Verde Clean Fuels Inc (NASDAQ:VGAS) said it has halted development of its planned Permian Basin project, a move the company attributed to evolving market conditions and particularly to rising demand for natural gas within the Permian region. The announcement came late Friday and was followed by a roughly 6% drop in Verde shares in after-hours trading.
The project had been pursued under a joint development agreement signed in February 2024 with Cottonmouth Ventures, LLC, a wholly owned subsidiary of Diamondback Energy, Inc. (NASDAQ:FANG). The initiative intended to convert natural gas into gasoline using Verde's STG+® technology.
Following formation of the partnership, Verde commenced development activities, including a front-end engineering and design (FEED) study. That FEED study was completed in December 2025, according to the company.
In a statement, Verde's CEO, Ernest Miller, thanked Diamondback for its backing and highlighted the practical value of the work completed so far. "We are thankful to Diamondback for their support of the Permian Basin project. The learnings from the work that was completed, in particular from the FEED study, will continue to be useful as we explore other opportunities to deploy our technology," Miller said.
Miller said the company will redirect its resources toward regions where natural gas is stranded or flared and lacks access to higher value markets. The company also noted that Cottonmouth remains Verde's second-largest shareholder and continues to support Verde's technology deployment efforts.
The suspension reflects a reassessment of the project's viability given the current supply-demand dynamics in the Permian Basin. Verde has indicated it will look for alternative locations where its STG+® platform can capture value from constrained natural gas supplies rather than markets where gas demand is already absorbing available volumes.
Key operational milestones and corporate relationships cited in the announcement remain unchanged: the February 2024 joint development agreement with Cottonmouth Ventures; completion of the FEED study in December 2025; and the company's stated pivot toward stranded and flared gas opportunities.