California Resources Q3 2026 Production Rises 2%

California Resources Corporation (NYSE: CRC) reported third-quarter 2026 net production of 152,000 barrels of oil equivalent per day, up about 2% sequentially as reservoir performance, drilling and workover activity, and higher natural gas liquids output supported volumes. The California-focused producer also advanced its portfolio reshaping through the completed Crimson midstream acquisition and an agreement to divest its non-core Uinta Basin assets.

The company generated $341 million of adjusted EBITDAX and $300 million of operating cash flow before working-capital changes during the quarter. Free cash flow before working-capital changes was $142 million, while total capital spending was $158 million, including $155 million for exploration and production.

CRC returned $66 million to shareholders, consisting of $30 million of share repurchases and $36 million of dividends. That represented about 45% of quarterly free cash flow. The company increased its quarterly dividend by approximately 4% to $0.42 per share, although future dividends and repurchases remain subject to commodity prices, debt covenants and board approval.

Production growth and cost pressures

Oil accounted for roughly 80% of total production. Net oil production increased about 1% from the prior quarter to 121,000 barrels per day, primarily reflecting crude inventory sales and drilling and workover activity. The Uinta assets contributed approximately 4,000 barrels of oil equivalent per day.

CRC’s first carbon capture and storage project also supported operating results by cleaning inlet gas supplied to the Elk Hills cryogenic gas plant. A connection from the Belridge field provided additional gas for processing, contributing about 1,000 barrels of oil equivalent per day of incremental net NGL production. CRC estimated the arrangement could provide an annual revenue benefit of approximately $20 million under the assumptions used in the presentation.

Third-quarter operating costs were $386 million, while general and administrative expense was $89 million, or $79 million on an adjusted basis. Higher-than-anticipated natural gas prices increased energy costs for field operations, and elevated diesel margins raised costs for drilling rigs.

The company said its hedging program partially addresses that exposure. About 58% of estimated fourth-quarter 2026 natural gas consumption was hedged at an average price of $4.23 per million British thermal units, while approximately 58% of estimated 2027 consumption was hedged at an average of $3.98.

Oil realizations were approximately 91% of Brent in the quarter, compared with 95% in the second quarter. Average realized oil prices, including hedges, were $72.46 per barrel. NGL realizations were about 53% of Brent, while natural gas realizations were 119% of NYMEX.

California portfolio repositioning

CRC completed its all-cash acquisition of Crimson for an initial purchase price of approximately $63 million, excluding preliminary purchase-price adjustments. The transaction adds a roughly 2,000-mile midstream network, storage assets and rights-of-way that CRC said could help support a potential statewide carbon dioxide pipeline system.

The company is targeting the restart of the San Pablo Bay Pipeline in the first quarter of 2027. Development of a broader CO2 pipeline network would require additional land rights, permits, engineering, construction and significant capital, and CRC said there is no assurance the project will proceed.

Separately, CRC agreed to sell its Uinta Basin assets for an initial cash price of approximately $90 million before transaction costs and customary adjustments. The transaction is expected to close by the end of 2026, subject to third-party consents and customary conditions. CRC said the divestiture allows it to redirect about $35 million of remaining 2026 drilling and completion capital toward shareholder returns and other corporate purposes.

Carbon management expansion

CRC’s Carbon TerraVault subsidiary signed a non-binding memorandum of understanding with Bloom Energy to evaluate clean-power projects totaling at least 1 gigawatt and the potential storage of up to 3 million metric tons of CO2 annually. The parties are considering both utility-facing and behind-the-meter projects across California.

CRC also submitted a new EPA Class VI permit application covering approximately 57 million metric tons of potential CO2 storage, bringing its total submitted or received permit volumes to about 409 million metric tons. The company expects one or more additional draft Class VI permits by year-end 2026. Actual storage volumes and injection periods may differ from the amounts included in permit applications.

Fourth-quarter outlook

For the fourth quarter, including the Uinta assets, CRC expects net production of 150,000 to 152,000 barrels of oil equivalent per day, with oil representing about 79% of volumes. Adjusted EBITDAX is projected at $340 million to $380 million, and total capital spending is expected to range from $110 million to $130 million.

The outlook assumes Brent crude at $102.90 per barrel and NYMEX natural gas at $3.25 per thousand cubic feet. CRC estimated that production-sharing contract mechanics could reduce sequential net production by about 1,000 barrels of oil equivalent per day. Under these contracts, the company’s reported share of production generally declines as commodity prices rise.

For early 2027 planning, management indicated approximately $450 million to $475 million of drilling, completion and workover capital, an average of about six rigs and flat gross production from the beginning to the end of the year. CRC plans to disclose targets for its next phase of organic cost reductions with its 2027 plan.

At September 30, CRC had net debt of $1.27 billion, liquidity of $1.32 billion and net leverage of 1.0 times. Its revolving credit facility had no outstanding borrowings, and the company reported no debt maturities before 2034.

The outlook remains exposed to commodity-price volatility, changes in price realizations, production performance, energy costs and regulatory approvals. The timing and economics of the Uinta divestiture, Crimson integration, carbon storage permits and projects contemplated under the Bloom memorandum are also subject to execution and approval risks.