Oil and gas producer California Resources is considering splitting off its carbon management business, Carbon Terravault, in an effort to accelerate growth at the unit.
The carbon business, which is a joint venture with Brookfield Renewable, will be managed on a standalone basis over time, which would provide the flexibility to eventually separate the unit from its oil exploration and production business, the company stated in a press release.
ReSource previously interviewed the company’s chief sustainability officer about its approach to investments in carbon capture and blue molecule production in California.
“We have a vision that these two businesses over time need to be run and potentially separated. And that will mature over time,” said CEO Mark “Mac” McFarland on the company’s earnings call Friday. “This is just the first step of many.”
McFarland in May will transition from CEO to his former role as a non-executive director and will also serve as non-executive chair of the newly formed board of the Carbon TerraVault subsidiary. Replacing him as CEO is Francisco Leon, who is currently the CFO.
The Carbon Terravault joint venture was formed to create a partnership focused on carbon capture and sequestration development, along with carbon management service agreements with parties such as Lone Cypress Energy and Grannus, LLC, to provide permanent carbon storage.
In 2023, CRC is focused on signing up additional emitter projects, advancing CalCapture and the California Direct Air Capture Hub, and submitting additional Class VI permit applications.
“If you look at the PDP value of the company, and then I look at what we think is the value of carbon management, we don’t think it’s reflected in the stock price,” Leon said on the call. “We’re going to take the steps to unlock that.”
