrocarbons and otherwise, which I think led to quite a bit of misunderstanding about this particular incident, even though we do take it seriously and have worked to improve.

Thanks. That's helpful.

Our next question comes from Dylan Nassano with Wolfe Research.

Yeah, hi. Thanks for taking my question. I'm just trying to tie together some of the prior comments around the constructive market outlook for pricing and the Google framework agreement in particular. Can you just level set us here on if the Google framework agreement moves forward with the first gigawatt, how should we think about that capacity being allocated across different resources within your development pipeline? Would you put it all on one resource? Can you spread it out? Just any color there would be helpful.

Yeah. Good to talk to you again, Dylan, thanks for the question. This is something that we're actively looking at, one thing that we really like about this agreement with Google is that it provides Fervo with some optionality on where we want to propose projects to Google. It won't surprise you that we talk to them quite often and that we try to have a really close partnership with them. So we're not proposing projects to them that we don't think are matching the commercial intent and criteria that we've laid out in that agreement. We do have some flexibility across the resources in our portfolio, which is obviously really heavily anchored to Nevada and Utah today, but growing to other states as well.

So when we talk to them, when we think about resources that are readily available right now, it's certainly those resources that we've talked about quite a bit, Corsac, Blanford, Cape. We do have several others that are moving quickly through our pipeline and have an active dialogue with Google across all of those AOIs.

Got it. Thanks. Then just quick follow-up on the NVIDIA announcement.

Sure.

Can you just confirm within this data set that you guys are building, is this proprietary? Is this an exclusive deal? I guess just given the DOE is part of it, is any of this being shared with the larger EGS industry?

Yeah. It's a great question and probably a good point to remind on the Fervo mission, which is to accelerate and make geothermal energy more cost competitive. We truly believe that geothermal energy should be one of the anchor power sources in the world, and we want to move that forward. We believe Fervo is the market leader in doing that, but by no means are we the only company doing that. This is one of those things where working with the Department of Energy, you can advance the technology in a way that moves the whole industry forward. We're not concerned about that because we think our competitive position in the industry is fantastic. To truly unlock geothermal at scale, we expect there to be major advancements in geothermal technology.

We are always mindful that these Department of Energy funded projects do come with sharing data, and we embrace that. I think in this particular agreement, we're also excited about the fact that we have a lot of optionality to choose which data we disclose or don't disclose. I think it's an opportunity for us to really pursue the dual mandate here, which is to provide information and resources that lifts all boats and provides major advancement for the entire industry, but at the same time, protects Fervo's proprietary data and our competitive positioning. I think that this funded project will be able to achieve both those things at the same time. We'll be able to be tactical and have discretion over which data we choose to share at what point in time.

Great. Thank you.

Our next question comes from Sunaina Ocalan with Bernstein.

Hey, good morning, team. Congratulations on your first earnings call after going public. If I could really quickly maybe follow up on the Google framework as well. You both mentioned it. What sort of milestones are you looking for from your side to convert some of these into PPAs? What cadence should we expect you to report these on?

Yeah, thanks for the question, Sunaina. If I'm not mistaken, think we're sharing our first earnings call together, congratulations to you as well.

Thank you.

On the GFA, in terms of milestones, these are progressing through our normal development framework as our commercial teams are working closely with Google's team to establish where there's overlap between where Fervo would like to do a project today and where that's helpful and constructive for Google's own portfolio to do a project. We think there's a ton of overlap there, that's obviously why we signed this three gigawatt framework agreement. Would expect as we're proposing this first gigawatt of projects to them over the next 24 months, that those projects will likely start to convert to PPAs. As they do, we're going to tell you all about it. Think that that's going to come.

I'd say that one of the things that we like about our partnership with Google broadly, about the GFA specifically, is that it is fairly broad in terms of optionality. We don't necessarily look at this as a rigid structure where we have to propose X number of megawatts on Y date. We really want to have a conversation with Google and understand where they want to do projects and achieve scale. I think as they are able to communicate that to us and we're able to communicate that to them, we see opportunities to tackle that in kind of less than linear fashion, if that makes sense. We're certainly in an active dialogue and think over the next year or two as we're working through this, that we'll have more to talk about.

Great. Maybe if I can just follow up. Everything around that 3 GW Google framework is incremental to the 658 MW that you mentioned, correct?

That's correct.

Excellent. Thank you so much. Congrats again.

Our next question comes from Joseph Osha with Guggenheim Partners. Joseph, your line may be on mute. Our next question comes from Ben Kallo with Baird.

Hey, guys. Thanks for fitting me in. Congratulations. My first question is on accelerating. Could you just talk about how you balance accelerating, if you're going to go do parallel projects? Do you want to see more results from Cape? Also, like ordering long lead time equipment, how do you think about that versus equipment evolving and next generation equipment, not ordering it too soon? On the people side, can you talk to us about what the extra capital that you have has allowed you guys to do? My follow-up is just on water, and how important it is. We've seen projects get canceled or change technologies because of water usage.

I think there's some inaccuracies about how you guys use water, could you just talk if that could ultimately be a benefit for you guys in some of projects, specifically on the data center side? Thank you.

Yeah, thanks. I appreciate both questions. I'll try to hit it, knock them out quickly here. In terms of accelerating projects, I think very similar to our answer earlier on customers are not really waiting for more milestones at Cape phase I before advancing commercially. We also have seen all the milestones from Cape phase I in terms of well testing and construction timelines and otherwise to feel comfortable moving forward with parallel projects and the maturity of the technology. We're both pursuing that from getting the right human capital and resources lined up, also from a long lead time item standpoint. This is one thing that I think is really powerful about our standardized GeoBlock and also the long-term supply agreements, is just that, to be honest, you flagged a key tension on long lead time projects.

There's a tension to order more now because you want to ensure that you have the equipment available to grow. If you wait, then you can incorporate more design improvements into those projects as you move forward with the long lead time equipment. Maybe we have good ideas about turbine design or casing design between now and two or three years from now, it would behoove us to order it.

I think this is really the power of the agreements that we have where we can kind of have our cake and eat it too, because these are long-term supply agreements, for example, with Turboden, the MHI subsidiary that cover 35 GeoBlocks, where we have a delivery cadence with them where we know that there's certainty of supply for turbines that goes forward that covers that 1.75 GW, we're not required to do a design freeze of the entire pipeline right now today. What we're focused on is certainty of supply as well as flexibility. The long-term agreements that we have with a company like Turboden balance that well, I think, where we can be certain about turbine supply, also have the opportunity to partner for improved designs in the future.

We're kind of moving full steam ahead on parallel projects and long lead time equipment at this point in time. I also appreciate the opportunity to talk about water, because you're right, this is far commonly misunderstood. We actually have committed to using air cooling for 100% of our power projects going forward, we have no evaporative losses in our system at all from a power conversion standpoint using this Organic Rankine Cycle air-cooled technology. That's quite exciting for us. The main use of water in our system is actually to supplement the subsurface flow, and we do that with deep water wells. I think the key for this is even in arid regions, there's an abundance of what we consider to be brackish or degraded water.

Water that's deep enough and high enough salinity that it's not actually suitable for agricultural or municipal purposes. It is suitable for our purpose because what we're doing is recirculating that water through the geothermal reservoir. What we've done at Project Cape is I think quite instructive, which is sourcing some of that water and then recirculating it in the process. It's water that we're not in competition generally with farmers or municipalities on because it is degraded water that's not of the right quality for municipal uses, is of the right quality for recirculation in a geothermal reservoir. Our freshwater consumption is sort of de minimis, and we can use that degraded water in our process. As a result, anywhere you go in the United States or anywhere in the world, you can always find degraded water.

The challenge has always been about fresh water. Because we have a process that can use that degraded water, we have not found water to be a limiter in our development.

Thank you, guys.

Our next question comes from Justin Clare with Roth Capital Partners.

Hey, good morning. Thanks for the questions here. Just wanted to follow up on Cape phase I. You're on track for first power delivery in Q4 2026 with the first GeoBlock commissioning underway. Wondering if you just walk through the remaining kind of critical items between now and commercial operation and just what milestones should we be looking for over the next few months here?

Yes, it's a great question. For the initial well pads in GeoBlock Unit 1, we are mechanically complete and in the commissioning phase. I was out on site last week, which was quite exciting. The kind of activities you're seeing here is we're energizing systems for the first time. We're testing that equipment. We're making sure that our control logic is working as intended, filling the plant with the organic Rankine fluid that will serve as the working fluid and doing that kind of test and commissioning work. We're going to continue to progress through that commissioning work. The milestones you'll see is first checks of subsystems that they're working as intended and then bringing the full plant online and running through a test energy phase in advance of the commercial operations date.

That's the main activity that we're working on Cape phase I right now is all the initial drilling is completed, all the initial wells are completed. The power plants, two of the three have achieved a mechanically complete milestone. We plan to finish the third in the coming months. The major bulk of the work out there is commissioning, which mostly comprises of system checks and energization. That's what we're working for on right now and plan to complete through the end of this year.

Okay. Great. Just a follow-up. For the phase I wells, they've been drilled, stimulated, completed. Just wondering what you've learned about the subsurface program so far for that project in terms of flow rates, temperature, or reservoir performance that you can share at this point.

Yeah, I mean, the short answer is a ton. As I mentioned, we've got terabytes and terabytes of data, fiber optic sensing in these wells, logging trials, tracer studies. The nice thing about drilling 20+ wells as we have for Cape phase I is it provides an enormous opportunity for learning while doing. Each well can some way serve as a test for different well spacing designs, different frac plug designs, different casing designs, and fracture spacing designs. Everything is all about maximizing the learning and the output. In addition to that, I think we're excited that, and especially this was reviewed exhaustively, as you can imagine, in the non-recourse project that David discussed earlier.

The well test that we've conducted on the key pads for Cape phase I showed that the reservoir performance from a flow rate and temperature standpoint is all in line with the expectations and kind of within the range that you would expect across a portfolio of wells given the trials that we're running there. I think that we feel that the well test data that we've done so far, as well as the logging work and the fiber optic work, has been very exciting in terms of confirming the reservoir assumptions that we've made for the quality and performance of the wells as we go forward.

Okay. Great to hear. Congratulations.

Thank you.

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