California Resources Corp (CRC) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. California Resources Corporation (CRC) operates as an independent energy and carbon management company. A material event affecting comparability is the Berry Merger, which closed on December 18, 2025. Consequently, the Q1 2026 results include the full quarter of Berry Corporation's operations, whereas the Q1 2025 comparative period does not.
Key Financial Metrics
| Metric (in millions, except per share) | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Operating Revenues | $119 | $912 |
| Oil, Gas & NGL Sales (Gross) | $905 | $814 |
| Net Loss from Commodity Derivatives | $(848) | $6 |
| Net (Loss) Income | $(711) | $115 |
| Diluted EPS | $(8.02) | $1.26 |
| Operating Cash Flow | $99 | $186 |
| Capital Investments | $(131) | $(55) |
| Long-Term Debt (Net) | $1,310 | $1,283 |
| Cash and Cash Equivalents | $40 | $214 |
Material Changes vs. Prior Period
- Revenue Volatility: While gross oil, gas, and NGL sales increased by $91 million (11%) due to higher production from the Berry Merger and higher realized prices, Total Operating Revenues plummeted to $119 million from $912 million. This was driven by a massive $848 million non-cash loss on commodity sales derivatives, compared to a $6 million gain in Q1 2025. This loss reflects the fair value adjustment of hedges as oil prices surged (Brent avg $77.90/bbl in Q1 2026 vs $63.08/bbl in Q1 2025).
- Profitability: The company reported a Net Loss of $711 million, a reversal from the $115 million Net Income in Q1 2025. The loss is primarily attributable to the derivative valuation adjustment and increased operating costs associated with the Berry acquisition.
- Debt Restructuring: In March 2026, CRC issued $350 million in additional 2034 Senior Notes and used proceeds to redeem $350 million of 2029 Senior Notes, incurring a $21 million loss on early extinguishment of debt.
- Production: Net production sold increased to 154 MBoe/d in Q1 2026 from 137 MBoe/d in Q1 2025, with 19 MBoe/d attributed to Berry properties.
Guidance, Outlook, and Risks
- Capital Program: Management revised the 2026 full-year capital program upward to a range of $520 million to $560 million (previously $430-$470 million). This includes $500-$525 million for oil and gas, $12-$20 million for carbon management, and $8-$15 million for corporate activities.
- Operational Outlook: CRC plans to increase to a seven-rig program in the second half of 2026 (6 in California, 1 in Utah). The company expects oil prices to remain volatile due to geopolitical tensions in the Middle East and Russia.
- Carbon Management: The Carbon TerraVault JV with Brookfield continues development. The segment reported a loss of $12 million for the quarter. CRC is preparing for first injection at its cryogenic gas processing facility.
- Risks: Key risks include commodity price volatility, the impact of tariffs on supply chain costs, regulatory changes in California (specifically water injection limits and Cap-and-Invest), and the successful integration of Berry operations.
Investor Verification Checklist
- Derivative Impact: Verify the magnitude of the $848 million non-cash derivative loss and its impact on reported earnings versus underlying operational cash flow.
- Berry Integration: Assess the preliminary purchase price allocation for the Berry Merger and the timeline for finalizing asset valuations.
- Liquidity Position: Confirm the $1.251 billion availability on the Revolving Credit Facility and the company's ability to fund the increased capital program while maintaining dividends.
- Debt Profile: Review the terms of the new 2034 Senior Notes and the remaining balance of the 2029 Senior Notes following the partial redemption.
- Regulatory Exposure: Monitor the status of the BSEE offshore platform decommissioning claim ($18 million liability) and the CalGEM orphaned well dispute ($25 million paid under protest).