California Resources (NYSE:CRC) outlined what executives called a record year of operational and financial performance in its fourth-quarter 2025 earnings call, highlighting production growth, significant shareholder returns, and progress on regulatory permitting and carbon capture initiatives.
Record 2025 results despite lower commodity prices
President and CEO Francisco León said the company grew production for the third consecutive year, delivered “record financial performance,” and returned record capital to shareholders even as commodity prices declined 14% year-over-year. Since 2021, the company has returned nearly $1.6 billion to shareholders, he said, emphasizing a capital framework centered on investing in high-return opportunities, preserving balance sheet strength, and returning excess cash to shareholders.
For the full year 2025, CRC generated nearly $1.25 billion of adjusted EBITDAX and $543 million of free cash flow, which management described as the highest level since 2021. Net production increased 25% year-over-year to 138,000 BOE/d, supported by base performance, cost reductions, realized synergies, and higher-than-average Resource Adequacy payments from the company’s power assets.
Shareholder returns, balance sheet, and capital spending
Capital spending in the fourth quarter totaled $120 million, within guidance, bringing full-year capital deployment to $322 million. Management said that in a permitting-constrained environment during 2025, CRC focused spending on its highest-return drilling opportunities while returning excess free cash flow to shareholders.
Cleo said CRC returned approximately 94% of 2025 free cash flow to shareholders through dividends and share repurchases. The company’s board recently approved a $430 million increase to its share repurchase authorization and extended the program through 2027, leaving roughly $600 million of remaining capacity.
On the balance sheet, CRC exited 2025 at 1.0x leverage with total liquidity of $1.4 billion. Management also cited a refinancing transaction associated with the Berry merger, redemption of its 2026 senior notes, expanded lender commitments, and improved rating agency outlooks as actions that enhanced flexibility and reduced the cost of capital.
Reserves depth and permitting progress shape the near-term plan
León said CRC’s conventional, low-decline reservoir base remains a core differentiator, allowing the company to sustain production with less capital intensity than shale-focused peers. He pointed to an expanded 2P disclosure of nearly 1.2 billion BOE and described it as supporting “20-plus years of development at current production levels.” In response to analyst questions, he added that the company disclosed 23 years of inventory on a 2P basis.
Discussing the regulatory environment, León said the resumption of new drill permitting and a “steady flow of approvals” represented a “step change” from recent years. He said CRC now has the majority of permits required to execute its 2026 capital program and is building line of sight into 2027.
On the call, León also said the company grew its 1P reserves 350% and cited drivers that included permits coming in, stronger-than-expected base decline, and the Berry acquisition. He added that, at SEC prices, the value of the 1P reserves alone was about $9 billion.
2026 guidance: production growth, higher capital, hedges in place
CRC provided 2026 guidance that management described as a “measured” ramp in capital deployment alongside resilient cash flow generation. At $65 Brent, CRC expects to generate approximately $1 billion of adjusted EBITDA, supported by lower costs and additional synergy capture, despite lower commodity assumptions and a softer Resource Adequacy market.
Key 2026 guidance items discussed on the call included:
- Capital spending: Approximately $450 million, including $280 million to $300 million of drilling, completions, and workover capital supporting a full rig program.
- Production: Expected to increase 12% year-over-year to 155,000 BOE/d at the midpoint, with oil representing roughly 81% of volumes.
- Hedges: Two-thirds of expected oil production hedged at $65 Brent.
In a discussion of the year’s cadence, Cleo said the 2026 program is designed to reduce corporate decline to roughly 2%, with an effectively “flat” quarter-over-quarter glide path. The program is weighted toward lower-risk development, with roughly two-thirds of activity on sidetracks and one-third on new wells, supported by a robust workover program. Management said the sequencing is deliberate, with more sidetracks and workovers in the first half and a transition into new wells as permit inventory builds.
On capital efficiency, Cleo said the 2026 program’s development costs are about $9 per BOE, with “just shy of 4x” multiple on invested capital, mid-40% returns at $65 Brent, and roughly a three-year payout, describing the portfolio as 90% oil-weighted.
Carbon capture, power, and other assets: milestones and optionality
CRC’s Carbon TerraVault (CTV) business was a major focus. León said construction is complete on what he described as California’s first commercial-scale CCS project at Elk Hills, and the project is in the commissioning and testing phase. He said CRC has successfully captured CO2 from its gas processing plant and is awaiting final EPA approval to commence injection.
León also said the company filed CTV II with the EPA, describing it as another 27 million tons of capacity adjacent to CTV I, supporting a hub concept at Elk Hills. He said CRC expects draft permits tied to filings made two to three years ago to begin coming through in 2026.
On the power platform and data center opportunity, León said CRC is advancing a “power now” concept to provide initial scale from the Elk Hills Power Plant and through partnerships with nearby plants, including La Paloma and Sunrise, for a total portfolio of 2 gigawatts. He also described work on a “land now” concept—permitted and powered land—saying CRC is working with a leading data center developer and is in early stages of design and permitting.
In response to a question about Resource Adequacy, management said pricing has normalized from prior spikes and cited an expected $25 million to $50 million annually of Resource Adequacy revenue in 2026 under current conditions.
CRC also addressed several assets acquired with Berry, including an oil-weighted position in Utah’s Uinta Basin. León said Berry drilled four horizontals in the Uteland Butte member that are tracking around type curve and that additional benches such as Castle Peak and Wasatch appear promising. He said CRC is evaluating options, but the asset must compete for capital against California returns.
Finally, the company provided an update on its Huntington Beach asset, describing it as 90 acres of beachfront property. Management said the asset is currently cash flow positive and that production is effectively funding ongoing plugging and abandonment work. CRC said it has made progress with the City of Huntington Beach on entitlements, expects formal review in late 2026, followed by approximately two years of review by the Coastal Commission, and that it expects roughly 80 active wells would remain to plug once entitlements are approved.
About California Resources (NYSE:CRC)
California Resources Corporation (NYSE: CRC) is an independent exploration and production company focused exclusively on developing oil and natural gas assets in California. Headquartered in Newport Beach, the company engages in hydraulic fracturing, well completions, reservoir management and enhanced recovery operations to produce crude oil, natural gas and natural gas liquids.
CRC’s operations are concentrated in three core regions: the Los Angeles Basin, the Ventura Basin and the San Joaquin Basin.
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