This Energy Stock Fell 11% in a Year, but One Fund Is Betting $169 Million on Its Performance

Denver-based Sourcerock Group increased its stake in California Resources Corporation (NYSE:CRC) by 1.18 million shares in the third quarter, contributing to a net position change of $77.77 million, according to a November 14 SEC filing.

What Happened

Sourcerock Group disclosed an increased position in California Resources Corporation (NYSE:CRC), adding 1.18 million shares for a total holding of 3.18 million shares, according to a filing with the Securities and Exchange Commission released November 14. The value of the CRC position rose to $169.14 million as of September 30, up $77.77 million from the previous quarter.

What Else to Know

Sourcerock's increased CRC stake now represents 11.5% of 13F assets under management.

Top holdings after the filing:

• NYSE: AR: $261.30 million (17.77% of AUM)
• NYSE: CRC: $169.14 million (11.5% of AUM)
• NYSE: NE: $120.27 million (8.18% of AUM)
• NYSE: TALO: $102.63 million (6.98% of AUM)
• NASDAQ: CHRD: $93.67 million (6.37% of AUM)

As of Monday, CRC shares were priced at $44.60, down about 11% over the past year and underperforming the S&P 500, which is instead up about 15.5% in the same period.

Company Overview

Company Snapshot

• California Resources Corporation produces and markets crude oil, natural gas, and natural gas liquids; it also generates and sells electricity to utilities and the grid.
• The company operates an integrated model focused on exploration, production, gathering, processing, and marketing of hydrocarbons, with revenue generated primarily from commodity sales and electricity generation.
• It serves California refineries, marketers, and other purchasers with access to transportation and storage infrastructure.

California Resources Corporation is a leading independent energy company with significant operations in California. The company leverages its scale and integrated infrastructure to efficiently extract, process, and market oil and gas, while also diversifying revenue through electricity generation. Its strategic focus on serving the California market positions it to capitalize on local demand and regulatory dynamics.

Foolish Take

Sourcerock’s $169 million bet on California Resources is an interesting reminder to look beyond a stock’s short-term price performance and instead assess what’s under the hood. California Resources sits squarely in the kind of energy profile that rewards patient capital willing to live with volatility in exchange for cash generation. In the third quarter, the company produced $279 million in operating cash flow and $188 million in free cash flow while spending just $91 million on capital, a gap that continues to fund dividends, buybacks, and debt reduction.

To that end, management raised the quarterly dividend by 5% to $0.405 per share and retired its remaining 2026 notes, extending maturities and reinforcing liquidity that now totals roughly $1.15 billion. Meanwhile, net income came in at $64 million, while adjusted EBITDAX reached $338 million, underscoring how resilient the model remains even with oil prices far from cycle highs. That financial flexibility matters when energy cycles turn. Compared with other holdings in the portfolio, this position stands out as a high conviction cash flow anchor (that can quietly compound over time) rather than a growth bet.

Glossary

Stake: The ownership interest or amount of shares held in a company by an investor.
13F reportable assets: Securities that institutional investment managers must disclose quarterly to the SEC using Form 13F.
Assets under management (AUM): The total market value of investments managed by a fund or firm on behalf of clients.
Portfolio: The collection of investments held by an individual or institutional investor.
Dividend yield: Annual dividends per share divided by the share price, shown as a percentage.
Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.
Net position change: The difference in the number or value of shares held by an investor over a specific period.
Integrated model: A business structure combining multiple stages of production, processing, and distribution within one company.
Mineral acres: Land area over which a company has rights to extract oil, gas, or minerals.
Commodity sales: Revenue generated from selling raw materials like oil, gas, or metals.
Electricity generation: The process of producing electrical power for sale to utilities or the grid.
Regulatory dynamics: The influence of government rules and policies on a company's operations and strategy.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool recommends Noble Plc. The Motley Fool has a disclosure policy.