LONG BEACH - California Resources Corporation (NYSE: NYSE:CRC) and its subsidiary Carbon TerraVault have received unanimous approval from the Kern County Board of Supervisors for the conditional use permit of the Carbon TerraVault I (CTV I) carbon capture and storage project. This authorization, announced today, enables the commencement of construction for what is set to be California's inaugural carbon capture and storage endeavor.
The permit follows a recommendation from the Kern County Planning Commission in September and is a significant milestone for CRC's carbon management strategy. "This is a significant step forward for Kern County and CRC in supporting energy transition in California," stated Francisco Leon, CRC President and CEO.
CTV I will be located at CRC's Elk Hills Field in Kern County and boasts a storage reservoir with an estimated total capacity of up to 46 million metric tons of carbon dioxide (CO2). The project is expected to inject and store over 1 million metric tons of CO2 annually, which is roughly the equivalent of the emissions from about 200,000 passenger vehicles each year.
Setting a national precedent, CTV I is also the first project in the United States to use a depleted oil and gas reservoir for CO2 sequestration. The site has been recognized by the California Energy Commission as one of the prime CO2 sequestration sites in the country. The California Air Resources Board has identified carbon capture and storage as an essential measure for reducing greenhouse gas emissions.
In alignment with its commitment to community wellbeing, CRC has introduced a Community Benefits Plan for CTV I, dedicating a portion of the project's investments to local programs and collaborations with labor, community organizations, and academic institutions.
Carbon TerraVault, CRC's carbon management business, is developing services to capture, transport, and permanently store CO2 for its customers. CRC, an independent energy and carbon management company, is focused on the energy transition and environmental stewardship. It aims to maximize the value of its land, mineral ownership, and energy expertise through carbon capture and storage projects and other initiatives to reduce emissions.
This development is based on a press release statement from California Resources Corporation.
In other recent news, California Resources Corporation (CRC) has reported robust second-quarter financials, with $139 million in adjusted EBITDAX and $63 million in free cash flow, returning $57 million to shareholders. The company is projecting a significant increase in cash flow in the second half of 2024, with an expected adjusted EBITDAX of around $1 billion. UBS initiated coverage on CRC with a Buy rating, seeing potential in the company's diversified assets, particularly its emerging Carbon Capture, Utilization, and Storage (CCUS) unit. Mizuho Securities maintained an Outperform rating on CRC, underscoring the firm's belief in the company's strategic initiatives and its ability to capitalize on opportunities within the carbon management space.
CRC recently determined the consideration for its cash tender offer to purchase a portion of its outstanding 7.125% senior notes due 2026, as part of its strategy to manage its hedge book to support investments, debt servicing, and shareholder returns. The company is also considering refinancing or prepaying debt as part of its commitment to reducing net leverage and enhancing shareholder value. Furthermore, CRC is expected to secure key permits in the fourth quarter of 2024, an event identified by UBS as a key catalyst that will enhance the visibility of the growth trajectory for the CCUS unit. These are among the recent developments that highlight CRC's strategic direction and commitment to driving long-term growth and value for its stakeholders.
InvestingPro Insights
California Resources Corporation's (CRC) recent approval for its carbon capture and storage project aligns well with its financial position and market performance. According to InvestingPro data, CRC has a market capitalization of $4.5 billion and has demonstrated profitability over the last twelve months. This financial stability provides a solid foundation for the company to pursue innovative projects like CTV I.
InvestingPro Tips reveal that CRC has raised its dividend for three consecutive years, with a current dividend yield of 3.02%. This consistent dividend growth, coupled with the company's strong return over the last five years, suggests that CRC is well-positioned to invest in long-term projects while maintaining shareholder value.
The company's focus on energy transition and environmental stewardship is reflected in its financial metrics. With a gross profit margin of 52.41% in the last twelve months, CRC appears to have the financial flexibility to invest in projects like CTV I without compromising its overall financial health. Additionally, the fact that CRC operates with a moderate level of debt, as noted in the InvestingPro Tips, indicates prudent financial management as it embarks on this significant project.
It's worth noting that InvestingPro offers 7 additional tips for CRC, providing investors with a more comprehensive analysis of the company's financial position and market outlook. These insights could be particularly valuable as CRC moves forward with its carbon capture and storage initiatives.
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