money moves
Houston clean fuels co. secures $50M investment from Diamondback Energy subsidiary
Verde Clean Fuels announced the entry into a stock purchase agreement with Cottonmouth Ventures, a wholly-owned subsidiary of Diamondback Energy.
With the deal, Midland, Texas-based Cottonmouth will make a $50 million equity investment into Houston-based Verde.
The investment will consist of the purchase of 12.5 million shares of Verde’s Class A common stock at a purchase price of $4.00 per share. Closing of the investment is anticipated to occur during the first quarter of the new year, which will be subject to satisfaction of customary closing conditions. The investment would represent the second investment by Cottonmouth in Verde over the past two years, which would equal a total investment of $70 million. This would make Cottonmouth the second largest shareholder of Verde.
“We are pleased to further our relationship with Diamondback and continue advancing our plans to deploy our technology through the development of commercial production plants,” Ernest Miller, CEO of Verde, says in a news release. “Diamondback is a strategic industry partner at the forefront of bringing sustainable operational practices to the oilfield and supporting the overall transition to clean energy.”
Verde Clean Fuels key pioneering technology is its "syngas-to-gasoline plus" (STG+®), which turns diverse feedstocks like biomass, municipal solid waste (MSW), and natural gas – into gasoline or methanol. Verde is able to deploy facilities in areas with abundant and low-cost feedstock. The company has developed two different pathways to gasoline production with the goal of reducing carbon emissions.
Proceeds from the investment are expected to be used to further the development and construction of potential “natural gas-to-gasoline production plants in the Permian Basin and for other general corporate purposes,” according to Verde Clean Fuels. The proposed plants developed by the parties would produce fully-refined gasoline utilizing Verde’s patented STG+® process from associated natural gas feedstock supplied from Diamondback's operations in the Permian Basin. Verde will also expand its board of directors to eight members and appoint a new director to be designated by Cottonmouth. Cottonmouth will be entitled to appoint an observer to the company’s board.
“This investment is an expression of confidence in our technology, which we believe has the potential to alleviate economic and environmental concerns in the Permian Basin and other pipeline-constrained basins, where flaring and stranded natural gas represent a significant challenge,” Miller adds in the release.