California Resources Corp (CRC) Q3 2025 Earnings Call Highlights: Strong Performance and ...

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Net Production: 137,000 BOE per day, 78% oil, roughly flat quarter-over-quarter. Adjusted EBITDAX: $338 million. Free Cash Flow: $231 million before changes in working capital. Capital Investment: $91 million for the quarter. Net Leverage: 0.6 times at quarter end. Total Liquidity: Exceeded $1.1 billion, including $196 million of cash and an undrawn revolver. Dividend Increase: 5% increase during the quarter. Shareholder Returns: Over $450 million returned year-to-date through dividends and share repurchases. Capital Expenditure Guidance: Full year expected within $280 million to $330 million. 2026 Production Hedging: Two-thirds hedged at a Brent floor price of $64 per barrel.

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Release Date: November 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

California Resources Corp (NYSE:CRC) reported strong quarterly performance with net production of 137,000 BOE per day, maintaining a high oil percentage of 78%. The company successfully integrated Aera, leading to a revised lower annual base decline assumption of 8% to 13%, enhancing cash flow generation and capital efficiency. CRC announced a merger agreement with Berry Corporation, expected to create synergies and enhance operational scale in California. The company is advancing its carbon capture and sequestration (CCS) projects, with the first commercial-scale CCS project in California expected to begin CO2 injection in early 2026. CRC's financial position remains strong with a net leverage of 0.6 times and total liquidity exceeding $1.1 billion, including a recent $400 million refinancing on favorable terms.

Negative Points

CRC's capital expenditures are expected to be modestly higher in the fourth quarter due to deferred projects and strategic scope changes, although full-year expenditures remain within guidance. The company faces challenges in ramping up production due to previous permitting constraints, although recent legislative changes are expected to improve this situation. CRC's reliance on oil production means that fluctuations in oil prices could impact financial performance, despite a strong hedge position. The integration of Berry Corporation, while promising synergies, presents execution risks and requires careful management to realize anticipated benefits. CRC's focus on CCS and power generation projects involves regulatory and technological uncertainties, which could affect timelines and financial outcomes.

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Q & A Highlights

Q: Can you discuss the recent MOU with Capital Power and the potential for expanding power generation in Kern County? A: Francisco Leon, President and CEO, explained that the market for power generation is growing, with significant opportunities emerging. The partnership with Capital Power is a step towards creating a hub for decarbonized power in Kern County, leveraging CRC's natural gas supply and CCS capabilities. The collaboration aims to serve data centers and the grid, with further expansion plans in the works.

Q: How has CRC managed to improve its PDP decline rate from 10%-15% to 8%-13%? A: Francisco Leon attributed the improvement to owning high-quality conventional assets and effective reservoir management. The team has focused on injection techniques and technology, such as AI for remote surveillance, to enhance production performance and manage declines more effectively.

Q: What is the vision for the emerging decarbonized power hub in Kern County? A: Francisco Leon described the vision as creating a hub that integrates existing power plants with CCS to meet California's growing power demand. The strategy involves retrofitting natural gas plants for CCS, leveraging existing infrastructure, and aligning with state goals for decarbonized baseload power.

Q: How does CRC plan to balance capital allocation between production growth and shareholder returns in 2026? A: Francisco Leon emphasized a disciplined approach to capital allocation, focusing on maximizing free cash flow per share. CRC plans to double its rig count while maintaining flexibility to adjust based on market conditions, ensuring a balance between production growth and share buybacks.

Q: What are the expectations for CRC's maintenance capital requirements following the decline rate improvement? A: Francisco Leon noted that CRC's maintenance capital requirements are now below $500 million, reflecting improved efficiencies and asset performance. The pending Berry merger will further refine these estimates, with expectations of maintaining production at lower capital levels.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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