Sec Form 13D Filing - Diamondback Energy Inc. (FANG) filing for VERDE CLEAN FUELS WT EXP 02/04 (VGASW) - 2023-03-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Teresa L. Dick

Executive Vice President, Chief Accounting Officer and Assistant Secretary

Diamondback Energy, Inc.
515 Central Park Drive, Suite 500

Oklahoma City, Oklahoma 73105

(405) 463-6900

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)


February 15, 2023

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g) check the following box [ ]

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Act”), or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

(1) Based on 9,358,620 shares of Class A Common Stock of Verde Clean Fuels, Inc. (the “Issuer”) outstanding as of February 15, 2023, following the completion of the Issuer’s Business Combination (as defined in Item 4 below), as reported in the Issuer’s Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on February 21, 2023.

(1) Based on 9,358,620 shares of Class A Common Stock of the Issuer outstanding as of February 15, 2023, following the completion of the Issuer’s Business Combination (as defined in Item 4 below), as reported in the Issuer’s Form 8-K filed with the SEC on February 21, 2023.

(1) Based on 9,358,620 shares of Class A Common Stock of the Issuer outstanding as of February 15, 2023, following the completion of the Issuer’s Business Combination (as defined in Item 4 below), as reported in the Issuer’s Form 8-K filed with the SEC on February 21, 2023.

This Statement is being filed with respect to Class A Common Stock, par value $0.0001 per share (“Class A Common Stock”), of Verde Clean Fuels, Inc. (the “Issuer”).

The address of the principal executive offices of the Issuer is:

All capitalized terms contained herein but not otherwise defined shall have the meanings ascribed to such terms in the Schedule 13D. Information given in response to each item shall be deemed incorporated by reference in all other items, as applicable.

All disclosures herein with respect to the Reporting Persons is made by such Reporting Persons.  Any disclosures herein with respect to persons other than the Reporting Persons is made on information and belief after making inquiry to such party.

The name and present principal occupation of each director and executive officer of Diamondback (collectively, the “Listed Persons”) are set forth on Exhibit A to this Schedule 13D, which is incorporated herein by reference.  None of the Listed Persons individually beneficially owns any securities of the Issuer.

The information in Item 4 is incorporated herein by reference.

Private Placement Purchase

The Issuer (formerly, CENAQ Energy Corp. (“CENAQ”)), entered into that certain Business Combination Agreement, dated as of August 12, 2022 (as amended, the “Business Combination Agreement”), by and among CENAQ, Verde Clean Fuels OpCo, LLC, a wholly owned subsidiary of CENAQ (“OpCo”), Bluescape Clean Fuels Holdings, LLC, Bluescape Clean Fuels Intermediate Holdings, LLC, and, solely with respect to Section 6.18 thereto, CENAQ Sponsor LLC.  On February 15, 2023, the transactions contemplated by the Business Combination Agreement (such transactions, collectively, the “Business Combination”) closed.

In connection with the Business Combination, on February 13, 2023, the Issuer entered into a subscription agreement (the “Subscription Agreement”) with Cottonmouth, pursuant to which Cottonmouth agreed to purchase, and the Issuer agreed to sell to Cottonmouth, an aggregate of 2,000,000 shares of Class A Common Stock for a purchase price of $10.00 per share, or an aggregate purchase price of $20,000,000, in a private placement (the “Private Placement Purchase”). The closing of the Private Placement Purchase was contingent upon the concurrent consummation of the Business Combination. The Private Placement Purchase closed on February 15, 2023, concurrently with the closing of the Business Combination. Cottonmouth used working capital to fund its acquisition of the 2,000,000 shares of Class A Common Stock.

Pursuant to the Subscription Agreement, the Issuer agreed to use commercially reasonable efforts to submit to or file with the Securities and Exchange Commission (“SEC”), within 30 calendar days after consummation of the Business Combination (at the Issuer’s sole cost and expense), a registration statement registering the resale of the shares of Class A Common Stock purchased in the Private Placement Purchase, and the Issuer agreed to use its commercially reasonable efforts to have the registration statement declared effective as soon as practicable after the filing thereof but no later than the earlier of (i) ninety (90) calendar days (or one hundred twenty (120) calendar days if the SEC notifies the Issuer that it will review the registration statement) following the closing of the Business Combination and (ii) the tenth (10th) business day after the SEC notifies the Issuer that the registration statement will not be reviewed or will not be subject to further review.

The foregoing description of the Subscription Agreement is qualified in its entirety by reference to the full text of the form of Subscription Agreement, which is incorporated by reference as Exhibit 99.2 and is incorporated herein by reference.

The acquisition of the shares of Class A Common Stock pursuant to the Private Placement Purchase was for investment purposes.  The Reporting Persons at any time and from time to time may acquire additional shares of Class A Common Stock, either in the open market or in private transactions, or dispose of any or all of the shares of Class A Common Stock it owns, in each case depending upon an ongoing evaluation of the investment in the shares of Class A Common Stock, the Reporting Persons’ business, prospects and financial condition, the market for the shares of Class A Common Stock, general economic and prevailing market conditions, future developments and/or other factors.

Other than as described in this Schedule 13D, the Reporting Persons have no plans or proposals which relate to, or could result in, any of the matters referred to in paragraphs (a) through (j) inclusive of the instructions to Item 4 of the Schedule 13D.  The Reporting Persons may, at any time and from time to time, review or reconsider their position and/or change their purpose and/or formulate plans or proposals with respect thereto.

The information contained in Item 4 above is incorporated herein by reference.

Equity Participation Right Agreement

In connection with the Subscription Agreement, the Issuer and OpCo entered into an Equity Participation Right Agreement (the “Participation Right Agreement”) with Cottonmouth, pursuant to which, among other things, the Issuer and OpCo will grant Cottonmouth the right to participate between 50% to 65% in the ownership of certain future project facilities of the Issuer on the terms and conditions described therein through December 31, 2043. In addition, the Participation Right Agreement allows the Issuer and OpCo to participate in certain future project facilities brought forth by Cottonmouth on the terms and conditions described therein. Additionally, the Issuer has granted certain contractual preemptive rights to Cottonmouth relating to the sale of equity securities in the Issuer for a period of five years.

The foregoing description of the Participation Right Agreement is qualified in its entirety by reference to the full text of the Participation Right Agreement, which is incorporated by reference as Exhibit 99.3 and is incorporated herein by reference.

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date:  March 1, 2023

Executive Officers and Directors of Diamondback Energy, Inc.