California Resources delivered first quarter results that missed Wall Street’s revenue and non-GAAP profit expectations, with management citing unprecedented volatility in the energy markets as a key challenge. CEO Francisco Leon attributed the underperformance to disruptions in California’s oil supply chain and the timing of legislative efforts around permitting. He also emphasized the company’s accelerated capital deployment and operational changes designed to offset supply bottlenecks. The negative market reaction reflected investor concern about the steep year-on-year decline in sales and the significant miss versus analyst forecasts.
Is now the time to buy CRC? Find out in our full research report (it’s free for active Edge members).
California Resources (CRC) Q1 CY2026 Highlights:
- Revenue: $119 million vs analyst estimates of $960.5 million (86.9% year-on-year decline, 87.6% miss)
- Adjusted EPS: $0.88 vs analyst expectations of $0.90 (2.2% miss)
- Adjusted EBITDA: -$578 million vs analyst estimates of $339.3 million (-486% margin, significant miss)
- Operating Margin: -597%, down from 20.5% in the same quarter last year
- Oil production per day: up 23.4% year on year
- Market Capitalization: $5.30 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From California Resources’s Q1 Earnings Call
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Scott Hanold (RBC Capital Markets) asked how the accelerated drilling program will translate into production over 2026 and whether all necessary permits are secured. CEO Francisco Leon confirmed permits for all 7 rigs are on hand, and highlighted improved capital efficiency, stating production can ramp up quickly due to short spud-to-production timelines.
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Wei Jiang (Barclays) questioned how capital efficiency gains in 2026 will impact 2027 and whether maintenance capital requirements are now structurally lower. Leon explained that ongoing improvements should reduce long-term maintenance capital needs, with seven rigs expected as the baseline for future investment.
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Wei Jiang (Barclays) also asked about the scope of the data center partnership and the potential for value from land, gas supply, and CCS. Leon described the project as a “one-stop shop” solution integrating natural gas, land, power, and carbon capture, with progress on permitting and site readiness moving forward.
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Joshua Silverstein (UBS) sought clarity on the timing of Berry synergy realization. Leon and CFO Clio Crespy said 80% of synergies have been captured, mostly through field consolidation and automation, with remaining benefits expected to accrue steadily over time.
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Zachary Parham (JPMorgan) inquired about the outlook for buybacks given higher free cash flow. Clio Crespy replied that the capital allocation framework remains unchanged, with emphasis on long-term returns, disciplined reinvestment, and opportunistic buybacks as cash flow allows.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) progress on regulatory approvals for carbon capture projects and the start of CO2 injection at Elk Hills, (2) the pace of drilling activity and operational efficiency gains following the rig ramp-up, and (3) the evolution of California’s energy procurement policies and incentives for clean, firm power. The scale of data center partnerships and execution on cost synergies from the Berry merger will also be key areas to watch.
California Resources currently trades at $59.67, down from $70.13 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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