Fervo Energy Co. (NASDAQ:FRVO) shares traded lower in Tuesday’s premarket session, giving back part of Monday’s 26% surge on mixed third-quarter results, as Baird lowered its price target to $20 from $26 while keeping an Outperform rating.
On Monday’s earnings call, CEO and co-founder Tim Latimer said the first full-scale Geoblock is delivering brine at expected volume and temperature and selling electricity as planned.
Management also outlined how its Google agreement supports larger-scale deployment and how repeated field execution could drive costs lower.
Quarterly Financial Update
Fervo reported a third-quarter loss of 7 cents per share, narrower than the 9-cent analyst estimate. Revenue rose 111% year over year to $116,000 but missed the $165,375 consensus estimate.
The company ended September with $1.9 billion in unrestricted cash.
It lowered its second-half capital spending forecast to $700 million-$750 million from $850 million-$900 million.
Fervo maintained its fourth-quarter and 2027 revenue outlooks.
Cape Station Shows Early Commercial Validation
Fervo’s Geoblock 1 began commercial operations on Sept. 30, ahead of schedule, and is producing about 33 megawatts of power.
“Said simply, brine is arriving at the power plant at the design volume and temperature, and electricity is being sold as planned,” Latimer said.
Geoblock 2 has synchronized with the grid and is delivering test energy, while Geoblock 3 has entered cold commissioning. Both remain on track to begin commercial operations by Jan. 1, 2027.
Latimer said flow and temperature are tracking within expectations and that performance remains “very in line with our prior disclosures on the Q2 call in terms of our Q4 2026 revenue target.”
Google Deal Supports Larger-Scale Deployment
Fervo’s 15-year agreement with Google covers about 396 megawatts delivered in four 99-megawatt tranches.
Commercial operations are targeted to begin in mid-2028, with the full set of Geoblocks expected online before the end of 2028.
The agreement also gives Google an option to expand purchases by about 600 megawatts, potentially bringing the total close to 1 gigawatt.
Fervo now has 1,054 megawatts under binding power purchase agreements, representing about $11.9 billion in contracted revenue. That compares with 658 megawatts and $7.2 billion at the end of the second quarter.
“That is the point of this structure: it lowers project-on-project risk. We built Cape Station on our schedule. Google can develop a potential data center on their schedule, and neither party is waiting on the other,” Latimer said.
Cost-Down Path Hinges On Repetition
Management said lower costs will depend on incremental improvements across drilling, completions and surface procurement rather than a single technological breakthrough.
“Reducing costs and increasing production aren’t the result of any single breakthrough. They’re the result of intentional, iterative improvement where small changes compound into large increases in productivity,” Latimer said.
Latimer added that the company is positioned to achieve installed capital expenditures of $5,500 per kilowatt for Geoblocks 4 through 11.
“Our drilling results continue to improve as we drill more wells with our 3.0 design,” Latimer said.
FRVO Price Action: Fervo Energy shares were down 3.34% at $11.00 in premarket trading at the time of publication Tuesday, according to Benzinga Pro data.
Photo: Samuel Boivin / Shutterstock
