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California Resources Corp (CRC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered resilient operations with net production of 137 MBoe/d (78% oil), adjusted EBITDAX of $338M, free cash flow of $188M, and a 5% dividend hike to $0.405/share; total operating revenues fell sequentially to $855M on lower derivative gains and higher taxes other than income .
  • Significant beats/misses vs S&P Global consensus: EPS beat ($1.46 vs $1.27*) and adjusted EBITDAX exceeded expectations by management commentary, while revenue was modestly below consensus (actual $878M* vs $887M*); note CRC reports EBITDAX (not EBITDA), creating definitional differences (S&P EBITDA consensus $334M* vs actual $231M*) .
  • Strategic momentum: early redemption of all remaining 2026 notes ($122M), $400M 7% 2034 notes raised to refinance Berry at close, borrowing base reaffirmed, elected commitments increased to $1.45B, liquidity $1.154B; Moody’s upgrade and Fitch positive outlook .
  • Guidance: Q4 2025E net production 131–135 MBoe/d, adjusted EBITDAX $220–$260M; preliminary 2026 plan averages four rigs, $280–$300M D&C/workover capital, ~2% entry-to-exit production decline; dividend raised to $0.405/share .
  • Catalysts: dividend increase, improving regulatory tailwinds (CO2 pipelines, permitting), Capital Power MOU (up to 3 MMTPA CO2), Berry merger progress (Q1 2026 close expected) .

What Went Well and What Went Wrong

What Went Well

  • Electricity margin surged to $90M (from $53M in Q2), supported by strong internal generation and pricing, lifting cash flows and offsetting commodity derivative headwinds .
  • Adjusted net income and adjusted EPS grew QoQ ($123M, $1.46 diluted vs $98M, $1.10), and adjusted EBITDAX rose to $338M; CEO: “solid results… disciplined approach… positions us to create further value” .
  • Balance sheet strengthened: redeemed remaining 2026 notes ($122M), increased revolver commitments to $1.45B, liquidity $1.154B; CFO emphasized net leverage ~0.6x and rating agency upgrades to Ba3/positive outlook .

What Went Wrong

  • Total operating revenues declined QoQ and YoY ($855M vs $978M and $1,353M), with GAAP net income down to $64M (vs $172M and $345M), reflecting lower derivative gains and higher taxes other than income .
  • Net loss from commodity derivatives swung to $(23)M (vs +$157M in Q2), adding earnings volatility despite hedge benefits; CFO cited continued downside protection from hedges .
  • Operating costs and G&A increased QoQ ($316M and $87M vs $295M and $79M), although adjusted G&A was $82M; this partially offset margin gains from electricity .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Operating Revenues ($M)1,353 912 978 855
Net Income ($M)345 115 172 64
Diluted EPS (GAAP, $)3.78 1.26 1.92 0.76
Adjusted Net Income ($M)137 98 98 123
Adjusted EPS Diluted ($)1.50 1.07 1.10 1.46
Adjusted EBITDAX ($M)402 328 324 338
Free Cash Flow ($M)141 131 109 188
Net Production (MBoe/d)145 141 137 137
Oil % of Production—79% 80% 78%
Electricity Margin ($M)60 12 53 90
Margin from Purchased Commodities ($M)8 14 15 14

Segment results:

Segment MetricQ3 2024Q2 2025Q3 2025
Oil & Gas Segment Profit ($M)298 194 182
Oil & Gas Adjusted EBITDAX ($M)474 346 332
Carbon Mgmt Segment Adjusted EBITDAX ($M)(19) (17) (14)

KPIs and realized prices:

KPIQ3 2024Q2 2025Q3 2025
Realized Oil Price w/ Derivatives ($/Bbl)75.38 66.73 67.04
Realized Gas Price ($/Mcf)2.68 2.79 3.47
Adjusted G&A ($M)89 72 82
Adjusted G&A per BOE ($)6.68 5.77 6.52

Estimate comparisons (S&P Global):

MetricQ1 2025 EstimateQ1 2025 ActualQ2 2025 EstimateQ2 2025 ActualQ3 2025 EstimateQ3 2025 Actual
Primary EPS Consensus Mean ($)0.772*1.07*0.922*1.10*1.274*1.46*
Revenue Consensus Mean ($M)861.6*906.0*798.2*821.0*887.5*878.0*
EBITDA Consensus Mean ($M)283.5*322.0*293.0*429.0*333.8*231.0*
EPS # of Estimates11*—10*—9*—
Revenue # of Estimates6*—5*—5*—

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Production (MBoe/d)Q3 2025E135–139 Actual 137 Met midpoint
Adjusted EBITDAX ($M)Q3 2025E310–340 Actual 338 At high end
Net Production (MBoe/d)Q4 2025EN/A131–135 New
Adjusted EBITDAX ($M)Q4 2025EN/A220–260 New
Capital Investments ($M)Q4 2025EN/A105–125 New
G&A ($M)Q4 2025E—78–86; Adj G&A 72–80 New
Interest & Debt Expense ($M)Q4 2025E25–29 (Q3 guide) 30–35 Raised sequentially
Effective Tax Rate (%)Q3 2025E29 27 (Q4 2025E) Lowered
Dividend per Share ($)Quarterly0.3875 (Aug 5) 0.405 (Nov 4) Raised 5%
2026 Preliminary2026N/AAverage 4 rigs; D&C/workover capital $280–$300M; ~2% entry-to-exit decline New outlook

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
AI/tech in operationsRemote surveillance and faster well failure detection discussed as a driver of lower PDP decline Reinforced as key to reducing downtime; AI aids “blocking & tackling” in Elk Hills and Bell Ridge Strengthening
Regulatory environmentLegislature pursuing permitting fixes; CPUC RCPP consideration for CCS power; Class VI progress SB 614/CO2 pipelines authorization; SB 237 enabling permits; improving framework; seven Class VI permits under review Improving
Decarbonized power strategyEngagements for Elk Hills power + CCS; behind/front-of-meter opportunities Capital Power MOU (La Paloma, up to 3 MMTPA), hyperscaler interest, data center demand >10 GW in PG&E interconnection queue Accelerating
Capital allocation/maintenance capexMaintenance capital trending to lower end of prior $500–$600M range 2026 plan focuses on 4 rigs, majority workovers/sidetracks; mix optimized for cash flow per share More efficient
Berry mergerNoted pending; synergies anticipated S-4 effective; close expected Q1 2026; $400M notes to refinance Berry debt; ~5.6M CRC shares to be issued at 0.0718 ratio Advancing
Liquidity and ratingsStrong liquidity; undrawn revolver Liquidity $1.154B; Moody’s upgrade to Ba3; Fitch positive outlook Strengthened

Management Commentary

  • CEO: “California's energy and regulatory environment is improving... strengthening oil and gas permitting, authorizing CO2 pipelines, and extending the Cap and Invest program… CRC is well positioned” .
  • CFO: “We generated adjusted EBITDAX of $338M and free cash flow before changes in working capital of $231M… net leverage is at 0.6x and total liquidity exceeded $1.1B” .
  • CEO on CCS/power: “California needs clean, reliable baseload power… pairing natural gas generation with CCS is a practical and scalable path” .
  • CEO on base decline: “We can now move our annual base decline assumption to 8–13%, down from 10–15%” .
  • CEO on Berry: “This deal… will add assets adjacent to our current positions, creating meaningful synergies” .

Q&A Highlights

  • PPAs and power hub: Management sees “significant scale on the map” with Capital Power and Hull Street; focus on “the right deal at the right time” for firm, clean baseload power near demand centers .
  • 2026 decline cadence: Four rigs from Jan 1; steady performance expected across 2026 as workovers/sidetracks drive declines shallower .
  • PDP decline drivers: Injection focus (Bell Ridge), AI-based remote surveillance (Elk Hills) reduce downtime; conventional reservoirs allow predictable decline management .
  • Maintenance capital: CRC standalone maintenance capital now “below $500M”; Berry historically maintained ~flat with ~$70M (post-close to be updated) .
  • Huntington Beach: Entitlements progressing; 800-unit plan; abandonment cost previously guided $200–$250M (2023 number) with monetization targeted ~2028 .

Estimates Context

  • EPS beat: Q3 2025 adjusted EPS $1.46 vs S&P consensus $1.27*, likely prompting upward revisions to FY EPS and cash generation assumptions.
  • Revenue modest miss: Q3 2025 actual $878M* vs $887M* consensus; lower derivative gains weighed on reported GAAP operating revenues ($855M) .
  • EBITDA discrepancy: S&P “EBITDA” actual $231M* below $334M* consensus, but CRC’s reported adjusted EBITDAX was $338M, and management stated a consensus beat, highlighting definitional differences .
  • Forward outlook: Q4 2025E EBITDAX $220–$260M and preliminary 2026 stability may temper near-term EBITDA estimates but support longer-term EPS/cash flow per share given improved base decline and regulatory backdrop .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Electrification tailwinds and policy shifts are creating real optionality: CCS-enabled baseload power partnerships (Capital Power MOU) and improving permitting (SB 237, pipelines) support a multi-year growth and cash flow narrative .
  • Cash return durability: Dividend increased 5% to $0.405; >$200M remaining buyback capacity through mid-2026; balance sheet flexibility and low leverage enable opportunistic repurchases .
  • Operations resilient: Q3 electricity margin and realized gas prices improved; adjusted EBITDAX and free cash flow grew QoQ despite derivative losses, showcasing internal margin levers .
  • 2026 visibility: Four rigs, majority workovers/sidetracks, ~2% entry-to-exit decline—capital intensity improving with lower base decline assumptions; hedges (~64% oil) underpin cash flow stability .
  • Berry merger synergies and refinancing plan de-risk integration: $400M 2034 notes earmarked to retire Berry debt; close targeted Q1 2026; expect operational synergies adjacent to current footprint .
  • Watch definitional differences in consensus (EBITDA vs EBITDAX): CRC’s reporting and guidance use EBITDAX; model alignment matters for beat/miss interpretation .
  • Near-term trading implication: Dividend hike and ratings momentum vs softer revenue headline—stock likely sensitive to policy updates (permitting bill), power PPA announcements, and Berry merger milestones .