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California Resources Corp (CRC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered $877M total operating revenues, $316M adjusted EBITDAX, and $118M free cash flow; adjusted EBITDAX exceeded prior Q4 guidance ($260–$300M) and was a notable operational beat .
  • Net production averaged 141 MBoe/d (79% oil); realized oil price was 99% of Brent, evidencing strong price realizations despite commodity derivative losses of $49M .
  • Carbon TerraVault secured California’s first EPA Class VI permits and signed an MOU with National Cement (up to 1.0 MMTPA CO2), with first CO2 injection and initial CCS cash flow targeted by year-end 2025; CCS project pipeline stands near 9 MMTPA .
  • 2025 outlook: capital $285–$335M, net production 132–138 MBoe/d (~79% oil), and adjusted EBITDAX $1.1–$1.2B; resource adequacy payments expected to rise ~50% to $150M, and two-rig program planned in 2H 2025 .
  • Shareholder returns remained robust: $92M returned in Q4 (dividends + buybacks) and quarterly dividend of $0.3875 declared; leverage reduced via redemption of $123M of 2026 notes with remaining $122M expected later in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Achieved >70% of targeted $235M Aera synergies, with cost reductions across operations and G&A; Q4 adjusted G&A fell 10% q/q to $95M, supporting the EBITDAX beat .
  • Price realizations remained strong: realized oil price 99% of Brent in Q4; electricity margin contributed $30M and marketing margin $6M despite commodity volatility .
  • Strategic CCS progress and commercial traction: first EPA Class VI permits in CA; MOU with National Cement (up to 1.0 MMTPA) and plans to break ground at Elk Hills CCS in Q2 2025 with first injection by year-end .
  • “We have the right people, portfolio, and business plan to help lead California’s decarbonization efforts” — CEO Francisco Leon, reinforcing integrated O&G, carbon management, and power initiatives .

What Went Wrong

  • Sequential revenue and electricity margin compression vs Q3: revenues fell to $877M (from $1,353M) and electricity margin to $30M (from $60M); net income dropped to $33M (from $345M), driven partly by $49M commodity derivative losses .
  • Operating costs per BOE increased to $25.35 vs $23.73 in Q3, reflecting higher non‑energy operating cost per BOE and lower electricity margin leverage .
  • Natural gas purchase derivative losses ($19M) and higher carbon management expenses ($20M) weighed on operating results, while realized gas prices remained modest ($3.65/Mcf) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Total Operating Revenues ($M)$514 $1,353 $877
Operating Income ($M)$38 $518 $68
Net Income ($M)$8 $345 $33
Diluted EPS ($)$0.11 $3.78 $0.36
Adjusted Net Income ($M)$42 $137 $84
Adjusted Net Income per Share – Diluted ($)$0.60 $1.50 $0.91
Adjusted EBITDAX ($M)$139 $402 $316
Free Cash Flow ($M)$63 $141 $118
Net Production (MBoe/d)76 145 141
Net Oil Production (MBbl/d)47 113 112
Margins and Price RealizationsQ2 2024Q3 2024Q4 2024
Electricity Margin ($M)$22 $60 $30
Margin from Purchased Commodities ($M)$8 $8 $6
Realized Oil % of Brent (with settlements)96% 96% 99%
Realized Gas Price ($/Mcf, with settlements)$1.78 $2.68 $3.65
Operating Costs per BOE ($/BOE)$23.14 $23.73 $25.35
Segment Adjusted EBITDAX ($M)Q4 2023Q3 2024Q4 2024
Oil & Natural Gas$258 $477 $426
Carbon Management$(21) $(19) $(26)
Key KPIsQ2 2024Q3 2024Q4 2024
Realized Oil Price with Settlements ($/Bbl)$81.29 $75.38 $73.00
Realized NGL Price ($/Bbl)$46.96 $45.77 $52.62
Realized Gas Price with Settlements ($/Mcf)$1.78 $2.68 $3.65
Net Gain (Loss) from Commodity Derivatives ($M)$5 $356 $(49)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Production (MBoe/d)Q4 2024140–144 Actual: 141 In line vs guide
Adjusted EBITDAX ($M)Q4 2024$260–$300 Actual: $316 Beat guidance
Capital ($M)Q4 2024$85–$105 Actual: $88 Low end of guide
General & Administrative ($M)Q4 2024$90–$100 Actual: $95 In range
Net Production (MBoe/d)1Q25E—138–142 New
Adjusted EBITDAX ($M)1Q25E—$275–$295 New
Capital ($M)1Q25E—$60–$70 New
General & Administrative ($M)1Q25E—$80–$84 (Adj: $75–$80) New
Taxes Other Than on Income ($M)1Q25E—$70–$78 New
Interest & Debt Expense ($M)1Q25E—$26–$30 New
Net Production (MBoe/d)2025E—132–138 New
Adjusted EBITDAX ($M)2025E—$1,100–$1,200 New
Capital ($M)2025E—$285–$335 New
General & Administrative ($M)2025E—$325–$345 (Adj: $300–$320) New
Dividend per share ($)Quarterly$0.3875 (prior) $0.3875 declared (Mar 2) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
Aera synergy captureTarget synergies raised to $235M; interest expense cut ~$60M; early supply chain and G&A savings >70% synergies actioned; 10% q/q G&A reduction; plan to capture remaining $65M in 2025 Improving execution, expanding runway
CCS permitting and pipelinesExpanded Class VI applications; doubling Central CA storage capacity; conditional use permits at Kern First EPA Class VI permits secured; nearly 9 MMTPA pipeline; push to lift CA pipeline moratorium Regulatory momentum, commercial traction
Power business and data centers (AI)MOU with a leading power partner; resource adequacy payments discussed RA payments to increase ~50% to $150M; pursuing 150–200 MW behind-the-meter PPAs for AI data centers; CCS-enabled low-carbon power plan Growing opportunity set
Shareholder returns and buybacksDividend raised 25%; ongoing buybacks $92M returned in Q4; >$550M buyback capacity; management views stock as undervalued Aggressive capital returns
Deleveraging/liquidity$1.1B revolver; extended maturities; tender of 2026 notes Redeemed $123M of 2026 notes; >$1B liquidity; remaining $122M expected in 2025 Strengthening balance sheet

Management Commentary

  • “We delivered exceptional results in 2024, while successfully completing our transformative merger with Aera Energy... lead California’s decarbonization efforts... combining conventional oil and gas, carbon management and an expanding power solutions business.” — CEO Francisco Leon .
  • “We exceeded expectations this quarter driven by net production of 141,000 BOE per day, realized oil prices at 99% of Brent and continued cost discipline... $316 million in adjusted EBITDAX and $118 million in free cash flow.” — CFO Clio Crespy .
  • “We are actively pursuing agreements with multiple well-known parties to advance new AI data centers in California... looking at about 150 to 200 megawatts... make electrons low emissions and then the data carbon free.” — CEO Francisco Leon .
  • “We received the nation’s first EPA Class 6 permits... break ground in the second quarter with first injection expected later this year... nearly 9 million metric tons per annum under consideration.” — CEO Francisco Leon .

Q&A Highlights

  • Stock underperformance and lock-up: Management reiterated conviction in buybacks (> $550M capacity) and detailed lock-up tranches for CPPIB/ICAV/Oaktree with staggered expiries; intent to support market if large holders sell .
  • Data center PPAs: CRC outlined behind‑the‑meter solution at Elk Hills, 150–200 MW target, firm gas supply, CCS-enabled low-carbon power, and grid standby agreements for redundancy .
  • Synergy phasing: $170M run-rate savings actioned in 2024 (incl. $110M non‑energy/G&A and $60M interest); remaining $65M targeted in 2025; operational projects to unlock NGL uplift and fuel optimization .
  • Brookfield JV milestone timing: Third installment deferred pending storage contracts for 35% of annual capacity at 26R; $92M received to date; multi-reservoir pipeline progressing .
  • 2025 rigs and permits: Second rig in 2H 2025 is not contingent on new well permits (sidetracks/workovers available); management expects more normal permitting cadence by late 2025 into 2026 .

Estimates Context

  • Wall Street consensus estimates (S&P Global) for Q4 2024 EPS/revenue/EBITDA were unavailable due to SPGI daily request limits at the time of retrieval. We will update estimate comparisons once accessible.
  • Given unavailability, we anchor performance vs internal guidance and reported results; adjusted EBITDAX materially beat Q4 guidance ($316 vs $260–$300), while revenues and net income declined sequentially amid derivative losses and lower electricity margin .

Key Takeaways for Investors

  • Operational beat: Q4 adjusted EBITDAX exceeded guidance despite weaker sequential revenues; strong price realizations and cost discipline underpinned the performance — a positive setup into 2025 .
  • Capital returns and balance sheet: Expect continued buyback support given management commentary and >$550M authorization capacity, alongside further deleveraging of 2026 notes — supportive of per‑share metrics .
  • Near-term catalysts: CCS first injection and initial cash flow by year-end 2025, additional EPA Class VI permits, and potential AI data center PPAs could drive multiple expansion as carbon/power optionality becomes tangible .
  • Aera synergies and capital efficiency: Remaining $65M synergies expected in 2025, with infrastructure consolidation (e.g., NGL uplift) and efficient sidetrack/workover inventory supporting margins through a low-decline base .
  • Power monetization: Resource adequacy payments expected to rise ~50% to $150M; incremental PPAs for spare capacity could diversify and stabilize cash flows beyond upstream earnings .
  • Watch electricity margin and operating costs per BOE: Q4 saw electricity margin and operating cost per BOE move unfavorably vs Q3; monitor commodity spreads, power plant uptime, and cost trajectory in H1 2025 .
  • Regulatory track: Continued progress on pipeline moratorium and permitting will be pivotal for CCS revenue realization; management indicates coordinated state/federal engagement with momentum building in 2025 .