California Resources Faces Permit Challenges And Oversupply Risks—Analyst Sees Growth, But Stay Cautious

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J.P. Morgan analyst Alejandra Magana maintained a Neutral rating on California Resources Corporation ( CRC ) with a price forecast of $63.

Earlier in March, California Resources ( CRC ) reported fourth-quarter 2024 adjusted EPS of $0.91, missing the $0.97 estimate and revenue of $877 million, falling short of the $897.75 million expectation.

The analyst notes that the company delivered a strong fourth quarter, with EBITDA beating estimates, solid operations, and continued momentum in CCS volume agreements.

Magana writes that the company faces challenges maintaining output due to strict California regulations.

While the Aera acquisition bolstered the business, concerns remain about its oil exposure amid potential oversupply in 2025, adds the analyst.

The analyst says that the company's permit inventory rebuild is stalled as CalGEM revises well procedures, and a new bill may allow local governments to impose further restrictions.

Magana says the company is also exploring clean power, aiming to connect Elk Hills to a CCS vault.

While CRC has unique CCS and power opportunities, regulatory uncertainty and ongoing permitting challenges keep the analyst cautious.

Investors can gain exposure to the stock via Invesco S&P SmallCap Energy ETF ( PSCE ) and Innovator U.S. Small Cap Managed Floor ETF ( RFLR ) .

Price Action: CRC shares are up 2.59% at $43.14 at the last check Friday.

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