Company Overview - California Resources Corporation (NYSE:CRC) is identified as an undervalued stock with significant upside potential, focusing on oil and natural gas exploration, development, and production primarily in California's San Joaquin, Los Angeles, and Sacramento basins [1][4]. Analyst Ratings and Price Targets - Josh Silverstein from UBS reiterated a Buy rating on CRC but lowered the price target from $68 to $64 [1]. - Sam Margolin from Wells Fargo also reduced the price target from $58 to $56 while maintaining a Buy rating, indicating a conservative valuation with potential for upside [1][3]. Sector Outlook - Despite slight reductions in price targets, analysts remain optimistic about the energy sector, anticipating improvements in oil and natural gas outlooks by 2026, along with benefits from cost efficiencies, emerging opportunities in oilfield services (OFS), and enhanced value creation from mergers and acquisitions [2]. Development Opportunities - Margolin highlighted three potential development areas for CRC: resource delineation in exploration and production, a datacenter joint venture in the Power segment, and permits plus contracts for carbon capture, utilization, and storage [4].

Core Insights - California Resources Corporation (CRC) is experiencing benefits from a supportive policy environment and a pending merger, although quarterly results are still influenced by commodity prices [1] Financial Performance - Shares are currently trading at $44.64 with a price target of $50, showing a trailing EV/EBITDA of 4.07X compared to 10.1X for the sub-industry and 5.46X for the sector, with a price-to-sales ratio of 1.2X [2] - The most recent quarter reported an adjusted EPS of $1.46, exceeding expectations, while revenue was $855 million, reflecting a year-over-year decline due to derivative outcomes [4] Cash Returns and Balance Sheet - CRC has a dividend yield of approximately 3.6%, supported by a 5% increase in the latest quarter, and retains over $200 million in its repurchase program through mid-2026 [5] - Total liquidity exceeds $1.1 billion, with a robust hedge book and modest leverage supporting ongoing cash returns and capital expenditures [5] Catalysts for Growth - California's improved policy climate includes strengthened permitting and an extension of Cap-and-Invest to 2045, which is expected to enhance development visibility [6] - The pending merger with Berry is projected to generate $80–$90 million in annual synergies within 12 months of closing, with nearly half expected to be realized in the first six months [6][7] - Early carbon capture monetization is targeted for 2026, supported by seven Class VI permits under review [6] Valuation and Market Position - CRC's stock trades at a significant valuation discount compared to peers, despite strong assets and favorable policy support [7] - The company is positioned to benefit from upcoming catalysts, which could lead to stronger earnings and valuation gains if executed as planned [8]

Core Insights - California's electrification efforts are aligning with the AI compute boom, presenting a significant opportunity for California Resources Corporation (CRC) through its Carbon TerraVault platform and carbon capture and storage (CCS) initiatives [1][10] Electrification and AI Demand - There is a notable shift in global AI spending towards inference, increasing the demand for reliable power sources near urban areas [2] - California's grid capacity is projected to nearly double by 2035, driven by new utility connections and procurement programs, which enhances opportunities for "power-to-CCS" solutions [2] Carbon Capture Initiatives - CRC is positioned to combine dependable, lower-carbon power with nearby storage sites, particularly around PG&E Corporation's expanding interconnect network for data centers [3] - A memorandum of understanding (MOU) with Capital Power aims to evaluate CCS at the La Paloma combined-cycle plant, with potential to capture up to 3 million metric tons of CO2 annually [4] Regulatory Progress - CRC has secured California's first EPA Class VI permits for its CCS projects, reducing execution risk and supporting timelines for carbon injection goals set for 2026 [6][10] Joint Venture and Investment Structure - The partnership with Brookfield plans to inject approximately 5 million metric tons of CO2 annually by the end of 2027, supported by a total investment of $2.5 billion [8] - This joint venture structure allows CRC to cover its equity needs for initial projects, providing flexibility for shareholder returns and future growth in low-carbon power [9] Economic Considerations - The most favorable economics for CCS projects arise from medium to high concentration CO2 streams, which have lower capture costs and are easier to finance [11] - CRC's strategy will prioritize early Power-to-CCS projects focusing on higher-concentration sources, with plans to expand as technology improves [12] Emissions Certification - CRC has achieved MiQ "Grade A" methane certifications for its operations, enhancing its credibility in emissions reduction when negotiating with CCS customers [13] - Ongoing efforts to expand certifications statewide will further strengthen CRC's decarbonization brand [14] Future Milestones - Key upcoming milestones include the closing of the Berry merger, the first carbon capture and storage injection at Elk Hills in early 2026, and decisions on additional EPA Class VI permits [15] - Final investment decisions related to the Power-to-CCS corridor and adjacent data-center projects will be critical for quantifying future earnings [16]

Core Viewpoint - California Resources Corporation (CRC) has entered into a Memorandum of Understanding (MOU) with Middle River Power (MRP) to provide carbon transportation and sequestration services for MRP's power facilities in California, marking CRC's first MOU for a brownfield power facility in Northern California [1][3] Group 1: Strategic Alliance - The MOU signifies a strategic alliance aimed at decarbonizing existing power generation infrastructure in California, aligning with the state's climate and reliability goals [3][6] - This partnership is CRC's third MOU with a brownfield power producer, indicating a growing trend in the power sector towards practical decarbonization solutions [3][6] Group 2: Company Profiles - California Resources Corporation (CRC) is focused on energy transition and environmental stewardship, aiming to maximize the value of its land and mineral ownership through carbon capture and storage (CCS) projects [4] - Carbon TerraVault (CTV), CRC's carbon management business, is developing services for capturing, transporting, and permanently storing CO2, with ongoing CCS projects targeting industrial sources [5] - Middle River Power (MRP) is an independent power producer committed to innovative energy solutions, with a focus on decarbonizing its generation infrastructure [6][7] Group 3: Project Details - The initial focus of the collaboration will be on two MRP power facilities: the 850 MW High Desert plant and the 330 MW San Joaquin Energy Center, which together produce up to 2.75 million metric tons of CO2 emissions annually [6] - CTV will serve as the exclusive provider of CO2 transportation and sequestration services for these facilities, supporting MRP's operational reliability and sustainability goals [6]

Core Viewpoint - Berry Corporation has successfully received approval from its stockholders for the merger with California Resources Corporation, with a fixed exchange ratio of 0.0718 shares of CRC common stock for each share of Berry common stock [1][2]. Group 1: Merger Approval - Approximately 73% of the total shares outstanding and about 98% of the shares voted supported the merger [2]. - The final voting results will be reported in a Form 8-K to be filed with the U.S. Securities and Exchange Commission [2]. Group 2: Company Overview - Berry Corporation is an independent upstream energy company focused on onshore oil and gas reserves in the western United States, operating in two segments: exploration and production (E&P) and well servicing [3]. - The E&P assets are primarily located in California and Utah, characterized by high oil content, with California assets in the San Joaquin Basin (100% oil) and Utah assets in the Uinta Basin (70% oil) [3].

Group 1 - The article discusses the analysis of oil and gas companies, focusing on identifying undervalued firms within the sector [1] - The author emphasizes the cyclical nature of the oil and gas industry, highlighting the importance of patience and experience in investing [2] - The investing group, Oil & Gas Value Research, seeks out under-followed oil companies and midstream firms that present attractive investment opportunities [2] Group 2 - The article mentions that the author has a beneficial long position in OXY shares, indicating a personal investment interest [3] - It is noted that the article is not intended as investment advice and encourages investors to review company documents for their own investment decisions [4] - Seeking Alpha clarifies that past performance does not guarantee future results and that the views expressed may not represent the platform as a whole [5]

Core Insights - California Resources Corporation (CRC) enters 2026 with a simplified near-term strategy and clearer long-term goals, supported by strengthened liquidity, a higher dividend, and disciplined capital management [1][10] Short-Term Setup - CRC's shares hold a Zacks Rank 3 (Hold) with a VGM Score of A, indicating expectations for in-line performance in the near term while being attractive on value and momentum factors [2] Regulatory Environment - Recent California policy changes, including SB 237 and SB 614, facilitate the approval of new production permits and CO2 transportation through pipelines, providing CRC with a clearer path for future drilling and carbon storage initiatives [3][10] Financial Performance - In the third quarter, CRC's net production averaged 137 thousand barrels of oil equivalent per day (Mboe/d), with approximately 78% being oil. Adjusted EBITDAX was around $338 million, and free cash flow was approximately $188 million [4][10] - Liquidity exceeded $1.1 billion, including $180 million in cash, and the quarterly dividend was increased by 5%, maintaining a conservative credit profile [5][10] Capital Management - Management targets a corporate base decline of 8–13% for 2026, with capital spending projected at $280–$300 million, reflecting a disciplined, cash-flow-first approach [6][10] - The combination of a moderated decline rate, hedging, and cost control supports free cash flow durability while allowing for shareholder returns [6] Carbon Capture Initiatives - CRC's first carbon capture and storage (CCS) injection at Elk Hills is planned for early 2026, pending final approvals, with construction completion expected by the end of 2025 [7][10] - The approval of CO2 pipelines under SB 614 is crucial for connecting future capture sites to storage locations, and CRC has a memorandum of understanding with Capital Power for potential "power-to-CCS" projects [8] Investment Outlook - The Zacks Rank 3 suggests in-line performance over the next one to three months, with a focus on near-term execution on permits, the timing of the first injection, and stabilizing production against a lower base-decline framework [11] - Peers such as Matador Resources and Murphy Oil are noted for comparison, providing insights into capital returns and relative value within the sector [12] Conclusion - CRC's setup for 2026 is characterized by a stronger liquidity position, measured capital expenditures, and improving policy support, with upcoming CCS milestones and moderated base declines contributing to a balanced near-term outlook and medium-term diversification potential [13]

Core Insights - California Resources Corporation (CRC) is advancing its California-first strategy, focusing on carbon capture and storage (CCS) initiatives to generate cash flow by early 2026 [1][11] Group 1: Carbon Capture and Storage (CCS) Initiatives - CRC's Carbon TerraVault aims for initial carbon capture and storage cash flows in early 2026, supported by seven Class VI permits under EPA review [2][11] - The carbon management segment is currently pre-revenue, but ongoing spending on permits and early-stage work indicates a pathway to monetization once approvals are secured [3] - Management plans to double the rig count to four by early 2026, enhancing development visibility and cycle times as permitting normalizes [2][11] Group 2: Power and Data Center Collaborations - CRC signed a Memorandum of Understanding (MOU) with Capital Power to capture and store approximately 3 million metric tons of CO2 annually from the La Paloma natural gas plant [4] - The collaboration also explores opportunities related to data centers and regulatory partnerships, reflecting increasing in-state demand for carbon reduction [4] Group 3: Policy Environment and Market Position - California's legislative environment has improved, with new laws enhancing oil and gas permitting and extending Cap-and-Invest through 2045, creating a favorable framework for CRC [6][11] - The company received MiQ 'Grade A' methane certifications for its assets, validating its practices and enhancing marketability in lower-emission oil and gas [8][11] - These certifications can support wider demand for CRC's products as buyers increasingly seek verified lower-emission supplies [9] Group 4: Financial Position and Execution Strategy - CRC's liquidity exceeds $1.1 billion, with minimal net leverage and maturities extended to 2029, providing financial flexibility during regulatory processes [12] - The company has reaffirmed its 2025 capital expenditure at $280–$330 million and outlined a steady program for 2026 [13] - Corporate base decline is projected at 8–13% in 2026, reflecting improved reservoir performance [13] Group 5: Investor Outlook - CRC holds a Zacks Rank 3 (Hold) and a VGM Score of A, indicating a balanced near-term outlook as the company builds its carbon and certified-methane credentials [14] - Near-term challenges include output softness and elevated operating costs, but the advancing CCS initiatives and strong policy support position CRC favorably for future growth [16]

Core Insights - California Resources has established a strong position in California's independent exploration and production sector, holding significant mineral rights and a diverse portfolio of oil and gas plays, with 81% of its proved reserves located in the San Joaquin Basin [1][6] - Wells Fargo analysts have initiated an Overweight rating on California Resources and Tamboran Resources, highlighting their unique asset mixes and upcoming catalysts for 2026 [3][14] - The energy sector is experiencing a complex evolution driven by decarbonization efforts and local economic factors, impacting investment strategies [5] California Resources - The company produced 137,000 barrels of oil equivalent per day in the second and third quarters of the year, with crude oil making up approximately 78% of this total [6] - California Resources reported a revenue of $855 million in 3Q25, down over 36% year-over-year, but beat earnings expectations with a non-GAAP EPS of $1.46, up from $1.10 in 2Q25 [8] - The company is involved in carbon capture and storage through its Carbon TerraVault project, partnering with Brookfield Renewable to develop CCS opportunities [7][10] - Analyst Margolin believes CRC shares are trading at their PDP value, with potential for significant upside, setting a price target of $58, indicating a 21.5% increase [10] Tamboran Resources - Tamboran operates in the unconventional natural gas sector in Australia's Northern Territory, with a focus on tapping into the Beetaloo/MacArthur basin [11][12] - The company has not yet begun commercial production and is currently operating at a loss, raising $56.1 million through a public offering and planning additional fundraising [13] - Analyst Margolin highlights the potential for high output and earnings from Tamboran's assets, with a price target of $35 suggesting a 36% upside [14]

Core Insights - California Resources (CRC) is entering 2026 with an improved regulatory environment, a clear integration strategy, and a conservative balance sheet, despite facing challenges such as lower production and higher costs [1][10] Regulatory Environment - California's 2025 policy changes have created a favorable regulatory landscape, including tighter permitting frameworks and extended Cap-and-Invest programs, which are expected to enhance project visibility and accelerate approvals [2] Berry Merger - CRC's all-stock merger with Berry is anticipated to close in Q1 2026, targeting annual synergies of $80–$90 million, with significant production and acreage additions, while maintaining pro forma leverage below 1X [3][10] Financial Position - CRC has over $1.1 billion in liquidity, minimal net leverage, and extended debt maturities to 2029, supporting a 5% increase in quarterly dividends and ongoing stock repurchases [4][10] Near-Term Challenges - The company is experiencing production declines, with Q3 2025 net production averaging 137 Mboe/d, and increased operating costs due to the merger with Aera Energy and elevated taxes [5][10] Q4 and 2026 Guidance - For Q4, CRC projects production of 131–135 Mboe/d, with capital expenditures estimated at $115 million, while the 2026 capex framework is set at $280–$300 million, indicating a focus on stabilizing volumes [6][10] Market Position - CRC holds a short-term Zacks Rank of 3 (Hold) and a VGM Score of A, reflecting strong value and momentum characteristics, with a constructive outlook for 2026 driven by policy shifts and the Berry merger [7][10] Peer Comparison - Matador Resources and Murphy Oil, both ranked 3, offer competitive value characteristics and dividend income, appealing to investors seeking balanced return profiles alongside CRC [9]