California Resources Corp
For the period ended Jun 30, 2026. Filed Aug 10, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 10, 2026
CRC$46.96+3.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001609253-26-000106
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-10.
0001609253-26-000130
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 147 previous paragraphs and 167 current paragraphs.
91 unchanged; 37 reworded; 30 added; 19 removed; 0 previous and 9 current paragraphs rearranged.
Tables are not compared: 15 previous and 24 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (30)
Current report
In the three months ended June 30, 2026, we were informed by a pipeline operator that it had received nominations in excess of available capacity on a segment of its pipeline and the volume of crude oil we were allowed to transport was pro-rated along with other shippers. This led to both lower realizations, higher transportation costs and the incurrence of capital expenditures related to additional storage capacity as we sought alternative routes to market. We also experienced a temporary crude oil inventory build of approximately 137,000 barrels that negatively impacted our net production sold for the period. A substantial majority of this inventory was sold in July 2026.
Current report
Furthermore, our realized prices were negatively impacted during the period due to force majeure claims made by certain counterparties that affected pricing and offtake commitments.
Current report
The negative impact of these disputes to our pre-tax income for the three months ended June 30, 2026 was approximately $25 million.
Current report
We are disputing the pipeline operator's ability to pro-rate our nominations under the applicable tariff as well as the validity of the force majeure claims. We expect to prevail in these disputes, however, the timing and outcome of such disputes are inherently uncertain. If we are not able to resolve these disputes on favorable terms or in a timely manner, we could experience an adverse effect on our realizations, our ability to market our crude oil and our financial results.
Current report
We currently hold sufficient permits to support our 2026 capital program and we continue to build our permit inventory in anticipation of our expected operations in 2027. Refer to Liquidity and Capital Resources, Capital Program for additional information on our 2026 capital program.
Current report
In May 2026, CARB adopted amendments updating the existing cap-and-invest program. The amendments include the inclusion of carbon capture and sequestration projects as activities that could qualify for reducing a reporting entity’s cap-and-invest reporting requirements. Before this credit mechanism can take effect, however, CARB must adopt additional rules under SB 905 defining a "quantification methodology" for how such reductions resulting from the projects will be measured and verified. The amendments also create a new “Manufacturing Decarbonization Incentive” under which an entity may be eligible for incentive allowances for carbon capture and sequestration projects. The amendments also revise the cap-and-invest program’s allowance budgets between 2027 and 2030. However, these changes to the allowance budgets are not expected to materially affect CRC’s compliance with the program or its operations thereunder. In July 2026, Communities for a Better Environment filed a lawsuit challenging the regulatory amendments alleging violations of the California Environmental Quality Act. We cannot predict whether or not this challenge will ultimately be successful or how CARB may revise the amendments if the challenge is successful.
Current report
Energy operating costs — Energy operating costs for the three months ended June 30, 2026 were $87 million, which was a decrease of $23 million from $110 million for the three months ended March 31, 2026. This decrease was primarily due to lower prices for natural gas purchased and used in our steamflood operations.
Current report
Non-energy operating costs — Non-energy operating costs for the three months ended June 30, 2026 were $254 million, which was an increase of $4 million from $250 million for the three months ended March 31, 2026 primarily due to additional downhole maintenance activity.
Current report
General and administrative expenses — General and administrative (G&A) expenses were $97 million for the three months ended June 30, 2026 compared to $106 million for the three months ended March 31, 2026. The decrease primarily resulted from lower compensation-related costs due to workforce reductions associated with the Berry Merger and lower cash-settled stock-based compensation expense resulting from a decline in the fair value of our incentive awards.
Current report
Net loss (gain) on natural gas purchase derivatives — Net loss from derivatives related to our purchase of natural gas was $5 million for the three months ended June 30, 2026 compared to a net loss of $24 million for the three months ended March 31, 2026. The change primarily resulted from changes in the fair value of our outstanding commodity derivatives from the positions held, as well as the relationship between contract prices and the associated forward curves at the end of each measurement period. Gains and losses from our commodity derivative contracts are shown in the table below:
Current report
Income taxes – We recorded an income tax benefit of $56 million on $458 million of income before taxes for the three months ended June 30, 2026, representing an effective tax rate of 12% for the period and an annual effective tax rate of 35% for the six months ended June 30, 2026. The tax rate for the three months ended June 30, 2026 reflects a true up to the annual effective tax rate of 6% from the prior quarter as a result of an increase in the full year projected pre-tax loss and the benefit of income tax credits such as the marginal well credit made available in June 2026. The projected full year pre-tax loss is largely due to the effect of the derivative losses. The effective tax rate for the three months ended March 31, 2026 reflects nondeductible compensation and tax credits. See Part I, Item 1 – Financial Statements, Note 7 Income Taxes.
Current report
Six months ended June 30, 2026 compared to June 30, 2025
Current report
(a)The increase in production primarily relates to the addition of the Berry fields on December 18, 2025. See Part I, Item 1 – Financial Statements, Note 2 Business Combinationfor additional information.
Current report
Revenue from marketing of purchased commodities — Revenue from marketing of purchased commodities was $67 million for the six months ended June 30, 2026, which was a decrease of $53 million from $120 million during the six months ended June 30, 2025. The decrease was primarily the result of lower natural gas prices and volumes in 2026 compared to 2025. Additionally, we had lower crude oil volumes purchased and used for blending in the six months ended June 30, 2026 compared to 2025.
Current report
Energy operating costs — Energy operating costs for thesix months ended June 30, 2026 were$197 million, which was an increase of $16 million from$181 million for thesix months ended June 30, 2025. The increase is primarily related to the addition of the Berry fields for the fullsix months of 2026 compared to the same prior year period. Excluding Berry, energy operating costs decreased due to lower prices and volumes of natural gas purchased and used in our steamflood operations for thesix months ended June 30, 2026.
Current report
Non-energy operating costs— Non-energy operating costs for thesix months ended June 30, 2026 were$504 million, which was an increase of$83 million from$421 million for thesix months ended June 30, 2025. The increase is primarily related to the operation of the Berry fields for the fullsix months of 2026 compared to a six-month period in the same prior year period. Excluding Berry, we had higher downhole maintenance activity and compensation-related expenses during thesix months ended June 30, 2026 compared to the same prior year period. These increases were partially offset by a decrease in workover activity and lower surface operations maintenance activity.
Current report
General and administrative expenses — General and administrative (G&A) expenses were $203 million for the six months ended June 30, 2026 compared to $151 million for the six months ended June 30, 2025, which was an increase of $52 million. The increase was primarily due to additional compensation-related expense and other corporate expenses resulting from the Berry Merger. We also had higher legal costs in the six months ended June 30, 2026 compared to the same prior year period.
Current report
Transportation costs — Transportation costs for the six months ended June 30, 2026 were $56 million which is an increase of $16 million from $40 million for the six months ended June 30, 2025. The increase in transportation costs was primarily a result of additional transportation contracts assumed in the Berry Merger.
Current report
Net loss (gain) from natural gas purchase derivatives — Net loss from derivatives related to our purchase of natural gas was $29 million for the six months ended June 30, 2026 compared to a net gain of $3 million for the six months ended June 30, 2025. The change primarily resulted from changes in the fair value of our outstanding commodity derivatives from the positions held, as well as the relationship between contract prices and the associated forward curves at the end of each measurement period. Gains and losses from our natural gas purchase derivative contracts are shown in the table below:
Current report
Other operating expenses, net — Other operating expenses, net increased $16 million to $114 million for the six months ended June 30, 2026 compared to $98 million for the six months ended June 30, 2025.
Current report
(a)See Part I, Item 1 – Financial Statements, Note 5 Lawsuits, Claims, Commitments and Contingenciesfor more information on a $25 million payment we made to CalGEM during the six months ended June 30, 2025.
Current report
Loss on early extinguishment of debt– Loss on early extinguishment of debt was $49 million for the six months ended June 30, 2026, which included $40 million of premiums paid and $9 million of write-offs of unamortized debt issuance costs net of unamortized premium. Loss on early extinguishment of debt was $1 million for the six months ended June 30, 2025 for the write-off of unamortized debt issuance costs.
Current report
For financial information related to our subsidiaries designated as Unrestricted Subsidiaries under the 2034 Senior Notes Indenture and 2035 Senior Notes Indenture, see Part I, Item 1 – Financial Statements, Note 14 Condensed Consolidating Financial Information.
Current report
Total average net production sold increased to 152 MBoe/d for the six months ended June 30, 2026 compared to 139 MBoe/d for the six months ended June 30, 2025. The increase included 22 MBoe/d related to the addition of the Berry properties. Excluding the impact of Berry production, our production decreased as a result of an increase in our crude oil inventory and natural production decline, partially offset by increased production from drilling and workover activity. Our PSCs, which are described below, negatively impacted our net oil production by 1 MBoe/d in the six months ended June 30, 2026 compared to the six months ended June 30, 2025. For more information on the increase in our crude oil inventory, see Marketing Arrangements above.
Current report
Oil — Brent crude oil prices for the three and six months ended June 30, 2026 were volatile as a result of the conflict in the Middle East, as well as various market responses to cessations in hostilities.
Current report
Senior Notes
Current report
With respect to oil and natural gas development, we expect to run an average of 5 rigs in the second half of 2026 which is an increase from an average of 4 drilling rigs in the first half of 2026.
Current report
Acquisitions and Divestitures
Current report
Crimson Acquisition
Current report
In June 2026, we entered into an agreement to acquire Crimson Midstream Holdings, LLC (Crimson) from CorEnergy Infrastructure Trust Inc. Crimson owns various onshore midstream assets in California, including the San Pablo Bay Pipeline and SoCal Pipeline System. The aggregate cash purchase price for the transaction is approximately $63 million, subject to certain adjustments. We believe this transaction strengthens our long-term market access, while also providing opportunities to enhance flow and optimize utilization of the pipeline system. We also expect to generate tariff revenue from certain of these lines that are in service as common carriers. Closing of the transaction is contingent on satisfaction of customary closing conditions, including receipt of required government approvals, and is expected later this year.
Removed paragraphs (19)
Previous report
We continued to experience relatively flat pricing from our suppliers during the first three months of 2026 compared to the prior year. U.S. tariff policy regarding both country of origin and material type remains highly uncertain and subject to future changes. During 2025, the United States significantly expanded tariff rates on imported goods, including increasing Section 232 tariffs on steel and aluminum to 50% and adding copper at the same rate. In February 2026, the Supreme Court ruled that the President's use of emergency powers under the International Emergency Economic Powers Act to impose country-specific "reciprocal" tariffs was unconstitutional; however, Section 232 metals tariffs were not affected by this ruling. In April 2026, the Federal government further restructured the Section 232 metals tariffs establishing a tiered rate structure based on metal content and applying tariffs to the full customs value of imported articles rather than only the embedded metal content.
Previous report
These expanded and restructured tariff rates are expected to increase our cost of oilfield goods and extend delivery lead times over the longer term. The shift to full-value assessment for derivative articles, in particular, may increase duty burdens on certain imported components and assemblies beyond prior levels. Overall, we expect a slight impact from tariffs on our supply chain in 2026. We believe we can mitigate a portion of these cost increases through bulk purchases, domestic sourcing, and ongoing review of product classifications and supplier origin. However, the evolving nature of tariff policy—including the potential for future modifications, legal challenges, and new product inclusions — creates continued uncertainty that may limit our ability to fully offset these impacts.
Previous report
In early 2026 Valero ceased purchasing crude oil for its Benicia refinery and it is reported that the refinery ceased operations in April 2026. While we have historically sold a portion of our crude oil to this refinery, we have not experienced difficulty in selling our production to the remaining refineries in California or any negative impact on pricing or realizations as a result of this closure.
Previous report
In March 2026, the United States Secretary of Energy issued an order under the authority of the Defense Production Act of 1950 directing Sable Offshore Corp. (Sable) to restart oil and gas production at the San Ynez Unit, located in Federal offshore waters, and to facilitate the movement of offshore crude oil into California via the Las Flores pipeline. The State of California and other non-governmental organizations have filed suit against the United States Secretary of Energy and Sable, the owner of the San Ynez Unit, to block transportation of this crude oil into California. However, Sable has indicated that it is currently producing crude oil and has the potential to increase production to approximately 60,000 barrels per day. We expect that this additional production could strain existing pipeline transportation capacity required to reach refiners, which could require us to find alternative routes to market that may be limited or more costly. In addition, we expect that this production will have the potential to compete with our crude oil production in the California refining market.
Previous report
During the three months ended March 31, 2026, we received permits for 66 new oil and gas wells, 21 workovers and 2 sidetracks. We currently hold sufficient permits to support a seven rig program, which includes 6 rigs in California and 1 rig in Utah, in the second half of 2026.
Previous report
Water Injection
Previous report
Our operations in the Wilmington Oil Field use injection wells to reinject produced water under approved waterflooding plans. CalGEM has issued a directive to reduce the injection well pressure in a gradual manner in accordance with a five-year injection reduction work plan. The first phase of reduction commenced July 1, 2024, and a second reduction began in January 2025. We expect that the next phase of reduction will remain on hold until the fall of 2026 while we evaluate the impact of the previously implemented reductions together with CalGEM. We currently estimate a negligible impact on production and reserves under the existing work plan. However, material changes to the existing plan could require revisions to these estimates.
Previous report
In January 2026, the California Air Resources Board released proposed amendments to update its existing Cap-and-Invest program. The rulemaking process is ongoing, and the final terms and requirements of any proposed amendments have not yet been determined. We are actively monitoring these developments and potential impacts to our business.
Previous report
Energy operating costs — Energy operating costs for the three months ended March 31, 2026 were $110 million, which was an increase of $9 million from $101 million for the three months ended December 31, 2025 primarily due to the addition of the effect of the Berry properties as part of the Berry Merger. Excluding the Berry properties, energy operating costs decreased as a result of lower natural gas prices in the three months ended March 31, 2026 compared to the three months ended December 31, 2025.
Previous report
Non-energy operating costs — Non-energy operating costs for the three months ended March 31, 2026 were $250 million, which was an increase of $30 million from $220 million for the three months ended December 31, 2025 primarily due to the addition of the Berry properties following the Berry Merger. Excluding the Berry properties, non-energy operating costs decreased for the three months ended March 31, 2026 compared to the three months ended December 31, 2025 primarily due to lower compensation-related costs and less workover and surface maintenance activity.
Previous report
General and administrative expenses — General and administrative (G&A) expenses were $106 million for the three months ended March 31, 2026 compared to $95 million for the three months ended December 31, 2025. The increase primarily resulted from the Berry Merger including $12 million from higher compensation-related costs related to the addition of the Berry workforce and $3 million of incremental insurance cost. Additionally, cash-settled stock-based compensation expense increased by $7 million due to higher value on our incentive awards resulting from an increase in our stock price at March 31, 2026 compared to December 31, 2025. We also had higher legal costs in the three months ended March 31, 2026 compared to the three months ended December 31, 2025. Offsetting these increases, compensation-related expenses decreased $10 million in the three months ended March 31, 2026 compared to the three months ended December 31, 2025 due to the reduction of annual incentive compensation accruals.
Previous report
Asset impairment— We did not record an asset impairment in the three months ended March 31, 2026. We recognized an asset impairment during the three months ended December 31, 2025 of $57 million related to the write-down of our proved natural gas properties in the Sacramento basin. For more information, refer to Part II, Item 8 – Financial Statements and Supplementary Data, Note 3 Property, Plant and Equipmentin our 2025 Annual Report for more information.
Previous report
(a)Asset impairment for the three months ended December 31, 2025 includes the write-down of our proved properties in the Sacramento basin.
Previous report
Oil — Brent crude oil prices for the three months ended March 31, 2026 were volatile as market focus during the period shifted from a developing oversupply situation to shortages driven by the military conflict in the Middle East and escalating crude infrastructure damage in Russia. For the three months ended March 31, 2026, Brent crude oil prices averaged $77.90 per barrel which was higher than $63.08 for the three months ended December 31, 2025.
Previous report
2029 Senior Notes
Previous report
In March 2026, we redeemed $350 million in face value of 2029 Senior Notes from the proceeds of an offering of additional 2034 Senior Notes. See Part I, Item 1 – Financial Statements, Note 4 Debtfor more information.
Previous report
2034 Senior Notes
Previous report
With respect to oil and natural gas development, we expect to increase to a seven rig program in the second half of 2026, which includes 6 rigs in California and 1 rig in Utah. We currently hold sufficient permits to support a seven rig program in the second half of 2026.
Previous report
•the expected timing and resumption of the issuance of well permits following the enactment of SB 237;
Reworded paragraphs (37)
Previous wording
Global oil prices increased significantly towards the end of the three months ended March 31, 2026 and continuing to date through the second quarter due to military conflicts and geopolitical tensions. In March 2026, oil prices escalated sharply as Middle East crude and product flows from the region were interrupted due to damage to regional energy infrastructure and the effective closure of the Strait of Hormuz. Additionally, oil prices were affected to a lesser extent by Ukrainian military strikes that significantly impacted Russian export capabilities. We expect oil prices to remain volatile as these geopolitical circumstances continue to evolve. Refer to Results of Our Oil and Natural Gas Operations, Production, Prices and Realizations below for information on our realized prices.
Current wording
Global oil prices were volatile during the first half of 2026 and continuing into the third quarter of 2026. During the second quarter of 2026, oil prices generally remained elevated due to the ongoing conflict in Iran and neighboring countries, disruptions to shipping through the Strait of Hormuz and concerns regarding the impact of supply disruptions on global energy markets. Oil prices declined sharply during the second half of June 2026 as tensions in the Middle East eased following an agreement to reopen the Strait of Hormuz. Prices were further impacted by continued tepid demand from Chinese refiners and the release of strategic petroleum reserves. In July 2026, oil prices increased as tensions in the Middle East re-escalated. We expect oil prices to remain volatile as these geopolitical circumstances continue to evolve. Refer to Results of Our Oil and Natural Gas Operations, Production, Prices and Realizations below for information on our realized prices.
Previous wording
High fuel costs are adversely impacting transportation and equipment prices, and high oil prices are impacting oil-based products such as chemicals and lubricants. At current oil prices, we expect these costs to increase by $6 million to $8 million for the remainder of 2026.
Current wording
We continued to experience relatively flat pricing from our suppliers during the first six months of 2026 compared to the prior year. However, high fuel costs are adversely impacting transportation and equipment prices, and high oil prices are impacting oil-based products such as chemicals and lubricants. We expect these prices to impact our full year 2026 costs by approximately $9 million.
Previous wording
CA Cap-and-Invest (AB 1207 and SB 840)
Current wording
California Cap-and-Invest (AB 1207 and SB 840)
Previous wording
Our consolidated results of operations include the results of Berry beginning on December 18, 2025, the closing date of the Berry Merger. For more information on the Berry Merger, see Part I, Item 1 – Financial Statements, Note 2 Business Combination. The Berry Merger affected the comparability of our financial results for the three months ended March 31, 2026 to the prior comparative period.
Current wording
Our consolidated results of operations include the results of Berry beginning on December 18, 2025, the closing date of the Berry Merger. For more information on the Berry Merger, see Part I, Item 1 – Financial Statements, Note 2 Business Combination. The Berry Merger affected the comparability of our financial results for the three and six months ended June 30, 2026 as compared to the prior-year comparative periods.
Previous wording
Oil, natural gas and natural gas liquids sales — Oil, natural gas and natural gas liquids sales, excluding the effects of cash settlements on our commodity derivative contracts, were $905 million for the three months ended March 31, 2026, which was an increase of $226 million compared to $679 million for the three months ended December 31, 2025. Oil, natural gas and natural gas liquids sales included $131 million and $18 million for the three months ended March 31, 2026 and December 31, 2025, respectively, related to sales of additional production from the Berry properties following the completion of the Berry Merger on December 18, 2025.
Current wording
Oil, natural gas and natural gas liquids sales — Oil, natural gas and natural gas liquids sales, excluding the effects of cash settlements on our commodity derivative contracts, were $1,056 million for the three months ended June 30, 2026, which was an increase of $151 million compared to $905 million for the three months ended March 31, 2026.
Previous wording
Revenue from marketing of purchased commodities— Revenue from marketing of purchased commodities was $41 million for the three months ended March 31, 2026 compared to $60 million for the three months ended December 31, 2025. The decrease was related to lower natural gas prices in California resulting from high storage levels.
Current wording
Revenue from marketing of purchased commodities— Revenue from marketing of purchased commodities was $26 million for the three months ended June 30, 2026 compared to $41 million for the three months ended March 31, 2026. The decrease was mainly related to lower crude oil volumes purchased and used in blending in the three months ended June 30, 2026 compared to the three months ended March 31, 2026.
Previous wording
Changes in our stock price introduce volatility in our results of operations because we pay cash-settled incentive awards based on our stock price on the vesting date and accounting rules require that we adjust our obligation for unvested awards to the amount that would be paid using our stock price at the end of each reporting period. Consequently, any future increases in our stock price will result in additional cash-settled stock-based compensation expense. Similarly, any future decrease in our stock price will result in lower compensation expense. Equity-settled stock-based compensation awards are not similarly adjusted for changes in our stock price. General and administrative expenses for equity-settled stock-based compensation, was approximately $7 million for the three months ended March 31, 2026 and $6 million for the three months ended December 31, 2025.
Current wording
Changes in our stock price introduce volatility in our results of operations because we pay cash-settled incentive awards based on our stock price on the vesting date and accounting rules require that we adjust our obligation for unvested awards to the amount that would be paid using our stock price at the end of each reporting period. Consequently, any future increases in our stock price will result in additional cash-settled stock-based compensation expense. Similarly, any future decrease in our stock price will result in lower compensation expense. Equity-settled stock-based compensation awards are not similarly adjusted for changes in our stock price. General and administrative expenses for equity-settled stock-based compensation, were approximately $8 million for the three months ended June 30, 2026 and $7 million for the three months ended March 31, 2026.
Previous wording
Other operating expenses, net — Other operating expenses, net decreased $28 million to $54 millionfor the three months ended March 31, 2026 compared to $82 million for the three months ended December 31, 2025. For the three months ended March 31, 2026 and December 31, 2025, other operating expenses, net includes the following:
Current wording
Other operating expenses, net — Other operating expenses, net increased $6 million to $60 millionfor the three months ended June 30, 2026 compared to $54 million for the three months ended March 31, 2026. For the three months ended June 30, 2026 and March 31, 2026, other operating expenses, net includes the following:
Previous wording
Net (loss) gain from commodity sales derivatives — We report gains and losses on our derivative contracts related to sales of our oil and marketing activities in operating revenues. Net loss from commodity sales derivatives was $848 million for the three months ended March 31, 2026 compared to a net gain of $126 million for the three months ended December 31, 2025. The change primarily resulted from the non-cash changes in the fair value of our outstanding commodity derivatives from the positions held at the end of each measurement period. Oil prices significantly increased as of March 31, 2026 compared to December 31, 2025. For instance, the Brent forward curve for the twelve months following March 31, 2026 increased by approximately 40% to $83.66 compared to $60.30 at December 31, 2025. As of March 31, 2026, we have hedges on approximately 65% of our expected oil production for the remainder of 2026 at a weighted average floor price of $64.99. Gains and losses from our commodity derivative contracts are shown in the table below:
Current wording
Net (loss) gain from commodity derivatives –We report gains and losses on our derivative contracts related to sales of our produced oil and marketing activities in operating revenue. Net loss from commodity derivatives was $643 million for the six months ended June 30, 2026 compared to a net gain of $163 million for the six months ended June 30, 2025. The change primarily resulted from payments to settle commodity derivative contracts and the non-cash changes in the fair value of our outstanding commodity derivatives from the positions held at the end of each measurement period. Gains and losses from our commodity derivative contracts are shown in the table below:
Previous wording
Electricity revenue — Electricity revenue decreased by $41 million to$11 million for the three months ended March 31, 2026 compared to $52 million for the three months ended December 31, 2025. This decrease was primarily a result of reduced resource adequacy revenues as well as less electricity generated in response to market conditions during the three months ended March 31, 2026 compared to the three months ended December 31, 2025.
Current wording
Electricity revenue — Electricity revenue decreased by $63 million to $17 million for the six months ended June 30, 2026 compared to $80 million for the six months ended June 30, 2025. This decrease was primarily a result of lower pricing from resource adequacy contracts in 2026 compared to the prior year period.
Previous wording
Taxes other than on income — Taxes other than on income for the three months ended March 31, 2026 were $67 million, which was an increase of $12 million from $55 million for the three months ended December 31, 2025. The increase was primarily due to an increase in ad valorem and production taxes resulting from the Berry Merger.
Current wording
Taxes other than on income — Taxes other than on income for the six months ended June 30, 2026 were $133 million, which is an increase of $16 million from $117 million for the six months ended June 30, 2025. This increase was a result of higher greenhouse gas expense, production taxes and ad valorem taxes related to the Berry assets following the completion of the Berry Merger.
Previous wording
Costs related to marketing of purchased commodities — Costs related to marketing of purchased commodities were $23 million for the three months ended March 31, 2026 compared to $47 million for the three months ended December 31, 2025. The decrease was primarily a result of lower natural gas prices and volumes purchased in the three months ended March 31, 2026.
Current wording
Costs related to marketing of purchased commodities — Costs related to marketing of purchased commodities were $38 million for the six months ended June 30, 2026, which was a decrease of $53 million from $91 million for the six months ended June 30, 2025. The decrease primarily related to lower natural gas prices and lower crude oil volumes purchased for blending in the six months ended June 30, 2026 compared to 2025.
Previous wording
Income taxes – The income tax provision for the three months ended March 31, 2026 was a benefit of $49 million (representing an effective tax benefit of 6%), compared to a provision of $11 million (representing an effective tax rate of 48%) for the three months ended December 31, 2025. The effective tax rate for the three months ended March 31, 2026, reflects nondeductible compensation and tax credit. See Part I, Item 1 – Financial Statements, Note 7 Income Taxes.
Current wording
Income taxes – The income tax benefit for the six months ended June 30, 2026 was $105 million (representing an effective tax rate of 35%), compared to a provision of $117 million (representing an effective tax rate of 29%) for the six months ended June 30, 2025. See Part I, Item 1 – Financial Statements, Note 7 Income Taxes for additional information on our income taxes.
Previous wording
The following table includes financial results and key operating data for our oil and natural gas segment for the three months ended March 31, 2026 and December 31, 2025.
Current wording
The following table includes financial results and key operating data for our oil and natural gas segment for the periods presented.
Previous wording
(b)Includes general and administrative expenses allocated to our oil and natural gas segment.
Current wording
(a)Includes general and administrative expenses allocated to our oil and natural gas segment.
Previous wording
(c)Excludes depreciation, depletion and amortization related to our corporate assets and our Elk Hills power plant.
Current wording
(b)Excludes depreciation, depletion and amortization related to our corporate assets and our Elk Hills power plant.
Previous wording
The following table presents our net production sold per day in each of the California basins in which we operate for the periods presented. The amounts in the production table below include volumes produced from operated and non-operated fields for each of the periods presented.
Current wording
The following table presents our net production sold per day in each of the basins in which we operate for the periods presented. The amounts in the production table below include volumes produced from operated and non-operated fields for each of the periods presented.
Previous wording
Total average net production sold increased by 17 MBoe/d to 154 MBoe/d for the three months ended March 31, 2026 compared to 137 MBoe/d forthe three months ended December 31, 2025. The increase included 19 MBoe/d related to the addition of the Berry properties. Excluding the impact of the Berry production, our net production decreased by 1 MBoe/d primarily as a result of natural decline, offset by development results. Additionally our production-sharing contracts (PSCs), which are described below, negatively impacted our net oil production by 1 MBoe/d in the three months ended March 31, 2026 compared to the three months ended December 31, 2025.
Current wording
Total average net production sold decreased by 5 MBoe/d to 149 MBoe/d for the three months ended June 30, 2026 compared to 154 MBoe/d forthe three months ended March 31, 2026. The decrease was primarily a result of an increase in our crude oil inventory and natural production decline, partially offset by increased production from drilling and workover activity. Additionally our production-sharing contracts (PSCs), which are described below, negatively impacted our net oil production by 2 MBoe/d in the three months ended June 30, 2026 compared to the three months ended March 31, 2026.
Previous wording
The reporting of our PSCs creates a difference between reported operating costs, which are for the full field, and reported volumes, which are only our net share, inflating the per barrel operating costs. For further information on our production-sharing contracts, see Part I, Item 1 & 2 Business and Properties, Oil and Natural Gas Operations, Production, Price and Cost History in our 2025 Annual Report.
Current wording
The reporting of our PSCs creates a difference between reported operating costs, which are for the full field, and reported volumes, which are only our net share, inflating the per barrel operating costs. For further information on our production-sharing contracts, see Part I, Item 1 & 2 Business and Properties, Oil and Natural Gas Segment, Production, Price and Cost History in our 2025 Annual Report.
Previous wording
NGLs — Realizations on natural gas liquids during the three months ended March 31, 2026 decreased compared to the three months ended December 31, 2025 as propane inventories built despite seasonal demand. California NGLs maintained a material premium to the broader North American NGL market.
Current wording
NGLs — Realizations on natural gas liquids during the three months ended June 30, 2026 decreased compared to the three months ended March 31, 2026 as liquids attempted to keep pace with crude oil prices. Prices for natural gas liquids during the six months ended June 30, 2026 were slightly lower than the prior year due to year-over-year increases in U.S. natural gas production and ample product inventories. California NGLs maintained a premium to the broader North American NGL market.
Previous wording
Natural Gas — North American natural gas prices for the three months ended March 31, 2026 were generally higher compared to the three months ended December 31, 2025 as the Eastern part of the country experienced unseasonably cold weather. California natural gas prices for the three months ended March 31, 2026 were lower than the three months ended December 31, 2025 as warmer-than-normal temperatures and an abundance of storage impacted prices.
Current wording
Natural Gas — North American natural gas prices for the three months ended June 30, 2026 were generally lower compared to the three months ended March 31, 2026 due to reduced seasonal demand. Natural gas prices increased for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 driven by stronger winter demand. California natural gas prices for the three months ended June 30, 2026 were lower than the three months ended March 31, 2026 as storage inventories remained elevated and production from outside the state made its way to California. California natural gas prices for the six months ended June 30, 2026 were lower compared to the prior year as warmer-than-normal winter temperatures, out-of-state imports and elevated storage inventory levels impacted prices.
Previous wording
Our carbon management segment, which we refer to as Carbon TerraVault, primarily pursues the development of CCS projects. We expect that our Carbon TerraVault CCS projects will inject CO 2 captured from industrial, power, agriculture and other emissions sources into subsurface reservoirs and permanently store CO 2 deep underground. We also expect to invest in projects that rely on CCS technology in connection with reducing our own emissions. In addition, we may participate in the development of projects that are the source of these CO 2 emissions. We recently completed construction of our first carbon capture project at our cryogenic gas processing facility and are preparing for first injection, subject to commissioning and final regulatory approval. We define carbon management expense to be our direct operating costs to run our carbon management segment.
Current wording
Our carbon management segment, which we refer to as Carbon TerraVault, is engaged in the operation and development of CCS projects. We recently completed construction of our first carbon capture project at our cryogenic gas processing facility and achieved our first injection during the second quarter of 2026. We expect that our Carbon TerraVault business will develop other CCS projects using CO 2 captured from industrial, power, agriculture and other emissions sources into subsurface reservoirs and permanently store CO 2 deep underground. We may also participate in the ownership and development of projects that are the source of these CO 2 emissions. We define carbon management expenses to be our direct operating costs to run our carbon management segment.
Previous wording
The following table includes results for our carbon management segment for the three months ended March 31, 2026 and December 31, 2025.
Current wording
The following table includes results for our carbon management segment for the periods presented.
Previous wording
Carbon management expenses decreased for thethree months ended March 31, 2026 compared to thethree months ended December 31, 2025 as a result of lower easement costs.
Current wording
Carbon management expenses decreased for thesix months ended June 30, 2026 compared to the six months ended June 30, 2025 as a result of lower easement costs and preliminary development expenses.
Previous wording
Our primary sources of liquidity and capital resources are cash flows from operations, available cash and cash equivalents and available borrowing capacity under our Revolving Credit Facility. We consider our low leverage and ability to control costs to be a core strength and strategic advantage, which we are focused on maintaining. Our primary uses of operating cash flow for the three months ended March 31, 2026 were for capital investments and payment of dividends.
Current wording
Our primary sources of liquidity and capital resources are cash flows from operations, available cash and cash equivalents, proceeds from the 2034 Senior Notes and 2035 Senior Notes and available borrowing capacity under our Revolving Credit Facility. We consider our low leverage and ability to control costs to be a core strength and strategic advantage, which we are focused on maintaining. Our primary uses of operating cash flow for the three and six months ended June 30, 2026 were for capital investments, payment of dividends and costs related to the redemption of our 8.250% senior unsecured notes due 2029 (2029 Senior Notes).
Previous wording
(a)Excludes restricted cash of $15 million.
Current wording
(a)Excludes restricted cash of $13 million.
Previous wording
At current commodity prices and based upon our planned 2026 capital program described below, we expect to generate operating cash flow to return cash to shareholders through dividends. We regularly review our financial position and evaluate whether to (i) adjust our drilling program, (ii) return available cash to shareholders through dividends or share repurchases to the extent permitted under our Revolving Credit Facility, our 8.25% senior notes due 2029 (2029 Senior Notes), and our 7.00% senior notes due 2034 (2034 Senior Notes) (iii) reduce outstanding indebtedness, (iv) advance carbon management activities, or (v) maintain cash and cash equivalents on our balance sheet. We continue to monitor the current macroeconomic environment and will adjust our planned uses of cash as necessary. We believe we have sufficient sources of liquidity to meet our obligations for the next twelve months.
Current wording
We regularly review our financial position and evaluate whether to (i) adjust our drilling program, (ii) return available cash to shareholders through dividends or share repurchases to the extent permitted under our Revolving Credit Facility, our 7.000% senior notes due 2034 (2034 Senior Notes), and our 7.250% senior notes due 2035 (2035 Senior Notes), (iii) reduce outstanding indebtedness, (iv) advance carbon management activities, or (v) maintain cash and cash equivalents on our balance sheet. We continue to monitor the current macroeconomic environment and will adjust our planned uses of cash as necessary. We believe we have sufficient sources of liquidity to meet our obligations for the next twelve months.
Previous wording
On April 14, 2026, the borrowing base under our Revolving Credit Facility was reaffirmed at $1.5 billion and we entered into an amendment to the Revolving Credit Facility. For more information, see Part I, Item 1 – Financial Statements, Note 15 Subsequent Eventsfor more information.
Current wording
On April 14, 2026, the borrowing base under our Revolving Credit Facility was reaffirmed at $1.5 billion and we entered into an amendment to the Revolving Credit Facility. See Part I, Item 1 – Financial Statements, Note 4 Debtfor more information.
Previous wording
In March 2026, we completed an offering of $350 million of additional 2034 Senior Notes. See Part I, Item 1 – Financial Statements, Note 4 Debtfor more information.
Current wording
In June 2026, we completed an offering of $550 million of 2035 Senior Notes, the proceeds of which were used together with cash on hand to redeem all of the remaining outstanding 2029 Senior Notes. Following this redemption, we had outstanding $750 million of 2034 Senior Notes and $550 million of 2035 Senior Notes. See Part I, Item 1 – Financial Statements, Note 4 Debtfor more information on our 2029 Senior Notes, 2034 Senior Notes and 2035 Senior Notes.
Previous wording
See Part I, Item 1 – Financial Statements, Note 15 Subsequent Eventsfor information on a dividend declared in May 2026.
Current wording
See Part I, Item 1 – Financial Statements, Note 9 Stockholders' Equityfor more information on our dividends. See Part I, Item 1 – Financial Statements, Note 15 Subsequent Eventsfor information on a dividend declared in August 2026.
Previous wording
We entered 2026 with a capital program of $430 million to $470 million and have revised our 2026 capital program to a range of $520 million to $560 million. Of this amount, $500 million to $525 million is related to our oil and natural gas segment, $12 million to $20 million is for our carbon management segment and $8 million to $15 million is for corporate and other activities. The above amounts related to carbon management projects do not include amounts funded by Brookfield through the Carbon TerraVault JV, such as drilling injection and monitoring wells at our 26R reservoir.
Current wording
Our 2026 capital program is expected to range from $520 million to $560 million. Of this amount, $500 million to $525 million is related to our oil and natural gas segment, $12 million to $20 million is for our carbon management segment and $8 million to $15 million is for corporate and other activities. The above amounts related to carbon management projects do not include amounts funded by Brookfield through the Carbon TerraVault JV, such as drilling injection and monitoring wells at our 26R reservoir.
Previous wording
Unless otherwise indicated, we use the term “hedge” to describe derivative instruments that are designed to achieve our hedging requirements and program goals, even though they are not accounted for as cash-flow or fair-value hedges. We did not have any commodity derivatives designated as accounting hedges as of and during the three months ended March 31, 2026. See Part I, Item 1 – Financial Statements, Note 6 Derivatives for further information on our derivatives and a summary of our open derivative contracts as of March 31, 2026 and Part II, Item 8 – Financial Statements and Supplementary Data, Note 5 Debtin our 2025 Annual Report for information on the hedging requirements included in our Revolving Credit Facility.
Current wording
Unless otherwise indicated, we use the term “hedge” to describe derivative instruments that are designed to achieve our hedging requirements and program goals, even though they are not accounted for as cash-flow or fair-value hedges. We did not have any commodity derivatives designated as accounting hedges as of and during the six months ended June 30, 2026. See Part I, Item 1 – Financial Statements, Note 6 Derivatives for further information on our derivatives and a summary of our open derivative contracts as of June 30, 2026 and Part II, Item 8 – Financial Statements and Supplementary Data, Note 5 Debtin our 2025 Annual Report for information on the hedging requirements included in our Revolving Credit Facility.
Previous wording
Cash flows from operating activities — For the three months ended March 31, 2026, our operating cash flow decreased by $87 million to $99 million from $186 million in the same period in 2025. This decrease in operating cash flow was primarily driven by changes in working capital.
Current wording
Cash flows from operating activities — For the six months ended June 30, 2026, our operating cash flow increased by $11 million to $362 million from $351 million in the same period in 2025. This increase in operating cash flow was primarily driven by changes in working capital.
Previous wording
Oil production during the three months ended March 31, 2026 as compared to the same period in 2025 increased 13 MBbl/d from 111 MBbl/d to 124 MBbl/d as a result of the Berry Merger. Revenue increased as a result of the increases in production from the Berry Merger offset by lower average realized prices after derivative settlements. Average realized prices after derivative settlements for oil decreased by $2.64 per barrel to$69.37 in thethree months ended March 31, 2026 from$72.01 in the same prior year period. Our derivative settlements and premiums paid for the three months ended March 31, 2026 were$68 million, which was an increase of $40 million from$28 million in the same prior year period. Further, as a result of the Berry Merger, we experienced higher operating costs, employee costs, well abandonment costs, production taxes and greenhouse gas taxes during thethree months ended March 31, 2026 as compared to the same prior year period.
Current wording
Oil production during the six months ended June 30, 2026 as compared to the same period in 2025 increased 12 MBbl/d from 110 MBbl/d to 122 MBbl/d as a result of the Berry Merger. Revenue increased as a result of the increases in production from the Berry Merger and higher average realized prices after derivative settlements. Average realized prices after derivative settlements for oil increased by $3.49 per barrel to$72.88 in thesix months ended June 30, 2026 from$69.39 in the same prior year period. Our derivative settlements and premiums paid for thesix months ended June 30, 2026 were$258 million, which was an increase of $240 million from$18 million in the same prior year period. Further, as a result of the Berry Merger, we experienced higher operating costs, employee costs, well abandonment costs, production taxes and greenhouse gas taxes during thesix months ended June 30, 2026 as compared to the same prior year period.
Previous wording
(a)Note: The total value of shares purchased includes excise taxes, which are generally paid in the year following the share repurchase. Commissions paid on share repurchases were not significant in all periods presented.
Current wording
(a)The total value of shares purchased includes excise taxes, which are generally paid in the year following the share repurchase. Commissions paid on share repurchases were not significant in all periods presented.
Previous wording
For the three months ended March 31, 2026, our cash flow used in financing activities was $55 million compared to $265 million in the same period in 2025. In the three months ended March 31, 2026, we completed an add-on to our 2034 Senior Notes and redeemed $350 million in face value of our 2029 Senior Notes. In the three months ended March 31, 2025, we repurchased $101 million of our common stock and redeemed $123 million of our 2026 Senior Notes.
Current wording
For the six months ended June 30, 2026, our cash flow used in financing activities was $149 million compared to $521 million in the same period in 2025. In the six months ended June 30, 2026, we completed the issuance of our 2035 Senior Notes, an add-on to our 2034 Senior Notes and redeemed all of our outstanding 2029 Senior Notes. In the six months ended June 30, 2025, we repurchased $318 million of our common stock and redeemed $123 million of our 2026 Senior Notes.
Previous wording
•government policy, war and political conditions and events, including the military conflicts in Israel and Ukraine and geopolitical uncertainty in the Middle East, including the current conflict in Iran, and Venezuela;
Current wording
•government policy, war and political conditions and events, including the military conflicts in Israel and Ukraine and geopolitical uncertainty in the Middle East, including the current conflict in Iran;
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
Net gain (loss) from commodity sales derivatives — We report gains and losses on our derivative contracts related to sales of our oil and marketing activities in operating revenues. Net gain from commodity sales derivatives was $205 million for the three months ended June 30, 2026 compared to a net loss of $848 million for the three months ended March 31, 2026. The change primarily resulted from the non-cash changes in the fair value of our outstanding commodity derivatives from the positions held at the end of each measurement period.
Current report — wording carried from elsewhere
The following table presents our consolidated operating revenues for the periods indicated:
Current report — wording carried from elsewhere
Oil, natural gas and natural gas liquids sales — Oil, natural gas and natural gas liquids sales, excluding the effects of cash settlements on our commodity derivative contracts, were $1,961 million for the six months ended June 30, 2026, which was an increase of $445 million compared to $1,516 million for the six months ended June 30, 2025.
Current report — wording carried from elsewhere
The following table shows changes in oil, natural gas and natural gas liquids sales for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Current report — wording carried from elsewhere
Note: See Productionfor volumes by commodity type and Prices and Realizations for index and realized prices for comparative periods.
Current report — wording carried from elsewhere
The following table presents our consolidated operating and non-operating expenses and income for the six months ended June 30, 2026 and June 30, 2025.
Current report — wording carried from elsewhere
Operating costs —The following table presents our operating costs for the six months ended June 30, 2026 and June 30, 2025.
Current report — wording carried from elsewhere
For the six months ended June 30, 2026 and June 30, 2025, other operating expenses, net includes the following:
Current report — wording carried from elsewhere
Carbon management expenses were slightly higher for thethree months ended June 30, 2026 compared to thethree months ended March 31, 2026 as a result of additional compensation-related expense.