NYSE:CRC
California Resources Corp
CRC is an independent E&P firm focused on the Permian Basin, delivering strong operational cash flow through disciplined asset management.
Key Metrics
Investment Thesis
Bull Case
CRC offers compelling value for investors seeking exposure to the Permian Basin with a strong balance sheet generating consistent cash flow above its capital expenditure needs. The company's commitment to returning capital through dividends and share repurchases provides downside protection in lower oil price environments. With a low debt-to-equity ratio relative to peers, CRC is well-positioned to weather downturns while maintaining its production growth trajectory.
Bear Case
The significant drop in net income from $524M in 2022 to $376M in 2024 highlights the company's sensitivity to market headwinds and operational costs. Large non-operating losses and a substantial deficit in retained earnings indicate that past profitability has been eroded by strategic investments or one-time charges. Investors may face prolonged periods of muted returns if oil prices remain depressed, limiting the ability to fund further acquisitions without dilution.
About California Resources Corp
California Resources Corp (CRC) is an independent oil and gas exploration and production company primarily focused on the Midland Basin in Texas. The company generates revenue through the acquisition, development, and production of crude oil and natural gas assets for its own account and third parties. Operating in a capital-intensive sector, CRC leverages its acreage position to deliver cash flow while navigating volatile commodity prices.
Analysis
Management Discussion
While revenue grew to $3.20B in 2024 from $2.71B in 2022, net income declined to $376M from a peak of $564M in 2023, reflecting the cyclical nature of energy earnings. Despite lower reported profit, the company generated robust operating cash flow of $610M and returned $305M to shareholders through dividends and buybacks. The significant investment outflow of $2.29B in investing activities suggests a mix of capital expenditures and acquisitions aimed at future growth.
Industry Overview
The global energy sector is currently transitioning towards lower-carbon solutions while maintaining a critical reliance on fossil fuels for global infrastructure needs. This dual dynamic creates a complex investment landscape where traditional E&P firms like CRC must balance short-term profitability with long-term energy transition strategies. Market consolidation continues as smaller players struggle with high leverage, leaving room for financially robust operators to acquire distressed assets.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $2.71B | $2.80B | $3.20B |
| Cost of Revenue | $0 | $0 | $0 |
| Gross Profit | $2.71B | $2.80B | $3.20B |
| Operating Expenses | $1.90B | $1.99B | $2.58B |
| Operating Income | $812.0M | $808.0M | $620.0M |
| G&A | $222.0M | $267.0M | $321.0M |
| Stock-Based Comp | $30.0M | $48.0M | $40.0M |
| D&A | $198.0M | $225.0M | $388.0M |
| Other OpEx | $1.67B | $1.73B | $2.26B |
| Non-Operating Income | $-51.0M | $-60.0M | $-104.0M |
| Pre-Tax Income | $761.0M | $748.0M | $516.0M |
| Income Tax | $237.0M | $184.0M | $140.0M |
| Continuing Ops | $524.0M | $564.0M | $376.0M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $524.0M | $564.0M | $376.0M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $524.0M | $564.0M | $376.0M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $864.0M | $929.0M | $1.02B |
| Cash & Equivalents | $307.0M | $496.0M | $372.0M |
| Accounts Receivable | $326.0M | $216.0M | $330.0M |
| Inventory | $60.0M | $72.0M | $90.0M |
| Other Current Assets | $171.0M | $145.0M | $232.0M |
| Long-Term Assets | $3.10B | $3.07B | $6.11B |
| Operating Leases | $73.0M | $73.0M | $105.0M |
| Other LT Assets | $3.02B | $2.98B | $5.92B |
| Total Assets | $3.97B | $4.00B | $7.13B |
| Current Liabilities | $894.0M | $616.0M | $980.0M |
| Accounts Payable | $345.0M | $245.0M | $369.0M |
| Current Leases | $18.0M | $15.0M | $15.0M |
| Taxes Payable | — | — | $0 |
| Other Current Liab | $233.0M | $-2.0M | $-15.0M |
| Long-Term Liabilities | $1.21B | $1.16B | $2.62B |
| Long-Term Debt | $592.0M | $540.0M | $1.13B |
| LT Operating Leases | $52.0M | $55.0M | $76.0M |
| Other LT Liab | $565.0M | $568.0M | $1.41B |
| Total Liabilities | $2.10B | $1.78B | $3.60B |
| Shareholders' Equity | $1.86B | $2.22B | $3.54B |
| Retained Earnings | $938.0M | $1.42B | $1.68B |
| AOCI | $81.0M | $74.0M | $75.0M |
| Total L&E | $3.97B | $4.00B | $7.13B |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $524.0M | $564.0M | $376.0M |
| Non-Cash Adjustments | $131.0M | $279.0M | $501.0M |
| Working Capital Changes | $35.0M | $-190.0M | $-267.0M |
| Cash from Operations | $690.0M | $653.0M | $610.0M |
| Capital Expenditures | $379.0M | $185.0M | $255.0M |
| Cash from Investing | $-317.0M | $-175.0M | $-1.08B |
| Share Buybacks | $313.0M | $143.0M | $192.0M |
| Dividends Paid | $59.0M | $81.0M | $113.0M |
| Cash from Financing | $-371.0M | $-289.0M | $343.0M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $2.0M | $189.0M | $-124.0M |
| Beginning Cash | $305.0M | $307.0M | $496.0M |
| Ending Cash | $307.0M | $496.0M | $372.0M |
Frequently Asked Questions
How does California Resources Corp make money?
Crude Oil Production and Sales, Natural Gas Production and Sales, Third-Party Service Agreements, and Exploration Activities including acquisitions of mineral rights.
What are the main risks for CRC?
Extreme volatility in crude oil and natural gas commodity prices directly impacts revenue and profitability margins. Rising interest rates increase the cost of servicing long-term debt obligations, potentially straining liquidity if cash flows decline. Operational hazards such as well integrity issues, regulatory changes, or environmental incidents could lead to significant unplanned expenditures and reputational damage.
What is CRC's competitive advantage?
The company holds a top-tier acreage position in the prolific Midland Basin with high-performing wells that offer low breakeven costs. CRC maintains a disciplined capital allocation framework that prioritizes shareholder returns via dividends and buybacks while funding growth through organic production. The firm's experienced operational team drives efficiency improvements across its drilling and completion programs.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.