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California Resources 2026 Outlook: Policy Shifts and Berry Merger
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Key Takeaways
CRC sees a constructive 2026 setup with policy shifts, Berry merger, and a conservative balance sheet.
California's SB 237 and CO2 pipeline approvals boost CRC's rig plans and carbon storage permit visibility.
The Berry merger adds 20 Mboe/d, $80-$90M in synergies, and keeps pro forma leverage under 1X.
California Resources ((CRC - Free Report) ) heads into 2026 with a markedly improved in-state backdrop and a clear integration agenda. Supportive policy reforms, a pending Berry tie-up, and a conservative balance sheet anchor the setup.
Near term, investors still need to navigate softer production, higher operating and tax costs, and derivative noise. But the path to steadier activity is getting clearer.
Why California Policy Now Supports In-State Production
California’s 2025 policy shift tightened the permitting framework (SB 237), authorized CO2 pipelines, and extended Cap-and-Invest to 2045, creating the most constructive regulatory landscape in years. Management plans to double the rig count to four in early 2026 and advance multiple Class VI carbon storage permits under EPA review, with the normalization of permitting and CO2 transport expected to accelerate approvals. This improves project visibility and should shorten cycle times as CRC moves through 2026.
What Scale and Synergies the Berry Deal Adds
CRC expects to close its all-stock merger with Berry in the first quarter of 2026. The deal targets $80–$90 million of annual synergies within 12 months of closing, with nearly half realized in the first six months. It adds 20,000 net acres and 20 thousand barrels of oil equivalent per day (Mboe/d) of production, deepening CRC’s low-decline conventional portfolio, while pro forma leverage remains below 1X. Integration execution and the cadence of permit approvals are the key swing factors for realizing the synergy and volume plan.
Financial Cushions that Support Steady Capital Returns
CRC finished the latest quarter with more than $1.1 billion of liquidity, minimal net leverage, and maturities pushed out to 2029. Management raised the quarterly dividend 5% to $0.405 and continues to repurchase stock, supported by a robust hedge book that stabilizes cash flows through commodity cycles. These cushions support measured investment and consistent returns as integration proceeds.
Near-Term Pressure Points Investors Should Watch
Production softness versus 2024 remains a headwind. Q3 2025 net production averaged 137 Mboe/d (down from 145 Mboe/d a year ago), and operating costs stepped up with last year’s merger with Aera Energy, alongside elevated taxes other than income. Derivative swings were the dominant driver of the year-over-year revenue delta in Q3 2025, turning a prior gain into a loss and explaining about $498 million of the decline. These factors complicate quarter-to-quarter comparability.
For Q4, CRC guided to 131–135 Mboe/d with ~78% oil, operating costs near $310 million, adjusted EBITDAX around $240 million at the midpoint, and capital spending of roughly $115 million. Looking into 2026, the capex framework sits at $280–$300 million, and the corporate base decline assumption was lowered to 8–13%, supporting steadier volumes as permitting and integration progress.
What the Short-Term Rating Signals
CRC holds a short-term Zacks Rank of 3 (Hold) and a VGM Score of A, reflecting strong Value and Momentum characteristics with a solid Growth profile. Estimate trends are mixed near term, with the four-week change in F1 EPS modestly positive and the 12-week trend lower, a pattern consistent with a neutral short-term view. Execution on catalysts such as Berry synergy capture, rig adds, and permitting milestones could tilt revisions and multiples as 2026 unfolds.
Matador Resources ((MTDR - Free Report) ). MTDR also carries a Zacks Rank of 3 and offers value characteristics within the U.S. E&P sub-industry, with dividend income and scale in liquids-weighted development that may appeal to investors comparing capital return profiles alongside CRC.
Murphy Oil ((MUR - Free Report) ). MUR, ranked 3, pairs a higher dividend yield with low EV/EBITDA among peers, providing another balanced return option for investors seeking payout plus value while monitoring commodity sensitivity.
Bottom Line
Policy normalization, CO2 infrastructure enablement, and Cap-and-Invest extension support CRC’s ability to plan and execute in-state projects with shorter cycles. The Berry merger adds scale, synergy, and low leverage, while ample liquidity, extended maturities, a higher dividend, buybacks, and hedging underpin returns. Against near-term production softness, cost inflation, and derivative variability, the Zacks Rank of 3 and A VGM score frame a watch-and-verify stance as permitting, rig adds, and integration milestones drive the 2026 narrative.
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California Resources 2026 Outlook: Policy Shifts and Berry Merger
Key Takeaways
California Resources ((CRC - Free Report) ) heads into 2026 with a markedly improved in-state backdrop and a clear integration agenda. Supportive policy reforms, a pending Berry tie-up, and a conservative balance sheet anchor the setup.
Near term, investors still need to navigate softer production, higher operating and tax costs, and derivative noise. But the path to steadier activity is getting clearer.
Why California Policy Now Supports In-State Production
California’s 2025 policy shift tightened the permitting framework (SB 237), authorized CO2 pipelines, and extended Cap-and-Invest to 2045, creating the most constructive regulatory landscape in years. Management plans to double the rig count to four in early 2026 and advance multiple Class VI carbon storage permits under EPA review, with the normalization of permitting and CO2 transport expected to accelerate approvals. This improves project visibility and should shorten cycle times as CRC moves through 2026.
What Scale and Synergies the Berry Deal Adds
CRC expects to close its all-stock merger with Berry in the first quarter of 2026. The deal targets $80–$90 million of annual synergies within 12 months of closing, with nearly half realized in the first six months. It adds 20,000 net acres and 20 thousand barrels of oil equivalent per day (Mboe/d) of production, deepening CRC’s low-decline conventional portfolio, while pro forma leverage remains below 1X. Integration execution and the cadence of permit approvals are the key swing factors for realizing the synergy and volume plan.
Financial Cushions that Support Steady Capital Returns
CRC finished the latest quarter with more than $1.1 billion of liquidity, minimal net leverage, and maturities pushed out to 2029. Management raised the quarterly dividend 5% to $0.405 and continues to repurchase stock, supported by a robust hedge book that stabilizes cash flows through commodity cycles. These cushions support measured investment and consistent returns as integration proceeds.
Near-Term Pressure Points Investors Should Watch
Production softness versus 2024 remains a headwind. Q3 2025 net production averaged 137 Mboe/d (down from 145 Mboe/d a year ago), and operating costs stepped up with last year’s merger with Aera Energy, alongside elevated taxes other than income. Derivative swings were the dominant driver of the year-over-year revenue delta in Q3 2025, turning a prior gain into a loss and explaining about $498 million of the decline. These factors complicate quarter-to-quarter comparability.
For Q4, CRC guided to 131–135 Mboe/d with ~78% oil, operating costs near $310 million, adjusted EBITDAX around $240 million at the midpoint, and capital spending of roughly $115 million. Looking into 2026, the capex framework sits at $280–$300 million, and the corporate base decline assumption was lowered to 8–13%, supporting steadier volumes as permitting and integration progress.
What the Short-Term Rating Signals
CRC holds a short-term Zacks Rank of 3 (Hold) and a VGM Score of A, reflecting strong Value and Momentum characteristics with a solid Growth profile. Estimate trends are mixed near term, with the four-week change in F1 EPS modestly positive and the 12-week trend lower, a pattern consistent with a neutral short-term view. Execution on catalysts such as Berry synergy capture, rig adds, and permitting milestones could tilt revisions and multiples as 2026 unfolds.
You can see the complete list of today’s Zacks #1 Rank stocks here.
California Resources Corporation Price and Consensus
California Resources Corporation price-consensus-chart | California Resources Corporation Quote
Peer Context
Matador Resources ((MTDR - Free Report) ). MTDR also carries a Zacks Rank of 3 and offers value characteristics within the U.S. E&P sub-industry, with dividend income and scale in liquids-weighted development that may appeal to investors comparing capital return profiles alongside CRC.
Murphy Oil ((MUR - Free Report) ). MUR, ranked 3, pairs a higher dividend yield with low EV/EBITDA among peers, providing another balanced return option for investors seeking payout plus value while monitoring commodity sensitivity.
Bottom Line
Policy normalization, CO2 infrastructure enablement, and Cap-and-Invest extension support CRC’s ability to plan and execute in-state projects with shorter cycles. The Berry merger adds scale, synergy, and low leverage, while ample liquidity, extended maturities, a higher dividend, buybacks, and hedging underpin returns. Against near-term production softness, cost inflation, and derivative variability, the Zacks Rank of 3 and A VGM score frame a watch-and-verify stance as permitting, rig adds, and integration milestones drive the 2026 narrative.