Hoang Quoc Anh
8 min read
When I evaluate a company, I don't think in terms of stock charts, quarterly earnings beats, or Wall Street narratives. I think about businesses. Specifically: Would I want to own 100% of this company at this price and hold it for the next 5-10 years?
In that spirit, let's take a closer look at California Resources Corporation (CRC). It's an upstream oil and gas company operating in one of the most misunderstood marketsCalifornia. On the surface, this company produces oil. But beneath that, there's something else: a deeply undervalued asset base, durable cash flows, and an intriguing second enginecarbon capture and storagethat just might turn CRC into a long-term compounder hiding in plain sight.
CRC is not your typical shale operator. It holds long-life, conventional oil fields in the San Joaquin and Los Angeles Basins, including names like Elk Hills and Kern Front. These aren't high-decline, capital-hungry assets. These are slow-and-steady producers that have been pumping for decades and still have decades to go. As of year-end 2024, CRC reported 545 million barrels of oil equivalent in proved reserves, with over 80% in oil. That equates to nearly an 11-year reserve life, which is unusually long for an independent producer.
Importantly, CRC owns its infrastructurepipelines, steam generation plants, even mineral rights in many of its operating areas. This vertical integration creates both operating efficiency and margin stability. And in a business where the price of the commodity can swing dramatically, any degree of cost control is a significant advantage. Think of it as owning not just the oil, but the entire value chain through which that oil flows.
But oil isn't the only thing buried in CRC's asset base. Through a business unit called Carbon TerraVault, the company is turning depleted reservoirs into carbon storage sites. With the U.S. government now offering $85 per metric ton of CO? stored (under the 45Q tax credit), CRC has a shot at transforming geological leftovers into a regulated, cash-flowing service business. It's a free call option on energy transition infrastructureand few investors seem to be paying attention to it.
CRC stands out as a rare case where the quality of the underlying assets is matched by the quality of its leadership. The business generates steady, durable cash flowsand management has shown a clear commitment to disciplined, shareholder-focused capital allocation.
