Carbon TerraVault and Power Deals Reshape CRC Optionality

California Resources Corporation (CRC) is expanding beyond oil and gas, with clearer plans to generate revenue from carbon capture and power-related projects. Supportive state policies and a growing project pipeline improve its outlook into 2026. In the near term, progress depends on execution and approvals, so patience may be needed.

Carbon Capture and Storage (CCS) Pipeline Gains Traction

CRC’s Carbon TerraVault – its carbon management business - is advancing seven Class VI storage permits, with first injection and initial commercial cash flows targeted in early 2026. This timeline reflects a more constructive California backdrop and rising local demand for in-state solutions.

Policy support is helping set the pace. In 2025, California improved oil and gas permitting, approved CO2 pipelines, and extended the Cap-and-Invest program to 2045. These changes make it easier for CRC to move projects forward and shorten development timelines as it enters 2026.

Capital Power Partnership Expands Scope

CRC and its Carbon TerraVault unit signed an MOU with Capital Power to capture and store up to 3 million metric tons of CO2 per year from the La Paloma natural gas plant in Kern County. The collaboration also includes studies on data centers, infrastructure and regulatory partnerships, underscoring industrial appetite for large-scale decarbonization in California.

The agreement strengthens CRC’s permitting plans by directly linking a carbon emitter with available storage, making the business case clearer as approvals move forward. It also positions Kern County as a possible center where carbon storage and power infrastructure grow together.

Revenue Mix Diversification Potential

Management is building long-lasting cash flow sources beyond upstream operations. Carbon capture and power partnerships create steadier, fee-based income that is less tied to commodity prices, helping smooth earnings over time. While these projects have not yet generated revenue, a planned start in 2026 provides a clear path toward contribution.

This diversification adds to CRC’s core oil and gas business and is supported by a solid financial position, with strong liquidity and effective hedging in place. Together with carbon and power initiatives, the platform positions CRC as an integrated in-state energy and carbon management provider with multiple catalysts.

Execution and Approval Milestones

State and federal approvals are still critical. Several storage permits and partnership agreements are pending, and delays could slow project timelines and limit near-term clarity. The pace of permitting and legal outcomes will shape how quickly CRC turns projects into contracted cash flow.

Even as policy trends are constructive, investors should track the sequencing: permit progress, commercial agreements, infrastructure buildout and first injection. Slippage in any step would affect the early-2026 commercialization path highlighted by management.

ESG Proof Points in Operations

CRC earned a MiQ “Grade A” methane certification in the Ventura Basin, following similar recognition for the Los Angeles Basin. The company is the only producer in California and the Rocky Mountain region with MiQ certification and plans to expand coverage across the state. These third-party validations reinforce CRC’s emissions management and transparency.

CRC’s strong methane performance fits well with California’s climate goals and strengthens its appeal for carbon capture partnerships, where environmental standards matter as much as cost and technical capability.

Investment Takeaway for the Near Term

The short-term Zacks Rank #4 (Sell) suggests patience while regulatory steps and project de-risking advance into 2026. At the same time, CRC holds a VGM Score of B, reflecting valuation and quality factors that support longer-horizon appeal as CCS and power cash flows develop.

California Resources Corporation Price and Consensus

California Resources Corporation price-consensus-chart | California Resources Corporation Quote

For industry context, Matador Resources (MTDR) and Murphy Oil (MUR) both carry Zacks Rank #3 (Hold) and offer different commodity mixes and basins. They remain conventional upstream comparables while CRC’s mix increasingly incorporates carbon management and power partnerships that could reshape cash-flow durability over time.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Bottom Line

Carbon TerraVault’s permit progress, the Capital Power MOU and policy tailwinds expand CRC’s strategic options and potential earnings stability. Investors should watch permitting, contracting and infrastructure milestones that bridge today’s pre-revenue carbon work to anticipated 2026 commercialization.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research