California Resources has ‘unique opportunities’ to meet power demand, says bullish analyst following Aera merger – California Resources (NYSE:CRC)

Last month, California Resources Corp CRC completed its pure stock merger with Aera Energyin a deal worth $2.1 billion.

Data centers, many of which have ample cash, could provide an opportunity to commercialize carbon capture and storage (CCS), according to Bank of America Securities.

Bank of America Securities analyst Kalei Akamine has upgraded the rating for California Resources from Neutral to Buy and simultaneously increasing the price target from $57 to $65.

“California’s power grid is not growing fast enough,” the company said in a statement. Financially strong data centers may not be willing to wait four years to be connected. This background could be an opportunity for CCS to become commercialized, the company said.

Resources in California could provide “unique insights into this topic” if the company continues with its CalCapture project, Akamine said.

The Resources in California Thesis: While natural gas with carbon capture is not considered environmentally friendly enough, that perception could change “as the market comes to terms with the impact on electricity demand that comes with data center expansion,” Akamine said in the upgrade announcement.

Check out other analysts’ stock ratings.

Given the increasing demand for electricity, it is “unreasonable to assume” that all of California’s electricity generation can be replaced by renewable energy sources within a “timeframe that meets demand while also meeting the needs of the power grid,” the analyst wrote.

“The pragmatic approach to addressing this need is to use natural gas with carbon capture as a transition fuel,” Akamine added.

CRC price promotion: Shares of California Resources was up 4.36% to $51.65 at the time of publication on Wednesday.

Read now:

Image: Pixabay