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Introduction & Market Context
California Resources Corporation (NYSE:CRC) released its first quarter 2025 results on May 7, showcasing strong financial and operational performance despite a challenging oil price environment. The company’s shares traded at $35.51 at the previous close, with a modest 1.63% gain, suggesting cautious optimism from investors ahead of the earnings presentation.
CRC’s Q1 performance represents a notable recovery from its Q4 2024 results, which had missed both EPS and revenue forecasts, leading to an 8.83% stock price drop at that time. The company has positioned itself as "A Different Kind of Energy Company," emphasizing its integrated strategy combining conventional energy production with carbon management initiatives.
Quarterly Performance Highlights
California Resources delivered strong first quarter results, generating $328 million in adjusted EBITDAX, which exceeded the company’s guidance. Net production remained flat quarter-over-quarter at 141 MBOE/D, coming in above the guidance midpoint, with a production mix of 79% oil, 7% NGLs, and 14% natural gas.
As shown in the following detailed performance overview:
The company’s operating cash flow reached $186 million in Q1, with capital expenditures of $55 million resulting in free cash flow of $131 million. Brent crude prices averaged $74.92 per barrel during the quarter, with CRC achieving strong price realizations across its commodity portfolio.
CRC’s integrated business strategy has created a diversified revenue stream that provides stability in fluctuating market conditions. The company’s 2024 revenue sources were comprised of 78% oil, 3% NGLs, 5% natural gas, 6% purchased commodities, and 7% electricity, demonstrating its reduced reliance on any single commodity.
Cost Structure & Synergies
A key focus for California Resources has been enhancing its cost structure following the Aera merger. The company reported a 7% quarter-over-quarter decrease in non-energy operating costs in Q1 2025, demonstrating progress in its efficiency initiatives. CRC is targeting a ~15% improvement in its 2025 controllable cost structure compared to the pro forma 2023 baseline.
The company has made significant progress on realizing synergies from the Aera merger, as illustrated in the following chart:
CRC has realized $173 million or approximately 74% of the total expected synergies of $235 million to date. The company expects to achieve $185 million of synergies by the end of 2025, with the remainder to be realized in early 2026.
The company is also enhancing cash flow through portfolio optimization, including a natural gas redirection initiative that will reduce energy operating costs at its Belridge steamfloods. This operational synergy will result in approximately 10 MMcf/d (2 MBoe/d) reduction in net gas production in Q2 2025, fully offset by cost savings.
Shareholder Returns & Balance Sheet
California Resources delivered record quarterly returns to shareholders in Q1 2025, returning $135 million or 103% of its quarterly free cash flow. This included $100 million in share repurchases (2.3 million shares) and $35 million in dividends, maintaining an attractive fixed dividend yield of approximately 4.3%.
The company’s consistent track record of shareholder returns and competitive dividend yield is highlighted in the following charts:
CRC has maintained a strong balance sheet while delivering these returns. As of March 31, 2025, the company reported net debt of $823 million, representing a low leverage ratio of 0.7x based on 2025 expected EBITDAX. The company further strengthened its financial position by redeeming $123 million of 2026 Senior Notes in February 2025.
2025 Outlook & Guidance
Despite a 16% decrease in 2025 Brent price expectations, California Resources reaffirmed its 2025 adjusted EBITDAX guidance of $1.1-1.2 billion. The company’s resilience is supported by its strong hedge book, with approximately 70% of remaining 2025 net oil production hedged at a floor price of ~$67 per barrel Brent.
CRC provided the following detailed guidance for Q2 and full-year 2025:
The company’s low-cost structure provides significant downside protection, with a 2025 Brent breakeven price of $33-35 per barrel. This positions CRC favorably compared to peers on both leverage and breakeven metrics, allowing it to generate cash flow even in a challenging price environment.
Carbon Management Progress
California Resources continues to advance its carbon management business as a key differentiator. The company has received California’s first EPA Class VI permits for carbon capture and storage at its Carbon TerraVault I project, with seven additional permits in the regulatory queue representing approximately 287 million metric tons of potential CO2 storage.
The following slide illustrates CRC’s leadership in California’s decarbonization efforts:
CRC’s carbon management business is supported by a partnership with Brookfield Renewable’s Global Energy Transition Fund, which has made an initial commitment of up to $500 million. The company is well-positioned to capitalize on California’s decarbonization needs, with its storage reservoirs located in proximity to the state’s highest-emitting industries.
California Resources is targeting first CO2 sequestration from its Elk Hills cryogenic gas plant by year-end 2025, along with expecting to secure a long-term, third-party, behind-the-meter power purchase agreement at its Elk Hills Power Plant by the same timeframe.
As the company moves through 2025, it expects to see well permitting progression in the second half of the year, potentially increasing activity in 2026 if market conditions warrant. This balanced approach to both traditional energy production and carbon management initiatives positions CRC uniquely within California’s evolving energy landscape.
Full presentation:
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