Verde Clean Fuels, Inc. (NASDAQ: VGAS) is experiencing a notable upswing in its stock performance on the US market today, reflecting a bullish trend. At the latest check during the current trading session, Verde's stock has surged by 36.38%, reaching a trading price of $3.82. This significant rise in VGAS stock value follows the recent announcement of a Joint Development Agreement (JDA) between Verde (VGAS) and Cottonmouth Ventures LLC, a subsidiary of Diamondback Energy.
The JDA signifies a collaborative effort between the parties for the development, construction, and operation of a facility aimed at producing commodity-grade gasoline. This endeavor utilizes associated natural gas feedstock supplied from Diamondback's operations in the Permian Basin.
The agreement establishes a framework for finalizing definitive documents and reaching a Final Investment Decision (FID) for the proposed project. These documents include various contracts such as operating agreements, ground lease agreements, construction agreements, license agreements, and financing agreements, alongside conditions precedent to closing, notably FID.
The envisioned project aims to produce approximately 3,000 barrels per day of fully-refined gasoline utilizing Verde's patented STG+ process. By utilizing natural gas from the pipeline-constrained Permian Basin as feedstock, the project seeks to address environmental concerns by potentially mitigating the flaring of up to 34 million cubic feet of natural gas per day while yielding a valuable, marketable product.
Verde expresses enthusiasm for finalizing the JDA with Diamondback Energy, emphasizing the economic and environmental benefits it could bring to West Texas. The project's potential to alleviate midstream constraints, reduce natural gas flaring, and produce less carbon-intensive gasoline is viewed as significant for natural gas producers.
Furthermore, the scalability of the project presents opportunities for similar facilities across Diamondback's locations in West Texas. The proposed facility, slated for Martin County, Texas, situated in the heart of the Permian Basin, could serve as a model for similar natural gas-to-gasoline projects in other pipeline-constrained regions of the United States and address flared or stranded natural gas opportunities globally.