Vallourec (VK) Investor update summary

Strategic positioning and market opportunity

• Rapid growth in next-generation geothermal is creating significant demand for premium tubular solutions, with geothermal expected to contribute 10%-15% of group EBITDA by 2030, driven by rising electricity needs from data centers, EVs, and industrial electrification.

• Enhanced and advanced geothermal technologies are unlocking vast, location-independent energy potential, with the U.S. holding the largest technically feasible capacity and commercial traction accelerating through major power purchase agreements and capital inflows.

• Drilling costs for geothermal projects have dropped by 70% since 2022, improving project viability and scalability, with further reductions expected as the industry applies oil and gas expertise.

• Major hyperscalers like Amazon, Google, Meta, and Microsoft are driving clean energy investments, accounting for 80% of U.S. corporate renewable PPAs, while funding for next-gen geothermal has surged to over EUR 3.2 billion in 2026.

• Vallourec’s value-over-volume strategy focuses on high-margin, technically demanding segments, leveraging local manufacturing, R&D, and long-term partnerships to capture a growing share of the geothermal market.

Technical innovation and product development

• Geothermal wells require premium tubulars with high resistance to thermal fatigue, burst, and torque, especially as projects move to deeper, hotter formations.

• Vallourec has qualified VAM-21 connections for up to 350°C and pioneered industry-first high-temperature casing collapse tests, providing validated data for well design.

• Proprietary solutions like THERMOCASE VIT vacuum insulated tubing are being integrated into advanced geothermal pilot projects, with ongoing R&D targeting even higher temperatures and improved corrosion resistance.

• The company’s engineering and well design expertise helps optimize costs and performance, reducing project risk and supporting bankability for customers.

Commercial traction and financial outlook

• A five-year exclusive supply agreement with Fervo Energy, worth up to $800 million, marks the largest New Energies contract in company history, supporting Fervo’s 41 GW EGS pipeline and flagship projects.

• Addressable geothermal markets are projected to grow up to fivefold by 2030, with most growth expected beyond 2030, and Vallourec targeting a higher market share than in oil and gas due to technical barriers to entry.

• Geothermal currently represents about 1% of volumes but is expected to become the largest contributor to New Energies EBITDA, with premium pricing and higher margins than traditional markets.

• Spare capacity in U.S. manufacturing facilities allows for growth without dilution, and potential bottlenecks would be addressed through targeted investments.