California Resources Corporation Reports Strong Q1 2026 Results, Ups 2026 Guidance Amid Strategic Expansion

Key Highlights for Investors

• Significant Guidance Increase: CRC raised its 2026 Adjusted EBITDAX guidance by 42% to a midpoint of \$1.45 billion, driven by robust oil prices, operational efficiencies, and increased merger synergies.
• Accelerated Development: The company is boosting drilling activity in the second half of 2026, targeting higher production and cash flow, and building momentum into 2027.
• Strong Production Growth: Q1 average net production reached 154 MBoe/d (81% oil), with a targeted year-end gross production exit rate of 175 MBoe/d, representing ~1% entry-to-exit growth.
• Capital Investments: Capital budget raised to \$520–\$560 million, with a full-year average of five rigs and a ramp-up to seven rigs in H2 2026 (six in California, one in Utah).
• Berry Merger Synergies: CRC increased its Berry merger annual synergy target by 12% to \$90–\$100 million, a key driver of cost savings and operational improvements.
• Shareholder Returns: \$46 million returned in Q1 2026 (\$36 million in dividends, \$10 million in share repurchases). Since mid-2021, CRC has returned \$1.62 billion to shareholders.
• Strong Liquidity and Capital Structure: Liquidity as of March 31, 2026, was \$1.28 billion, including \$25 million cash and \$1.25 billion in borrowing capacity. CRC completed a \$350 million senior notes offering due 2034, using proceeds to redeem \$350 million of 8.25% notes due 2029.
• Reported Net Loss but Robust Underlying Performance: CRC posted a Q1 net loss of \$711 million, primarily due to non-cash losses on commodity derivatives. However, adjusted net income was \$79 million, with adjusted EBITDAX of \$304 million.
• First Carbon Capture Project Nearing Injection: CRC is preparing for its first CO₂ injection at the Elk Hills cryogenic gas plant, marking a milestone for its Carbon TerraVault (CTV) carbon management business.

Detailed Financial and Operating Results

• Production & Realized Prices:
  • Net oil production: 124 MBbl/d (Q4 2025: 109 MBbl/d)
  • Realized oil price (ex-derivatives): \$74.53/bbl (Q4 2025: \$61.14/bbl)
  • Net NGL production: 10 MBbl/d; realized NGL price: \$44.98/bbl
  • Net natural gas production: 117 MMcf/d; realized gas price: \$3.56/mcf
  • Total net production: 154 MBoe/d (Q4 2025: 137 MBoe/d)
• Cash Flow & Investments:
  • Net cash provided by operating activities: \$99 million
  • Free cash flow: negative \$32 million (due to accelerated capital spending)
  • Total capital investments: \$131 million, at the high end of expectations to support H2 2026 ramp-up
• Expenses & Efficiencies:
  • Operating expenses: \$365 million (in line with expectations)
  • General & administrative expenses: \$106 million (slightly higher due to legal fees and higher share price-linked compensation)
• Debt & Liquidity Actions:
  • Revolving credit facility reaffirmed at \$1.5 billion
  • Senior notes due 2034 issued at 7.0%, redemption of 2029 notes at 8.25%
• Shareholder Actions:
  • Quarterly dividend of \$0.405/share declared, payable June 18, 2026
  • Share repurchases: 0.2 million shares for \$10 million at ~\$45.70 per share

2026 Outlook and Guidance

• Production: 2026 average net production guidance: 149–155 MBoe/d (81% oil).
• Adjusted EBITDAX: Guidance raised to \$1.4–\$1.5 billion (midpoint \$1.45 billion).
• Capital Investments: \$520–\$560 million, focused on high-return California and Utah drilling projects.
• Synergies: Berry merger annual synergy target increased to \$90–\$100 million.
• Second Half 2026 Expansion: Drilling activity accelerates to 7 rigs, with most permits in hand.
• Carbon Management: Ongoing development of carbon capture and storage (CCS) projects under Carbon TerraVault, with first CO₂ injection imminent.

Key Risks and Price-Sensitive Information

• Commodity Price Sensitivity: Guidance is based on Brent oil at \$90.58/bbl for 2026, and actual results may vary significantly with market price changes.
• Derivative Losses: The \$711 million net loss in Q1 2026 was almost entirely due to non-cash losses on commodity derivatives. This could impact investor sentiment but does not reflect underlying operational strength.
• Capital Allocation: Accelerated capital spending in H1 2026 resulted in negative free cash flow but is expected to drive higher production, cash flow, and returns in H2 and beyond.
• Liquidity & Debt: The company maintains strong liquidity, but investors should note ongoing debt management and refinancing activities.
• Merger Integration: Realization of Berry merger synergies and operational efficiencies is a key factor for future profitability.
• Regulatory and Environmental Factors: Ongoing regulatory approvals and the success of CCS projects are critical for long-term growth and California market positioning.

Upcoming Events

CRC will host a conference call and webcast on May 6, 2026, at 1 p.m. ET (10 a.m. PT) to discuss results and outlook. The company will also present at several high-profile investor conferences in the coming months, including those hosted by Goldman Sachs, RBC, BofA Securities, JP Morgan, and TD Cowen.

Management Commentary

“With higher oil prices and an attractive drilling return portfolio, we see a clear opportunity to accelerate development across our multi-decade resource inventory. As a result, we are adding incremental drilling activity this year to drive higher production, EBITDAX and cash flow. Our low-decline, capital-efficient conventional asset base underpins this strategy and we are moving decisively to unlock its value. CRC is a different kind of energy company, and our consistent results reinforce our ability to create durable, long-term value for our shareholders while meeting California’s energy needs.” — Francisco Leon, President & CEO

Conclusion for Investors

California Resources Corporation delivered a strong operational quarter and raised its full-year guidance significantly, reflecting high oil prices, effective capital allocation, and merger synergy realization. The ramp-up in drilling and the imminent launch of its first carbon capture project position CRC for robust growth and enhanced shareholder returns in 2026 and beyond. Investors should monitor oil price trends, execution of the capital program, and progress on CCS initiatives as key catalysts for CRC’s share price.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Forward-looking statements are subject to risks and uncertainties, including commodity price volatility, project execution, regulatory factors, and other risks detailed in CRC’s SEC filings. Investors should perform their own due diligence and consult professional advisors before making investment decisions.

View California Resources Corp Historical chart here