On Monday, Truist Securities began coverage on shares of California Resources Corporation (NYSE:CRC), a diversified energy company, with a Buy rating and a price target of $75.00.
The coverage initiation by Truist Securities highlights the company's comprehensive operations, which include carbon management, traditional upstream activities, and various other assets.
California Resources was established in late 2014 following Occidental Petroleum (NYSE:OXY)'s spin-off of its California subsidiary. The company's carbon management business, which is largely conducted through its Carbon TerraVault joint venture, focuses on carbon storage, transportation, and capture. Meanwhile, its traditional upstream segment concentrates on drilling and completing wells in some of California's largest oil fields.
The analyst from Truist Securities emphasized that California Resources operates the Elk Hills 550 megawatt natural gas power plant and a 200 million cubic feet per day cryogenic gas processing plant near Bakersfield. Additionally, the company owns significant surface acres and real estate.
Recent developments for California Resources include the announcement of California's first approved carbon capture and storage (CCS) project, which followed the receipt of final Class VI well permits from the Environmental Protection Agency (EPA). The company also signed a memorandum of understanding (MOU) with Net Power to develop ultra-low emission power plants in California.
The analyst forecasts that California Resources' traditional upstream business will continue to generate substantial free cash flow (FCF). This cash flow is expected to be utilized to manage debt, reward shareholders, and further expand the carbon management platform.
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