California Resources Faces Permit Challenges And Oversupply Risks—Analyst Sees Growth, But Stay Cautious
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 14 2025
0mins
Source: Benzinga
Analyst Rating and Performance: J.P. Morgan analyst Alejandra Magana maintains a Neutral rating on California Resources Corporation (CRC) with a price target of $63, noting a strong fourth quarter despite missing EPS and revenue estimates, while highlighting challenges from California regulations and potential oversupply concerns in 2025.
Regulatory Challenges and Opportunities: The company is facing stalled permit inventory due to regulatory revisions and may encounter further local restrictions; however, it is exploring clean power initiatives and has unique opportunities in carbon capture and storage (CCS).
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Analyst Views on CRC
Wall Street analysts forecast CRC stock price to rise
9 Analyst Rating
9 Buy
0 Hold
0 Sell
Strong Buy
Current: 62.260
Low
56.00
Averages
64.33
High
72.00
Current: 62.260
Low
56.00
Averages
64.33
High
72.00
About CRC
California Resources Corporation is an independent energy and carbon management company committed to energy transition. The Company’s segments include Oil and Natural Gas and Carbon Management. Its Carbon Management business, Carbon TerraVault, focuses on building, installing, operating, and maintaining carbon dioxide equipment, transportation assets and storage facilities. The Oil and Natural Gas segment explores for, develops and produces crude oil, oil condensate, natural gas liquids and natural gas. It has operations in oil and gas basins, including San Joaquin Basin, Los Angeles Basin, Sacramento Basin, and other. It has interests in oil and gas fields throughout the San Joaquin basin, including in Elk Hills, Buena Vista, Coles Levee, North Belridge and South Belridge, Kern Front, Lost Hills, Cymric, McKittrick, Midway Sunset and Coalinga. The Los Angeles Basin is a northwest-trending plain about 50 miles long and 20 miles wide. The Company is also focused on Uinta basin.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Citi Upgrades Ovintiv and CRC to Buy with Price Targets of $70 and $78
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- Market Opportunity: Despite a pullback in California Resources' shares following earnings, Gruber sees this as an opportunity, as the core oil and gas business value has materially improved due to higher medium-term oil prices and a more favorable permitting environment in California.
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See More
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- Increased Drilling Activity: The company plans to add three rigs this summer, with two in California and one in Utah, aiming to drill approximately 357 new wells throughout the year, reflecting a proactive strategy to enhance production capacity and market responsiveness.
- Carbon Capture Project Progress: CRC completed the construction of California's first commercial-scale carbon capture and storage project at its Elk Hills gas plant, expecting to receive final EPA approval soon, which will solidify the company's leadership position in environmental sustainability.
- Free Cash Flow Outlook: The company anticipates free cash flow exceeding $800 million in 2026, showcasing ongoing improvements in capital deployment and operational efficiency, thereby enhancing its financial resilience in an uncertain market environment.
See More
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- Rating Upgrade: Citi has upgraded Ovintiv (OVV) and California Resources (CRC) from Neutral to Buy, with price targets set at $70 and $78 respectively, indicating a rising relative value appeal in the exploration and production sector.
- Financial Improvement: Analyst Scott Gruber notes that Ovintiv's acquisition of Montney peer Arc Resources should enhance its visibility in the play, while anticipated fund flows may offset AECO pricing pressures, further improving the company's financial health.
- Production Outlook: Ovintiv's well productivity in Midland continues to show impressive improvement, which is expected to de-risk the volume outlook going forward and potentially set the stage for a type-curve uplift into 2027, with a forecasted net debt of approximately $2 billion by then.
- Market Opportunity: Despite a pullback in California Resources' shares following earnings, Gruber sees this as an opportunity, as the core oil and gas business value has materially improved due to higher medium-term oil prices and a more favorable permitting environment in California.
See More
Latest Wall Street Rating Updates
- Goldman Sachs Reiterates Buy on Broadcom: Goldman raised Broadcom's price target from $480 to $500, anticipating strong CapEx spending patterns from key customers, indicating that the upcoming earnings report may exceed market expectations.
- Oppenheimer Upgrades Rubrik: Oppenheimer upgraded Rubrik from Perform to Outperform with a price target of $85, based on strong checks from value-added resellers, highlighting the product's competitive strength in the market.
- UBS Upgrades Packaging Corp: UBS upgraded Packaging Corp from Neutral to Buy, expecting the $50/ton price hike to stick, which, combined with high utilization and prior capacity cuts, could add approximately $290 million in annualized EBITDA.
- Deutsche Bank Upgrades Humana: Deutsche Bank believes there is still time to buy shares of Humana, upgrading its rating to Buy, as it anticipates a new rally in managed care organizations that is just beginning.
See More
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- Nvidia Earnings Anticipation: Nvidia is set to release its earnings tonight, with market expectations for a beat to drive a post-earnings rally; however, skepticism remains regarding its ability to maintain market share amidst competition from Amazon and Google’s in-house chips.
- Target's Performance Rebound: Under new CEO leadership, Target reported a quarterly earnings beat with same-store sales up 5.6%, significantly surpassing the 2.4% consensus, and raised its full-year net sales growth forecast to 4%, indicating strong growth in fashion and health products.
- UnitedHealth Stock Recovery: UnitedHealth has shown strong performance since CEO Steve Hemsley's return, with Mizuho raising its price target from $410 to $440, reflecting a 20% stock price increase over the past month, indicating market confidence in its growth trajectory.
See More
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- Earnings Miss: California Resources reported Q1 revenue of $119 million, significantly below analyst expectations of $960.5 million, representing an 86.9% year-on-year decline, highlighting the company's struggles amid unprecedented volatility in the energy markets.
- Adjusted EPS Decline: The adjusted EPS came in at $0.88, slightly missing the $0.90 forecast, indicating pressure on operational efficiency and cost management, which could impact investor confidence moving forward.
- Accelerated Capital Deployment: CEO Francisco Leon noted the company's accelerated capital deployment to address supply chain bottlenecks, with oil production per day increasing by 23.4%, yet the overall operating margin plummeted to -597%, reflecting severe profitability issues.
- Negative Market Reaction: The steep decline in sales and significant earnings miss led to a negative market reaction, with shares dropping from $70.13 to $59.67, intensifying investor concerns about the company's future outlook.
See More
AI Investment Fuels Surge in Energy Spending
- Surge in Capital Expenditure: BNP Paribas reports that AI-related capital expenditures are projected to reach $725 billion by 2026, nearly doubling last year's estimate of $365 billion, indicating robust investment demand in the energy sector.
- Significant Market Impact: The $725 billion spending is comparable to the GDP of some mid-sized European countries and nearly matches JPMorgan's market cap, highlighting the substantial influence of AI investments on the energy market, which could drive stock prices higher for related companies.
- Optimistic Industry Outlook: UBS anticipates that spending on power generation capacity will reach $511 billion by 2030, while Evercore ISI is even more bullish, forecasting expenditures of $800 billion, reflecting strong demand for energy infrastructure.
- Diverse Investment Opportunities: Investors should consider energy infrastructure firms like Hut 8, which recently signed a $9.8 billion deal leading to a stock surge, and Fluence Energy, which saw its shares double after securing supply agreements with major tech companies, showcasing the strong demand for energy solutions.
See More
California Resources Corporation Q1 2026 Earnings Call Highlights
- Earnings Growth Outlook: California Resources Corporation reported an adjusted EBITDAX of $304 million for Q1 2026, exceeding guidance midpoint by approximately 17%, with a full-year adjusted EBITDAX midpoint target of $1.45 billion, indicating significant profitability enhancement amid market volatility.
- Increased Drilling Activity: The company plans to add three rigs this summer, with two in California and one in Utah, aiming to drill approximately 357 new wells throughout the year, reflecting a proactive strategy to enhance production capacity and market responsiveness.
- Carbon Capture Project Progress: CRC completed the construction of California's first commercial-scale carbon capture and storage project at its Elk Hills gas plant, expecting to receive final EPA approval soon, which will solidify the company's leadership position in environmental sustainability.
- Free Cash Flow Outlook: The company anticipates free cash flow exceeding $800 million in 2026, showcasing ongoing improvements in capital deployment and operational efficiency, thereby enhancing its financial resilience in an uncertain market environment.
See More
