California Resources Corp (CRC): what the price requires

At today's price, California Resources Corp (CRC) is priced for +3.7% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/CRC

Headline

FieldValue
TickerCRC
CompanyCalifornia Resources Corp
Current price$53.38/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed6.3%
Operating margin (mid-cycle)16.3%
Margin compression implied-10.0pp
Trailing margin (depressed year)-5.6%
Implied growth3.7%
Multiple paid13x mid-cycle operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.7pp.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history-0.43σ
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.71x2expensive
Earnings1.45x2expensive
Relative1.08x2expensive
Growth0.93x5justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.

Per-Model Detail (n=11)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$141.080.38xyesFCF base $0.4B, growth 15% (input: historical growth), terminal g 4.0%, WACC 7.5%, 5yr projection
DCF Exit MultipleGrowth$80.490.66xyesExit EV/EBITDA: 23.4x / 28.4x / 33.4x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$49.541.08xyesP/S fallback (negative EPS): Sector P/S 1.2x × TTM revenue — excluded from consensus
Simple DDMGrowth$5.449.81xyesDPS $1.62, g=-15.9% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$57.570.93xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$32.901.62xyesReference only (book value floor): BV/sh $32.90, ROE negative
Two-Stage Excess ReturnAsset$29.611.80xyesReference only (book value with convergence): BV/sh $32.90, ROE converges to ke
Discounted Future Market CapGrowth$52.061.03xyesRev $3.7B, growth 15% (input: historical growth; tapered), Terminal P/S: 1.0x / 1.3x / 1.6x (bear / base = today's held flat / bull, cap 6x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$45.071.18xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.51B × (1−21%) / WACC 7.5% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$0.015338.00xyesEBITDA $0.21B × sector EV/EBITDA 6.0x (excluded from median)
FCF YieldEarnings$31.231.71xyesFCF $380.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$49.541.08xyesRevenue $3.66B × sector P/S 1.2x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$1.4b
Net debt / NOPAT (after-tax)3.78x
Net debt / operating income (pre-tax)2.99x
Interest coverage4.4x
Share count CAGR (dilution)3.1%
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 16.3%); the trailing year was depressed.

Bullet Takeaways

Bull Case

Start with what the market seems to be pricing and contrast it with the fundamentals, because the GAAP headline is misleading. California Resources reported a Q1 2026 net loss of $711 million, but $848 million of that was a non-cash mark-to-market loss on commodity derivatives, an accounting swing, not a cash outflow. Strip it out and the operating quarter was strong: net production reached 154 MBoe/d, and management raised full-year 2026 adjusted EBITDAX guidance by 42% to a $1.45 billion midpoint. At $55.31 (June 27, 2026) the stock trades at about 13x mid-cycle operating income, implying roughly 5% annual operating growth, a within-range bar that the production and EBITDAX trajectory comfortably clears.

The core business is more durable than most California oil exposure suggests. CRC operates long-life, low-decline conventional fields, and the Berry merger added scale, with synergy targets recently raised to $90 to $100 million. The 10-K describes operational investments to "improve propane recovery from inlet gas, and reduce the carbon intensity of the electricity generated at our Elk Hills" field (accession 0001609253-26-000051), the kind of efficiency work that supports margins and aligns the conventional business with California's regulatory direction. Book value per share near $32.90 provides an asset floor, and the company pays a meaningful dividend.

The optionality is the carbon-capture business, which the oil-and-gas methods do not price. CRC achieved first CO2 injection at Carbon TerraVault I at Elk Hills in 2026, California's first operational carbon capture and storage project, with capacity to store up to 1.46 million metric tons of CO2 annually and 38 million metric tons total. In a state determined to decarbonize, a producer that owns the pore space and permits to store CO2 has a genuinely scarce asset, and federal and state incentives for sequestration give it a revenue path independent of oil prices. The bull case is a cash-generative, deleveraged California producer trading at a low mid-cycle multiple, with a real carbon-capture call option the market is getting close to free.

Bear Case

The capital-allocation question sits at the center of the bear case, because CRC is funding two capital-hungry strategies at once. The company raised its 2026 capital budget to $520 to $560 million while running a roughly five-rig program in the conventional business, and it is simultaneously building out the Carbon TerraVault carbon-capture infrastructure, which requires its own large, long-dated investment before it generates meaningful revenue. Spending on oil drilling and on a speculative carbon-storage venture at the same time, while also paying a dividend and integrating the Berry acquisition, stretches the cash that a cyclical producer cannot always count on. If oil prices fall, the capital plan competes directly with the payout and the deleveraging.

The regulatory and macro exposure is uniquely sharp for a California producer. The state is the most aggressive in the country on restricting oil and gas, with permitting delays, setback rules, and a declared path to phase down in-state production. CRC's conventional cash flows, the engine that funds the carbon-capture pivot, face a hostile and tightening regulatory environment that few other US producers contend with. The carbon-capture business depends on the same regulators and on federal incentives that could change with the political cycle, so both halves of the company carry policy risk that the multiple does not fully reflect.

The cyclicality is the unavoidable backdrop. The $848 million derivative loss is a reminder of how violently commodity exposure moves the financials, and trailing operating income is negative on a GAAP basis. The valuation methods that ignore the cycle flag the price as expensive: simple excess return near $33 and EPV near $45 sit below the price, and the relative price-to-sales fallback near $50 is excluded from consensus because earnings are negative. The carbon-capture optionality is real but unproven at scale, and pricing it as a near-certainty is a leap. The bet against CRC is that the company is spending heavily across oil and carbon capture into a regulatory headwind, that a soft oil price would force hard choices between the capital plan and the dividend, and that the carbon-storage value the bulls credit is still years and many approvals away.

Valuation

At $55.31, inverting the price puts California Resources at roughly 13x mid-cycle operating income, which solves to about 5% annual operating growth over a five-year stage at a 9.4% cost of capital. The engine uses through-the-cycle margins on current revenue rather than the trough quarter, because trailing GAAP earnings are depressed by the $848 million non-cash derivative loss. The implied pace is within what the company has recently delivered, so the priced-in assumption reads as within range.

The model families split as they do for a cyclical with a hidden option. The growth lens reaches above the price, with DCF perpetual growth near $139 (inflated by a high historical growth input and best discounted) and the exit-multiple DCF near $82. The discounted-future-market-cap method near $54 and the two-stage DDM near $58 land near the price. The book-value floor near $33 and EPV near $45 are the cautious references, and the relative price-to-sales fallback near $50 is excluded from consensus for negative EPS. The blended X-ray near $50 sits just below the price. Critically, none of these methods value the Carbon TerraVault business, which is an off-balance-sheet option.

The valuation conclusion is that the conventional business alone roughly supports the price on mid-cycle economics, with the carbon-capture venture as upside the standard frames cannot capture. The price is justified by the relative-multiple and growth methods while the asset and earnings-power lenses call it full, the normal shape for a cyclical near mid-cycle. The deciding variables are the oil price, which drives the conventional cash flow, and whether Carbon TerraVault converts permits and first injection into a real, recurring revenue stream. If carbon capture scales, the price understates the company; if oil weakens and the capital plan strains, the conservative methods near $33 to $45 become the anchor.

Catalysts

Carbon capture is the catalyst that could re-rate the company. CRC achieved first CO2 injection at Carbon TerraVault I at Elk Hills in 2026, California's first operational carbon capture and storage project, with 1.46 million metric tons per year of capacity and 38 million metric tons total. Progress on additional storage permits, new CO2 offtake or storage agreements, and evidence the venture is generating revenue are the signals that would validate the optionality.

The Berry merger and operating execution are the near-term reads. Management raised the expected annual synergy range 12% to $90 to $100 million and lifted 2026 adjusted EBITDAX guidance 42% to a $1.45 billion midpoint, targeting about 12% production growth to 152 to 157 MBoe/d. The next earnings reports test whether synergies and production deliver against that raised frame; adjusted EBITDAX and production volumes are the cleanest metrics, since GAAP results are distorted by derivative marks.

The dominant external variables are the oil price and California regulation. Commodity prices drive the conventional cash flow that funds the dividend, the capital plan, and the carbon-capture build, while state permitting and decarbonization policy affect both the oil business and the storage venture. Watch the capital budget, currently $520 to $560 million, against oil prices, and any regulatory developments on in-state production or carbon-storage incentives.

Sources: California Resources Q1 2026 earnings review (Finsee), CRC dividend, losses and carbon capture (Simply Wall St), CRC Q4 2025 results and 2026 guidance (CRC)

Peer Cohorts (Per Segment, With Filing Citations)

Oil and Natural Gas (reported)

Carbon Management (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive CRC report on boothcheck