California Resources to buy Berry Corp in $717 million deal amid regulatory shift
By Pooja Menon
Sept 15 (Reuters) - California Resources CRC.N said on Monday it would buy rival Berry Corp BRY.O, hoping to create a bigger, more cost-efficient oil and gas producer in the most populous U.S. state as it eases its stringent environmental regulations.
The all-stock deal, which values Berry at $717 million including debt, comes just days after lawmakers in California passed a bill to boost oil drilling in Kern County. The move, aimed at making oil supply more affordable for the state's refineries and keeping prices in check, marks a major reprieve for energy companies that have been leaving the state due to its strict restrictions on fossil fuels.
Berry shareholders will receive 0.0718 of California Resources shares for each share they own. That values Berry at $3.806 apiece and puts the equity value of the deal at about $295 million, according to Reuters calculations.
Shares of Berry jumped 20.7% to $3.99, while California Resources rose 5.2%.
"We think this acquisition makes a lot of strategic sense for (California Resources) given the overlap and adjacency of (Berry's) California assets," said Roth MKM analysts.
"The recent legislative move in California to reopen oil and gas well permitting in Kern County ... makes the deal even more compelling."
California Resources will also own Berry's C&J Well Services unit as part of the transaction. This business will help it to manage wells and improve operational efficiency.
Besides, the deal will bring in Berry's Uinta Basin position in Utah, adding oil-focused operational and financial flexibility.
On a pro forma basis, the combined company would have produced about 161,000 barrels of oil equivalent per day in the second quarter and held about 652 million boe of proved reserves as of 2024-end.
California Resources shareholders will own about 94% of the combined company. Berry's long-term debt stood at $364.6 million, as of June 30.
The transaction, expected to close in the first quarter of 2026, has been approved by the boards of both companies.
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