California Resources Corp
For the period ended Sep 30, 2026. Filed Nov 3, 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.
Sep 30, 2026 · Filed Nov 3, 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 2026-06-30; filed 2026-08-10.
0001609253-26-000130
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-03.
0001609253-26-000147
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 167 previous paragraphs and 176 current paragraphs.
96 unchanged; 51 reworded; 29 added; 19 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 24 previous and 22 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 (29)
Current report
Recent Developments
Current report
Uinta Basin Divestiture
Current report
In September 2026, we entered into an agreement to sell our Uinta basin assets for cash consideration of approximately $90 million, subject to customary purchase price adjustments (Uinta Basin Divestiture). The Uinta basin assets were acquired as part of the Berry Merger and make up our only material assets outside of California. The transaction has an effective date of July 1, 2026. Closing is expected in the fourth quarter of 2026, subject to the receipt of certain third-party consents and satisfaction of other customary closing conditions.
Current report
On September 1, 2026, we completed the Crimson Acquisition for a payment of $70 million, which included $7 million of preliminary purchase price adjustments. The final purchase price remains subject to certain adjustments. Crimson owns various onshore midstream assets in California, including the SoCal Pipeline System and San Pablo Bay Pipeline. We believe this transaction enhances our ability to efficiently transport California-produced crude oil to higher-value markets, while increasing operational flexibility and flow assurance across our portfolio.
Current report
In August 2026, we filed a complaint with the California Public Utilities Commission (CPUC) disputing the ability of the pipeline operator to pro-rate our nominations under the applicable tariff. We cannot predict the timing or outcome of this proceeding. Until this matter is resolved or additional transportation capacity becomes available, we expect reduced capacity on this pipeline segment to continue to negatively impact our realizations and transportation costs.
Current report
In the first six months of 2026, two counterparties made force majeure claims that continued to affect pricing and offtake commitments during the three months ended September 30, 2026. In October 2026, we settled our dispute with one of these counterparties with an effective date of September 1, 2026. We do not expect this settlement to materially affect our future price realizations or volumes sold. We continue to dispute the validity of the force majeure claim made by the other counterparty and expect to submit the dispute to arbitration later this year. We cannot predict the timing or outcome of any such arbitration.
Current report
Carbon TerraVault I CEQA Litigation
Current report
On November 2, 2026, the Kern County Superior Court issued a ruling in litigation brought by a coalition of community and environmental organizations. The litigation challenges Kern County’s certification of the revised environmental impact report (REIR) prepared under CEQA for our Carbon TerraVault I CCS project at our Elk Hills field, and the County’s related approval of the project. The court granted the petition and directed the County to set aside its certification of the REIR and its approval of the project, and to refrain from taking further action to implement the project until a new EIR has been prepared and considered. This REIR underlies our CTV I project and impacts the CEQA analysis for the potential CalCapture project. However, we are developing multiple other CTV projects that do not rely on this REIR.
Current report
The ruling is not yet final and remains subject to further proceedings, and its impact on the existing operations at CTV I is uncertain. We intend to aggressively pursue legal actions to protect and advance our CTV I project; however, we can provide no assurances that we will be successful in these efforts. We do not expect the ruling to have a material impact on our results of operations or financial condition.
Current report
Regulatory Activity
Current report
On October 8, 2026, the Kern County Superior Court issued a tentative ruling in litigation brought by our subsidiary, Aera Energy LLC, together with other industry participants, challenging CalGEM’s denial of certain well stimulation treatment permit applications and its subsequent 2024 rule prohibiting the approval of such permits. The tentative ruling would set aside the challenged permit denials as arbitrary and unsupported, annul the 2024 rule, and remands the denied applications to CalGEM for formal review. The ruling is not a final judgment and remains subject to further proceedings and potential appeal, and we cannot predict the outcome of the matter or its ultimate impact on our operations.
Current report
Senate Bill 614 (Carbon Dioxide Pipeline Regulation)
Current report
Effective on July 1, 2026, the Office of the State Fire Marshal (OSFM) adopted emergency regulations governing the safe transportation of carbon dioxide in intrastate pipelines pursuant to SB 614. The adoption of these regulations lifted the prior statewide moratorium on the construction and operation of new carbon dioxide pipelines used to transport carbon dioxide to or from carbon capture, removal or sequestration projects, subject to pipeline operators demonstrating compliance with the OSFM standards. Although SB 614 and the new OSFM emergency rules impose significant requirements on new carbon dioxide pipelines, it is still expected to make possible the development of projects that rely on transportation of carbon dioxide from a remote emission source to a sequestration facility.
Current report
CCS Project Permitting
Current report
As of September 30, 2026, we have nine Class VI UIC permit applications related to our carbon management segment pending with the EPA at various stages of the permitting process. We currently expect the EPA to issue draft permits for certain of these projects by year-end 2026; however, the timing remains uncertain, and we cannot provide assurances as to if or when the permits will be issued.
Current report
Electricity revenue — Electricity revenue was $46 million for the three months ended September 30, 2026 compared to $6 million for the three months ended June 30, 2026. The increase was primarily due to higher prices for resource adequacy revenue and sales from electricity delivered to the wholesale market as we ran the Elk Hills power plant at a higher operational capacity in the three months ended September 30, 2026 compared to the three months ended June 30, 2026.
Current report
Taxes other than on income — Taxes other than on income were $81 million for the three months ended September 30, 2026 compared to $66 million for the three months ended June 30, 2026. Greenhouse gas expense increased for the three months ended September 30, 2026 due to running the Elk Hills power plant at a higher operational capacity and higher market prices for purchased allowances.
Current report
Costs related to marketing of purchased commodities — Costs related to marketing of purchased commodities for the three months ended September 30, 2026 were $25 million, which is an increase of $10 million from $15 million for the three months ended June 30, 2026. The increase in the three months ended September 30, 2026 was due to higher purchased gas prices, partially offset by lower volume activity.
Current report
Nine months ended September 30, 2026 compared to September 30, 2025
Current report
Depreciation, depletion and amortization — Depreciation, depletion and amortization for the nine months ended September 30, 2026 was $401 million compared to $382 million during the nine months ended September 30, 2025. The increase was the result of a higher carrying value for our property, plant and equipment and higher production volumes as a result of the Berry Merger.
Current report
Transportation costs — Transportation costs for the nine months ended September 30, 2026 were $87 million which was an increase of $28 million from $59 million for the nine months ended September 30, 2025. The increase in transportation costs was primarily a result of additional trucking costs due to constraints from pipeline closures and a dispute with a pipeline operator. See Marketing Arrangements above for more information on the dispute with a pipeline operator. In addition, transportation costs increased in 2026 as a result of incremental production related to the Berry Merger.
Current report
(a)See Results of our Carbon Management Segment below for more information on our carbon management expenses for the periods presented.
Current report
(a)Net loss on asset divestitures for the nine months ended September 30, 2025 related to the sale of oil and gas assets located in Ventura.
Current report
(a)Production volumes from our Uinta basin assets are included in our net production sold until the closing of the Uinta Basin Divestiture. Refer to Part I, Item 1 – Financial Statements, Note 8 Assets Held for Salefor more information.
Current report
Natural Gas — North American natural gas prices for the three months ended September 30, 2026 were slightly higher compared to the three months ended June 30, 2026 due to strong seasonal demand. Our prices for the three months ended September 30, 2026 rebounded sharply as the west and southwest experienced warmer-than-normal temperatures and take-away capacity in key production regions provided out-of-state gas supplies with alternative markets to California.
Current report
Natural gas prices increased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 as stronger winter and summer demand outpaced materially larger natural gas production. Our realized natural gas prices for the nine months ended September 30, 2026 were lower compared to the prior year as abundant out-of-state production and elevated storage inventory levels impacted prices.
Current report
In October 2026, we entered into the tenth amendment to our Revolving Credit Facility to, among other things, extend the maturity date to March 2030, increase the elected commitments of our lenders to $1.47 billion, re-affirm our borrowing base at $1.5 billion, and implement certain other technical amendments. See Part I, Item 1 – Financial Statements, Note 16 Subsequent Eventsfor more information.
Current report
•the ability to successfully close the divestiture of our Uinta assets;
Current report
•refinery closures and changes in pipeline transportation or storage capacity and their impact on future production, revenues and realizations;
Removed paragraphs (19)
Previous 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.
Previous report
The negative impact of these disputes to our pre-tax income for the three months ended June 30, 2026 was approximately $25 million.
Previous 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.
Previous report
Well Permitting
Previous 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.
Previous report
California Cap-and-Invest (AB 1207 and SB 840)
Previous 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.
Previous report
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 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:
Previous report
Six months ended June 30, 2026 compared to June 30, 2025
Previous 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.
Previous 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:
Previous report
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 report
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 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.
Previous report
Acquisitions and Divestitures
Previous 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.
Previous report
•refinery closures and reductions in pipeline transportation capacity;
Previous report
•limitations on transportation or storage capacity and the need to shut-in wells;
Reworded paragraphs (51)
Previous 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.
Current wording
Global oil prices were volatile during the first nine months of 2026. Oil prices decreased slightly during the third quarter of 2026 as Middle East exports increased and hopes for a permanent ceasefire developed but ultimately faltered. Prices increased toward the end of the third quarter as renewed military strikes on energy infrastructure in the Middle East heightened concerns about oil supply disruptions. 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
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.
Current wording
We continued to experience relatively flat pricing from our suppliers during the first nine 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 $10 million. We also expect higher energy prices to continue to affect our results in 2027.
Previous wording
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 wording
In May 2026, we were informed by a pipeline operator that the volume of crude oil we were allowed to transport on a pipeline segment was being pro-rated along with other shippers due to capacity constraints. During the three months ended September 30, 2026, we continued to experience a reduction in available capacity on this pipeline segment. We used alternative routes to transport affected production to market, which resulted in lower realizations and higher transportation costs. In addition, our crude oil inventory was reduced to normal operating levels following an inventory build in the preceding three-month period.
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 and six months ended June 30, 2026 as compared to the prior-year comparative periods.
Current wording
Our consolidated results of operations include the results of Crimson beginning September 1, 2026, the closing date of the Crimson Acquisition. 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 Crimson Acquisition and the Berry Merger, see Part I, Item 1 – Financial Statements, Note 2 Business Combinations. The Berry Merger significantly affected the comparability of our financial results for the three and nine months ended September 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 $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.
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 $1,002 million for the three months ended September 30, 2026, which was a decrease of $54 million compared to $1,056 million for the three months ended June 30, 2026.
Previous wording
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 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 $675 million for the three months ended September 30, 2026 compared to a net gain of $205 million for the three months ended June 30, 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. Oil prices significantly increased as of September 30, 2026 compared to June 30, 2026. For instance, the Brent forward curve for the twelve months following September 30, 2026 increased by approximately 23% to $88.39 compared to $71.96 at June 30, 2026. As of September 30, 2026, we have hedges on approximately 65% of our expected oil production for the remainder of 2026 at a weighted average floor price of $64.80.
Previous 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.
Current wording
Revenue from marketing of purchased commodities— Revenue from marketing of purchased commodities was $40 million for the three months ended September 30, 2026 compared to $26 million for the three months ended June 30, 2026. The increase was mainly related to higher natural gas prices in the three months ended September 30, 2026 compared to the three months ended June 30, 2026.
Previous wording
Energy operating costs consist of purchased natural gas used to generate electricity for our operations and steam for our steamfloods, purchased electricity and internal costs to generate electricity used in our operations. Gas processing costs include costs associated with compression, maintenance and other activities needed to run our gas processing facilities at Elk Hills. Non-energy operating costs equal total operating costs less energy operating costs and gas processing costs.
Current wording
Energy operating costs include costs associated with (i) purchased natural gas used to generate electricity and steam for our operations, (ii) purchased electricity and (iii) the internal generation of electricity used in our operations. Gas processing costs include costs associated with compression, maintenance and other activities needed to run our gas processing facilities at Elk Hills. Non-energy operating costs equal total operating costs less energy operating costs and gas processing costs.
Previous wording
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 wording
Energy operating costs — Energy operating costs for the three months ended September 30, 2026 were $123 million, which was an increase of $36 million from $87 million for the three months ended June 30, 2026. This increase was primarily due to higher prices for natural gas purchased and used in our steamflood operations.
Previous wording
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 wording
Non-energy operating costs — Non-energy operating costs for the three months ended September 30, 2026 were $257 million, which was an increase of $3 million from $254 million for the three months ended June 30, 2026 primarily due to higher workover activity, partially offset by lower downhole maintenance activity.
Previous wording
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 wording
General and administrative expenses — General and administrative (G&A) expenses were $89 million for the three months ended September 30, 2026 compared to $97 million for the three months ended June 30, 2026. The decrease primarily resulted from lower legal and corporate expenses in the three months ended September 30, 2026.
Previous 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:
Current wording
Other operating expenses, net — Other operating expenses, net decreased $17 million to $43 millionfor the three months ended September 30, 2026 compared to $60 million for the three months ended June 30, 2026. For the three months ended September 30, 2026 and June 30, 2026, other operating expenses, net include the following:
Previous wording
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 wording
Income taxes – We recorded an income tax benefit of $113 million on $428 million of loss before taxes for the three months ended September 30, 2026, representing an effective tax rate of 26%. 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. 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. The projected full year pre-tax loss is largely due to the effect of the derivative losses. See Part I, Item 1 – Financial Statements, Note 7 Income Taxes.
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 $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 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 $2,963 million for the nine months ended September 30, 2026, which was an increase of $732 million compared to $2,231 million for the nine months ended September 30, 2025.
Previous wording
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 wording
The following table shows changes in oil, natural gas and natural gas liquids sales for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Previous wording
(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 wording
(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 Combinationsfor additional information.
Previous 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:
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 $1,318 million for the nine months ended September 30, 2026 compared to a net gain of $140 million for the nine months ended September 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
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 wording
Revenue from marketing of purchased commodities — Revenue from marketing of purchased commodities was $107 million for the nine months ended September 30, 2026, which was a decrease of $71 million from $178 million during the nine months ended September 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 nine months ended September 30, 2026 compared to 2025.
Previous 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.
Current wording
Electricity revenue — Electricity revenue decreased to $63 million for the nine months ended September 30, 2026 compared to $181 million for the nine months ended September 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
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 wording
The following table presents our consolidated operating and non-operating expenses and income for the nine months ended September 30, 2026 and September 30, 2025.
Previous wording
Operating costs —The following table presents our operating costs for the six months ended June 30, 2026 and June 30, 2025.
Current wording
Operating costs —The following table presents our operating costs for the nine months ended September 30, 2026 and September 30, 2025.
Previous wording
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 wording
Energy operating costs — Energy operating costs for thenine months ended September 30, 2026 were$320 million, which was an increase of$47 million from$273 million for thenine months ended September 30, 2025. The increase is primarily related to the addition of the Berry fields for the full nine months of 2026 compared to the same prior year period. Excluding Berry, energy operating costs decreased due to lower prices of natural gas purchased and used in our steamflood operations for thenine months ended September 30, 2026.
Previous wording
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 wording
Non-energy operating costs— Non-energy operating costs for thenine months ended September 30, 2026 were$761 million, which was an increase of$122 million from$639 million for thenine months ended September 30, 2025. The increase is primarily related to the operation of the Berry fields for the full nine months of 2026 compared to the same prior year period. In addition, we had higher downhole maintenance activity and compensation-related expenses during thenine months ended September 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.
Previous wording
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 wording
General and administrative expenses — General and administrative (G&A) expenses were $292 million for the nine months ended September 30, 2026 compared to $238 million for the nine months ended September 30, 2025, which was an increase of $54 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 nine months ended September 30, 2026 compared to the same prior year period.
Previous 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.
Current wording
Taxes other than on income — Taxes other than on income for the nine months ended September 30, 2026 were $214 million, which is an increase of $27 million from $187 million for the nine months ended September 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 $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.
Current wording
Costs related to marketing of purchased commodities — Costs related to marketing of purchased commodities were $63 million for the nine months ended September 30, 2026, which was a decrease of $72 million from $135 million for the nine months ended September 30, 2025. The decrease primarily related to lower natural gas prices and lower crude oil volumes purchased for blending in the nine months ended September 30, 2026 compared to 2025.
Previous wording
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 wording
Other operating expenses, net — Other operating expenses, net increased $30 million to $157 million for the nine months ended September 30, 2026 compared to $127 million for the nine months ended September 30, 2025.
Previous wording
For the six months ended June 30, 2026 and June 30, 2025, other operating expenses, net includes the following:
Current wording
For the nine months ended September 30, 2026 and 2025, other operating expenses, net include the following:
Previous wording
(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 wording
(b)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 nine months ended September 30, 2025.
Previous wording
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 wording
Loss on early extinguishment of debt– Loss on early extinguishment of debt was $49 million for the nine months ended September 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 nine months ended September 30, 2025 for the write-off of unamortized debt issuance costs.
Previous 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.
Current wording
Income taxes – The income tax benefit for the nine months ended September 30, 2026 was $218 million (representing an effective tax rate of 30%), compared to a provision of $128 million (representing an effective tax rate of 27%) for the nine months ended September 30, 2025. See Part I, Item 1 – Financial Statements, Note 7 Income Taxes for additional information on our income taxes.
Previous wording
(a)Includes general and administrative expenses allocated to our oil and natural gas segment.
Current wording
(b)Includes general and administrative expenses allocated to our oil and natural gas segment.
Previous wording
(b)Excludes depreciation, depletion and amortization related to our corporate assets and our Elk Hills power plant.
Current wording
(c)Excludes depreciation, depletion and amortization related to our corporate assets and our Elk Hills power plant.
Previous 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.
Current wording
Total average net production sold increased by 3 MBoe/d to 152 MBoe/d for the three months ended September 30, 2026 compared to 149 MBoe/d forthe three months ended June 30, 2026. The increase was primarily a result of the sale of our crude oil inventory accumulated during the prior quarter and drilling and workover activity, partially offset by natural decline. Additionally, our production-sharing contracts (PSCs), which are described below, positively impacted our net oil production by 1 MBoe/d in the three months ended September 30, 2026 compared to the three months ended June 30, 2026.
Previous wording
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 wording
Total average net production sold increased to 152 MBoe/d for the nine months ended September 30, 2026 compared to 138 MBoe/d for the nine months ended September 30, 2025. The increase included 21 MBoe/d related to the addition of the Berry properties. Excluding the impact of Berry production, our production decreased as a result of 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 nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Previous wording
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 wording
Oil — Brent crude oil prices for the three and nine months ended September 30, 2026 were volatile as a result of the conflict in the Middle East, the conflict between Russia and Ukraine, and the potential for cessation of hostilities or, alternatively, escalation in each. Our oil realizations for the three and nine months ended September 30, 2026 were negatively impacted by a dispute with a pipeline operator and certain counterparty force majeure claims. See Marketing Arrangements above for more information.
Previous 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.
Current wording
NGLs — Realized prices on natural gas liquids during the three months ended September 30, 2026 decreased compared to the three months ended June 30, 2026 due to seasonal demand. Prices for natural gas liquids during the nine months ended September 30, 2026 were higher than the prior year although liquids prices failed to keep pace with crude oil prices. California NGLs maintained a premium to the broader North American NGL market.
Previous 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.
Current wording
Our carbon management segment, which we refer to as Carbon TerraVault, is engaged in the operation and development of CCS projects. We 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
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.
Current wording
Carbon management expenses were slightly higher for thethree months ended September 30, 2026 compared to thethree months ended June 30, 2026 as a result of higher easement costs.
Previous 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.
Current wording
Carbon management expenses decreased for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 as a result of lower easement costs, compensation-related costs and preliminary development expenses.
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Previous report — wording carried elsewhere
The amounts in the table below reflect components of our capital investment for the periods indicated, excluding changes in capital investment accruals: