California Resources Corporation 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- California Resources Corporation reported a solid second quarter 2026 driven by strong operational execution, synergy capture, and sustainable drilling efficiency gains.
- Net production averaged 149,000 barrels of oil equivalent per day with oil representing 81% of total volumes.
- Oil realizations were approximately 95% of Brent before hedges, within the second quarter guidance range.
- Operating costs were $347 million, in line with guidance, and G&A declined nearly 9% reflecting Berry related efficiencies.
- Second quarter adjusted EBITDA was $338 million, operating cash flow was $300 million, and free cash flow before working capital was $151 million.
- The company implemented more than 100% of its 2026 Berry synergy target six months ahead of schedule, representing approximately $103 million of annualized savings.
- Time to market improved approximately 25% in California, allowing more wells, sidetracks, and workovers than planned.
- Approximately 80% of wells drilled year to date outperformed their type curve with average initial production more than 10% above expectations.
- California production can now be maintained with six rigs on a normalized annual basis, one fewer than previously projected, and approximately 5% lower D&C and workover maintenance capital.
- The company refinanced its remaining 2029 Senior Notes with new Senior Notes due 2035, extending weighted average debt maturity to eight years and reducing annual expenses by $5.5 million.
- Temporary takeaway constraints due to marketing disputes caused a build of approximately 1,500 barrels of oil per day inventory during the quarter, impacting operating costs and differentials.
- Absent these impacts, production would have exceeded guidance and adjusted EBITDA and operating cash flow before working capital would have been approximately $25 million higher each.
- Net production is targeted to average approximately 153,000 barrels of oil equivalent per day for full year 2026 with full year capital guidance of $520 to $560 million.
- Full year realizations are expected at about 94%, within the original 94 to 98% range.
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Transcript
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Good day, and welcome to the California Resources Corporation second quarter 2026 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your questions, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Daniel Juck, Vice President of Investor Relations.
Please go ahead. Good morning, and welcome to California Resources Corporation's second quarter 2026 conference call.
We hope you've had a chance to review our earnings materials, which include our non-GAAP reconciliations. Today's call includes forward-looking statements, and actual results may differ due to factors described in our earnings release and SEC filings. Following prepared remarks, our leadership team will take questions. As a reminder, please limit your questions to one primary and one follow-up. I will now turn over the call to Francisco.
Good morning, everyone. We delivered a solid quarter in our oil and gas business, driven by strong operational execution, continued synergy capture, and sustainable drilling efficiency gains that strengthened our outlook. We also made good progress on our emerging carbon management and behind-the-meter power platforms and announced two important midstream transactions that build on our long-term strategy to generate shareholder value from our California assets. Let me begin with some comments on our strategic plans. Clio will then walk through our quarterly results and outlook. While focused on near-term execution, our team is also looking to the future. The state's regulatory environment, once seen as an impediment to our industry, is now supporting local onshore production to the benefit of all Californians. Events in the Middle East have caused ripple effects throughout energy markets.
Here at home, California's reliance on imported crude and refined products has created temporary transportation and price challenges across the state, highlighting the need for energy security and reliable, stable sources of local supply. That's precisely the need CRC is built for. For the last several years, CRC has been intentionally building a stronger and more integrated California energy platform. Our Aera and Berry mergers created scale and new avenues to profitably grow our business. As the largest producer in the state, the expansion of our midstream infrastructure and marketing capabilities was a logical step to bolster our long-term strategy. Greater control of critical infrastructure will provide options to enhance the commercial capabilities of our business and stability of our operations. This benefits CRC as well as other producers working to move more local product to local markets and ultimately supports California's energy security and affordability.
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