California Resources: 2Q26 Earnings Preview: Making Progress on Long-Term Value Drivers; Expecting In-Line Ops, But EBITDA Miss on Mark-to-Market

Research evidence excerpt

California Resources: 2Q26 Earnings Preview: Making Progress on Long-Term Value Drivers; Expecting In-Line Ops, But EBITDA Miss on Mark-to-Market

of capex. Our model now

assumes 124 MBo/d of net oil production in 4Q26, which compares to the STe at Quarterly Forecasts (FYE Dec)

123 MBo/d. We now estimate $1.3 B of FY26 EBITDA at ~$79 per bbl Brent and Adj. EPS ($)

forecast the company generating $576 MM of FCF this year (~12% yield). Given 2025A 2026E 2027E

the shift toward growth, we believe the company may prioritize retaining cash on Q1 1.07 0.89A 0.69

Q2 1.10 1.32 0.68

its balance sheet, and have accordingly removed our buyback assumptions in the Q3 1.46 0.80 0.88

model. In 2027, we model 125 MBo/d of oil production (+2% YoY growth) under Q4 0.47 0.89 0.83

$576 MM of total capex, supporting $1.3 B of EBITDA and $570 MM of FCF at FY 4.10 3.89 3.08

a ~$71 per bbl Brent oil price.

Style Exposure

On the quarter, our financial estimates are below the STe after marking to market

for 2Q26 commodity prices. We forecast CFPS of $3.44 vs. the STe at $3.66, while

our EBITDA estimate of $338 MM compares to the STe at $355 MM. Our oil

production estimate of 121 MBo/d is slightly below the STe at 122 MBo/d. We

estimate 2Q capex at $140 MM, which is above the STe of $130 MM and at the

high-end of CRC’s $120 - $140 MM guidance range. We note that our higher capex

estimate for 2Q is timing related, driven by what we believe was an acceleration

of activity in the quarter as the company continues to execute in the field. Our FY26

capex estimate of $541 MM remains in-line with the STe and midpoint of company

guidance at $540 MM. We continue to view CRC as a differentiated story within

our E&P coverage that is trading at a deeply discounted valuation. At recent strip,