XGS Energy Hires Morgan Stanley to Evaluate Its IPO

XGS Energy, a California-based enhanced geothermal developer, hired Morgan Stanley to evaluate an initial public offering (IPO), Axios reported on July 9, 2026. The company is the second next-generation geothermal firm to explore public markets this year, two months after Fervo Energy's stock market debut.

The move comes two months after Fervo Energy debuted on the Nasdaq with a valuation of $1.9 billion in May 2026, the first public offering in the enhanced geothermal systems (EGS) sector. Market appetite for these technologies is being driven by data center demand for firm, clean power, which requires uninterrupted 24-hour supply and commands a premium for carbon-free electricity. According to Latitude Media, XGS completed a $13 million growth round in March 2025 and added another $13 million in early 2026, with plans to raise up to $100 million more in private capital to fund its commercial expansion.

Unlike Fervo, which uses hydraulic fracturing in hot rock, XGS operates a closed-loop system: vertical wells with steel tubing and a proprietary heat-transfer fluid that captures heat without water loss, a critical advantage in water-stressed regions such as New Mexico. XGS's commercial portfolio includes a 115-megawatt (MW) project with community choice aggregators in California and a 150 MW contract with Meta in New Mexico, signed in the summer of 2025. The company also recently hired Richard Chong, a former Calpine executive, as chief financial officer to execute a multi-gigawatt pipeline.

For Mexico and Latin America, whose geothermal fields (Cerro Prieto, Los Azufres, Los Humeros) represent a substantial but underexploited resource, capital market validation of enhanced geothermal technologies opens a financing pathway that previously did not exist. Morgan Stanley's decision, expected in the coming weeks, will determine whether the sector moves fully into the era of public capital.

This article was drafted with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.