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California Resources Corp (CRC)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was strong operationally with production at the high end of guidance (137 MBoe/d, 80% oil), adjusted EBITDAX of $324M, and a record $287M returned to shareholders; management raised full‑year net production and adjusted EBITDAX guidance and trimmed capital .
  • EPS and revenue exceeded Wall Street consensus: adjusted EPS $1.10 vs. $0.92*, revenue $0.821B vs. $0.798B*, driven by higher production, strong commodity realizations, and lower operating costs; CFO noted adjusted EBITDAX “exceeded consensus expectations” .
  • CRC fully implemented $235M annualized Aera merger synergies ahead of schedule, with $185M expected in 2025 and $50M in 2026; liquidity stood at ~$1.04B with leverage ~0.7x and an undrawn revolver .
  • Catalysts: improving California permitting dialogue, EPA authorization to construct Class VI wells for the 26R reservoir, potential Elk Hills power agreements paired with CCS, and opportunistic buybacks extension through June 2026 .

What Went Well and What Went Wrong

  • What Went Well

    • Production and costs: Net production reached 137 MBoe/d at high end of guidance, most cost items were at/below guidance; CFO emphasized cost discipline and synergies driving margin resilience .
    • Capital returns: Record $287M returned ($252M buybacks incl. $228M block at $46/share; $35M dividends); Board extended repurchase authorization to June 2026 .
    • Carbon progress: EPA granted authorization to construct Class VI wells for the 26R reservoir; targeting construction completion by year‑end 2025 and injection early 2026; “first of a kind” milestone in the U.S. .
    • Quote: “Our team’s ability to scale efficiently has nearly doubled our revenue and strengthened profitability – while fully implementing merger synergies ahead of schedule.” — Francisco Leon (CEO) .

  • What Went Wrong

    • Realizations softened QoQ: Oil realizations fell to $66.73/Bbl (with hedges) from $72.01; gas realizations dropped to $2.79/Mcf from $4.12, pressuring upstream price mix .
    • Other operating expenses rose: “Other operating expenses net of other revenue” increased to $60M from $27M; litigation and settlement expenses were $25M within unusual items .
    • Carbon segment remains a drag near‑term: Carbon Management adjusted EBITDAX was -$17M (vs. -$21M in Q1); CMB guidance implies continued negative EBITDAX for 2025 .
    • Production taxes catch‑up created volatility: CFO clarified Q2 “stepped down” production taxes reflected an accrual adjustment, signaling model sensitivity to tax assumptions .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Operating Revenues ($USD Millions)$514 $912 $978
Operating Income ($USD Millions)$38 $186 $267
Net Income ($USD Millions)$8 $115 $172
Diluted EPS (GAAP) ($)$0.11 $1.26 $1.92
Adjusted Net Income ($USD Millions)$42 $98 $98
Adjusted EPS (Diluted) ($)$0.60 $1.07 $1.10
Adjusted EBITDAX ($USD Millions)$139 $328 $324
Net Income Margin (%)1.6% (=$8/$514) 12.6% (=$115/$912) 17.6% (=$172/$978)
Adjusted EBITDAX Margin (%)27.0% (=$139/$514) 36.0% (=$328/$912) 33.1% (=$324/$978)

Segment Performance (Adjusted EBITDAX):

SegmentQ2 2024Q1 2025Q2 2025
Oil & Natural Gas ($USD Millions)$205 $422 $346
Carbon Management ($USD Millions)-$21 -$21 -$17

Key KPIs:

KPIQ2 2024Q1 2025Q2 2025
Net Total Production (MBoe/d)76 141 137
Net Oil Production (MBbl/d)47 111 109
Realized Oil Price with Derivatives ($/Bbl)$81.29 $72.01 $66.73
Realized NGL Price ($/Bbl)$46.96 $54.64 $42.41
Realized Gas Price with Derivatives ($/Mcf)$1.78 $4.12 $2.79
Electricity Margin ($USD Millions)$22 $12 $53
Margin from Purchased Commodities ($USD Millions)$8 $14 $15
Free Cash Flow ($USD Millions)$63 $131 $109
Adjusted G&A ($USD Millions)$56 $66 $72

Actual vs Consensus (S&P Global) – Q2 2025:

MetricConsensus*Actual (S&P basis)*Company-reported
Adjusted EPS ($)0.922*1.10*1.10
Revenue ($USD Billions)0.798*0.821*0.978

Values marked * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Production (MBoe/d)FY 2025132–138 134–138 Raised lower bound
Adjusted EBITDAX ($USD Millions)FY 20251,100–1,200 1,195–1,275 Raised
Capital Investments ($USD Millions)FY 2025285–335 280–330 Lowered
Drilling, Completions & Workovers ($USD Millions)FY 2025165–180 160–175 Lowered
Operating Costs ($USD Millions)FY 20251,230–1,300 1,220–1,280 Lowered
G&A ($USD Millions)FY 2025310–335 310–335 Maintained
Adjusted G&A ($USD Millions)FY 2025289–309 290–310 Slightly raised
DD&A ($USD Millions)FY 2025500–515 515–530 Raised
Taxes Other Than Income ($USD Millions)FY 2025265–285 235–260 Lowered
Transportation Costs ($USD Millions)FY 202590–98 82–94 Lowered
Interest & Debt Expense ($USD Millions)FY 2025100–113 100–110 Maintained
Electricity Margin ($USD Millions)FY 2025175–190 175–190 Maintained
Dividend per Share ($)Q2 & Q3$0.3875 (declared) $0.3875 (declared) Maintained
Net Production (MBoe/d)Q3 2025EN/A135–139 New
Adjusted EBITDAX ($USD Millions)Q3 2025EN/A310–340 New
Capital Investments ($USD Millions)Q3 2025EN/A84–108 New
Effective Tax Rate (%)Q3 & FY 2025E29% 29% Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Permitting/RegulatoryEPA Class VI permits received for 26R; focus on 2025 execution; state permitting challenges noted CEO optimistic on legislative fix; Kern County EIR litigation and conditional use permits in parallel; timeline clarity expected Aug–Oct Improving visibility; constructive engagement
Carbon Management (CCS)First Class VI permits; CDMAs/MOUs signed for up to 5.4 MMTPA; Elk Hills CCS project planned EPA authorization to construct; construction targeted by YE 2025, injection early 2026 Execution milestones achieved
Power Solutions (Elk Hills)Building power platform; resource adequacy contributions noted Exploring PPAs behind-the-meter for hyperscalers; CPUC considering CCS in reliable/clean procurement program; update expected by YE Momentum rising; regulatory support
Capital Efficiency/Maintenance CapexPost-Aera cost reductions; capital efficiency improved Consistently stronger production with lower CapEx; maintenance capex likely at low end of $500–$600M if permits improve Efficiency sustained; upside with permits
Shareholder Returns~$303M returned in 2024; authorization extended Record $287M Q2; $205M capacity remains; opportunistic buybacks through June 2026 Accretive returns continue
Tax/Policy Tailwinds2025 guidance tax assumptions; leveraging incentives CFO sees ~$35M cash tax savings in 2025; multi‑year savings from bonus depreciation/R&D expensing Structural FCF lift

Management Commentary

  • Strategic positioning: “We have a differentiated business model… uniquely positioned to support California’s energy transition… our high return oil developments complement our expanding carbon management and power platforms.” — Francisco Leon (CEO) .
  • Capital returns discipline: “We plan to remain opportunistic with share repurchases… we still have over $200M available under our share repurchase program… longer term, it’s about taking a balanced approach.” — Clio Crespy (CFO) .
  • CCS timeline: “We expect to complete construction of the Class VI wells at or around year end 2025… ready to inject early in 2026.” — Francisco Leon (CEO) .
  • Permitting outlook: “The state is actively looking to resolve the permitting situation… we expect more details… in mid‑August… ready to provide solutions.” — Francisco Leon (CEO) .

Q&A Highlights

  • Permitting mechanics and P&A requirements: Management views potential plug‑and‑abandon requirements as manageable given CRC’s aggressive existing program (~1,500 wells/year), with legislative fixes preferred for broader normalization .
  • Maintenance capex and unconstrained case: Focus remains on maximizing cash flow per share; activity mix (workovers, sidetracks, new wells) will be optimized when permits normalize, not growth for growth’s sake .
  • Capital allocation: Expect retirement/refinancing of remaining 2026 notes in 2H25; buybacks to remain opportunistic while balancing strategic priorities .
  • Power PPA/AI demand: Ongoing negotiations, update targeted by year‑end; CRC sees strong interest from hyperscalers and regulatory inclusion of CCS in resource adequacy, with Elk Hills power and CTV storage as a differentiated solution .
  • Taxes: ~$35M cash tax savings in 2025 expected; medium‑term cash taxes as % of EBITDAX to trend high single digits, improving FCF .

Estimates Context

  • Q2 2025 beat: Adjusted EPS $1.10 vs $0.92*; Revenue $0.821B vs $0.798B*; EBITDA $0.429B vs $0.293B*, with CFO highlighting an adjusted EBITDAX beat vs consensus .
  • Note: Company‑reported total operating revenues were $0.978B, which include derivative gains and other revenue; S&P’s revenue “actual” basis reflects standardized reporting and differs from company presentation .
  • Revisions outlook: Raised FY2025 production and adjusted EBITDAX, lower capital and operating costs suggest upward estimate revisions to EPS/EBITDA and slightly lower capex; continued electricity margin strength and cost discipline support out‑quarter models .

Values marked * retrieved from S&P Global.

Key Takeaways for Investors

  • CRC delivered a high‑quality quarter: production and costs beat internal targets, adjusted EBITDAX robust, and cash returns aggressive—all underpinned by fully realized Aera synergies .
  • Guidance improved: FY2025 adjusted EBITDAX raised to $1.195–$1.275B and production to 134–138 MBoe/d, while capital and operating costs were reduced—favorable for multi‑quarter EPS/FCF trajectories .
  • Structural optionality: Legislative/regulatory momentum in California plus CPUC support for CCS‑paired power elevate permitting and power monetization prospects; Elk Hills plus CTV assets are strategically advantaged .
  • Carbon remains an investment phase: CMB negative EBITDAX persists in 2025, but first injection early 2026 is a pivotal milestone; investors should watch for incremental Class VI permits and PPAs .
  • Capital allocation: With leverage ~0.7x and liquidity ~$1.04B, CRC can remain opportunistic on buybacks (authorization extended), while addressing the 2026 notes in 2H25 .
  • Near‑term trading setup: Positive estimate revision risk and policy catalysts (permitting, CCS authorization, power deals) are supportive; watch commodity realizations and “other operating expenses” (litigation) for volatility .
  • Medium‑term thesis: Conventional reservoirs with low declines, realized synergies, integrated CCS/power platform, and policy tailwinds position CRC to compound cash flow per share through cycles .