Fervo Energy Company (FRVO) Earnings Call Transcript & Summary

Greetings, and welcome to Fervo Energy's First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Paxton Bentzinger, Senior Director, 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, 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 is 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 catalyze 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 start-up of our first utility scale project, Cape Station now within sight. 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 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 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 4 Mountain West states, crossing party lines, launched a coordinated consortium to facilitate up to 200 gigawatts 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 3 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 to 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 demand. 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 lengths, 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 megawatts, though the site has 4.3 gigawatts of potential capacity. Cape Station Phase 1 is an approximately 100-megawatt installation, comprising 33-megawatt GeoBlocks. All initial Phase 1 wells have been drilled, stimulated and completed, meaning our initial subsurface program for Phase 1 is done. In the first quarter of 2026, we achieved mechanical completion in our first GeoBlock. This last quarter, we conducted our largest zipper operations to date, simultaneously stimulating 6 wells on the Frisco pad. The successful completion of the Frisco pad highlights in efficiency metrics such as stages per day and cost per foot where we have seen continuous improvement throughout Cape Phase 1. 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 2 is a 400-megawatt expansion, comprising 850-megawatt GeoBlocks, which represents our go-forward design. I am pleased to report that Phase 2 construction commenced in the first quarter. Two Helmerich & Payne rigs are actively drilling. All 4 initial Fervo Generation 3.0 wells, our new upsized 7,500-foot 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 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 the bespoke, one-of-a-kind projects simply cannot. Our active projects expand beyond Cape Station. Last year, we drilled an appraisal well 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 the even higher temperature geothermal, unlocking greater power plant efficiency over time. An independent assessment completed by the DeGolyer & MacNaughton, 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. Fervo has 658 megawatts 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 5 years ago to develop our 3-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 offtake 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. 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 3 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 3-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 time lines 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 5-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 time lines. 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 negative $9 million, starting with the net loss figure I just referenced and adding back noncash P&L items totaling $21 million, primarily reflecting $13.1 million in noncash 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 advance both Phase 1 commissioning and Phase 2 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, but 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 31, 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 13, we listed on NASDAQ, and 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, our world-class partners, advisers and investors that have supported us and 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 underwriters' 30-day option. The strength of investor demand was evident throughout the process. We launched our roadshow with an initial price range of $21 to $24, revised the range upward to $25 to $26, and then priced above that revised range while issuing 26% more shares than anticipated at roadshow launch. Now 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 gigawatt of installed capacity. We raised significantly more than we had 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 3 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; and then 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 3 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, and the transparency, governance and accountability that came with being a public company strengthens 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 nonrecourse project debt for Cape Station Phase 1, 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. And finally, top-tier global financial institutions underwrote a first-of-its-kind EGS project, disrupting the long-held assumption that nonrecourse 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 we 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 megawatts 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-gigawatt 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 3 categories of maturity: mature, pipeline and prospects. The mature category includes 500 megawatts under construction at Cape Station and 550 megawatts 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 derisked near-term growth opportunities. Our pipeline category includes an additional 2.6 gigawatts in advanced development across several GeoClusters in Utah, Nevada. In early development, we've secured land rights across 10 GeoClusters and commissioned an independent expert, DeGolyer & MacNaughton, to conduct heat-in-place studies, reflecting over 38 gigawatts of capacity potential. You should think about the 40-plus gigawatts in advanced and early development as the locations where we have begun development activities, permitting work and resource characterization, and the 2.6 gigawatts 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 7 states, with a total evaluated pipeline that exceeds 42 gigawatts. Operator, you may now open up to Q&A.

[Operator Instructions] Our first question comes from Mark Strouse with JPMorgan.

Welcome to the public markets. Can I start maybe just kind of with your drilling cost? So you mentioned the 4 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 kind of achieving your medium- to longer-term targets with bringing that down closer to $3,000 overall project cost?

Yes. Fantastic. Thanks, Mark, for the question, and the "Welcome to the public markets," we appreciate it. Yes. We're really excited about the Cape Phase 2 results. We're not going to disclose the dollar per foot metric on an individual well basis. And these are just the first handful of wells for Cape Phase 2. 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. But I can 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 2 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 2 wells because it's not just a cost per well or a cost per foot metric that matters because, as you know, we are targeting larger casing size. These are 8-5/8-inch casing as opposed to the 7-inch casing on Cape Phase 1, which accommodates significantly more flow as well as the longer laterals of 7,500 feet and significantly higher temperature approaching 430 degrees Fahrenheit. And so 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. And so 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. So 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 sort of industry benchmarks before Fervo existed, and we continue to push to ever more extreme drilling designs with this kind of performance.

Okay. Great. And then 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, kind of, as we look further out this decade, to the extent that you are having conversations with folks now, just kind of what you're seeing with pricing trends?

Yes. It's a great question, Mark. And 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, but 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. And so I would say that, yes, we're seeing constructive pricing movement in the market. I 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, selling in the range of $100 to $130 per megawatt hour. But 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.

Maybe just to build a bit here on Mark's question. For future PPA agreements and offtakers, at this point, what are they kind of looking for from you all to sign up? Is there -- is the customer base wanting to see, I guess, results from Cape Phase 1? Or do you think you can all sign folks up kind of before performance history is kind of established there?

Yes. I appreciate the question, Chris. And I think the answer is 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 1, which, as I'm sure you could imagine, was sort of exhaustively reviewed in order to unlock that kind of nonrecourse project debt. And so given the operating history of Project Red and the maturity and key milestones that have been achieved on Cape Phase 1, including the production test and independent engineering assessments, no one is really hinging future PPAs off of further demonstration milestones. I think all of our customers view the technology to be mature and sufficiently demonstrated. And 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. And then maybe just as a follow-up to that, as you look out to Cape Phase 3, 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?

Yes. I think it's a fantastic question, and I can answer probably more broadly about how we think about behind the meter, is that it is an unlock for faster project development. And that would be true of future project phases at Cape as well as other places in our pipeline. I think we're really pleased, at our project maturity, that's represented not just by site control and permits, but also by our interconnection queue position and transmission development plans, but the whole reason to prefer to pursue behind the meter is it is an accelerator over our sort of base case plan. So 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 would go beyond what the interconnection queue position could support. And that's what we find appealing about it, and I can guarantee 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.

Our next question comes from Derek Podhaizer with Piper Sandler.

Maybe I just wanted to start off asking about the news out this morning with your results with NVIDIA, the EGS-Twin. Maybe can you talk to us about what that's actually going to look like and then how that will 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. And as you know, we've made intentional efforts in building a standardized and modularized power plant design called the GeoBlock. And 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. And 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. And the challenge with geothermal historically has been that a lot of the action happens 10,000 feet or deeper below your feet where it's very difficult to sense and measure and monitor what is occurring. So that -- tightening that feedback loop so you come down the drilling -- the learning curve faster involves processing that data, figuring out how it integrates with your power plant optimization and moving more quickly. So 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. And 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 is -- that allows us to test and calibrate and actually how do you paint the full picture of when we ran a trial or drilled a new geology or change the well spacing a little bit, what does that actually mean and how does that tie to the production performance. And 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. And 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 derisk the projects not only in our eyes, but in the eyes of potential project financiers as well. So 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 sort of 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. So 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. But maybe can you help all of us understand some of the project milestones we think about bringing Blanford towards that COD date or whenever you expect that to be? I mean this is a huge resource for you guys. I think it's the biggest one in your portfolio, at 11 gigawatts. So maybe just help us understand how we could think about those time lines as you continue to develop Blanford.

Yes, it's a great question. And obviously, given the exciting results in terms of temperature and depth there, it quickly has sort of 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. And as we noted, is actually significantly hotter than Project Cape at similar temperatures. So there's enormous amount of geologic upside here. And I think how we develop Project Cape is probably instructive. The next step for us is to -- 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 a time line for that right now, but we're actively in the planning process for that. As you mentioned, this -- 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. So 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.

Congrats on your first set of results.

Our next question comes from Dave Anderson with Barclays.

I saw -- you mentioned all the supply agreements that you've got lined up here. I just had a question on sort of the cost inflation component of that, and wondering kind of how you're talking or thinking about addressing some of that. So you mentioned the Vallourec agreement for 5 years. But in terms of the pricing of that, I'm assuming that's at market cost, whereas on 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. So 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?

Yes. 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. And we're really in such an interesting spot in the market because we are actively using the oilfield services supply chain through our drilling and completions work, but we're not selling oil and gas. And 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. But 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. And this really comes down to actually that diversification benefit where whenever we're negotiating 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? And the answer, of course, is Fervo because we sell a product that is under long-term power purchase agreements that -- where our volume of activity doesn't fluctuate with the price of oil. And 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. And so this creates an interesting opportunity where we can price 5-year-plus agreements with different pricing structures that protect kind of both parties where it's a win-win for both. And so broadly, to your point about there may be 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. And 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 customers -- with our suppliers.

Makes a lot of sense. And I was wondering if you could just kind of clarify something around transmission capacity that you have. If I'm not mistaken, I think Cape 1 has full transmission capacity part of Cape 2. Can you talk about, kind of, 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, but how do you get access to that?

Yes. That's right, Dave. And I think you have those numbers correct on the Cape resource specifically. All of Cape Phase 1, which is 100 megawatts, we have the transmission fully contracted. And on Phase 2, which is 400 megawatts, we have 300 megawatts 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. And 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. And so that number is constantly changing, but we'll say that, 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. I think these 2 things are going to be highly complementary. And in addition to that, where there are kind of 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 kind of sub-500-megawatt scale. But 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 3 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, but we do add to the interconnection queue and to our position broadly on a regular basis.

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

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 markets. Maybe just to begin with a question, I know this is a common theme occurring across the conversation, but 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. But does that really imply more so post 2030? Or could we see something more near term in terms of an announcement?