What is driving the current bottleneck in differentials and transport, and what gives confidence that this pressure will be alleviated soon, with an outlook for 2027?

The current issues are viewed as temporary commercial problems, not structural changes. The California market is improving with increased rig activity and refinery investments. While some producers face $20/barrel impacts, CRC limited its impact to ~$2/barrel through proactive measures. Q3 is expected to be the low point, with recovery in Q4, and the Crimson acquisition will provide greater control over midstream and market access for 2027. “But we do view those as temporary conditions and not structural changes to the California market. Again, we see the market as improving drastically.”

Can you provide an update on Uinta drilling and outline the long-term plans for the asset?

CRC is drilling 4 wells in Uinta, ahead of schedule, with all expected online before year-end at costs below plan (~$11.5 million per well). However, Uinta is deemed a noncore asset due to higher capital intensity, breakevens, lower crude quality, and steeper declines compared to California assets. It's unlikely to compete for long-term capital, and CRC will evaluate ways to maximize its value. “Ultimately, it's a drag of about 1% on realization. So putting it side by side with the California assets that have very low decline and generate better returns. It's hard to see us allocating a lot of dollars back into the Uinta -- so I would say it's a noncore asset to core asset -- noncore asset where we're taking CRC, and we will continue to evaluate the best way to maximize the value of that asset going forward.”

How did the partnership with Beacon data centers for the Golden Valley Tech Hub come about, and what is the critical path forward for hyperscaler commitments, permitting, and FID?

Beacon data centers was chosen for their engagement with hyperscalers, construction, and capitalization expertise, complementing CRC's land, power infrastructure, and permitting ability in California. The project is designed with triple redundancy, behind-the-meter power, low water use, and community support. The critical path involves advancing hyperscale engagement, commercial agreements, permitting, engineering, and financing in parallel. “So if you look at what they bring to the table over and then it's a nice complement to our land position or power infrastructure and ultimately, our ability to permit and execute in California. So we think it's a strong combination in -- at the end of the day, we look at data center development, maybe a little bit different from what you're seeing from other E&Ps.”

CRC

California Resources (CRC) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 10, 2026

Source: earnings call transcript

Executive summary

California Resources Corporation Q2 FY26 — Strategic Midstream Expansion & Operational Efficiency Gains

California Resources Corporation delivered a solid quarter, marked by strategic midstream acquisitions and significant operational efficiency gains that are structurally improving the business. Despite temporary market access challenges impacting differentials, the company is advancing its integrated California energy platform, including the first-of-its-kind CCS project and a new data center partnership. Management is focused on capital discipline and maximizing shareholder value through organic growth, balance sheet strength, and opportunistic capital returns.

Highlights

Achieved over 100% of 2026 Berry synergy target 6 months ahead of schedule, representing approximately $103 million in annualized savings.
Commenced CO2 injection and achieved first revenue at California's first commercial-scale CCS project at Elk Hills, capturing 270 tonnes/day.
Refinanced 2029 senior notes with new 2035 notes, extending weighted average debt maturity from 5.5 to 8 years and reducing annual expenses by $5.5 million.
Drilling efficiency improved significantly, with days to total depth down approximately 25% and 80% of wells outperforming type curve by over 10%.
Acquired Crimson Midstream for approximately 4.4x estimated 2027 EBITDA, strengthening market access and commercial capabilities.

Concerns

Experienced temporary takeaway capacity constraints due to marketing disputes, leading to an inventory build of approximately 1,500 barrels of oil per day and negatively impacting differentials.
Temporary disruptions resulted in a total financial impact of approximately $25 million in the quarter, primarily from weaker differentials and increased operating costs.
Uinta assets are deemed noncore due to higher capital intensity, higher breakevens, lower crude quality, and steeper declines, posing a drag of about 1% on realization.
Q3 oil price realization is guided to approximately 93% of Brent, expected to be the low point for the year due to ongoing commercial and logistics actions.

Guidance & targets

Category	Target	Timeline	Confidence
Full year net production	approximately 153,000 barrels of oil equivalent per day high materiality	FY26	High
Full year capital expenditure	$520 million to $560 million high materiality	FY26	High
Full year gross entry to exit production growth	approximately 1% medium materiality	FY26	High
Full year oil realizations	about 94% high materiality	FY26	High
Q3 oil price realization	approximately 93% of Brent high materiality	Q3 · FY26	Medium
California rig count	6 rigs medium materiality	beginning of 2027 · FY27	High
Normalized annual D&C and workover maintenance capital	$450 million to $475 million high materiality	annual	High
Cumulative synergies and structural cost reductions	up to $470 million high materiality	through 2028 · FY28	High

CRC operating KPIs by quarter

CRC operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Production	137K boe/d Net production averaged 137,000 barrels of oil equivalent per day with oil realizations at 97% of Brent before hedges. Source: earnings call transcript	154K boe/d Net production averaged 154,000 BOE per day, with oil at 81% of the mix and realizations at 96% of Brent pre-hedged, in line with plan. Source: earnings call transcript	149K boe/d Net production averaged 149,000 barrels of oil equivalent per day with oil representing 81% of total volume. Source: earnings call transcript	-3.2%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

P66 Purchase of Line 100 pipeline nominal amount

Connects key Central Valley production hubs.

Crimson Midstream Acquisition of Crimson's midstream platform

Covers roughly 2,000 mile network of California crude oil pipelines, connecting production directly to California's highest value markets. Requires PUC approval, tentative approval received with no conditions.

Beacon data centers Co-development of Golden Valley Technology Hub

Proposed 275-megawatt campus spanning 100 acres adjacent to Elk Hills, to meet demand for power and AI. Combines CRC's permitting/operating experience with Beacon's data center expertise.

Capital programs

Golden Valley Technology Hub underway

Funding: co-developer partner (Beacon data centers)

Benefit:275 MW data center campus

Proposed 275-megawatt campus spanning 100 acres adjacent to Elk Hills, leveraging industrial acreage, existing infrastructure, and firm power from Elk Hills plant. Submitted conditional use permit, environmental review expected later this year. Designed with triple redundancy, behind-the-meter, low water use (closed loop cooling), and community support.

Uinta Drilling Program underway

Benefit:4 wells online

Currently drilling the fourth well, ahead of schedule. Completion rig in early September. Wells expected to be completed ahead and below the AFE cost of approximately $11.5 million per well.

Risks & headwinds

Temporary takeaway capacity constraints and marketing disputes Q2 FY26, expected to be temporary with Q3 FY26 as low point for realizations.

Resulted in an inventory build of approximately 1,500 barrels of oil per day and a financial impact of approximately $25 million (less than $2/BOE) in Q2 FY26.

Mitigation:Actively addressing with alternative logistics and marketing solutions; substantial majority of inventory sold in July; Crimson acquisition strengthens market access and commercial flexibility.

Uinta assets deemed noncore Long-term

Higher capital intensity, higher breakevens, lower crude quality (waxy crude), higher transportation and operating costs, steeper declines, and a drag of about 1% on realization compared to California assets.

Mitigation:Evaluating strategy to maximize value, not allocating long-term capital to Uinta.

Regulatory environment for Huntington Beach reentitlement City response expected before year-end, California Coastal Commission process through 2028.

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Mitigation:Making progress on reentitlement process, continuing to operate and produce oil (3,000 bbl/d gross) while systematically starting abandonment process.

What to watch in Q3 FY26

Crimson Midstream acquisition approval

later this month

Current Tentative PUC approval with no conditions

Target Final PUC approval

Why it matters

Final approval of Crimson Midstream acquisition is critical for strengthening market access, improving margins, and diversifying cash flows, reinforcing CRC's integrated California platform.

We recently received tentative approval with no conditions attached, and we expect the final decision later this month.

Find out whether CRC delivers this. Inve re-checks your case every morning.

Q&A highlights

How does the Crimson acquisition fit into CRC's broader strategy, and how long has this opportunity been considered?

The Crimson acquisition is a natural step in building an integrated California energy platform, considered for about 3 years. It provides critical infrastructure that is difficult to replicate, with contracted revenue, and connects CRC's production to key fields and high-value markets. It aligns with CRC's playbook of acquiring high-quality assets at attractive values where integration adds significant value.

“We started thinking about Crimson in particular about 3 years ago. But the first story of our business was to acquire Era and Berry, gave us a lot of scale, a lot of remaining oil and expanded our footprint considerably.”

asked by Wei Jiang · answered by Francisco Leon

3 min read 7 chapters

Detailed narrative

Strategic Midstream Expansion

California Resources Corporation significantly expanded its midstream footprint with two key acquisitions. The purchase of the Line 100 pipeline from P66 added 120 miles of crude pipelines and over 1 million barrels of storage capacity. This was followed by the acquisition of Crimson Midstream, a 2,000-mile network of California crude oil pipelines.

These strategic moves aim to enhance market access, improve price realizations, diversify cash flows, and drive new efficiencies by connecting CRC's production directly to California's highest value markets. The Crimson acquisition is financially accretive and is pending final PUC approval, expected later this month.

Operational Efficiency & Capital Discipline

The company demonstrated strong operational execution, with drilling efficiency improving significantly. Days to total depth decreased by approximately 25%, and about 80% of wells drilled year-to-date outperformed their type curve by more than 10%. These gains allowed CRC to reduce its planned 2026 D&C and workover capital by $10 million, redeploying savings into facilities.

The company now expects to operate with 5 rigs in California during H2 2026, down from 6, while maintaining production, and anticipates a normalized annual maintenance rig count of 6 rigs for 2027, leading to approximately 5% lower D&C and workover maintenance capital.

Emerging Carbon Management Platform

CRC achieved a significant milestone in its carbon management strategy by commencing CO2 injection and generating first revenue at California's first commercial-scale CCS project at Elk Hills. The project is currently capturing and injecting approximately 270 tonnes of CO2 per day, with an annualized target of 100,000 tons per year.

This operational success is expected to increase engagement with potential partners and emitters, while the company tracks the CPUC's Reliable and Clean Power Procurement Program (RCPPP) as a potential market for natural gas with CCS, identifying a near-term opportunity of 2.4 gigawatts in the Central Valley.

Golden Valley Technology Hub

In partnership with Beacon data centers, CRC is advancing the Golden Valley Technology Hub, a proposed 275-megawatt data center campus adjacent to Elk Hills. This behind-the-meter design leverages CRC's existing infrastructure and firm power, aiming to minimize power and water usage through closed-loop cooling.

The project has submitted a conditional use permit, with environmental review expected later this year. This initiative positions CRC to meet the rapidly growing demand for power and AI from hyperscale data center operators, with Beacon funding early-stage development.

Uinta Asset Re-evaluation

California Resources Corporation is re-evaluating its strategy for the Uinta assets, classifying them as noncore. While the company is currently drilling 4 wells in the region ahead of schedule and below cost, the Uinta position (100,000 acres) is characterized by higher capital intensity, higher breakevens, lower crude quality, higher transportation and operating costs, and steeper declines compared to its California assets.

Management does not foresee allocating significant long-term capital to Uinta and plans to maximize the value of the asset going forward, indicating a potential divestiture.

Balance Sheet & Capital Allocation

The company maintained a strong balance sheet, operating at approximately 1x leverage with no meaningful debt maturities for the next 7 years and an undrawn revolving credit facility. CRC proactively refinanced its 2029 senior notes with new 2035 notes, extending its weighted average debt maturity from 5.5 to 8 years, reducing annual expenses by $5.5 million, and achieving the lowest credit spread in its history.

This move enhances financial flexibility, supporting a balanced capital allocation framework that prioritizes high-return organic growth, strategic opportunities, and shareholder returns through dividends and opportunistic buybacks.

Synergy Capture & Structural Improvements

CRC has substantially completed the Berry integration, exceeding its 2026 synergy target by over 100% six months early, resulting in approximately $103 million of annualized savings. The company has delivered about $400 million of its broader target of up to $470 million in cumulative synergies and structural cost reductions through 2028, representing approximately 85% of the total.

The focus is now shifting from integration to optimizing the combined footprint, including infrastructure consolidation, NGL recovery, oil blending, and transportation, which are expected to drive further structural improvements in the business economics.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.