FRVO: Heating Up

Research evidence excerpt

FRVO: Heating Up

Fervo Energy Company

Target/Upside/Downside Scenarios Investment summary

We see FRVO shares outperforming peers due to:Fervo Energy Company

55 29 Days 12MAY26 - 19JUN26 • Well-positioned in a strong demand environment. We

50 believe FRVO is well-positioned to benefit from strong

45 TARGETTARGET 46.0046.00 electricity demand driven by datacenters, electrification,

40 and onshoring, and is affirmed by its framework agreement

35 CURRENTCURRENT 35.0935.09 with Google and firm PPAs with strong pricing. Geothermal

30 is well suited for the demand profile of datacenters and

25 demand for firm power in general, and FRVO is an industry

20 leader for enhanced geothermal systems, which would

40m enable faster and more deployment of geothermal.

30m

20m 10m • First mover advantage. FRVO has a strong competitive

M26 J26

18 25 1 8 15 moat established by acquiring a premium land position

FRVO US Rel. S&P 500 COMPOSITE MA 40 weeks years ahead of competition and has gotten ahead with

Source: Bloomberg and RBC Capital Markets estimates for Target its permitting needs and validation of its technology.

Valuation Additionally, the company's IP portfolio and in-house know-

Our $46 PT is based on a DCF that assume 5 GW of how serve as additional competitive advantages which will

development through 2035E and uses a discount rate of 10% be difficult to replicate quickly.

and a 2035 terminal multiple of 13.5x on estimated runrate • Demonstrating path to further improvements and cost

EBITDA (ex-PTC credits) of ~$2.9bn. All of the DCF value is outs. Although the company is in the early stages of its

derived from the terminal assumption due to the unleveraged operating history, it has already demonstrated learnings

cash outflows associated with project development.