California Resources NYSE: CRC reported third-quarter 2026 production, cash flow and adjusted EBITDAX above its expectations, while outlining plans to expand its California-focused infrastructure, power and carbon-management businesses.
President and CEO Francisco Leon said the company closed its acquisition of Crimson, agreed to sell its Uinta assets and increased its dividend for a fifth consecutive year. He said CRC is shifting from integrating acquisitions to optimizing its larger operating platform through additional cost reductions, standardized systems and digital tools.
“We have built a strong foundation. Now we are focused on getting more value from it,” Leon said.
Third-quarter results and fourth-quarter outlook
Net production averaged 152,000 barrels of oil equivalent per day in the third quarter, with oil accounting for 80% of the production mix. Production rose 2% from the second quarter and exceeded the company’s expectations, according to Executive Vice President and CFO Clio Crespy.
Adjusted EBITDAX totaled $341 million, above the top end of guidance and consensus, while operating cash flow before working-capital changes was $300 million. Free cash flow on the same basis was $142 million. Total capital spending was $158 million, within guidance.
Oil realizations were 91.3% of Brent before hedges, at the low end of the company’s guidance range. Crespy said short-term contract repricing and transportation constraints limited the company’s access to higher-value markets. CRC expects realizations of about 92% of Brent in the fourth quarter.
Operating costs increased $39 million sequentially to $386 million, largely because SoCal Border natural-gas prices more than doubled from the previous quarter and diesel costs rose. The company expects cost initiatives to reduce fourth-quarter operating costs by about $10 million.
Adjusted general and administrative expense fell 20% to $79 million as Berry-related synergies took hold. Reported G&A declined 16% from the first quarter to $89 million, including $1 million from Crimson.
For the fourth quarter, CRC expects net production of about 151,000 barrels of oil equivalent per day at $102 Brent, including Uinta assets pending their anticipated sale by year-end. It projects adjusted EBITDAX of about $360 million and total capital spending of approximately $120 million, including $8 million for 2027 drilling preparation.
For the full year, the company is targeting adjusted EBITDAX of roughly $1.34 billion at $92 Brent and average net production of approximately 152,000 barrels of oil equivalent per day.
Crimson acquisition and pipeline plans
Leon said the Crimson acquisition added roughly 2,000 miles of pipeline, as well as Line 100 and storage assets, giving CRC greater control over how it moves crude to market. The company’s immediate priority is restarting the San Pablo Bay Pipeline in the first quarter of 2027.
The restart is intended to restore northbound crude access, broaden the potential buyer base and improve flow assurance. Leon said the pipeline is ready to restart and does not require additional permits or capital to return to service, though the company is finalizing commercial and logistical arrangements.
CRC expects the reopened system to support oil realizations trending toward normalized levels in the mid-90% range of Brent over time. Crespy said that, at approximately 120,000 net barrels of oil per day and $90 Brent, each one-percentage-point improvement in realizations would represent roughly $40 million of annual EBITDA, excluding transportation savings and third-party midstream earnings.
The company expects a more meaningful financial contribution from the San Pablo Bay Pipeline in the second half of 2027 as shipments and commercial agreements ramp up. CRC also filed a formal complaint with the California Public Utilities Commission related to transportation disruptions and plans to seek recovery of associated losses, though no potential recovery is included in its outlook.
2027 drilling and operational optimization
CRC plans to operate a six-rig California maintenance program in 2027, targeting flat gross production from the beginning to the end of the year. The company expects to spend $450 million to $475 million on drilling, completions and workovers.
Leon said 2027 production should be second-half weighted as the company ramps its sixth rig. He characterized the expected production profile as flat to slightly declining early in the year, followed by a second-half recovery.
The company said its 2026 California drilling and workover spending is tracking at about $355 million. Crespy said new production is being developed at approximately $27,000 per flowing barrel, with expected returns of about 70% and a multiple on invested capital of about 4 times, based on actual 2026 results and end-of-October strip pricing for future production.
CRC also highlighted integration opportunities between its Belridge and Elk Hills fields. Since early July, it has processed additional Belridge gas at the Elk Hills cryogenic plant, increasing net natural-gas-liquid output by approximately 1,000 barrels per day, or about 10% sequentially. The company is evaluating similar connections across its asset base.
Separately, management said it will conduct an organization-wide review targeting additional organic cost reductions in 2027 and 2028. CRC plans to provide updated targets with its next earnings release.
Power, carbon projects and capital returns
CRC announced a memorandum of understanding with Bloom Energy covering the potential development of 1 gigawatt or more of clean, firm fuel-cell power with carbon-capture and storage capabilities. Under the proposed model, third-party power developers would own and finance the fuel-cell projects, while CRC would supply natural gas, land, infrastructure and carbon-storage services.
The company said it is evaluating sites across its Carbon TerraVault platform in Northern and Southern California. Leon said potential customers include investor-owned utilities, municipal utilities, community choice aggregators and hyperscalers.
At the Golden Valley Technology Hub in Elk Hills, CRC and co-developer Beacon submitted a project permit application to Kern County. Leon said the California Office of Land Use and Climate Innovation issued a notice of preparation, beginning the permitting process. CRC expects the process to take roughly 12 to 18 months.
The proposed initial campus would include 275 megawatts of behind-the-meter power from CRC’s existing Elk Hills plant. Management is targeting a memorandum of understanding with a hyperscaler in early 2027 and a draft power-purchase agreement later that year.
On carbon management, CRC submitted a Class VI permit application to the Environmental Protection Agency for its CTV VIII project, bringing total submitted storage volumes above 400 million metric tons.
CRC returned $66 million to shareholders during the quarter, including $36 million in dividends and $30 million in share repurchases. The company repurchased shares at an average price of $53.50 and has approximately $570 million remaining under its buyback authorization through the end of 2027.
The company ended the quarter with net leverage of 1 times and $1.3 billion of liquidity. It also extended its $1.5 billion credit facility to 2030 and previously extended senior-note maturities to 2034 and 2035.
About California Resources (NYSE:CRC)
California Resources Corporation NYSE: CRC is an independent energy company focused on the exploration, development and production of oil and natural gas in California. Its operations are concentrated in the state's San Joaquin and Los Angeles basins, where the company produces crude oil, natural gas and natural gas liquids for industrial, commercial and transportation markets.
In addition to conventional oil and gas production, California Resources is developing carbon-management projects through its Carbon TerraVault business.
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