Breaking Down California Resources Corporation (CRC) Financial Health: Key Insights for Investors

You're looking at California Resources Corporation (CRC) and trying to figure out if their operational momentum translates to real investor value, especially with the energy transition narrative complicating the oil and gas space.

The short answer is that the company's 2025 financial health is defintely showing resilience, driven by strong operational efficiencies and a clear capital return strategy. They've raised their full-year adjusted EBITDAX (Earnings Before Interest, Taxes, Depreciation, Amortization, and Exploration expenses) guidance to a midpoint of $1,235 million and are on track to realize $185 million in Aera merger synergies this year, which is a significant cost win. Plus, analysts are projecting a consensus full-year Earnings Per Share (EPS) of around $3.85 per share, with some forecasts going as high as $4.31 per share, suggesting a solid earnings picture. The key is their commitment to returning capital, evidenced by a record $287 million returned to shareholders in the second quarter of 2025 alone, alongside a low leverage ratio and over $1 billion in total liquidity, giving them a lot of financial flexibility.

Revenue Analysis

You need to know where the money is coming from to judge California Resources Corporation's (CRC) risk and opportunity, and the Q3 2025 results give us a clear map. The short takeaway is that while the core oil and gas business is still the engine, new energy transition revenue streams are starting to matter, but the core revenue is currently contracting.

Looking at the third quarter of 2025, CRC reported total operating revenues of $855 million, which actually missed the analyst forecast of $875.82 million. This total was a significant decline, down about 36.7% from the $1.35 billion reported in Q3 2024. That kind of year-over-year drop, even with commodity price volatility, demands a closer look.

Here's the quick math on the Q3 2025 revenue breakdown, showing the primary sources before derivatives:

• Oil, natural gas, and natural gas liquids sales: $715 million
• Electricity revenue: $101 million
• Marketing of purchased commodities: $58 million
• Other revenue sources: $4 million

Honestly, the core business-selling oil and gas-still drives the vast majority of the top line, contributing over 83% of the operating revenue in Q3 2025. Still, you can't ignore the non-E&P (Exploration and Production) segments, which are growing in strategic importance.

The biggest shift isn't just in the numbers, but in the new business segments CRC is building. They are defintely moving beyond just pumping crude. The electricity revenue, for example, is a direct result of their integrated operations in California, where they are also advancing a decarbonized power generation hub in Kern County. For the full year 2025, their resource adequacy payments for standby power capacity are contracted at a value of $150 million, which is a stable, non-commodity-linked revenue stream. This diversification is a key opportunity.

What this estimate hides is the future impact of their Carbon Capture and Sequestration (CCS) projects. Construction is underway for the first CCS project at Elk Hills, with CO2 injections anticipated to start in early 2026. That's a new, high-margin revenue source coming online. Plus, the pending merger with Berry Corporation is expected to enhance operational scale and deliver synergies, which will impact future revenue stability and cost structure, though the immediate 2025 TTM revenue ending Q3 is already strong at $3.62 billion. You need to factor in this strategic pivot when you value the company's long-term revenue potential, as detailed in Breaking Down California Resources Corporation (CRC) Financial Health: Key Insights for Investors.

Profitability Metrics

You want to know if California Resources Corporation (CRC) is actually making money, and the short answer is yes, they are, but the picture is complex. The company has seen a massive surge in net profitability, hitting a recent high of Breaking Down California Resources Corporation (CRC) Financial Health: Key Insights for Investors, but this is a peak analysts expect to moderate significantly over the next few years.

CRC's recent margins show strong operational control, yet their overall operating efficiency still lags the broader sector. You need to focus on what drives the Gross Margin-that's where their core cost discipline lives-and then see how overhead and taxes eat into that.

The Current Margin Breakdown (2025 Data)

Looking at the Trailing Twelve Months (TTM) through October 2025 and the most recent quarterly data, CRC's profitability ratios tell a story of a company successfully cutting costs while navigating volatile commodity prices. The Net Profit Margin, which is the bottom line, recently spiked to 18.3%, a huge jump from 7.2% a year prior. This is a massive year-over-year rebound in earnings, but it's defintely not a number you should pencil in for the long term.

Here is the quick math on their current profitability structure:

• Gross Margin (Q2 2025): 65.13%. This shows a strong ability to manage the direct costs of oil and gas production (Cost of Goods Sold) relative to revenue.
• Operating Margin (TTM Oct 2025): 25.56%. This is what's left after paying for general overhead (Selling, General, and Administrative expenses). This is the true measure of core business efficiency.
• Net Profit Margin (Recent High): 18.3%. This is the final profit after all expenses, interest, and taxes.

Operational Efficiency and Industry Context

The jump in margins is directly tied to operational efficiency, specifically 'disciplined operating cost controls' and their strategic moves in carbon management. CRC's focus on carbon capture and lower expenses is amplifying free cash flow, which is helping them expand margins even as revenue growth is expected to slow.

However, when you compare CRC to the industry, a crucial distinction appears. The average Operating Margin (TTM) for the broader oil and gas sector is around 28.66%. CRC's 25.56% Operating Margin tells you they are performing well, but they are still slightly behind the average peer group in converting revenue into pre-tax, pre-interest profit. For a concrete example, a peer like Matador Resources has an Operating Margin of 32.94%.

What this estimate hides is the future risk. Analyst consensus forecasts CRC's net margins to shrink from the current high of 18.3% to as low as 5.3% over the next three years. This projected decline is a near-term risk you must factor into your valuation, suggesting that the recent margin expansion may be temporary, driven by specific cost-cutting or commodity price timing, and not necessarily a sustainable new normal.

The volatility in their Gross Margin is also a red flag. For instance, it swung from 20.64% in Q4 2024 to 65.13% in Q2 2025. This kind of fluctuation is common in the E&P (Exploration and Production) space, but it makes cash flow less predictable.

Here's a snapshot of the trend and comparison:

Next Step: Finance should model the impact of a 5.3% Net Profit Margin scenario on Free Cash Flow for FY2026 by Friday.

Debt vs. Equity Structure

You want to know how California Resources Corporation (CRC) is funding its operations and growth, and the short answer is: very conservatively. The company is leaning far more on equity than debt, a clear signal of financial strength in the capital-intensive energy sector.

As of the third quarter of 2025, California Resources Corporation's balance sheet showed a net debt position of just $842 million. This is against a total shareholder equity of roughly $3.443 billion as of late September 2025. That's a low-leverage model, and it's defintely a key differentiator in the oil and gas space.

The Debt-to-Equity Advantage

The most telling metric here is the Debt-to-Equity (D/E) ratio, which measures how much of a company's financing comes from debt versus shareholder funds. For California Resources Corporation, the D/E ratio is exceptionally low, sitting at about 0.26 as of November 2025.

Here's the quick math: for every dollar of equity, the company has only about 26 cents of debt. Compare that to the industry average for U.S. Oil & Gas Exploration & Production (E&P) companies, which is closer to 0.48. This means California Resources Corporation operates with nearly half the financial leverage of its typical peer. This low D/E is why the company's net leverage ratio-total debt minus cash, divided by Adjusted EBITDAX-was only 0.6x in Q3 2025.

Strategic Debt Management and Refinancing

The company isn't shying away from debt entirely; it's just being strategic about its use and maturity profile. In October 2025, California Resources Corporation issued $400 million in new 7.000% senior unsecured notes due 2034. This wasn't to fund operations, but to manage a major strategic move: the pending acquisition of Berry Corporation.

The proceeds from this new debt are specifically earmarked to repay Berry Corporation's existing debt, essentially refinancing the acquisition's liabilities to fit California Resources Corporation's own structure. Plus, in a move that shows their commitment to extending their debt runway, they redeemed the remaining $122 million of their 2026 Senior Notes in October 2025. This means their next significant debt maturity doesn't hit until 2029.

• Issued $400 million in 2034 Senior Notes.
• Redeemed $122 million of 2026 Senior Notes.
• Next debt maturity is now in 2029.

Rating agencies have noticed this disciplined approach. Moody's upgraded the corporate family rating to Ba3, and Fitch revised its outlook to positive. This strong balance sheet is the foundation for their dual strategy: funding disciplined growth while consistently returning cash to shareholders through dividends and share repurchases. If you want to dive deeper into who is buying into this strategy, check out Exploring California Resources Corporation (CRC) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You need to know if California Resources Corporation (CRC) can cover its near-term bills, and the simple answer is: the ratios look tight, but the company's access to cash is strong. The short-term picture, measured by the current and quick ratios, suggests a slight liquidity deficit, which is common for capital-intensive energy companies. However, their overall financial flexibility-their solvency-is defintely robust.

As of the end of the second quarter of 2025, California Resources Corporation's current ratio was 0.78, and its quick ratio was also 0.78. The current ratio measures current assets (what they can turn into cash in a year) against current liabilities (what they owe in a year). A ratio below 1.0, like this 0.78, means current liabilities exceed current assets. In plain English, if every short-term creditor called their debt tomorrow, the company wouldn't have enough liquid assets on hand to cover it all without selling off longer-term assets.

Here's the quick math on working capital (current assets minus current liabilities): since the ratio is below 1.0, the working capital balance is technically negative. The cash flow statement for the second quarter of 2025 shows the change in working capital was a minor ($3 million) cash outflow, suggesting the balance isn't deteriorating rapidly. This is a manageable trend, but it's still a point to watch. The key is that their overall liquidity picture is much better than these two ratios suggest.

Cash Flow Statement Overview (Q1 & Q2 2025)

The cash flow statement is where the real story lives. California Resources Corporation is generating substantial cash from its core operations, which is the ultimate source of liquidity. For the first half of 2025, operating cash flow was strong, despite the capital returns. Exploring California Resources Corporation (CRC) Investor Profile: Who's Buying and Why?

Look at the quarterly trends in millions of dollars:

You can see that the company's operating cash flow is positive and robust. The large negative financing cash flow is a deliberate strategy, driven by significant shareholder returns-like the $252 million in share repurchases in Q2 2025-and debt reduction. This shows management is confident enough in future cash generation to return capital now, even with tight liquidity ratios.

Liquidity Strengths and Near-Term Actions

The company's true liquidity strength lies in its untapped credit. As of June 30, 2025, California Resources Corporation reported total liquidity of over $1 billion (specifically, $1,039 million). This is a critical buffer. It breaks down into two parts:

• Available cash and cash equivalents: $56 million
• Available borrowing capacity on the Revolving Credit Facility: $983 million

This massive, undrawn credit line means they can easily cover any short-term working capital needs. Plus, their leverage is low at about 0.7 times Debt/EBITDA, which is a very healthy solvency metric for an energy producer. This low leverage gives them plenty of room to borrow if needed. They are also proactively managing debt, planning to redeem or refinance the remaining $122 million of 2026 Senior Notes in the second half of 2025. That's a clear, positive action.

Valuation Analysis

You're looking at California Resources Corporation (CRC) and asking the core question: Is the stock price of around $47.55 right now a bargain or a premium? Honestly, based on the metrics we track, the stock looks moderately undervalued, especially when you consider its cash flow generation and the analyst consensus.

The near-term risk is always commodity price volatility, but the company's valuation multiples suggest a decent margin of safety compared to the broader energy sector. Here's the quick math on why a 'Moderate Buy' consensus is sensible right now.

• P/E Ratio (Current): 11.18. This is lower than the S&P 500 average, suggesting earnings are cheap.
• EV/EBITDA: 4.22. This low number points to a strong valuation relative to its core operating cash flow.
• P/B Ratio: 1.17. The market is valuing the company just slightly above its book value, which is defintely not a sign of an overvalued stock.

The Price-to-Earnings (P/E) ratio, which compares the current share price to the company's earnings per share (EPS), stands at approximately 11.18 on a current basis. This is a solid anchor for the valuation argument. Plus, the Enterprise Value-to-EBITDA (EV/EBITDA) ratio, which is a better measure for capital-intensive sectors like energy, is compellingly low at just 4.22. This means the total value of the company, including debt, is only about four times its annual core cash profit.

Stock Trend and Analyst Consensus

Looking at the last 12 months, the stock has seen a wide swing, moving from a 52-week low of $30.97 to a high of $60.08. The current price of around $47.55 sits roughly in the middle, but it's 20.9% below that high, which suggests there's room for a rebound if market sentiment improves.

Wall Street analysts are mostly bullish. The consensus rating from a group of 14 analysts is a 'Moderate Buy,' with an average 12-month price target set between $65.20 and $66.27. That average target implies a forecasted upside of over 37% from the current price. Still, remember that the lowest target is $47.00, so not everyone is convinced the downside is fully protected.

Dividend Strength and Payout

The dividend story here is strong and sustainable. California Resources Corporation is currently offering an annualized dividend payout of $1.62 per share, which translates to a forward dividend yield of approximately 3.4%.

The key figure is the payout ratio, which is a very healthy 36.05%. This ratio tells you that the company is only using about a third of its earnings to pay the dividend, leaving plenty of cash for reinvestment, debt reduction, or future dividend increases. It's a sign of financial discipline, not a warning sign of over-commitment. You can read more about the underlying fundamentals in Breaking Down California Resources Corporation (CRC) Financial Health: Key Insights for Investors.

Finance: draft 13-week cash view by Friday

Risk Factors

You're looking at California Resources Corporation (CRC) and seeing a strong Q3 2025 report, but as a seasoned analyst, I always map the near-term risks alongside the opportunities. Honestly, despite the strong balance sheet, the company operates in a high-risk state and a volatile commodity market. Your investment thesis needs to account for three clear areas of risk: external market forces, strategic execution, and the unique regulatory environment in California.

The good news is that CRC is defintely aware of these issues and has built in some serious financial shock absorbers. Still, you have to monitor the potential for a sudden shift in any of these areas.

External and Market Volatility

The most immediate external risk is the price of oil and gas. While CRC is an oil and gas producer, its revenue is tied directly to global commodity markets, which remain incredibly volatile. The company's full-year 2025 guidance is built on a Brent oil price assumption of $68.00 per barrel. If prices dip much below that, free cash flow takes a hit.

Here's the quick math on mitigation: CRC has hedged approximately 70% of its remaining 2025 oil production and natural gas consumption at favorable levels. This is a massive de-risking move. Management also states they can maintain free cash flow even if Brent prices drop as low as $34 per barrel. That's a strong floor, but what this estimate hides is the long-term impact on reserves and future capital spending if prices stay low for an extended period.

• Oil Price Fluctuation: Volatility beyond the $68.00/bbl Brent assumption.
• OPEC+ Policy: Production changes by major global players.
• Economic Slowdown: Reduced demand impacting realized prices.

Strategic and Financial Execution Risk

The biggest strategic risk on the table right now is the pending Berry Corporation merger. CRC is betting on this deal to unlock significant synergies and scale, but there's a financial trapdoor if it fails. In September 2025, California Resources Corporation issued a $400 million private debt offering to refinance Berry's existing debt ahead of the closing.

The critical financial risk is the mandatory redemption clause attached to those new notes. If the merger doesn't close by the deadline of March 14, 2026, that $400 million in notes triggers a mandatory redemption at par plus accrued interest. That would be a sudden, significant cash drain and a major strategic setback. Also, while the balance sheet is robust with net leverage at a low 0.6x and liquidity over $1.1 billion as of Q3 2025, any large, unexpected capital call would stress the system.

On the flip side, the company is on track to realize $185 million of Aera merger-related synergies by the end of 2025, which helps offset other operational costs.

Operational and Regulatory Headwinds

Operating in California means regulatory risk is baked into the business model. The state's push for energy transition and climate goals creates constant friction. The forward-looking statements in their filings clearly flag 'regulatory actions and changes' and 'the efforts of activists to delay prevent oil and gas activities' as material uncertainties. This means permit delays and increased compliance costs are a persistent threat to their drilling and production schedule.

A key mitigation strategy is the Carbon TerraVault (CCS) business, which aligns with the state's climate policy. However, this is a new venture with its own execution risk. The first CO₂ injection at the Elk Hills cryogenic plant is a major milestone, but it's only anticipated in early 2026 and is still 'pending approvals'. Any delay in getting those permits could impact the timeline and the overall valuation of the CCS segment. You can read more about their long-term strategy in their Mission Statement, Vision, & Core Values of California Resources Corporation (CRC).

Growth Opportunities

You're looking at California Resources Corporation (CRC) and wondering where the next dollar of growth comes from, especially in a state with such a complex regulatory environment. The direct takeaway is this: CRC's future isn't just about pumping oil; it's a dual-engine strategy focused on operational efficiency in their core business and a significant, high-margin pivot into carbon management.

The company is defintely repositioning itself as an energy and carbon management leader. This pivot is the main growth driver, leveraging their vast subsurface expertise and land holdings to build a new business line-Carbon Capture and Storage (CCS) through their Carbon TerraVault segment. This is a crucial move because it aligns CRC with California's aggressive decarbonization goals, turning a regulatory challenge into a new revenue stream.

Here's the quick math on their near-term financial picture, which is strong even before the full CCS revenue kicks in. For the full fiscal year 2025, the company raised its guidance, now expecting Adjusted EBITDAX (Earnings Before Interest, Taxes, Depreciation, Amortization, and Exploration Expense) to hit a midpoint of $1,235 million. That's solid performance. They are also projecting full-year 2025 revenue around $3.26 billion and Earnings Per Share (EPS) of about $3.18.

• Core production remains robust at a raised 2025 midpoint of 136 thousand barrels of oil equivalent per day (MBoe/d).
• They are realizing significant merger synergies, expecting to pull in $185 million in savings during 2025 from the Aera Energy integration.
• Free cash flow generation is strong; they delivered $188 million in Q3 2025 alone.

You can see the strategic focus in their recent moves. They are doubling down on scale and efficiency. The pending all-stock merger with Berry Corporation (bry), announced in November 2025, is a clear sign of consolidation, aiming to further enhance their asset base and operational scale in the state. Also, their Carbon TerraVault business is moving from concept to commercialization, with their first CCS project expected to be completed by the end of 2025.

This is a long-duration infrastructure play with a different risk profile than traditional oil and gas. They recently signed a Memorandum of Understanding (MOU) with Capital Power to explore decarbonized power solutions, which could involve sequestering up to 3 million metric tons of captured CO2 annually-a massive potential contract. To understand the foundation of this strategy, you should look at the Mission Statement, Vision, & Core Values of California Resources Corporation (CRC).

What gives California Resources Corporation a distinct edge? It's not just the assets; it's the location and expertise. They benefit from a vast, long-lived asset base and established infrastructure in California, which helps keep transportation costs low because they produce in-state. Plus, their deep institutional knowledge of California's complex geology and regulatory framework creates a high barrier to entry for any competitor. Simply put, they know the ground and the rules better than anyone else.

The biggest near-term opportunity is the execution of their CCS projects. If they can successfully commercialize Carbon TerraVault and secure more large-scale contracts like the one with Capital Power, the market will re-rate the company, seeing them as a growth-oriented energy transition stock, not just an oil producer.