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A Diamondback Energy Inc. subsidiary has committed a $50 million equity investment into Verde Clean Fuels Inc., Verde said Dec. 19.
Cottonmouth Ventures LLC’s investment comes in the form of a stock purchase agreement in which the subsidiary will buy 12.5 million shares of Verde Class A common stock for $4 per share.
Proceeds from the investment will be used to further the development and construction of natural gas-to-gasoline production plants in the Permian Basin. The proposed plants would be jointly developed by Cottonmouth and Verde and would produce gasoline using a Verde-patented process from associated natural gas feedstock supplied by Diamondback operations in the Permian.
The proposed plants would be able to help alleviate economic concerns in the Permian “and other pipeline-constrained basins, where flaring and stranded natural gas represent a significant challenge.”
“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,” said Ernest Miller, CEO of Verde. “This investment is an expression of confidence in our technology.”
This is Cottonmouth’s second investment in Verde in the past two years for a total of $70 million.
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Cottonmouth is now Verde’s second largest shareholder. Once the transaction closes, Cottonmouth will appoint a new director to Verde’s board and will be entitled to appoint an observer to the board.
The transaction is expected to close in first-quarter 2025 and remains subject to customary closing conditions.
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