California Resources Corporation — Second Quarter 2026 Earnings Summary

Financial Performance

• Reported net income of $514 million, compared to a net loss of $711 million in the first quarter of 2026 and net income of $172 million in the second quarter of 2025.
• Adjusted net income was $88 million, up from $79 million in Q1 2026 and $98 million in Q2 2025.
• Adjusted EBITDAX was $338 million, compared to $304 million in Q1 2026 and $267 million in Q2 2025.
• Net cash provided by operating activities was $263 million, compared to $99 million in Q1 2026 and $165 million in Q2 2025.
• Net cash provided by operating activities before net changes in operating assets and liabilities was $300 million, compared to $247 million in Q1 2026.
• Free cash flow was $114 million, compared to a negative $32 million in Q1 2026 and negative $51 million in Q2 2025.
• Total operating revenues before net loss from commodity derivatives were $1,092 million, compared to $967 million in Q1 2026.
• Operating costs were $347 million, down from $365 million in Q1 2026.
• General and administrative expenses were $97 million, down from $106 million in Q1 2026; adjusted G&A was $89 million.
• Net gain from commodity derivatives was $205 million, compared to a net loss of $848 million in Q1 2026.
• Weighted-average common shares outstanding (diluted) were 89.3 million.
• Net income per share (diluted) was $5.76, compared to $(8.02) in Q1 2026.

Guidance and Future Outlook

• Reaffirmed full-year 2026 total capital outlook of $520 million to $560 million.
• Reduced expected full-year 2026 drilling, completions, and workover capital by $10 million to a range of $370 million to $390 million.
• Targets approximately 1% entry-to-exit gross production growth for 2026.
• Expects to operate an average of five rigs in California and one rig in Utah during the second half of 2026.
• Third quarter 2026 guidance: Net production of 151-154 MBoe/d; Capital investments of $150-$170 million; Adjusted EBITDAX of $285-$325 million.
• Full-year 2026 guidance: Net production of 150-155 MBoe/d; Capital investments of $520-$560 million; Adjusted EBITDAX of $1,200-$1,300 million.
• Guidance assumes Brent price of $84.51 per barrel and NYMEX gas price of $3.55 per Mcf for the full year.

Business Segments and Product Lines

• Delivered average net production of 149 thousand barrels of oil equivalent per day (MBoe/d), with 81% oil content.
• Net oil production averaged 120 MBbl/d; Net NGL production averaged 10 MBbl/d; Net natural gas production averaged 115 Mmcf/d.
• Realized oil price without derivative settlements was $91.55 per Bbl; with derivative settlements, it was $76.43 per Bbl.
• Realized NGL price was $49.62 per Bbl; Realized natural gas price was $1.84 per Mcf.
• Implemented more than 100% of the annual Berry merger synergy target, representing $103 million of annualized savings six months ahead of schedule.
• Achieved first carbon dioxide (CO2) injection and revenue at Carbon TerraVault I (CTV I), California's inaugural carbon capture and storage (CCS) project.
• Announced the Golden Valley Technology Hub project, a proposed data center development at CRC's Elk Hills field in partnership with Beacon Data Centers.

Market and Competitive Landscape

• Inventory of approximately 137 thousand barrels of oil (MBo) was built due to temporary takeaway constraints, equivalent to 1.5 MBo/d; the majority was sold in July 2026.
• Inventory buildup, weaker differentials, and higher operating and transportation costs reduced Q2 adjusted EBITDAX and operating cash flow before working capital changes by approximately $25 million.
• Drilling activity across the California portfolio increased by 25% compared to initial expectations.

Risks and Challenges

• Temporary takeaway constraints led to inventory buildup, impacting realized prices and cash flow in the quarter.
• Higher operating and transportation costs contributed to reduced financial metrics.
• The company faces risks related to commodity price fluctuations, regulatory actions, and the execution of carbon capture and storage projects.

Management Commentary and Tone

• Francisco Leon, President and CEO, stated that teams are executing exceptionally well, delivering durable operational improvements.
• Management highlighted that efficiency gains and synergy capture allow the company to maintain flat California production with fewer rigs and less maintenance capital.
• The acquisition of Crimson Midstream Holdings and the Golden Valley Technology Hub are viewed as strategic investments strengthening the integrated energy platform and creating long-term value.

Other Key Points

• Announced a definitive purchase agreement to acquire Crimson Midstream Holdings, LLC from CorEnergy Infrastructure Trust, Inc. for total cash consideration of $63 million.
• Completed a $550 million offering of 7.250% senior notes due 2035 and redeemed all outstanding 8.250% senior notes due 2029 for $573 million, resulting in a $28 million loss on extinguishment of debt.
• Ended the quarter with $1,322 million in liquidity, consisting of $43 million in cash and cash equivalents and $1,279 million in borrowing capacity under the Revolving Credit Facility.
• Returned $36 million to shareholders through dividends in Q2 2026; declared a new quarterly cash dividend of $0.405 per share.
• Since 2021, the company has returned approximately $1,655 million to shareholders, including $1,180 million in share repurchases and $475 million in dividends.
• Lowered California long-term maintenance capital outlook by reducing drilling, completions, and workover capital expectations by approximately 5% to a $450 million to $475 million range with six drilling rigs.