Fervo Energy Company Class A common stock 2026 Q2 Earnings Call

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, and 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.