With the deal, Midland, Texas-based Cottonmouth will make a $50 million equity investment into Houston-based Verde. Image via Shutterstock

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.

At the annual, SUPER DUG Conference & Exhibition 2024 in Fort Worth last week, Texas energy executives weighed in on the progress of the energy transition. Photo by Lindsey Ferrell

Texas energy transition leaders praise progress, call for continued efforts at conference

overheard at SUper dug

Woven in between reflections on the most active consolidation market in recent history, an underlying theme emerged from Hart Energy’s SUPER DUG Conference & Exhibition 2024 in Fort Worth last week. Executives, investors, and analysts conveyed admiration for the emissions reductions achieved across the shales while continuing to meet the growing demand for natural gas.

However, concern for continued investment echoed this praise, as many expressed the need for increased investment to support a world of flourishing population, economics, and technology.

Marshall Adkins, head of energy for Raymond James, shared an analogy demonstrating the energy demand impact from advancements in technology, most notably those sprouting from the widespread adoption of artificial intelligence. Adkins explained that a minimal whole-home generator consumes about 8,500 watts of power; to keep air conditioning, the washing machine, and garage door working results in a pull of approximately 14,000 watts. One single chip from NVIDIA requires that same 14,000 watts plus another 150 percent power for cooling, totaling approximately 35,000 watts — about the same as would completely power an average home as if there were no disruption in supply.

While this volume of power consumption seems hefty, consider that NVIDIA sold over half a million chips in a single quarter last year, and the effect starts to multiply exponentially. And while development of solar and wind power sources will replace most, if not all, of the current energy produced from coal, the stability of the power grid relies predominantly on the continuous stream of natural gas. That is, if the stream of investment into developing and expanding natural gas continues to grow in parallel.

Reflecting on the expectation from public and private investors, as well as upcoming talent, to embrace meaningful advancements in ESG, Will Van Loh, CEO of Quantum Energy Partners, shared the business benefit of greener practices.

“Switching your frac fleet from running diesel to natural gas, we saved one of our companies in the Haynesville half a million dollars per well and reduced GHG by 70 percent. Make a bunch of money and do good for the environment – (that’s a) pretty good deal,” Van Loh told Hart Energy’s editor-in-chief for Oil & Gas Investor, Deon Daugherty.

For decades, the industry has pursued increasingly eco-friendly habits, but the requirements of ESG reporting make it more visible to the rest of the world. Permian Operators, which produce almost half of all US daily oil volume, cited specific strides made in reducing emissions and operating more cleanly during their respective presentations:

  • Leadership from Diamondback Energy spoke about adopting the use of clear drilling fluids in lieu of oil-based mud, resulting in faster drilling times and cleaner operations. The technique came along with the acquisition of QEP Resources in 2021 and reflects the company’s commitment to remaining humble in its pursuit of more efficient and more environmentally beneficial methodologies.
  • Nick McKenna, vice president of the Midland Basin for ConocoPhillips praised their Lower48 team for reducing gas flaring by 80 percent since 2019 while also increasing the use of recycled water over 3x in that same 5-year horizon.
  • Clark Edwards, senior vice president of Development for BPX, cited achieving 95 percent electrification of their Permian well set as of the end of 2023. Building and installing their own microgrid – a practice repeated by numerous operators throughout the Basin, where public infrastructure lags far behind private entity needs – added enough megawatts to their operation to allow BPX to run drilling rigs completely independent of an already strained public grid.

In addition to reducing diesel usage, flaring, and dependence on the public grid for electricity, water management stays a top economic and ecological concern for shale operators all over the United States. While a compelling case of "have and have-not" dominated the shale water business over the last decade-plus, savvy operators increasingly embrace a mindset that water disposal should remain a choice of last resort. Companies like WaterBridge, a Joint Venture with Devon Energy, and Deep Blue, a joint venture with Diamondback Energy, help bring clean and recycled water to areas with shortages, both in and outside of the industry.

As Kaes Van’t Hof, president and CFO of Diamondback Energy, said, “The Midland Basin is now recycling as much water as it possibly can. Eventually it’s going to be about, ‘Water going downhole into a disposal well is the last option.’ Can you recycle it? Can you bring it somewhere else, evaporate it? We’re starting start some early de-sal[ination] tests in the Spanish Trail near the airport. Eventually, can we tell the story that we sell freshwater back to water the golf courses of Midland?”

The Energy Transition steams ahead, but pragmatic observations remind us that oil and gas make up approximately 60 percent of the energy supply today – a volume not easily replaced by any other source completely in the next few years. However, the overwhelming support for delivering the best barrel with the lowest carbon intensity possible permeated Hart Energy’s SUPER DUG Conference & Exhibition 2024.

A tie-up between Diamondback and Endeavor, if it succeeds, would create a player in the massive Permian Basin oil and gas field that straddles Texas and New Mexico. Photo via Unsplash

Potential $50B Texas energy giant emerges as Diamondback seeks to buy rival Endeavor

big deal

Diamondback Energy will attempt to buy rival Endeavor Energy Resources to create an energy giant in the Southwestern United States worth more than $50 billion.

Growing confidence in an economic recovery, particularly in the U.S., has driven massive deals in the energy sector in recent months, including Chevron's $53 billion acquisition of Hess in October, and a $59.5 billion deal two weeks before that by Exxon Mobil, its biggest acquisition since buying Mobil two decades ago.

A tie-up between Diamondback and Endeavor, if it succeeds, would create a player in the massive Permian Basin oil and gas field that straddles Texas and New Mexico.

It would be the third largest producer in the Permian behind Exxon and Chevron, overseeing 838,000 acres and potentially producing 816,000 oil-equivalent barrels each day.

Diamondback said Monday that it will buy Endeavor in a cash-and-stock deal valued at about $26 billion.

Endeavor is the largest private operator in the Permian Basin. Drillers can pull more than 4 million barrels of oil equivalent from the Permian daily and the rush is on to secure prime real estate in the largest oil field in the United States with little sign that the U.S. economy is slowing as many had expected.

“Our companies share a similar culture and operating philosophy and are headquartered across the street from one another, which should allow for a seamless integration of our two teams," Diamondback Chairman and CEO Travis Stice said in a prepared statement.

Despite broad expectations that it would dip into recession in a turbulent global economy, the U.S. has proven surprisingly resilient, with a red hot job market and economic growth that has surprised almost everyone. The nation’s economy grew at an unexpectedly brisk 3.3% annual pace from October through December.

Shareholders of Diamondback Energy Inc. will own about 60.5% of the combined company, while Endeavor’s equity holders would own approximately 39.5%.

“Diamondback and Endeavor’s assets are highly contiguous and offer opportunities to capture operational and overhead synergies through a combination,” Stifel's Derrick Whitfield said in an analyst note, explaining that the deal will add low-cost inventory to Diamondback's Midland Basin position.

The Diamondback, Endeavor deal confirmed Monday includes approximately 117.3 million shares of Diamondback common stock and $8 billion in cash, and will create a huge operator in the Permian Basin that straddles Texas and New Mexico.

The combined company will be based in Midland, Texas.

The boards of both companies have approved the deal, which is expected to close in the fourth quarter. It also has all of the necessary Endeavor approvals, the companies said.

Diamondback's stock rose nearly 2% before the market open.

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Solugen names Houston founder as new president of energy and water

new leaders

Houston-based biochemical producer Solugen has hired chemical industry veteran James Begeal as its new president of energy and water.

In his new position, Begeal leads the commercial strategy for the energy and produced-water sectors, “bringing our innovative chemistry directly to leading oil and gas operators, accelerating revenue growth, and deepening our commercial pipeline,” Solugen said in a news release.

Begeal has more than 25 years of experience in the chemical industry, including roles at oilfield technology company Baker Hughes and chemical company Clariant. In 2016, he co-founded NexGen Chemical Technologies, a Cypress-based provider of alternative natural-gas sweeteners. Begeal served as chief operating officer and chief technology officer at NexGen, which was acquired by League City-based Foremark Performance Chemicals in 2023. He then joined Foremark, which was acquired by investment firm CC Industries in 2024.

Begeal is no stranger to Solugen, having previously served as a company advisor.

“James is a builder — he knows what it takes to launch, scale, and win in this space,” says Solugen CEO Gaurab Chakrabarti. “We’re excited to have him bring that same builder’s mindset to Solugen as we double down on delivering solutions that meet our customers’ toughest challenges.”

The company also recently named Carlos Diaz as its new VP of strategy and international business. Diaz worked for 18 years at Baker Hughes and will lead Solugen's commercial expansion efforts into Latin America and beyond, according to a company representative.

Solugen, founded in 2016, raised $357 million in a series C venture capital round. The 2021 round catapulted Solugen into the unicorn category, meaning the private company is valued at more than $1 billion.

Weatherford partners with Abu Dhabi-based AI company to boost efficiency

eyes on ai

Houston-headquartered oilfield service company Weatherford International announced a strategic Memorandum of Understanding (MOU) with AIQ, an Abu Dhabi-based artificial intelligence company, to develop innovative solutions for the energy sector.

"We are excited to partner with AIQ to bring innovative, AI-driven solutions to the oil and gas industry,” Girish Saligram, president and CEO of Weatherford, said in a news release. “This strategic partnership allows us to deliver cutting-edge technologies that empower our customers to maximize their operational efficiency, enhance automation, and reduce costs. By combining our strengths, we are leading the way in helping operators modernize their workflows and achieve greater success in today's rapidly evolving energy landscape.”

The collaboration aims to use Weatherford's software and hardware solutions with AIQ's AI-driven systems. Weatherford and AIQ hope this union will significantly enhance operational efficiency across global oil and gas facilities, help operators to optimize their production workflows and reduce downtime.

The companies have developed the new Modern Edge Integration, which will combine AIQ's AI technology with Weatherford's Modern Edge program. It will enable operators to scale their work processes.

In addition, Weatherford's Universal Normalizer will work with AIQ's capabilities to combine operational and financial analysis. Customers will also now be able to procure software needs via a comprehensive industrial SaaS platform with the WFRD Software Launchpad, which can eliminate the issues associated with managing multiple systems and vendors, and provide a single point of access for all Weatherford and partner-built applications.

"This partnership marks another step in AIQ's mission to build partnerships that accelerate the deployment of impactful AI systems across the energy value chain,” Magzhan Kenesbai, Acting Managing Director of AIQ, said in a news release. “By integrating our advanced AI-driven tools with Weatherford's energy-specific technology, we are driving greater efficiencies to the industry through the development of scalable, automated applications. Together, we are set to empower operators to optimize their workflows, reduce downtime, and achieve unparalleled operational excellence.”