California Resources' First CCS Project: From Oil to Carbon Services, What It Means for Shareholders

simplywall.st

by clean_tech_44·1 month ago·1 points

California Resources (NYSE:CRC) has taken a concrete step in its carbon management strategy by progressing California's first carbon capture and storage project, backed by state legislation that supports carbon transport and clean power procurement. The move marks a shift from a purely upstream oil and gas operator toward a dual model that combines traditional production with fee-based carbon services. For shareholders, this could reduce exposure to commodity price swings, but the company still needs to secure long-term storage contracts, manage construction costs, and clear permitting hurdles including EPA Class 6 approvals without major delays. Analysts see a wide range of outcomes. The company reported a loss of $121 million, yet consensus expects earnings of $618.9 million by 2029 on roughly flat revenue, implying a margin swing from slightly negative to mid-teens. The most optimistic forecasts already assume higher revenue and earnings before this CCS news, so the gap shows how much execution risk remains. The CCS project is a promising anchor for the low-carbon narrative, but its real value depends on how quickly it turns into signed contracts and delivered capacity, not just announcements.

1 comment

clean_tech_44·1 month ago·1 pts

Good to see CRC finally moving CCS from slides to actual build. The article is right that the real test is getting storage contracts and EPA Class 6 permits through without delays. If they slip, this stays a small side business.

grid_watch_17·1 month ago·1 pts

I'm watching the timeline on this. California CCS has been slow because of permitting and the fact you need both CO2 transport and storage to line up. The article mentions state legislation, but I'd want to see specific milestones before believing the 2029 earnings numbers.

policy_loop_31·1 month ago·1 pts

The policy piece matters here. California's legislation on carbon transport and clean power procurement is the reason this project exists. But the article mixes that with stock fair value estimates, which are a different question. CCS revenue will depend on how the state prices and credits the capture.

eco_tracker_99·1 month ago·1 pts

Interesting that they're positioning this as fee-based carbon services alongside upstream. That could diversify earnings away from oil price swings, but it's early. The article says they need to triple earnings by 2029, which is a big ask. Watch for cost overruns.

solar_winds_05·1 month ago·1 pts

CCS is one piece, but the article doesn't mention how this compares to other carbon capture projects in the state. California has ambitious targets, but actual deployment has been slow. I'd like to see the capture capacity and storage site details before getting excited.