Fervo Energy Company

Greetings, and welcome to Fervo Energy's first 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's now my pleasure to introduce your host, Paxton Bensinger, Senior Director, Corporate Development and Investor Relations. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to Ferbo 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, and 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 Vervo 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. Vervo 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 with Insight. Ringing the NASDAQ bell marked an important milestone in our journey, but 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, and 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, or TRIR, stood at just 0.27. This TRIR demonstrates Vrbo'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, 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 rice that energy by 2035 the us is expected to face a 98 gigawatt 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 facilitate up to 200 gigawatts of geothermal development through streamlined permitting, shared geologic data, and accessible product 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, Vervo 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 wellfield and power plant design to unlock learning curves and meaningfully reduce cost over time. We then harness these learnings continuously improve our design, increasing production output and efficiency. Finally, going forward, by deploying our technology in modular 50 megawatt 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. 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, simulation 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 megawatts, So the site has 4.3 gigawatts of potential capacity. Cave station phase one is an approximately 100 megawatt installation, comprising three 33 megawatt geoblocks. All initial phase one wells have been drilled, stimulated, and completed, meaning our initial subsurface program for phase one 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 phase one. Key power facility equipment has been installed and commissioning is underway. We remain on track for first power in Q4, 2026, with geoblocks two and three expected to follow in Q1, 2027. Cape Station Phase 2 is a 400-megawatt expansion comprising 8 50-megawatt geoblocks, which represents our go-forward design. I am pleased to report that Phase 2 construction commenced in the first quarter. Two Helmer campaign rigs are actively drilling. All four initial FERVO Generation 3.0 wells, our new upsized 7,500-foot lateral design, have been drilled on the King's Path 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 Pace 2 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 feet, 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 DeGoyler and McNaughton, a leading engineering consulting firm, confirmed 10.8 gigawatt 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. Virgo has 658 megawatts of binding power purchase agreements, representing $7.2 billion of contract 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 three-megawatt commercial pilot, Project Red, which has been operational in Nevada since late 2023. We continue to expand our partnership with Google through the Clean Transition Tariff, a novel optic agreement covering 115 megawatts 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. Vervo 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 rank and 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 megawatts 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 1 and 2. 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 Valeric, 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 FERBO 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 employment. 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.