Diamondback Energy has entered into a partnership with Conduit Power and Granite Ridge Resources to develop 200 MW of distributed natural‑gas power generation in the Texas ERCOT Load Zone West. The project will be built, owned, and operated by Conduit, while Diamondback and Granite Ridge will provide fixed capacity payments in exchange for a preferred share of the power proceeds.
The partnership positions Diamondback as a key player in the growing demand for dispatchable generation that balances intermittent renewable output in ERCOT’s western region. By tying its capital to a 200 MW project, Diamondback gains a new revenue stream that complements its Permian‑Basin operations and reduces reliance on gas sales to the Waha hub.
Conduit Power’s CEO Matthew Herpich said the arrangement “allows Conduit to scale dispatchable generation in ERCOT alongside two premier upstream companies, delivering reliable power to the grid while creating durable value in Texas power markets.” Granite Ridge’s President Tyler Farquharson added that the deal “provides shareholders with enhanced well‑level economics through power sales and brings much‑needed new power generation to the ERCOT grid.”
The project is expected to reach commercial operation in 2026, with phased construction and grid interconnection managed by Conduit. The fixed capacity payments and preferred share structure give Diamondback and Granite Ridge a predictable cash flow while allowing them to participate in the growing Texas power market without the need for large upfront capital outlays.
Diamondback’s Q3 2025 earnings beat expectations, with revenue of $3.92 billion versus analysts’ $3.52 billion and EPS of $3.08 versus the $2.94 consensus. The beat was driven by strong production growth in the Permian Basin and disciplined cost management, underscoring the company’s financial strength as it expands into distributed generation.
Market reaction to the announcement was positive: the partnership was cited as a key driver behind a 3.36 % increase in Diamondback’s stock price to $154.07, and BMO Capital raised its price target to $175 from $167, reflecting confidence in the company’s diversified revenue mix.
The deal also addresses a critical headwind for the Permian Basin—limited associated‑gas takeaway capacity—by providing a new source of revenue for Granite Ridge and a hedge for Diamondback against rising electricity costs in its operations.
Overall, the partnership signals Diamondback’s strategic pivot toward a more balanced portfolio that includes both upstream production and downstream power generation, positioning the company to benefit from Texas’s evolving energy landscape and the growing need for dispatchable power to support renewable integration.
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