California Resources Corp — Call Transcript 2026

Good day, welcome to the California Resources Corporation Fourth Quarter 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Daniel Juck, Vice President of Investor Relations. Please go ahead. Good morning, welcome to California Resources Corporation's fourth quarter and year-end 2025 conference call. Following prepared comments, members of our leadership team will be available to take your questions. By now, I hope you had a chance to review our earnings release and supplemental slides. We have also provided an information reconciling non-GAAP financial measures to comparable GAAP measures on our website and in our earnings release. Today, we'll be making forward-looking statements based on current expectations. Actual results may differ due to factors described in our earnings release and SEC filings. As a reminder, please limit your questions to one primary and one follow-up, as this allows us to get to more of your questions. I'll now turn the call over to Francisco. Thank you, Daniel. Good morning, everyone. I'll begin with our 2025 results, then highlight what difference CRC today, including our unique position in California's energy and decarbonization landscape and how that translates into long-term value creation. I'll then turn it over to Cleo for the financials and 2026 guidance. Let me start with the big picture. In 2025, we grew production for the third consecutive year, deliver record financial performance, and return record capital to shareholders, even as commodity prices declined 14% year-over-year. Our guidance shows further annual production growth in 2026. Our high-quality, low-decline conventional assets generate stable cash flow, supporting annual capital returns while maintaining balance sheet strength. Since 2021, we have returned nearly $1.6 billion to shareholders, underscoring our commitment to long-term value creation. Our capital priorities remain clear: Invest in high-return opportunities, preserve financial strength, and return excess cash to shareholders. We will continue to take a measured and disciplined approach to shareholder returns, maintaining the flexibility to invest through the commodity cycles. As we enter 2026, CRC is stronger and more resilient, with a differentiated asset base and improved access to the full depth of our reserves, positioning us to grow cash flow per share. Three factors define CRC today. First, our conventional reservoir base is a core strength. These assets are characterized by low natural declines, strong recovery factors, and very predictable performance. That allows us to sustain production with less capital and lower risk than shale-focused peers. Our expanded 2P disclosure of nearly 1.2 billion BOE highlights the depth and longevity of our inventory, supporting 20-plus years of development at current production levels. Our assets are large-scale, low-decline, multi-stack sandstone reservoirs. Conventional systems where production is sustained through reservoir injection management and long-duration recovery, requiring low capital intensity without the need for the continuous high-intensity reinvestment. Notably, we see a similar recovery potential in our Belridge Field compared to Elk Hills, but at an early stage of development, reinforcing the strong industrial logic behind the Aera Energy merger. Many peers are looking to new basins and international opportunities to extend reserve life, our deep inventory provides confidence in the long-term durability of our production and cash flows right here in California. Second, regulatory progress has been meaningful. The resumption of new drill permitting and the steady flow of approvals through the system represent a step change from where we've been in recent years. We appreciate the efforts of state and local regulators to move this process forward. This progress positions us to stabilize production while supporting the state's objectives for energy affordability. We now have the majority of the permits required to execute our 2026 capital program, which materially expands our flexibility to plan, sequence, and high-grade capital across the portfolio. It also allows us to adjust activity levels methodically as market conditions and returns dictate. We have returned to drilling new wells in 2026 and see ample potential across our long runway assets. Our integrated strategy continues to differentiate CRC. We're investing in high-return oil and gas developments while advancing our carbon management and power platforms in a capital-efficient and returns-driven manner. Carbon TerraVault has moved from concept to execution. Construction is complete on California's first commercial scale CCS project at Elk Hills, and we're now in the commissioning and testing phase. We have successfully captured CO2 from our gas processing plant and are awaiting final EPA approval to commence injection. We believe each step in the process materially de-risk the platform, from engineering and construction to capture performance to regulatory clearance, and positions us to transition into full operations. Importantly, the proximity of our permitted CO2 storage reservoirs to existing infrastructure across the street provides a structural advantage as demands grow for reliable, low carbon power solutions. We continue to advance discussions related to our power platform with multiple high-quality counterparties. The demand signal is evident, but these are large, complex transactions in a market that is still maturing. As it evolves, commercial structures are improving and our options continue to expand. We have strong conviction in the value of our integrated power to CCS offering. We're not focused on speed. We're focused on getting the fundamentals right and securing the right agreement at the right time. One that appropriately aligns risks and returns and delivers durable long-term cash flow. As the market matures, we believe our differentiated position only strengthens. What does this all mean for CRC as we look ahead for the long term? What defines us is durability of inventory and returns. We're investing in 2026 from a position of strength, with 2027 marking the point where we return to a steady state level of activity to sustain production. On a hedge basis, our corporate maintenance breakeven sits in the mid-$50s WTI, providing resilience in the range-bound oil macro. This reflects the full enterprise, including upstream operations, Carbon TerraVault, power, base dividend, interest, corporate needs and hedges. For context, our upstream-only maintenance breakeven is in the low to mid-$50s WTI, among the more competitive levels across pure-play E&P peers. This outlook is grounded in asset quality, inventory depth, and structural cost discipline, not aggressive capital assumptions or optimistic pricing. Together, our reservoir base, improved regulatory visibility and integrated strategy support resilient long-term value across cycles. I'll turn it over to Cleo to walk through our financial results in 2026 guidance. Cleo. Thank you, Francisco. Good morning. The fourth quarter capped a record year for CRC. We delivered on our financial and operational targets while further strengthening the durability of our business. In the fourth quarter, we generated adjusted EBITDAX of $251 million and free cash flow of $115 million, including 14 days of contribution from Berry. Net production averaged 137,000 barrels of oil equivalent per day, with oil realizations at 97% of Brent before hedges. For the full year, we generated nearly $1.25 billion of adjusted EBITDAX and $543 million of free cash flow, the highest level since 2021. Results were driven by strong base performance, structural cost reductions, realized synergies, and higher than average Resource Adequacy payments from our power assets. Net production increased 25% year-over-year to 138,000 barrels of oil equivalent per day, reflecting consistent capital execution and value accretive transactions. Fourth quarter capital spending totaled $120 million within guidance, bringing full year capital deployment to $322 million. Capital allocation remained returns-focused throughout the year. In a permitting constrained environment, we directed investment towards our highest drilling opportunities and returned excess free cash flow to shareholders. The dividend continues to anchor our returns framework, and we have grown it meaningfully since 2021. In 2025, we returned approximately 94% of free cash flow to shareholders through dividends and share repurchases. Given the permitting constraints last year, repurchasing shares represented an attractive use of capital and enhanced per share cash flow. The board recently approved a $430 million increase to our share repurchase authorization and extended the program through 2027, bringing remaining capacity to approximately $600 million. As we enter 2026, we began receiving new well permits. As a result, a greater share of our capital will be directed toward high return reinvestment opportunities that support sustainable production and cash flow growth. This framework, reinvesting at attractive returns while maintaining a strong balance sheet and a durable dividend, remains central to our capital allocation philosophy. Turning to the balance sheet. We exited the year at 1 times leverage with total liquidity of $1.4 billion. During the year, we completed a refinancing transaction associated with the Berry merger, redeemed our 2026 senior notes, expanded lender commitments, and received improved outlooks from the rating agencies. Collectively, these actions enhance financial flexibility and reduce our cost of capital. Looking ahead to 2026, our guidance reflects a measured capital deployment ramp up and resilient cash flow generation. At $65 Brent, we expect to generate approximately $1 billion of adjusted EBITDA, supported by lower costs and ongoing synergy capture. These efficiencies position us to sustain strong margins despite lower commodity price assumptions and a softer Resource Adequacy market. We expect capital spending at roughly $450 million. Drilling completions and workover capital is projected at the $280 million-$300 million range, supporting a full rig program. We retain flexibility to adjust activity levels as the year progresses. Net production is expected to increase 12% year-over-year to 155,000 barrels of oil equivalent per day at midpoint of our guide, with oil representing roughly 81% of volume. Two-thirds of our expected oil production is hedged at $65 Brent, providing meaningful cash flow protection. We enter 2026 with a stronger balance sheet and expanded inventory of high return projects and improved visibility into sustainable production and cash flow growth. With that, I'll turn it back to Francisco for closing comments. Thanks, Cleo. As we look to 2026 and beyond, our priorities are clear. We're focused on responsibly developing our deep, high-quality resource base, lowering cost, maintaining our balance sheet, and effectively allocating capital. We will continue to advance platforms that will shape CRC's future. Carbon TerraVault and our power strategy are moving from concept to execution and are expected to contribute to a more durable, diversified cash flow profile over time. CRC plays an important role in California's energy future. Our locally produced oil and gas, combined with scalable carbon management and power solutions, position us to help meet the state's affordability needs while advancing emission reduction goals. As California's demand for secure, lower carbon energy evolves, we see our integrated model as part of the solution. Operator, we're now ready for questions. We will now begin the question-and-answer session. To ask a question, you may press Star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star than two. Please limit your questions to one primary and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Scott Hanold with RBC Capital Markets. Please go ahead. Yeah, thanks. Good afternoon. I was hoping if you could provide some added context on your 2P inventory update and maybe talk. You know, talk to that relative to how you see permitting, the permitting environment moving forward. Also speak to the duration of that inventory to hold your production plan. Hey, Scott. Thanks for the question. Really appreciate you leading with this question. Important that, you know, we convey the potential of the business. I have a few things to say. We have a great foundation that's well known, conventional assets with low declines, repeatable inventory. We actually have really good rock that actually flows. It's an asset base that's been built to outperform through any cycle. Really three things to highlight. In terms of the runway, the inventory, as I said on my remarks, we have permits in hand to execute 2026. We're building line of sight into 2027. Now that permitting is back to normal cadence, that allows us to put the focus on the resource. We grew our 1P reserves 350%, reserve replacement ratio on the back of the permits coming in, stronger than expected base decline and the Berry acquisition. If you look at the value of the 1P reserves alone, that's about $9 billion at SEC prices. But what really stands out is the running room beyond, the running room beyond that. We said, you know, we have 23 years of inventory of 2P basis on the 2P basis in our disclosure. We operate about 4 of the largest oil fields in the U.S. You can add 3 more, so 7. You have each oil in place that exceeds 3 billion barrels of oil in place. These are fields that have been producing for decades and have many, many decades ahead. Recovery factors of 40% plus in water floods, 75% plus on steam floods. That just tells you some of it gives you a sense of how much resource remains to be captured. On top of the resource, we also have very low subsurface risk that makes capital allocation very predictable. We have a lot of well control across all of our acreage. A lot of our production is about 2,000 feet deep, so very shallow. We have a lot of data that helps us de-risk every dollar that we deploy. A lot of the activity that we have on new wells is infill drilling, so low geological risk, and as technology continues to help us improve our lower base decline, we have a very repeatable capital efficient program that we can execute with confidence. Finally, you know, like to highlight it's truly an opportunity set with stacked optionality and returns. We have thousands of feet of stack pay across multiple producing horizons, 2 million acres of minerals, 89% on average working interest, which means really strong netbacks. As I highlighted in my remarks, Belridge is probably the best example. We look at Belridge in terms of development as we saw Elk Hills about 20 years ago. extremely long runway, low risk, and one of the highlights with Belridge Field is it's less than a 5% royalty burden. amazing setback, netbacks and really excited about the setup that we have for the company going forward. I think you had a second question. Yeah, absolutely appreciate the context. Just staying on kind of a similar theme, if you step back and think about 2026 program, it looks like 4Q flattens. Just wondering, is that a good forward, you know, rate to utilize for that, you know, building the maintenance of 27? Also maybe a little bit about the capital efficiency. That appears to have improved as well. Any color there, and I don't know if it's the type of wells you're drilling or what other factors might have helped the capital efficiency. We're extremely proud of the work the team has done to improve the capital efficiency. We've seen tremendous progress year-over-year and continue to work on it. I'll turn it to Cleo to highlight, to give some of the highlights around efficiency and the well mix. Thanks, Francisco. Hi, Scott. Yes. On our 26 program, it's really designed to materially reduce our corporate decline to roughly 2%. As you alluded, it really equates to 0.5% glide path quarter-over-quarter. That's effectively flat production throughout the year while generating substantial free cash flow. We're operating 4 rigs. We're deploying $280 million-$300 million of D&C and workover capital to support that production on a materially larger asset base. The program is intentionally weighted towards lower risk development. It's really focused on pad inventory. We've got roughly 2/3 of activity on sidetracks and 1/3 on new wells. That's all supplemented by a very robust workover program. The sequencing here is deliberate. More sidetracks and workovers in the first half, we transition into new wells as permit inventory builds here throughout the year. A couple of points. We're reinvesting less than 50% of cash flow. We're maintaining our leverage around 1x. You're really seeing a disciplined capital allocation at work here. You were asking, Scott, around our capital efficiency. We will think about it through 2 lenses, so on project level returns, but also on corporate capital intensity. If I start with our project level returns, our 2026 program, it's highly competitive on a standalone basis, at $9 per BOE of development costs. The program generates just shy of 4x multiple on invested capital. It generates mid-40% returns at $65 Brent and roughly a 3-year payout. The portfolio is also oil weighted. It's 90% oil weighted, which supports strong cash margins here and durable economics across the cycle. Those metrics reflect the quality of our inventory that Francisco was highlighting and also the structural improvements that we've captured over the past several years. If you take a step back and look at the corporate level, the impact of the Berry integration here is clear. What's most notable is that we're delivering this very low decline on a materially larger portfolio without increasing our structural capital intensity. We absorbed here roughly 25,000 BOE per day of incremental production with Berry, while managing to hold the combined business at 2% decline with no increase in our capital and no increase in our rig count versus our early November guide. That was built in a much smaller footprint without Berry. That's a meaningful demonstration of our improved capital efficiency and our integration synergies. We're generating those strong marginal returns on our new capital, and we're also lowering the capital required to sustain the broader base. That combination really supports our durable free cash flow generation. The next question comes from Betty Jiang with Barclays. Please go ahead. Hello. Thank you for taking my question and congrats on a very strong finish to 2025. Shifting gears a bit to the other growth opportunities in the portfolio, maybe starting with the CCS business. Can you speak to the remaining approval process needed to start injection at the cryogenic gas project. Maybe more broadly, as this CCS, the carbon capture business, is finally moving into execution, what are the key milestones you're targeting this year from a business development or permitting perspective? Hey, Betty. Thanks for the compliments. Yeah, in terms of our CCS business, really good progress, and we are near the finish line to deliver a fully integrated end-to-end capture to storage solution. Construction is complete. Commissioning and final approvals are underway. We have successfully captured our first CO2 from the plant, to running it through the amine system, and we're working closely with the EPA through the final operational readiness and compliance steps. We're excited. This first injection is really a big de-risking of the CCS business model, and really brings a lot of confidence to the business that we're building. You know, as we wait for market adoption and there's many moving parts to it, but it's coming quickly. Being able to have decarbonized molecules and electrons in California is what we think wins the day. We have you know, a state requirement under Cap-and-Invest Program to 2045 to decarbonize. We're bringing a market solution that may be very different from whatever else is happening in the rest of the country. Continue to see progress from our team in terms of permits. We just filed CTV with the EPA. That's another 27 million tons of capacity. It's adjacent to CTV I, so it's bringing that hub concept into that Elk Hills area to accommodate higher growth, which we expect. 2026 will also be a year where we see a lot of the permits in the queue that we filed 2 or 3 years ago starting to come in the form of draft permits coming forward. Overall, really good progress. A really exciting proof point to be able to decarbonize our gas processing plant. But there's a lot more to go and excited to share the news as it comes. 2026 is a big year for us. Great. Sounds great. My follow-up is on the power to CCS opportunity. On slide 11, Francisco, you alluded to the hub concept of you have multiple power plants that's sitting all on top of a growing carbon storage. Can you just expand on what are you seeing in the market on that front? What do we need to see from the market in terms of demand or other maturations to crystallize this opportunity for CRC? Yeah, Betty. It's clear now that the industry that's gonna lead the efforts to decarbonize is the electricity sector, the utility sector. And in California in particular, that's gonna be a requirement in order to be able to build data centers, in order to be able to source incremental demand, having to be decarbonized. Now we missed out in California from the first wave of data center growth, which is more focused around training. Pretty obvious we have high power prices here in California, so not the best place to site training data centers. We're really excited about the second wave that's coming through inference and edge compute, where you really have to be close to the user. If you look at the map, Elk Hills Power Plant, CTV I, CTV II now are right at that intersection of two of the most attractive use cases for content, for virtual gaming. Whether that's, it's Los Angeles or Las Vegas, these are where we see this very high demand center. It's a very compelling outlook as we look out into the next few years. The things that we've done to date, which some of them we highlighted, some of them are new, is first we wanted to have this Power Now concept that allows a customer, data center more than likely to be able to look at scale. And the scale comes initially from our Elk Hills Power Plant, but also from the partnership that we made with power plants around our site. We've highlighted La Paloma, we've highlighted Sunrise. Overall, 2 gigawatts of portfolio that ultimately you can scale the data center to. A more recent update is we've been advancing the what we call the Land Now concept, which is permitted and powered land. We're working closely with a leading data center developer. We're in early stages of design and permitting together. We think this is gonna be the most compelling and exciting site in California to build a data center. Making good progress along those lines. As you have line of sight to permits, as you have line of sight into a data center build out, the hyperscalers, we're picking up more and more interest on people that want to establish a foothold into the California market. The injection of CTV I is also an important milestone by being able to take CCS from a concept to a clean hourly match energy offering in a PPA negotiation really becomes a differentiator with the rest of the state that's solely relying on renewables and batteries. Putting all these things together, power at scale, site design and permitting, and a CCS de-risk opportunity is what we ultimately think will be the best path to create durable contracted cash flows and ultimately a good way to unlock shareholder value. We're making really good progress. The next question comes from Zach Parham with JP Morgan. Please go ahead. Hey, thanks for taking my question. First, just wanted to ask on cost reductions and your confidence in the Berry synergy capture. In the slide deck, you've got an interesting slide that shows incremental cost reductions going out to the 2027, 2028 timeframe. Can you just give us a little bit more color on what's driving those continued cost reductions? Thanks, Zach. Really appreciate the question. We're applying the same integration playbook to Berry as we did with Aera Energy. We're simplifying, we're standardizing and integrating the business. As we've announced, we're targeting about $80 million-$90 million of synergies. We were able to close the Berry merger earlier than expected, we're right now in full execution mode. The areas of focus are around field efficiencies, overhead redundancies, leverage on supply chain, but we also now have the ability to optimize well services through our C&J company. That on top of the refinancing that we did last year, these are all very control-controllable high confidence levers that we're gonna be able to pull. Ultimately, we still feel good about that $80 million-$90 million. What's been really impressive to watch as you step back, and that's the point of the slide, is that we're on a glide path to about half a billion dollars of cumulative structural savings between our two deals. I'm gonna let Cleo go through some of the details, but the track record of this team, our operations team in particular, has been outstanding in terms of achieving those synergies and getting to a lower cost structure for the future. Cleo, if you wanna take it away. Thanks, Francisco, and hi, Zach. Yes. Our synergy and our cost reduction journey, if you look at that graph that we shared with you all, since 2023, we've delivered $300 million of structural cost reductions, and those were primarily driven by the Aera integration. That was around $235 million, and we achieved those ahead of schedule. What's most important is that those savings are durable. They came from our field-level operating improvements, from the infrastructure rationalization exercise or workforce consolidation, of course, the centralized procurement as well as our system integration. These are really permanent changes to how we operate. They're not service cost deflation or temporary timing benefits here. It's also worth noting that these savings were realized during a period of permitting constraints and industry cost inflation. We've already been tested here. We've tested those in a challenging operating environment, which reinforces the durability point. Scale matters in our business. We're now operating at a scale where procurement, infrastructure, and field operations, those can be optimized in ways that were not available to us historically. That industrial scale advantage, it's really now embedded in our cost structure. As a result of all these actions we took, our current run rate total operating expenses, those are $550 million lower than the pro forma pre-merger baseline. That's not incremental optimization. That really is a structural reset of our cost base. Francisco mentioned the path. We're on that path. We're targeting $450 million of cumulative savings by year-end 2028. I'll add that's a meaningful portion for CRC. That's getting close to 10% of our market cap in 5 years. We are really well, well on our way to execute that target of half a billion dollars. If you look at it, that's 80% already executed or actioned. Excited to see the new and improved CRC. Thanks, Cleo. Thanks, Francisco. For my follow-up, I wanted to ask on how you're thinking about capital allocation over the longer term. You mentioned getting back to a steady state in 2027. How do you think about maintenance versus potential production growth and balancing those versus free cash flow generation? Yes, Zach. you know, we've certainly dealing with a lot of volatility in the commodity prices and we wanna have a disciplined outlook to growth. That's whether the markets are running hard or pulling back. We're really building this company that works well throughout the cycle, right? It's a commodity business. you know, you'll have those ups and downs, predictable returns, predictable cash flows is what we're after. We're really trying to stay very flexible in the way we're thinking about the year. We've been running four rigs since the beginning of the year. We're thinking about what incremental activity would be that ultimately gets us to from about a 2% year entry to exit decline to more of a flat, steady state. That's gonna require more activity. We've been thinking about that incremental fifth rig. Certainly there's a lot of things to think about what's happening in the geopolitics today. We have a lot of flexibility to increase activity. That comes not only from the running room that we talked about, the inventory, the projects are there. We also control 100% of all of our fields. We operate all of them. We have all the services and rigs that we need for the year. It's really a matter of timing and when can we deliver those higher returns for the investor. We invest to make higher returns, not invest to keep production flat, right? If we see high returns is the opportunity to lean in. Maybe I'll let Cleo talk about, more of the go-forward plan in 2027 and beyond. Yes, thanks, Francisco. When we look at beyond 2026, we've outlined what a maintenance framework would look like. That's holding production flat at the 2026 exit rate, that would require 7 rigs and about $485 million of D&C and workover capital. That's approximately 20% less capital than legacy CRC needed to sustain a similar production level. A real meaningful improvement there. At that activity level, our oil and gas breakeven is about $58 Brent or $54 WTI. If you look at it on a fully burdened corporate basis, that includes power, carbon management, corporate costs, and the dividend, that corporate breakeven is roughly $60 Brent. That's an important point. A $60 Brent breakeven reflects a structurally more resilient business, one that can sustain flat production, fund the dividend, and preserve balance sheet strength. Of course, above that level, we generate incremental free cash flow. One thing I'd like to add as well is operating within a maintenance framework, that doesn't mean static economics. We continue to see opportunities to structurally lower our breakeven over time through the Berry integration, through incremental capital efficiency gains, and also through portfolio high grading. As those improvements take hold, the capital required to hold that production flat should decline. Our objective really remains straightforward. It's durable cash flow, resilient margin, and our sustainable returns through the cycle here. We're excited about the breakeven progress. The next question comes from Kalei Akamine with Bank of America. Please go ahead. Hey, good afternoon. My first question is on gas. Just kinda looking at the screen, Valier Natural Gas in California is running below hub. Wondering if low natural gas is a net benefit at the operating level, noting that you guys sell and consume natural gas? As you prosecute this year's drilling program, wondering if there's gonna be a gas production benefit that could emerge, one that could help begin insulating operating costs, especially at the acquired assets? Hey, Kale. Yeah, thanks for the question. You know, it's a reminder, California is, we think about it as an energy island, a very regional market. You see sometimes the movements of gas price in California that are in the same direction as Henry Hub, but they're not really very well correlated. Ultimately, what you have to look at is the specific California dynamics. First of all, we import a lot of our gas, a lot of it from Texas and the Rockies. We're at literally at the end of the pipe or price takers as a state. Then you look at, you know, what are the underground conditions in what's local demand and what's the storage, what's the capacity on the gas pipes moving gas west. Right now those storage levels in particular are elevated. They're high. The weather, there has been kind of temperate weather for the last few weeks, so the build out of hydro and battery continue to add, and that puts pressure on natural gas. That's why you're seeing a dip in those realizations. You know, it's, you know, it's a reminder, it's pretty obvious in days like today, but you have asymmetric risk when demand exceeds the seasonal norms or where the infrastructure gets stretched or fails, California gas prices can spike dramatically, and that volatility tends to favor the producer. We've taken obviously a lot of steps in terms of our hedging strategy to protect our gross margins. The setup where oil prices are increasing and gas prices are decreasing is favorable. That gas to oil ratio ultimately means higher margins for our business and we protect the consumption of that gas to hedging. Right now the focus is more on oil, but we will be looking at gas opportunities in the year. Part of our mix of projects this year has natural gas projects, because this asymmetry in the market means that we need to be very well-positioned when conditions shift, and we believe they will be shifting in the near term. Got it. I appreciate that. My very quick follow-up is on Elk Hills Power. That business receives a benefit from the state's Resource Adequacy program. Can you simply quantify the benefit for 2026? Resource Adequacy, the capacity programs in the state, very highly regulated, from the procurement of power. As the state started making their capacity requirements for 2026, they came in well below expectations. Pricing pullback, I think we've been signaling this, since last November, where we can see where the contracts were heading. We really had a period where we had really big spikes, and now we're seeing much more of a normalized level as historical. much more historical, in a lot of ways. What we're seeing for this year is a $25 million-$50 million, annually RA, under current conditions. We're looking to, as we discuss later in contract the revenue to the PPA. But we're well set up, right? You know, ultimately, there's a lot of things that could happen in a market like California. You know, there could be plant retirements, you know, demand that is beyond expectations, which is likely the case. You can have some reserve margin adjustment. We don't underwrite those scenarios in our base case, but they're real optionality over time. It's gonna be really interesting to watch. California grid is now very heavy on solar and wind that just have never been tested under stress conditions. If those resources underperform during extreme heat or there's a failure somewhere in the system, the value of reliable dispatchable capacity could shift quickly. We're well-positioned for that RA market if that were to happen. The next question comes from Josh Silverstein with UBS. Please go ahead. Yeah. Thanks, everyone. I wanted to ask when Uinta Basin, you know, now that you have it in-house, how are you thinking about the asset? You know, is it viewed as non-core? I mean, you want to develop and then, you know, maybe just a little bit more details on it, you know, higher or lower cost relative to the California operations and what inventory depth looks like. Thanks. Thanks, Josh. Yeah, Utah came through our acquisition and merger with Berry. Oil weighted, a lot of STACK reservoir as well. We like the position. It's 100,000 contiguous net acreage. The Berry drilled 4 horizontals in the Uteland Butte that are all tracking around type curve, which gives us conviction around the repeatability and technical merit of the asset. We also see some promising benches, the Castle Peak and the Wasatch, to name 2 incremental areas of interest. It's a nice asset. We see it strategically as a high quality option. Right now we're focusing on optimization, well-designed ways where as we take control of the assets, where we can improve the capital efficiency. Ultimately, though, in order for us to scale it has to compete with full cycle returns across the broader portfolio and against the California assets. That's a really high bar. As we mentioned, we see about four times money on invested capital for California. Uinta Basin will have to compete for capital in that way. We'll continue to evaluate it. We've only been operating it for a couple months. Whether that's scaling it through development or partnership or other value-creating paths, we don't know yet, but we're keeping all options on the table. Ultimately it's gonna be returns and value creation that will guide the decision. Got it. Then I also wanted to ask just on the Huntington Beach asset, any update there in terms of how you guys are thinking about kind of optimizing the value of that? Thanks. 90 acres of beachfront property in one of the most expensive ZIP codes in California. It's an asset that we continue to advance. It's, you know, exciting to own this asset in the portfolio. We're executing our plan. A lot of the plugging and abandonment, it's been happening as we continue to produce. It's a cash flow positive asset, we are effectively paying the P&A with that production. We have made good progress in terms of working with the City of Huntington Beach, advancing the entitlements. We expect formal review in late 2026, that will be followed by approximately 2 year of review by the Coastal Commission. Once the entitlement is approved by the city and Coastal Commission, then we have, we will do the site redevelopment and remediation. We expect to have about 80 wells, active wells remaining to plug at that stage. We will look to ultimately, we're looking to optimize value. We see, if you look at comparables and the scarcity of land and high quality, development areas in the state, we see the, you know, some of the comparables going higher. We like where we sit, and we will go through the process, obviously look for ways to accelerate the process to the extent that we can. You know, we'll monetize it when we see the value, right? Right now the value as we abandon and entitle, shifts to the developer. We would like more of the value to accrue to our shareholders. We're working diligently in putting things forward, but we see a lot of significant value creation opportunity in a few years related to this asset base. I understand there is time for one last questioner. We have Nate Pendleton with Texas Capital. Please go ahead. Good morning, and congrats on the strong quarter. Referencing slide 10 and the potential storage of up to 1 billion tons of CO2 with the 350 submitted for CTV II and more in the works. How do you think about the timeline to develop the additional projects to reach that 1 billion ton marker? Should we think about that total number representing total potential or just what the team has de-risked at this point? Hey, Nate. Thanks for the question. Yeah, our CTV business continues to be a really bright spot in terms of the way the state is progressing through their net zero targets. We're seeing not only we talked a lot about today about the data center opportunity and how that part of the business can unlock CTV. The one area we didn't highlight today is through what is called the RCPP, which is the Reliable and Clean Power Procurement of the state. There's advanced discussions happening and a lot of advocacy trying to add carbon capture into the mix for procurement. Whether it's data centers or the state making it a requirement, we think CCS will be the solution for the state and that will bring the market forward. It's gonna be important to watch both progress this year. We have 2 very large markets, one behind the meter, one in front of the meter, that we're gonna tap. If that were all to come into fruition, we would that would fill up every single reservoir that we have. We continue to work on incremental capacity and bringing those permits forward. That's been a core strength of our team, is to advance those permits better than anyone else can in the state. We're well-situated for those market updates and for that market to unfold. We think this is the year where it all comes together. Just a moment. This concludes our question and answer session. I would like to turn the conference back over to Francisco Leon for any closing remarks. Thank you so much for joining us today. We really look forward to connecting with many of you in the coming weeks. Thanks, and have a great day.

Speaker 8: Good day, welcome to the California Resources Corporation Fourth Quarter 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Daniel Juck, Vice President of Investor Relations. Please go ahead. Good day, welcome to the California Resources Corporation Fourth Quarter 2025 conference call. good day welcome to the california resources corporation fourth quarter 2025 conference call All participants will be in listen-only mode. all participants will be in listen-only mode Should you need assistance, please signal a conference specialist by pressing star, then zero on your telephone keypad. should you need assistance please signal a conference specialist by pressing star then zero on your telephone keypad After today's presentation, there will be an opportunity to ask questions. after today's presentation there will be an opportunity to ask questions To ask a question, you may press star then one on your telephone keypad. to ask a question you may press star then one on your telephone keypad To withdraw your question, please press star then two. to withdraw your question please press star then two Please note this event is being recorded. please note this event is being recorded I would now like to turn the conference over to Daniel Juck, Vice President of Investor Relations. i would now like to turn the conference over to daniel juck vice president of investor relations Please go ahead. please go ahead

Speaker 3: Good morning, welcome to California Resources Corporation's fourth quarter and year-end 2025 conference call. Following prepared comments, members of our leadership team will be available to take your questions. By now, I hope you had a chance to review our earnings release and supplemental slides. We have also provided an information reconciling non-GAAP financial measures to comparable GAAP measures on our website and in our earnings release. Today, we'll be making forward-looking statements based on current expectations. Actual results may differ due to factors described in our earnings release and SEC filings. As a reminder, please limit your questions to one primary and one follow-up, as this allows us to get to more of your questions. I'll now turn the call over to Francisco. Good morning, welcome to California Resources Corporation's fourth quarter and year-end 2025 conference call. good morning welcome to california resources corporation's fourth quarter and year-end 2025 conference call Following prepared comments, members of our leadership team will be available to take your questions. following prepared comments members of our leadership team will be available to take your questions By now, I hope you had a chance to review our earnings release and supplemental slides. by now i hope you had a chance to review our earnings release and supplemental slides We have also provided an information reconciling non-GAAP financial measures to comparable GAAP measures on our website and in our earnings release. we have also provided an information reconciling non-gaap financial measures to comparable gaap measures on our website and in our earnings release Today, we'll be making forward-looking statements based on current expectations. today we'll be making forward-looking statements based on current expectations Actual results may differ due to factors described in our earnings release and SEC filings. actual results may differ due to factors described in our earnings release and sec filings As a reminder, please limit your questions to one primary and one follow-up, as this allows us to get to more of your questions. as a reminder please limit your questions to one primary and one follow-up as this allows us to get to more of your questions I'll now turn the call over to Francisco. i'll now turn the call over to francisco

Speaker 4: Thank you, Daniel. Good morning, everyone. I'll begin with our 2025 results, then highlight what difference CRC today, including our unique position in California's energy and decarbonization landscape and how that translates into long-term value creation. I'll then turn it over to Cleo for the financials and 2026 guidance. Let me start with the big picture. In 2025, we grew production for the third consecutive year, deliver record financial performance, and return record capital to shareholders, even as commodity prices declined 14% year-over-year. Our guidance shows further annual production growth in 2026. Our high-quality, low-decline conventional assets generate stable cash flow, supporting annual capital returns while maintaining balance sheet strength. Since 2021, we have returned nearly $1.6 billion to shareholders, underscoring our commitment to long-term value creation. Thank you, Daniel. thank you daniel Good morning, everyone. good morning everyone I'll begin with our 2025 results, then highlight what difference CRC today, including our unique position in California's energy and decarbonization landscape and how that translates into long-term value creation. i'll begin with our 2025 results then highlight what difference crc today including our unique position in california's energy and decarbonization landscape and how that translates into long-term value creation I'll then turn it over to Cleo for the financials and 2026 guidance. i'll then turn it over to cleo for the financials and 2026 guidance Let me start with the big picture. let me start with the big picture In 2025, we grew production for the third consecutive year, deliver record financial performance, and return record capital to shareholders, even as commodity prices declined 14% year-over-year. in 2025 we grew production for the third consecutive year deliver record financial performance and return record capital to shareholders even as commodity prices declined 14% year-over-year Our guidance shows further annual production growth in 2026. our guidance shows further annual production growth in 2026 Our high-quality, low-decline conventional assets generate stable cash flow, supporting annual capital returns while maintaining balance sheet strength. our high-quality low-decline conventional assets generate stable cash flow supporting annual capital returns while maintaining balance sheet strength Since 2021, we have returned nearly $1.6 billion to shareholders, underscoring our commitment to long-term value creation. since 2021 we have returned nearly $1.6 billion to shareholders underscoring our commitment to long-term value creation Our capital priorities remain clear: Invest in high-return opportunities, preserve financial strength, and return excess cash to shareholders. We will continue to take a measured and disciplined approach to shareholder returns, maintaining the flexibility to invest through the commodity cycles. As we enter 2026, CRC is stronger and more resilient, with a differentiated asset base and improved access to the full depth of our reserves, positioning us to grow cash flow per share. Three factors define CRC today. First, our conventional reservoir base is a core strength. These assets are characterized by low natural declines, strong recovery factors, and very predictable performance. That allows us to sustain production with less capital and lower risk than shale-focused peers. Our expanded 2P disclosure of nearly 1.2 billion BOE highlights the depth and longevity of our inventory, supporting 20-plus years of development at current production levels. Our capital priorities remain clear: Invest in high-return opportunities, preserve financial strength, and return excess cash to shareholders. our capital priorities remain clear invest in high-return opportunities preserve financial strength and return excess cash to shareholders We will continue to take a measured and disciplined approach to shareholder returns, maintaining the flexibility to invest through the commodity cycles. we will continue to take a measured and disciplined approach to shareholder returns maintaining the flexibility to invest through the commodity cycles As we enter 2026, CRC is stronger and more resilient, with a differentiated asset base and improved access to the full depth of our reserves, positioning us to grow cash flow per share. as we enter 2026 crc is stronger and more resilient with a differentiated asset base and improved access to the full depth of our reserves positioning us to grow cash flow per share Three factors define CRC today. three factors define crc today First, our conventional reservoir base is a core strength. first our conventional reservoir base is a core strength These assets are characterized by low natural declines, strong recovery factors, and very predictable performance. these assets are characterized by low natural declines strong recovery factors and very predictable performance That allows us to sustain production with less capital and lower risk than shale-focused peers. that allows us to sustain production with less capital and lower risk than shale-focused peers Our expanded 2P disclosure of nearly 1.2 billion BOE highlights the depth and longevity of our inventory, supporting 20-plus years of development at current production levels. our expanded 2p disclosure of nearly 1.2 billion boe highlights the depth and longevity of our inventory supporting 20-plus years of development at current production levels Our assets are large-scale, low-decline, multi-stack sandstone reservoirs. Conventional systems where production is sustained through reservoir injection management and long-duration recovery, requiring low capital intensity without the need for the continuous high-intensity reinvestment. Notably, we see a similar recovery potential in our Belridge Field compared to Elk Hills, but at an early stage of development, reinforcing the strong industrial logic behind the Aera Energy merger. Many peers are looking to new basins and international opportunities to extend reserve life, our deep inventory provides confidence in the long-term durability of our production and cash flows right here in California. Second, regulatory progress has been meaningful. The resumption of new drill permitting and the steady flow of approvals through the system represent a step change from where we've been in recent years. We appreciate the efforts of state and local regulators to move this process forward. Our assets are large-scale, low-decline, multi-stack sandstone reservoirs. our assets are large-scale low-decline multi-stack sandstone reservoirs Conventional systems where production is sustained through reservoir injection management and long-duration recovery, requiring low capital intensity without the need for the continuous high-intensity reinvestment. conventional systems where production is sustained through reservoir injection management and long-duration recovery requiring low capital intensity without the need for the continuous high-intensity reinvestment Notably, we see a similar recovery potential in our Belridge Field compared to Elk Hills, but at an early stage of development, reinforcing the strong industrial logic behind the Aera Energy merger. notably we see a similar recovery potential in our belridge field compared to elk hills but at an early stage of development reinforcing the strong industrial logic behind the aera energy merger Many peers are looking to new basins and international opportunities to extend reserve life, our deep inventory provides confidence in the long-term durability of our production and cash flows right here in California. many peers are looking to new basins and international opportunities to extend reserve life our deep inventory provides confidence in the long-term durability of our production and cash flows right here in california Second, regulatory progress has been meaningful. second regulatory progress has been meaningful The resumption of new drill permitting and the steady flow of approvals through the system represent a step change from where we've been in recent years. the resumption of new drill permitting and the steady flow of approvals through the system represent a step change from where we've been in recent years We appreciate the efforts of state and local regulators to move this process forward. we appreciate the efforts of state and local regulators to move this process forward This progress positions us to stabilize production while supporting the state's objectives for energy affordability. We now have the majority of the permits required to execute our 2026 capital program, which materially expands our flexibility to plan, sequence, and high-grade capital across the portfolio. It also allows us to adjust activity levels methodically as market conditions and returns dictate. We have returned to drilling new wells in 2026 and see ample potential across our long runway assets. Our integrated strategy continues to differentiate CRC. We're investing in high-return oil and gas developments while advancing our carbon management and power platforms in a capital-efficient and returns-driven manner. Carbon TerraVault has moved from concept to execution. Construction is complete on California's first commercial scale CCS project at Elk Hills, and we're now in the commissioning and testing phase. This progress positions us to stabilize production while supporting the state's objectives for energy affordability. this progress positions us to stabilize production while supporting the state's objectives for energy affordability We now have the majority of the permits required to execute our 2026 capital program, which materially expands our flexibility to plan, sequence, and high-grade capital across the portfolio. we now have the majority of the permits required to execute our 2026 capital program which materially expands our flexibility to plan sequence and high-grade capital across the portfolio It also allows us to adjust activity levels methodically as market conditions and returns dictate. it also allows us to adjust activity levels methodically as market conditions and returns dictate We have returned to drilling new wells in 2026 and see ample potential across our long runway assets. we have returned to drilling new wells in 2026 and see ample potential across our long runway assets Our integrated strategy continues to differentiate CRC. our integrated strategy continues to differentiate crc We're investing in high-return oil and gas developments while advancing our carbon management and power platforms in a capital-efficient and returns-driven manner. we're investing in high-return oil and gas developments while advancing our carbon management and power platforms in a capital-efficient and returns-driven manner Carbon TerraVault has moved from concept to execution. carbon terravault has moved from concept to execution Construction is complete on California's first commercial scale CCS project at Elk Hills, and we're now in the commissioning and testing phase. construction is complete on california's first commercial scale ccs project at elk hills and we're now in the commissioning and testing phase We have successfully captured CO2 from our gas processing plant and are awaiting final EPA approval to commence injection. We believe each step in the process materially de-risk the platform, from engineering and construction to capture performance to regulatory clearance, and positions us to transition into full operations. Importantly, the proximity of our permitted CO2 storage reservoirs to existing infrastructure across the street provides a structural advantage as demands grow for reliable, low carbon power solutions. We continue to advance discussions related to our power platform with multiple high-quality counterparties. The demand signal is evident, but these are large, complex transactions in a market that is still maturing. As it evolves, commercial structures are improving and our options continue to expand. We have strong conviction in the value of our integrated power to CCS offering. We're not focused on speed. We have successfully captured CO2 from our gas processing plant and are awaiting final EPA approval to commence injection. we have successfully captured co2 from our gas processing plant and are awaiting final epa approval to commence injection We believe each step in the process materially de-risk the platform, from engineering and construction to capture performance to regulatory clearance, and positions us to transition into full operations. we believe each step in the process materially de-risk the platform from engineering and construction to capture performance to regulatory clearance and positions us to transition into full operations Importantly, the proximity of our permitted CO2 storage reservoirs to existing infrastructure across the street provides a structural advantage as demands grow for reliable, low carbon power solutions. importantly the proximity of our permitted co2 storage reservoirs to existing infrastructure across the street provides a structural advantage as demands grow for reliable low carbon power solutions We continue to advance discussions related to our power platform with multiple high-quality counterparties. we continue to advance discussions related to our power platform with multiple high-quality counterparties The demand signal is evident, but these are large, complex transactions in a market that is still maturing. the demand signal is evident but these are large complex transactions in a market that is still maturing As it evolves, commercial structures are improving and our options continue to expand. as it evolves commercial structures are improving and our options continue to expand We have strong conviction in the value of our integrated power to CCS offering. we have strong conviction in the value of our integrated power to ccs offering We're not focused on speed. we're not focused on speed We're focused on getting the fundamentals right and securing the right agreement at the right time. One that appropriately aligns risks and returns and delivers durable long-term cash flow. As the market matures, we believe our differentiated position only strengthens. What does this all mean for CRC as we look ahead for the long term? What defines us is durability of inventory and returns. We're investing in 2026 from a position of strength, with 2027 marking the point where we return to a steady state level of activity to sustain production. On a hedge basis, our corporate maintenance breakeven sits in the mid-$50s WTI, providing resilience in the range-bound oil macro. This reflects the full enterprise, including upstream operations, Carbon TerraVault, power, base dividend, interest, corporate needs and hedges. We're focused on getting the fundamentals right and securing the right agreement at the right time. we're focused on getting the fundamentals right and securing the right agreement at the right time One that appropriately aligns risks and returns and delivers durable long-term cash flow. one that appropriately aligns risks and returns and delivers durable long-term cash flow As the market matures, we believe our differentiated position only strengthens. as the market matures we believe our differentiated position only strengthens What does this all mean for CRC as we look ahead for the long term? what does this all mean for crc as we look ahead for the long term What defines us is durability of inventory and returns. what defines us is durability of inventory and returns We're investing in 2026 from a position of strength, with 2027 marking the point where we return to a steady state level of activity to sustain production. we're investing in 2026 from a position of strength with 2027 marking the point where we return to a steady state level of activity to sustain production On a hedge basis, our corporate maintenance breakeven sits in the mid-$50s WTI, providing resilience in the range-bound oil macro. on a hedge basis our corporate maintenance breakeven sits in the mid-$50s wti providing resilience in the range-bound oil macro This reflects the full enterprise, including upstream operations, Carbon TerraVault, power, base dividend, interest, corporate needs and hedges. this reflects the full enterprise including upstream operations carbon terravault power base dividend interest corporate needs and hedges For context, our upstream-only maintenance breakeven is in the low to mid-$50s WTI, among the more competitive levels across pure-play E&P peers. This outlook is grounded in asset quality, inventory depth, and structural cost discipline, not aggressive capital assumptions or optimistic pricing. Together, our reservoir base, improved regulatory visibility and integrated strategy support resilient long-term value across cycles. I'll turn it over to Cleo to walk through our financial results in 2026 guidance. Cleo. For context, our upstream-only maintenance breakeven is in the low to mid-$50s WTI, among the more competitive levels across pure-play E&P peers. for context our upstream-only maintenance breakeven is in the low to mid-$50s wti among the more competitive levels across pure-play e&p peers This outlook is grounded in asset quality, inventory depth, and structural cost discipline, not aggressive capital assumptions or optimistic pricing. this outlook is grounded in asset quality inventory depth and structural cost discipline not aggressive capital assumptions or optimistic pricing Together, our reservoir base, improved regulatory visibility and integrated strategy support resilient long-term value across cycles. together our reservoir base improved regulatory visibility and integrated strategy support resilient long-term value across cycles I'll turn it over to Cleo to walk through our financial results in 2026 guidance. i'll turn it over to cleo to walk through our financial results in 2026 guidance Cleo. cleo

Speaker 2: Thank you, Francisco. Good morning. The fourth quarter capped a record year for CRC. We delivered on our financial and operational targets while further strengthening the durability of our business. In the fourth quarter, we generated adjusted EBITDAX of $251 million and free cash flow of $115 million, including 14 days of contribution from Berry. Net production averaged 137,000 barrels of oil equivalent per day, with oil realizations at 97% of Brent before hedges. For the full year, we generated nearly $1.25 billion of adjusted EBITDAX and $543 million of free cash flow, the highest level since 2021. Results were driven by strong base performance, structural cost reductions, realized synergies, and higher than average Resource Adequacy payments from our power assets. Thank you, Francisco. thank you francisco Good morning. good morning The fourth quarter capped a record year for CRC. the fourth quarter capped a record year for crc We delivered on our financial and operational targets while further strengthening the durability of our business. we delivered on our financial and operational targets while further strengthening the durability of our business In the fourth quarter, we generated adjusted EBITDAX of $251 million and free cash flow of $115 million, including 14 days of contribution from Berry. in the fourth quarter we generated adjusted ebitdax of $251 million and free cash flow of $115 million including 14 days of contribution from berry Net production averaged 137,000 barrels of oil equivalent per day, with oil realizations at 97% of Brent before hedges. net production averaged 137,000 barrels of oil equivalent per day with oil realizations at 97% of brent before hedges For the full year, we generated nearly $1.25 billion of adjusted EBITDAX and $543 million of free cash flow, the highest level since 2021. for the full year we generated nearly $1.25 billion of adjusted ebitdax and $543 million of free cash flow the highest level since 2021 Results were driven by strong base performance, structural cost reductions, realized synergies, and higher than average Resource Adequacy payments from our power assets. results were driven by strong base performance structural cost reductions realized synergies and higher than average resource adequacy payments from our power assets Net production increased 25% year-over-year to 138,000 barrels of oil equivalent per day, reflecting consistent capital execution and value accretive transactions. Fourth quarter capital spending totaled $120 million within guidance, bringing full year capital deployment to $322 million. Capital allocation remained returns-focused throughout the year. In a permitting constrained environment, we directed investment towards our highest drilling opportunities and returned excess free cash flow to shareholders. The dividend continues to anchor our returns framework, and we have grown it meaningfully since 2021. In 2025, we returned approximately 94% of free cash flow to shareholders through dividends and share repurchases. Given the permitting constraints last year, repurchasing shares represented an attractive use of capital and enhanced per share cash flow. Net production increased 25% year-over-year to 138,000 barrels of oil equivalent per day, reflecting consistent capital execution and value accretive transactions. net production increased 25% year-over-year to 138,000 barrels of oil equivalent per day reflecting consistent capital execution and value accretive transactions Fourth quarter capital spending totaled $120 million within guidance, bringing full year capital deployment to $322 million. fourth quarter capital spending totaled $120 million within guidance bringing full year capital deployment to $322 million Capital allocation remained returns-focused throughout the year. capital allocation remained returns-focused throughout the year In a permitting constrained environment, we directed investment towards our highest drilling opportunities and returned excess free cash flow to shareholders. in a permitting constrained environment we directed investment towards our highest drilling opportunities and returned excess free cash flow to shareholders The dividend continues to anchor our returns framework, and we have grown it meaningfully since 2021. the dividend continues to anchor our returns framework and we have grown it meaningfully since 2021 In 2025, we returned approximately 94% of free cash flow to shareholders through dividends and share repurchases. in 2025 we returned approximately 94% of free cash flow to shareholders through dividends and share repurchases Given the permitting constraints last year, repurchasing shares represented an attractive use of capital and enhanced per share cash flow. given the permitting constraints last year repurchasing shares represented an attractive use of capital and enhanced per share cash flow The board recently approved a $430 million increase to our share repurchase authorization and extended the program through 2027, bringing remaining capacity to approximately $600 million. As we enter 2026, we began receiving new well permits. As a result, a greater share of our capital will be directed toward high return reinvestment opportunities that support sustainable production and cash flow growth. This framework, reinvesting at attractive returns while maintaining a strong balance sheet and a durable dividend, remains central to our capital allocation philosophy. Turning to the balance sheet. We exited the year at 1 times leverage with total liquidity of $1.4 billion. During the year, we completed a refinancing transaction associated with the Berry merger, redeemed our 2026 senior notes, expanded lender commitments, and received improved outlooks from the rating agencies. The board recently approved a $430 million increase to our share repurchase authorization and extended the program through 2027, bringing remaining capacity to approximately $600 million. the board recently approved a $430 million increase to our share repurchase authorization and extended the program through 2027 bringing remaining capacity to approximately $600 million As we enter 2026, we began receiving new well permits. as we enter 2026 we began receiving new well permits As a result, a greater share of our capital will be directed toward high return reinvestment opportunities that support sustainable production and cash flow growth. as a result a greater share of our capital will be directed toward high return reinvestment opportunities that support sustainable production and cash flow growth This framework, reinvesting at attractive returns while maintaining a strong balance sheet and a durable dividend, remains central to our capital allocation philosophy. Turning to the balance sheet. this framework reinvesting at attractive returns while maintaining a strong balance sheet and a durable dividend remains central to our capital allocation philosophy. turning to the balance sheet We exited the year at 1 times leverage with total liquidity of $1.4 billion. we exited the year at 1 times leverage with total liquidity of $1.4 billion During the year, we completed a refinancing transaction associated with the Berry merger, redeemed our 2026 senior notes, expanded lender commitments, and received improved outlooks from the rating agencies. during the year we completed a refinancing transaction associated with the berry merger redeemed our 2026 senior notes expanded lender commitments and received improved outlooks from the rating agencies Collectively, these actions enhance financial flexibility and reduce our cost of capital. Looking ahead to 2026, our guidance reflects a measured capital deployment ramp up and resilient cash flow generation. At $65 Brent, we expect to generate approximately $1 billion of adjusted EBITDA, supported by lower costs and ongoing synergy capture. These efficiencies position us to sustain strong margins despite lower commodity price assumptions and a softer Resource Adequacy market. We expect capital spending at roughly $450 million. Drilling completions and workover capital is projected at the $280 million-$300 million range, supporting a full rig program. We retain flexibility to adjust activity levels as the year progresses. Collectively, these actions enhance financial flexibility and reduce our cost of capital. collectively these actions enhance financial flexibility and reduce our cost of capital Looking ahead to 2026, our guidance reflects a measured capital deployment ramp up and resilient cash flow generation. looking ahead to 2026 our guidance reflects a measured capital deployment ramp up and resilient cash flow generation At $65 Brent, we expect to generate approximately $1 billion of adjusted EBITDA, supported by lower costs and ongoing synergy capture. at $65 brent we expect to generate approximately $1 billion of adjusted ebitda supported by lower costs and ongoing synergy capture These efficiencies position us to sustain strong margins despite lower commodity price assumptions and a softer Resource Adequacy market. these efficiencies position us to sustain strong margins despite lower commodity price assumptions and a softer resource adequacy market We expect capital spending at roughly $450 million. we expect capital spending at roughly $450 million Drilling completions and workover capital is projected at the $280 million-$300 million range, supporting a full rig program. drilling completions and workover capital is projected at the $280 million-$300 million range supporting a full rig program We retain flexibility to adjust activity levels as the year progresses. we retain flexibility to adjust activity levels as the year progresses Net production is expected to increase 12% year-over-year to 155,000 barrels of oil equivalent per day at midpoint of our guide, with oil representing roughly 81% of volume. Two-thirds of our expected oil production is hedged at $65 Brent, providing meaningful cash flow protection. We enter 2026 with a stronger balance sheet and expanded inventory of high return projects and improved visibility into sustainable production and cash flow growth. With that, I'll turn it back to Francisco for closing comments. Net production is expected to increase 12% year-over-year to 155,000 barrels of oil equivalent per day at midpoint of our guide, with oil representing roughly 81% of volume. net production is expected to increase 12% year-over-year to 155,000 barrels of oil equivalent per day at midpoint of our guide with oil representing roughly 81% of volume Two-thirds of our expected oil production is hedged at $65 Brent, providing meaningful cash flow protection. two-thirds of our expected oil production is hedged at $65 brent providing meaningful cash flow protection We enter 2026 with a stronger balance sheet and expanded inventory of high return projects and improved visibility into sustainable production and cash flow growth. we enter 2026 with a stronger balance sheet and expanded inventory of high return projects and improved visibility into sustainable production and cash flow growth With that, I'll turn it back to Francisco for closing comments. with that i'll turn it back to francisco for closing comments

Speaker 4: Thanks, Cleo. As we look to 2026 and beyond, our priorities are clear. We're focused on responsibly developing our deep, high-quality resource base, lowering cost, maintaining our balance sheet, and effectively allocating capital. We will continue to advance platforms that will shape CRC's future. Carbon TerraVault and our power strategy are moving from concept to execution and are expected to contribute to a more durable, diversified cash flow profile over time. CRC plays an important role in California's energy future. Our locally produced oil and gas, combined with scalable carbon management and power solutions, position us to help meet the state's affordability needs while advancing emission reduction goals. As California's demand for secure, lower carbon energy evolves, we see our integrated model as part of the solution. Operator, we're now ready for questions. Thanks, Cleo. thanks cleo As we look to 2026 and beyond, our priorities are clear. as we look to 2026 and beyond our priorities are clear We're focused on responsibly developing our deep, high-quality resource base, lowering cost, maintaining our balance sheet, and effectively allocating capital. we're focused on responsibly developing our deep high-quality resource base lowering cost maintaining our balance sheet and effectively allocating capital We will continue to advance platforms that will shape CRC's future. we will continue to advance platforms that will shape crc's future Carbon TerraVault and our power strategy are moving from concept to execution and are expected to contribute to a more durable, diversified cash flow profile over time. carbon terravault and our power strategy are moving from concept to execution and are expected to contribute to a more durable diversified cash flow profile over time CRC plays an important role in California's energy future. crc plays an important role in california's energy future Our locally produced oil and gas, combined with scalable carbon management and power solutions, position us to help meet the state's affordability needs while advancing emission reduction goals. our locally produced oil and gas combined with scalable carbon management and power solutions position us to help meet the state's affordability needs while advancing emission reduction goals As California's demand for secure, lower carbon energy evolves, we see our integrated model as part of the solution. as california's demand for secure lower carbon energy evolves we see our integrated model as part of the solution Operator, we're now ready for questions. operator we're now ready for questions

Speaker 8: We will now begin the question-and-answer session. To ask a question, you may press Star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star than two. Please limit your questions to one primary and one follow-up. At this time, we will pause momentarily to assemble our roster. The first question comes from Scott Hanold with RBC Capital Markets. Please go ahead. We will now begin the question-and-answer session. we will now begin the question-and-answer session To ask a question, you may press Star then one on your telephone keypad. to ask a question you may press star then one on your telephone keypad If you're using a speakerphone, please pick up your handset before pressing the keys. if you're using a speakerphone please pick up your handset before pressing the keys If at any time your question has been addressed and you would like to withdraw your question, please press Star than two. if at any time your question has been addressed and you would like to withdraw your question please press star than two Please limit your questions to one primary and one follow-up. please limit your questions to one primary and one follow-up At this time, we will pause momentarily to assemble our roster. at this time we will pause momentarily to assemble our roster The first question comes from Scott Hanold with RBC Capital Markets. the first question comes from scott hanold with rbc capital markets Please go ahead. please go ahead

Speaker 9: Yeah, thanks. Good afternoon. I was hoping if you could provide some added context on your 2P inventory update and maybe talk. You know, talk to that relative to how you see permitting, the permitting environment moving forward. Also speak to the duration of that inventory to hold your production plan. Yeah, thanks. yeah thanks Good afternoon. good afternoon I was hoping if you could provide some added context on your 2P inventory update and maybe talk. i was hoping if you could provide some added context on your 2p inventory update and maybe talk You know, talk to that relative to how you see permitting, the permitting environment moving forward. you know talk to that relative to how you see permitting the permitting environment moving forward Also speak to the duration of that inventory to hold your production plan. also speak to the duration of that inventory to hold your production plan

Speaker 4: Hey, Scott. Thanks for the question. Really appreciate you leading with this question. Important that, you know, we convey the potential of the business. I have a few things to say. We have a great foundation that's well known, conventional assets with low declines, repeatable inventory. We actually have really good rock that actually flows. It's an asset base that's been built to outperform through any cycle. Really three things to highlight. In terms of the runway, the inventory, as I said on my remarks, we have permits in hand to execute 2026. We're building line of sight into 2027. Now that permitting is back to normal cadence, that allows us to put the focus on the resource. Hey, Scott. hey scott Thanks for the question. thanks for the question Really appreciate you leading with this question. really appreciate you leading with this question Important that, you know, we convey the potential of the business. important that you know we convey the potential of the business I have a few things to say. i have a few things to say We have a great foundation that's well known, conventional assets with low declines, repeatable inventory. we have a great foundation that's well known conventional assets with low declines repeatable inventory We actually have really good rock that actually flows. we actually have really good rock that actually flows It's an asset base that's been built to outperform through any cycle. it's an asset base that's been built to outperform through any cycle Really three things to highlight. really three things to highlight In terms of the runway, the inventory, as I said on my remarks, we have permits in hand to execute 2026. in terms of the runway the inventory as i said on my remarks we have permits in hand to execute 2026 We're building line of sight into 2027. we're building line of sight into 2027 Now that permitting is back to normal cadence, that allows us to put the focus on the resource. now that permitting is back to normal cadence that allows us to put the focus on the resource We grew our 1P reserves 350%, reserve replacement ratio on the back of the permits coming in, stronger than expected base decline and the Berry acquisition. If you look at the value of the 1P reserves alone, that's about $9 billion at SEC prices. But what really stands out is the running room beyond, the running room beyond that. We said, you know, we have 23 years of inventory of 2P basis on the 2P basis in our disclosure. We operate about 4 of the largest oil fields in the U.S. You can add 3 more, so 7. You have each oil in place that exceeds 3 billion barrels of oil in place. We grew our 1P reserves 350%, reserve replacement ratio on the back of the permits coming in, stronger than expected base decline and the Berry acquisition. we grew our 1p reserves 350% reserve replacement ratio on the back of the permits coming in stronger than expected base decline and the berry acquisition If you look at the value of the 1P reserves alone, that's about $9 billion at SEC prices. if you look at the value of the 1p reserves alone that's about $9 billion at sec prices But what really stands out is the running room beyond, the running room beyond that. but what really stands out is the running room beyond the running room beyond that We said, you know, we have 23 years of inventory of 2P basis on the 2P basis in our disclosure. we said you know we have 23 years of inventory of 2p basis on the 2p basis in our disclosure We operate about 4 of the largest oil fields in the U.S. we operate about 4 of the largest oil fields in the u.s You can add 3 more, so 7. you can add 3 more so 7 You have each oil in place that exceeds 3 billion barrels of oil in place. you have each oil in place that exceeds 3 billion barrels of oil in place These are fields that have been producing for decades and have many, many decades ahead. Recovery factors of 40% plus in water floods, 75% plus on steam floods. That just tells you some of it gives you a sense of how much resource remains to be captured. On top of the resource, we also have very low subsurface risk that makes capital allocation very predictable. We have a lot of well control across all of our acreage. A lot of our production is about 2,000 feet deep, so very shallow. We have a lot of data that helps us de-risk every dollar that we deploy. These are fields that have been producing for decades and have many, many decades ahead. these are fields that have been producing for decades and have many many decades ahead Recovery factors of 40% plus in water floods, 75% plus on steam floods. recovery factors of 40% plus in water floods 75% plus on steam floods That just tells you some of it gives you a sense of how much resource remains to be captured. that just tells you some of it gives you a sense of how much resource remains to be captured On top of the resource, we also have very low subsurface risk that makes capital allocation very predictable. on top of the resource we also have very low subsurface risk that makes capital allocation very predictable We have a lot of well control across all of our acreage. we have a lot of well control across all of our acreage A lot of our production is about 2,000 feet deep, so very shallow. a lot of our production is about 2,000 feet deep so very shallow We have a lot of data that helps us de-risk every dollar that we deploy. we have a lot of data that helps us de-risk every dollar that we deploy A lot of the activity that we have on new wells is infill drilling, so low geological risk, and as technology continues to help us improve our lower base decline, we have a very repeatable capital efficient program that we can execute with confidence. Finally, you know, like to highlight it's truly an opportunity set with stacked optionality and returns. We have thousands of feet of stack pay across multiple producing horizons, 2 million acres of minerals, 89% on average working interest, which means really strong netbacks. As I highlighted in my remarks, Belridge is probably the best example. We look at Belridge in terms of development as we saw Elk Hills about 20 years ago. A lot of the activity that we have on new wells is infill drilling, so low geological risk, and as technology continues to help us improve our lower base decline, we have a very repeatable capital efficient program that we can execute with confidence. a lot of the activity that we have on new wells is infill drilling so low geological risk and as technology continues to help us improve our lower base decline we have a very repeatable capital efficient program that we can execute with confidence Finally, you know, like to highlight it's truly an opportunity set with stacked optionality and returns. finally you know like to highlight it's truly an opportunity set with stacked optionality and returns We have thousands of feet of stack pay across multiple producing horizons, 2 million acres of minerals, 89% on average working interest, which means really strong netbacks. we have thousands of feet of stack pay across multiple producing horizons 2 million acres of minerals 89% on average working interest which means really strong netbacks As I highlighted in my remarks, Belridge is probably the best example. as i highlighted in my remarks belridge is probably the best example We look at Belridge in terms of development as we saw Elk Hills about 20 years ago. we look at belridge in terms of development as we saw elk hills about 20 years ago extremely long runway, low risk, and one of the highlights with Belridge Field is it's less than a 5% royalty burden. amazing setback, netbacks and really excited about the setup that we have for the company going forward. I think you had a second question. extremely long runway, low risk, and one of the highlights with Belridge Field is it's less than a 5% royalty burden. amazing setback, netbacks and really excited about the setup that we have for the company going forward. extremely long runway low risk and one of the highlights with belridge field is it's less than a 5% royalty burden amazing setback netbacks and really excited about the setup that we have for the company going forward I think you had a second question. i think you had a second question

Speaker 9: Yeah, absolutely appreciate the context. Just staying on kind of a similar theme, if you step back and think about 2026 program, it looks like 4Q flattens. Just wondering, is that a good forward, you know, rate to utilize for that, you know, building the maintenance of 27? Also maybe a little bit about the capital efficiency. That appears to have improved as well. Any color there, and I don't know if it's the type of wells you're drilling or what other factors might have helped the capital efficiency. Yeah, absolutely appreciate the context. yeah absolutely appreciate the context Just staying on kind of a similar theme, if you step back and think about 2026 program, it looks like 4Q flattens. just staying on kind of a similar theme if you step back and think about 2026 program it looks like 4q flattens Just wondering, is that a good forward, you know, rate to utilize for that, you know, building the maintenance of 27? just wondering is that a good forward you know rate to utilize for that you know building the maintenance of 27 Also maybe a little bit about the capital efficiency. also maybe a little bit about the capital efficiency That appears to have improved as well. that appears to have improved as well Any color there, and I don't know if it's the type of wells you're drilling or what other factors might have helped the capital efficiency. any color there and i don't know if it's the type of wells you're drilling or what other factors might have helped the capital efficiency

Speaker 4: We're extremely proud of the work the team has done to improve the capital efficiency. We've seen tremendous progress year-over-year and continue to work on it. I'll turn it to Cleo to highlight, to give some of the highlights around efficiency and the well mix. We're extremely proud of the work the team has done to improve the capital efficiency. we're extremely proud of the work the team has done to improve the capital efficiency We've seen tremendous progress year-over-year and continue to work on it. we've seen tremendous progress year-over-year and continue to work on it I'll turn it to Cleo to highlight, to give some of the highlights around efficiency and the well mix. i'll turn it to cleo to highlight to give some of the highlights around efficiency and the well mix

Speaker 2: Thanks, Francisco. Hi, Scott. Yes. On our 26 program, it's really designed to materially reduce our corporate decline to roughly 2%. As you alluded, it really equates to 0.5% glide path quarter-over-quarter. That's effectively flat production throughout the year while generating substantial free cash flow. We're operating 4 rigs. We're deploying $280 million-$300 million of D&C and workover capital to support that production on a materially larger asset base. The program is intentionally weighted towards lower risk development. It's really focused on pad inventory. We've got roughly 2/3 of activity on sidetracks and 1/3 on new wells. That's all supplemented by a very robust workover program. The sequencing here is deliberate. Thanks, Francisco. thanks francisco Hi, Scott. hi scott Yes. yes On our 26 program, it's really designed to materially reduce our corporate decline to roughly 2%. on our 26 program it's really designed to materially reduce our corporate decline to roughly 2% As you alluded, it really equates to 0.5% glide path quarter-over-quarter. as you alluded it really equates to 0.5% glide path quarter-over-quarter That's effectively flat production throughout the year while generating substantial free cash flow. that's effectively flat production throughout the year while generating substantial free cash flow We're operating 4 rigs. we're operating 4 rigs We're deploying $280 million-$300 million of D&C and workover capital to support that production on a materially larger asset base. we're deploying $280 million-$300 million of d&c and workover capital to support that production on a materially larger asset base The program is intentionally weighted towards lower risk development. the program is intentionally weighted towards lower risk development It's really focused on pad inventory. it's really focused on pad inventory We've got roughly 2/3 of activity on sidetracks and 1/3 on new wells. we've got roughly 2/3 of activity on sidetracks and 1/3 on new wells That's all supplemented by a very robust workover program. that's all supplemented by a very robust workover program The sequencing here is deliberate. the sequencing here is deliberate More sidetracks and workovers in the first half, we transition into new wells as permit inventory builds here throughout the year. A couple of points. We're reinvesting less than 50% of cash flow. We're maintaining our leverage around 1x. You're really seeing a disciplined capital allocation at work here. You were asking, Scott, around our capital efficiency. We will think about it through 2 lenses, so on project level returns, but also on corporate capital intensity. If I start with our project level returns, our 2026 program, it's highly competitive on a standalone basis, at $9 per BOE of development costs. The program generates just shy of 4x multiple on invested capital. It generates mid-40% returns at $65 Brent and roughly a 3-year payout. The portfolio is also oil weighted. More sidetracks and workovers in the first half, we transition into new wells as permit inventory builds here throughout the year. more sidetracks and workovers in the first half we transition into new wells as permit inventory builds here throughout the year A couple of points. a couple of points We're reinvesting less than 50% of cash flow. we're reinvesting less than 50% of cash flow We're maintaining our leverage around 1x. we're maintaining our leverage around 1x You're really seeing a disciplined capital allocation at work here. you're really seeing a disciplined capital allocation at work here You were asking, Scott, around our capital efficiency. you were asking scott around our capital efficiency We will think about it through 2 lenses, so on project level returns, but also on corporate capital intensity. we will think about it through 2 lenses so on project level returns but also on corporate capital intensity If I start with our project level returns, our 2026 program, it's highly competitive on a standalone basis, at $9 per BOE of development costs. if i start with our project level returns our 2026 program it's highly competitive on a standalone basis at $9 per boe of development costs The program generates just shy of 4x multiple on invested capital. the program generates just shy of 4x multiple on invested capital It generates mid-40% returns at $65 Brent and roughly a 3-year payout. it generates mid-40% returns at $65 brent and roughly a 3-year payout The portfolio is also oil weighted. the portfolio is also oil weighted It's 90% oil weighted, which supports strong cash margins here and durable economics across the cycle. Those metrics reflect the quality of our inventory that Francisco was highlighting and also the structural improvements that we've captured over the past several years. If you take a step back and look at the corporate level, the impact of the Berry integration here is clear. What's most notable is that we're delivering this very low decline on a materially larger portfolio without increasing our structural capital intensity. We absorbed here roughly 25,000 BOE per day of incremental production with Berry, while managing to hold the combined business at 2% decline with no increase in our capital and no increase in our rig count versus our early November guide. That was built in a much smaller footprint without Berry. It's 90% oil weighted, which supports strong cash margins here and durable economics across the cycle. it's 90% oil weighted which supports strong cash margins here and durable economics across the cycle Those metrics reflect the quality of our inventory that Francisco was highlighting and also the structural improvements that we've captured over the past several years. those metrics reflect the quality of our inventory that francisco was highlighting and also the structural improvements that we've captured over the past several years If you take a step back and look at the corporate level, the impact of the Berry integration here is clear. if you take a step back and look at the corporate level the impact of the berry integration here is clear What's most notable is that we're delivering this very low decline on a materially larger portfolio without increasing our structural capital intensity. what's most notable is that we're delivering this very low decline on a materially larger portfolio without increasing our structural capital intensity We absorbed here roughly 25,000 BOE per day of incremental production with Berry, while managing to hold the combined business at 2% decline with no increase in our capital and no increase in our rig count versus our early November guide. we absorbed here roughly 25,000 boe per day of incremental production with berry while managing to hold the combined business at 2% decline with no increase in our capital and no increase in our rig count versus our early november guide That was built in a much smaller footprint without Berry. that was built in a much smaller footprint without berry That's a meaningful demonstration of our improved capital efficiency and our integration synergies. We're generating those strong marginal returns on our new capital, and we're also lowering the capital required to sustain the broader base. That combination really supports our durable free cash flow generation. That's a meaningful demonstration of our improved capital efficiency and our integration synergies. that's a meaningful demonstration of our improved capital efficiency and our integration synergies We're generating those strong marginal returns on our new capital, and we're also lowering the capital required to sustain the broader base. we're generating those strong marginal returns on our new capital and we're also lowering the capital required to sustain the broader base That combination really supports our durable free cash flow generation. that combination really supports our durable free cash flow generation

Speaker 8: The next question comes from Betty Jiang with Barclays. Please go ahead. The next question comes from Betty Jiang with Barclays. the next question comes from betty jiang with barclays Please go ahead. please go ahead

Speaker 1: Hello. Thank you for taking my question and congrats on a very strong finish to 2025. Shifting gears a bit to the other growth opportunities in the portfolio, maybe starting with the CCS business. Can you speak to the remaining approval process needed to start injection at the cryogenic gas project. Maybe more broadly, as this CCS, the carbon capture business, is finally moving into execution, what are the key milestones you're targeting this year from a business development or permitting perspective? Hello. hello Thank you for taking my question and congrats on a very strong finish to 2025. thank you for taking my question and congrats on a very strong finish to 2025 Shifting gears a bit to the other growth opportunities in the portfolio, maybe starting with the CCS business. shifting gears a bit to the other growth opportunities in the portfolio maybe starting with the ccs business Can you speak to the remaining approval process needed to start injection at the cryogenic gas project. can you speak to the remaining approval process needed to start injection at the cryogenic gas project Maybe more broadly, as this CCS, the carbon capture business, is finally moving into execution, what are the key milestones you're targeting this year from a business development or permitting perspective? maybe more broadly as this ccs the carbon capture business is finally moving into execution what are the key milestones you're targeting this year from a business development or permitting perspective

Speaker 4: Hey, Betty. Thanks for the compliments. Yeah, in terms of our CCS business, really good progress, and we are near the finish line to deliver a fully integrated end-to-end capture to storage solution. Construction is complete. Commissioning and final approvals are underway. We have successfully captured our first CO2 from the plant, to running it through the amine system, and we're working closely with the EPA through the final operational readiness and compliance steps. We're excited. This first injection is really a big de-risking of the CCS business model, and really brings a lot of confidence to the business that we're building. You know, as we wait for market adoption and there's many moving parts to it, but it's coming quickly. Hey, Betty. hey betty Thanks for the compliments. thanks for the compliments Yeah, in terms of our CCS business, really good progress, and we are near the finish line to deliver a fully integrated end-to-end capture to storage solution. yeah in terms of our ccs business really good progress and we are near the finish line to deliver a fully integrated end-to-end capture to storage solution Construction is complete. construction is complete Commissioning and final approvals are underway. commissioning and final approvals are underway We have successfully captured our first CO2 from the plant, to running it through the amine system, and we're working closely with the EPA through the final operational readiness and compliance steps. we have successfully captured our first co2 from the plant to running it through the amine system and we're working closely with the epa through the final operational readiness and compliance steps We're excited. we're excited This first injection is really a big de-risking of the CCS business model, and really brings a lot of confidence to the business that we're building. this first injection is really a big de-risking of the ccs business model and really brings a lot of confidence to the business that we're building You know, as we wait for market adoption and there's many moving parts to it, but it's coming quickly. you know as we wait for market adoption and there's many moving parts to it but it's coming quickly Being able to have decarbonized molecules and electrons in California is what we think wins the day. We have you know, a state requirement under Cap-and-Invest Program to 2045 to decarbonize. We're bringing a market solution that may be very different from whatever else is happening in the rest of the country. Continue to see progress from our team in terms of permits. We just filed CTV with the EPA. That's another 27 million tons of capacity. It's adjacent to CTV I, so it's bringing that hub concept into that Elk Hills area to accommodate higher growth, which we expect. Being able to have decarbonized molecules and electrons in California is what we think wins the day. being able to have decarbonized molecules and electrons in california is what we think wins the day We have you know, a state requirement under Cap-and-Invest Program to 2045 to decarbonize. we have you know a state requirement under cap-and-invest program to 2045 to decarbonize We're bringing a market solution that may be very different from whatever else is happening in the rest of the country. we're bringing a market solution that may be very different from whatever else is happening in the rest of the country Continue to see progress from our team in terms of permits. continue to see progress from our team in terms of permits We just filed CTV with the EPA. we just filed ctv with the epa That's another 27 million tons of capacity. that's another 27 million tons of capacity It's adjacent to CTV I, so it's bringing that hub concept into that Elk Hills area to accommodate higher growth, which we expect. it's adjacent to ctv i so it's bringing that hub concept into that elk hills area to accommodate higher growth which we expect 2026 will also be a year where we see a lot of the permits in the queue that we filed 2 or 3 years ago starting to come in the form of draft permits coming forward. Overall, really good progress. A really exciting proof point to be able to decarbonize our gas processing plant. But there's a lot more to go and excited to share the news as it comes. 2026 is a big year for us. 2026 will also be a year where we see a lot of the permits in the queue that we filed 2 or 3 years ago starting to come in the form of draft permits coming forward. 2026 will also be a year where we see a lot of the permits in the queue that we filed 2 or 3 years ago starting to come in the form of draft permits coming forward Overall, really good progress. overall really good progress A really exciting proof point to be able to decarbonize our gas processing plant. a really exciting proof point to be able to decarbonize our gas processing plant But there's a lot more to go and excited to share the news as it comes. 2026 is a big year for us. but there's a lot more to go and excited to share the news as it comes 2026 is a big year for us

Speaker 1: Great. Sounds great. My follow-up is on the power to CCS opportunity. On slide 11, Francisco, you alluded to the hub concept of you have multiple power plants that's sitting all on top of a growing carbon storage. Can you just expand on what are you seeing in the market on that front? What do we need to see from the market in terms of demand or other maturations to crystallize this opportunity for CRC? Great. great Sounds great. sounds great My follow-up is on the power to CCS opportunity. my follow-up is on the power to ccs opportunity On slide 11, Francisco, you alluded to the hub concept of you have multiple power plants that's sitting all on top of a growing carbon storage. on slide 11 francisco you alluded to the hub concept of you have multiple power plants that's sitting all on top of a growing carbon storage Can you just expand on what are you seeing in the market on that front? can you just expand on what are you seeing in the market on that front What do we need to see from the market in terms of demand or other maturations to crystallize this opportunity for CRC? what do we need to see from the market in terms of demand or other maturations to crystallize this opportunity for crc

Speaker 4: Yeah, Betty. It's clear now that the industry that's gonna lead the efforts to decarbonize is the electricity sector, the utility sector. And in California in particular, that's gonna be a requirement in order to be able to build data centers, in order to be able to source incremental demand, having to be decarbonized. Now we missed out in California from the first wave of data center growth, which is more focused around training. Pretty obvious we have high power prices here in California, so not the best place to site training data centers. We're really excited about the second wave that's coming through inference and edge compute, where you really have to be close to the user. Yeah, Betty. yeah betty It's clear now that the industry that's gonna lead the efforts to decarbonize is the electricity sector, the utility sector. it's clear now that the industry that's gonna lead the efforts to decarbonize is the electricity sector the utility sector And in California in particular, that's gonna be a requirement in order to be able to build data centers, in order to be able to source incremental demand, having to be decarbonized. and in california in particular that's gonna be a requirement in order to be able to build data centers in order to be able to source incremental demand having to be decarbonized Now we missed out in California from the first wave of data center growth, which is more focused around training. now we missed out in california from the first wave of data center growth which is more focused around training Pretty obvious we have high power prices here in California, so not the best place to site training data centers. pretty obvious we have high power prices here in california so not the best place to site training data centers We're really excited about the second wave that's coming through inference and edge compute, where you really have to be close to the user. we're really excited about the second wave that's coming through inference and edge compute where you really have to be close to the user If you look at the map, Elk Hills Power Plant, CTV I, CTV II now are right at that intersection of two of the most attractive use cases for content, for virtual gaming. Whether that's, it's Los Angeles or Las Vegas, these are where we see this very high demand center. It's a very compelling outlook as we look out into the next few years. The things that we've done to date, which some of them we highlighted, some of them are new, is first we wanted to have this Power Now concept that allows a customer, data center more than likely to be able to look at scale. And the scale comes initially from our Elk Hills Power Plant, but also from the partnership that we made with power plants around our site. If you look at the map, Elk Hills Power Plant, CTV I, CTV II now are right at that intersection of two of the most attractive use cases for content, for virtual gaming. if you look at the map elk hills power plant ctv i ctv ii now are right at that intersection of two of the most attractive use cases for content for virtual gaming Whether that's, it's Los Angeles or Las Vegas, these are where we see this very high demand center. whether that's it's los angeles or las vegas these are where we see this very high demand center It's a very compelling outlook as we look out into the next few years. it's a very compelling outlook as we look out into the next few years The things that we've done to date, which some of them we highlighted, some of them are new, is first we wanted to have this Power Now concept that allows a customer, data center more than likely to be able to look at scale. the things that we've done to date which some of them we highlighted some of them are new is first we wanted to have this power now concept that allows a customer data center more than likely to be able to look at scale And the scale comes initially from our Elk Hills Power Plant, but also from the partnership that we made with power plants around our site. and the scale comes initially from our elk hills power plant but also from the partnership that we made with power plants around our site We've highlighted La Paloma, we've highlighted Sunrise. Overall, 2 gigawatts of portfolio that ultimately you can scale the data center to. A more recent update is we've been advancing the what we call the Land Now concept, which is permitted and powered land. We're working closely with a leading data center developer. We're in early stages of design and permitting together. We think this is gonna be the most compelling and exciting site in California to build a data center. Making good progress along those lines. As you have line of sight to permits, as you have line of sight into a data center build out, the hyperscalers, we're picking up more and more interest on people that want to establish a foothold into the California market. We've highlighted La Paloma, we've highlighted Sunrise. we've highlighted la paloma we've highlighted sunrise Overall, 2 gigawatts of portfolio that ultimately you can scale the data center to. overall 2 gigawatts of portfolio that ultimately you can scale the data center to A more recent update is we've been advancing the what we call the Land Now concept, which is permitted and powered land. a more recent update is we've been advancing the what we call the land now concept which is permitted and powered land We're working closely with a leading data center developer. we're working closely with a leading data center developer We're in early stages of design and permitting together. we're in early stages of design and permitting together We think this is gonna be the most compelling and exciting site in California to build a data center. we think this is gonna be the most compelling and exciting site in california to build a data center Making good progress along those lines. making good progress along those lines As you have line of sight to permits, as you have line of sight into a data center build out, the hyperscalers, we're picking up more and more interest on people that want to establish a foothold into the California market. as you have line of sight to permits as you have line of sight into a data center build out the hyperscalers we're picking up more and more interest on people that want to establish a foothold into the california market The injection of CTV I is also an important milestone by being able to take CCS from a concept to a clean hourly match energy offering in a PPA negotiation really becomes a differentiator with the rest of the state that's solely relying on renewables and batteries. Putting all these things together, power at scale, site design and permitting, and a CCS de-risk opportunity is what we ultimately think will be the best path to create durable contracted cash flows and ultimately a good way to unlock shareholder value. We're making really good progress. The injection of CTV I is also an important milestone by being able to take CCS from a concept to a clean hourly match energy offering in a PPA negotiation really becomes a differentiator with the rest of the state that's solely relying on renewables and batteries. the injection of ctv i is also an important milestone by being able to take ccs from a concept to a clean hourly match energy offering in a ppa negotiation really becomes a differentiator with the rest of the state that's solely relying on renewables and batteries Putting all these things together, power at scale, site design and permitting, and a CCS de-risk opportunity is what we ultimately think will be the best path to create durable contracted cash flows and ultimately a good way to unlock shareholder value. putting all these things together power at scale, site design and permitting and a ccs de-risk opportunity is what we ultimately think will be the best path to create durable contracted cash flows and ultimately a good way to unlock shareholder value We're making really good progress. we're making really good progress

Speaker 8: The next question comes from Zach Parham with JP Morgan. Please go ahead. The next question comes from Zach Parham with JP Morgan. the next question comes from zach parham with jp morgan Please go ahead. please go ahead

Speaker 10: Hey, thanks for taking my question. First, just wanted to ask on cost reductions and your confidence in the Berry synergy capture. In the slide deck, you've got an interesting slide that shows incremental cost reductions going out to the 2027, 2028 timeframe. Can you just give us a little bit more color on what's driving those continued cost reductions? Hey, thanks for taking my question. hey thanks for taking my question First, just wanted to ask on cost reductions and your confidence in the Berry synergy capture. first just wanted to ask on cost reductions and your confidence in the berry synergy capture In the slide deck, you've got an interesting slide that shows incremental cost reductions going out to the 2027, 2028 timeframe. in the slide deck you've got an interesting slide that shows incremental cost reductions going out to the 2027 2028 timeframe Can you just give us a little bit more color on what's driving those continued cost reductions? can you just give us a little bit more color on what's driving those continued cost reductions

Speaker 4: Thanks, Zach. Really appreciate the question. We're applying the same integration playbook to Berry as we did with Aera Energy. We're simplifying, we're standardizing and integrating the business. As we've announced, we're targeting about $80 million-$90 million of synergies. We were able to close the Berry merger earlier than expected, we're right now in full execution mode. The areas of focus are around field efficiencies, overhead redundancies, leverage on supply chain, but we also now have the ability to optimize well services through our C&J company. That on top of the refinancing that we did last year, these are all very control-controllable high confidence levers that we're gonna be able to pull. Ultimately, we still feel good about that $80 million-$90 million. Thanks, Zach. thanks zach Really appreciate the question. really appreciate the question We're applying the same integration playbook to Berry as we did with Aera Energy. we're applying the same integration playbook to berry as we did with aera energy We're simplifying, we're standardizing and integrating the business. we're simplifying we're standardizing and integrating the business As we've announced, we're targeting about $80 million-$90 million of synergies. as we've announced we're targeting about $80 million-$90 million of synergies We were able to close the Berry merger earlier than expected, we're right now in full execution mode. we were able to close the berry merger earlier than expected we're right now in full execution mode The areas of focus are around field efficiencies, overhead redundancies, leverage on supply chain, but we also now have the ability to optimize well services through our C&J company. the areas of focus are around field efficiencies overhead redundancies leverage on supply chain but we also now have the ability to optimize well services through our c&j company That on top of the refinancing that we did last year, these are all very control-controllable high confidence levers that we're gonna be able to pull. that on top of the refinancing that we did last year these are all very control-controllable high confidence levers that we're gonna be able to pull Ultimately, we still feel good about that $80 million-$90 million. ultimately we still feel good about that $80 million-$90 million What's been really impressive to watch as you step back, and that's the point of the slide, is that we're on a glide path to about half a billion dollars of cumulative structural savings between our two deals. I'm gonna let Cleo go through some of the details, but the track record of this team, our operations team in particular, has been outstanding in terms of achieving those synergies and getting to a lower cost structure for the future. Cleo, if you wanna take it away. What's been really impressive to watch as you step back, and that's the point of the slide, is that we're on a glide path to about half a billion dollars of cumulative structural savings between our two deals. what's been really impressive to watch as you step back and that's the point of the slide is that we're on a glide path to about half a billion dollars of cumulative structural savings between our two deals I'm gonna let Cleo go through some of the details, but the track record of this team, our operations team in particular, has been outstanding in terms of achieving those synergies and getting to a lower cost structure for the future. i'm gonna let cleo go through some of the details but the track record of this team our operations team in particular has been outstanding in terms of achieving those synergies and getting to a lower cost structure for the future Cleo, if you wanna take it away. cleo if you wanna take it away

Speaker 2: Thanks, Francisco, and hi, Zach. Yes. Our synergy and our cost reduction journey, if you look at that graph that we shared with you all, since 2023, we've delivered $300 million of structural cost reductions, and those were primarily driven by the Aera integration. That was around $235 million, and we achieved those ahead of schedule. What's most important is that those savings are durable. They came from our field-level operating improvements, from the infrastructure rationalization exercise or workforce consolidation, of course, the centralized procurement as well as our system integration. These are really permanent changes to how we operate. They're not service cost deflation or temporary timing benefits here. It's also worth noting that these savings were realized during a period of permitting constraints and industry cost inflation. We've already been tested here. Thanks, Francisco, and hi, Zach. thanks francisco and hi zach Yes. yes Our synergy and our cost reduction journey, if you look at that graph that we shared with you all, since 2023, we've delivered $300 million of structural cost reductions, and those were primarily driven by the Aera integration. our synergy and our cost reduction journey if you look at that graph that we shared with you all since 2023 we've delivered $300 million of structural cost reductions and those were primarily driven by the aera integration That was around $235 million, and we achieved those ahead of schedule. that was around $235 million and we achieved those ahead of schedule What's most important is that those savings are durable. what's most important is that those savings are durable They came from our field-level operating improvements, from the infrastructure rationalization exercise or workforce consolidation, of course, the centralized procurement as well as our system integration. they came from our field-level operating improvements from the infrastructure rationalization exercise or workforce consolidation of course the centralized procurement as well as our system integration These are really permanent changes to how we operate. these are really permanent changes to how we operate They're not service cost deflation or temporary timing benefits here. they're not service cost deflation or temporary timing benefits here It's also worth noting that these savings were realized during a period of permitting constraints and industry cost inflation. it's also worth noting that these savings were realized during a period of permitting constraints and industry cost inflation We've already been tested here. we've already been tested here We've tested those in a challenging operating environment, which reinforces the durability point. Scale matters in our business. We're now operating at a scale where procurement, infrastructure, and field operations, those can be optimized in ways that were not available to us historically. That industrial scale advantage, it's really now embedded in our cost structure. As a result of all these actions we took, our current run rate total operating expenses, those are $550 million lower than the pro forma pre-merger baseline. That's not incremental optimization. That really is a structural reset of our cost base. Francisco mentioned the path. We're on that path. We're targeting $450 million of cumulative savings by year-end 2028. I'll add that's a meaningful portion for CRC. That's getting close to 10% of our market cap in 5 years. We've tested those in a challenging operating environment, which reinforces the durability point. we've tested those in a challenging operating environment which reinforces the durability point Scale matters in our business. scale matters in our business We're now operating at a scale where procurement, infrastructure, and field operations, those can be optimized in ways that were not available to us historically. we're now operating at a scale where procurement infrastructure and field operations those can be optimized in ways that were not available to us historically That industrial scale advantage, it's really now embedded in our cost structure. that industrial scale advantage it's really now embedded in our cost structure As a result of all these actions we took, our current run rate total operating expenses, those are $550 million lower than the pro forma pre-merger baseline. as a result of all these actions we took our current run rate total operating expenses those are $550 million lower than the pro forma pre-merger baseline That's not incremental optimization. that's not incremental optimization That really is a structural reset of our cost base. that really is a structural reset of our cost base Francisco mentioned the path. francisco mentioned the path We're on that path. we're on that path We're targeting $450 million of cumulative savings by year-end 2028. we're targeting $450 million of cumulative savings by year-end 2028 I'll add that's a meaningful portion for CRC. i'll add that's a meaningful portion for crc That's getting close to 10% of our market cap in 5 years. that's getting close to 10% of our market cap in 5 years We are really well, well on our way to execute that target of half a billion dollars. If you look at it, that's 80% already executed or actioned. Excited to see the new and improved CRC. We are really well, well on our way to execute that target of half a billion dollars. we are really well well on our way to execute that target of half a billion dollars If you look at it, that's 80% already executed or actioned. if you look at it that's 80% already executed or actioned Excited to see the new and improved CRC. excited to see the new and improved crc

Speaker 10: Thanks, Cleo. Thanks, Francisco. For my follow-up, I wanted to ask on how you're thinking about capital allocation over the longer term. You mentioned getting back to a steady state in 2027. How do you think about maintenance versus potential production growth and balancing those versus free cash flow generation? Thanks, Cleo. thanks cleo Thanks, Francisco. thanks francisco For my follow-up, I wanted to ask on how you're thinking about capital allocation over the longer term. for my follow-up i wanted to ask on how you're thinking about capital allocation over the longer term You mentioned getting back to a steady state in 2027. you mentioned getting back to a steady state in 2027 How do you think about maintenance versus potential production growth and balancing those versus free cash flow generation? how do you think about maintenance versus potential production growth and balancing those versus free cash flow generation

Speaker 4: Yes, Zach. you know, we've certainly dealing with a lot of volatility in the commodity prices and we wanna have a disciplined outlook to growth. That's whether the markets are running hard or pulling back. We're really building this company that works well throughout the cycle, right? It's a commodity business. you know, you'll have those ups and downs, predictable returns, predictable cash flows is what we're after. We're really trying to stay very flexible in the way we're thinking about the year. We've been running four rigs since the beginning of the year. We're thinking about what incremental activity would be that ultimately gets us to from about a 2% year entry to exit decline to more of a flat, steady state. That's gonna require more activity. Yes, Zach. you know, we've certainly dealing with a lot of volatility in the commodity prices and we wanna have a disciplined outlook to growth. yes zach you know we've certainly dealing with a lot of volatility in the commodity prices and we wanna have a disciplined outlook to growth That's whether the markets are running hard or pulling back. that's whether the markets are running hard or pulling back We're really building this company that works well throughout the cycle, right? we're really building this company that works well throughout the cycle right It's a commodity business. you know, you'll have those ups and downs, predictable returns, predictable cash flows is what we're after. it's a commodity business you know you'll have those ups and downs predictable returns predictable cash flows is what we're after We're really trying to stay very flexible in the way we're thinking about the year. we're really trying to stay very flexible in the way we're thinking about the year We've been running four rigs since the beginning of the year. we've been running four rigs since the beginning of the year We're thinking about what incremental activity would be that ultimately gets us to from about a 2% year entry to exit decline to more of a flat, steady state. we're thinking about what incremental activity would be that ultimately gets us to from about a 2% year entry to exit decline to more of a flat steady state That's gonna require more activity. that's gonna require more activity We've been thinking about that incremental fifth rig. Certainly there's a lot of things to think about what's happening in the geopolitics today. We have a lot of flexibility to increase activity. That comes not only from the running room that we talked about, the inventory, the projects are there. We also control 100% of all of our fields. We operate all of them. We have all the services and rigs that we need for the year. It's really a matter of timing and when can we deliver those higher returns for the investor. We invest to make higher returns, not invest to keep production flat, right? If we see high returns is the opportunity to lean in. We've been thinking about that incremental fifth rig. we've been thinking about that incremental fifth rig Certainly there's a lot of things to think about what's happening in the geopolitics today. certainly there's a lot of things to think about what's happening in the geopolitics today We have a lot of flexibility to increase activity. we have a lot of flexibility to increase activity That comes not only from the running room that we talked about, the inventory, the projects are there. that comes not only from the running room that we talked about the inventory the projects are there We also control 100% of all of our fields. we also control 100% of all of our fields We operate all of them. we operate all of them We have all the services and rigs that we need for the year. we have all the services and rigs that we need for the year It's really a matter of timing and when can we deliver those higher returns for the investor. it's really a matter of timing and when can we deliver those higher returns for the investor We invest to make higher returns, not invest to keep production flat, right? we invest to make higher returns not invest to keep production flat right If we see high returns is the opportunity to lean in. if we see high returns is the opportunity to lean in Maybe I'll let Cleo talk about, more of the go-forward plan in 2027 and beyond. Maybe I'll let Cleo talk about, more of the go-forward plan in 2027 and beyond. maybe i'll let cleo talk about more of the go-forward plan in 2027 and beyond

Speaker 2: Yes, thanks, Francisco. When we look at beyond 2026, we've outlined what a maintenance framework would look like. That's holding production flat at the 2026 exit rate, that would require 7 rigs and about $485 million of D&C and workover capital. That's approximately 20% less capital than legacy CRC needed to sustain a similar production level. A real meaningful improvement there. At that activity level, our oil and gas breakeven is about $58 Brent or $54 WTI. If you look at it on a fully burdened corporate basis, that includes power, carbon management, corporate costs, and the dividend, that corporate breakeven is roughly $60 Brent. That's an important point. A $60 Brent breakeven reflects a structurally more resilient business, one that can sustain flat production, fund the dividend, and preserve balance sheet strength. Yes, thanks, Francisco. yes thanks francisco When we look at beyond 2026, we've outlined what a maintenance framework would look like. when we look at beyond 2026 we've outlined what a maintenance framework would look like That's holding production flat at the 2026 exit rate, that would require 7 rigs and about $485 million of D&C and workover capital. that's holding production flat at the 2026 exit rate that would require 7 rigs and about $485 million of d&c and workover capital That's approximately 20% less capital than legacy CRC needed to sustain a similar production level. that's approximately 20% less capital than legacy crc needed to sustain a similar production level A real meaningful improvement there. a real meaningful improvement there At that activity level, our oil and gas breakeven is about $58 Brent or $54 WTI. at that activity level our oil and gas breakeven is about $58 brent or $54 wti If you look at it on a fully burdened corporate basis, that includes power, carbon management, corporate costs, and the dividend, that corporate breakeven is roughly $60 Brent. if you look at it on a fully burdened corporate basis that includes power carbon management corporate costs and the dividend that corporate breakeven is roughly $60 brent That's an important point. that's an important point A $60 Brent breakeven reflects a structurally more resilient business, one that can sustain flat production, fund the dividend, and preserve balance sheet strength. a $60 brent breakeven reflects a structurally more resilient business one that can sustain flat production fund the dividend and preserve balance sheet strength Of course, above that level, we generate incremental free cash flow. One thing I'd like to add as well is operating within a maintenance framework, that doesn't mean static economics. We continue to see opportunities to structurally lower our breakeven over time through the Berry integration, through incremental capital efficiency gains, and also through portfolio high grading. As those improvements take hold, the capital required to hold that production flat should decline. Our objective really remains straightforward. It's durable cash flow, resilient margin, and our sustainable returns through the cycle here. We're excited about the breakeven progress. Of course, above that level, we generate incremental free cash flow. of course above that level we generate incremental free cash flow One thing I'd like to add as well is operating within a maintenance framework, that doesn't mean static economics. one thing i'd like to add as well is operating within a maintenance framework that doesn't mean static economics We continue to see opportunities to structurally lower our breakeven over time through the Berry integration, through incremental capital efficiency gains, and also through portfolio high grading. we continue to see opportunities to structurally lower our breakeven over time through the berry integration through incremental capital efficiency gains and also through portfolio high grading As those improvements take hold, the capital required to hold that production flat should decline. as those improvements take hold the capital required to hold that production flat should decline Our objective really remains straightforward. our objective really remains straightforward It's durable cash flow, resilient margin, and our sustainable returns through the cycle here. it's durable cash flow resilient margin and our sustainable returns through the cycle here We're excited about the breakeven progress. we're excited about the breakeven progress

Speaker 8: The next question comes from Kalei Akamine with Bank of America. Please go ahead. The next question comes from Kalei Akamine with Bank of America. the next question comes from kalei akamine with bank of america Please go ahead. please go ahead

Speaker 6: Hey, good afternoon. My first question is on gas. Just kinda looking at the screen, Valier Natural Gas in California is running below hub. Wondering if low natural gas is a net benefit at the operating level, noting that you guys sell and consume natural gas? As you prosecute this year's drilling program, wondering if there's gonna be a gas production benefit that could emerge, one that could help begin insulating operating costs, especially at the acquired assets? Hey, good afternoon. hey good afternoon My first question is on gas. my first question is on gas Just kinda looking at the screen, Valier Natural Gas in California is running below hub. just kinda looking at the screen valier natural gas in california is running below hub Wondering if low natural gas is a net benefit at the operating level, noting that you guys sell and consume natural gas? wondering if low natural gas is a net benefit at the operating level noting that you guys sell and consume natural gas As you prosecute this year's drilling program, wondering if there's gonna be a gas production benefit that could emerge, one that could help begin insulating operating costs, especially at the acquired assets? as you prosecute this year's drilling program wondering if there's gonna be a gas production benefit that could emerge one that could help begin insulating operating costs especially at the acquired assets

Speaker 4: Hey, Kale. Yeah, thanks for the question. You know, it's a reminder, California is, we think about it as an energy island, a very regional market. You see sometimes the movements of gas price in California that are in the same direction as Henry Hub, but they're not really very well correlated. Ultimately, what you have to look at is the specific California dynamics. First of all, we import a lot of our gas, a lot of it from Texas and the Rockies. We're at literally at the end of the pipe or price takers as a state. Then you look at, you know, what are the underground conditions in what's local demand and what's the storage, what's the capacity on the gas pipes moving gas west. Hey, Kale. hey kale Yeah, thanks for the question. yeah thanks for the question You know, it's a reminder, California is, we think about it as an energy island, a very regional market. you know it's a reminder california is we think about it as an energy island a very regional market You see sometimes the movements of gas price in California that are in the same direction as Henry Hub, but they're not really very well correlated. you see sometimes the movements of gas price in california that are in the same direction as henry hub but they're not really very well correlated Ultimately, what you have to look at is the specific California dynamics. ultimately what you have to look at is the specific california dynamics First of all, we import a lot of our gas, a lot of it from Texas and the Rockies. first of all we import a lot of our gas a lot of it from texas and the rockies We're at literally at the end of the pipe or price takers as a state. we're at literally at the end of the pipe or price takers as a state Then you look at, you know, what are the underground conditions in what's local demand and what's the storage, what's the capacity on the gas pipes moving gas west. then you look at you know what are the underground conditions in what's local demand and what's the storage what's the capacity on the gas pipes moving gas west Right now those storage levels in particular are elevated. They're high. The weather, there has been kind of temperate weather for the last few weeks, so the build out of hydro and battery continue to add, and that puts pressure on natural gas. That's why you're seeing a dip in those realizations. You know, it's, you know, it's a reminder, it's pretty obvious in days like today, but you have asymmetric risk when demand exceeds the seasonal norms or where the infrastructure gets stretched or fails, California gas prices can spike dramatically, and that volatility tends to favor the producer. We've taken obviously a lot of steps in terms of our hedging strategy to protect our gross margins. Right now those storage levels in particular are elevated. right now those storage levels in particular are elevated They're high. they're high The weather, there has been kind of temperate weather for the last few weeks, so the build out of hydro and battery continue to add, and that puts pressure on natural gas. the weather there has been kind of temperate weather for the last few weeks so the build out of hydro and battery continue to add and that puts pressure on natural gas That's why you're seeing a dip in those realizations. that's why you're seeing a dip in those realizations You know, it's, you know, it's a reminder, it's pretty obvious in days like today, but you have asymmetric risk when demand exceeds the seasonal norms or where the infrastructure gets stretched or fails, California gas prices can spike dramatically, and that volatility tends to favor the producer. you know it's you know it's a reminder it's pretty obvious in days like today but you have asymmetric risk when demand exceeds the seasonal norms or where the infrastructure gets stretched or fails california gas prices can spike dramatically and that volatility tends to favor the producer We've taken obviously a lot of steps in terms of our hedging strategy to protect our gross margins. we've taken obviously a lot of steps in terms of our hedging strategy to protect our gross margins The setup where oil prices are increasing and gas prices are decreasing is favorable. That gas to oil ratio ultimately means higher margins for our business and we protect the consumption of that gas to hedging. Right now the focus is more on oil, but we will be looking at gas opportunities in the year. Part of our mix of projects this year has natural gas projects, because this asymmetry in the market means that we need to be very well-positioned when conditions shift, and we believe they will be shifting in the near term. The setup where oil prices are increasing and gas prices are decreasing is favorable. the setup where oil prices are increasing and gas prices are decreasing is favorable That gas to oil ratio ultimately means higher margins for our business and we protect the consumption of that gas to hedging. that gas to oil ratio ultimately means higher margins for our business and we protect the consumption of that gas to hedging Right now the focus is more on oil, but we will be looking at gas opportunities in the year. right now the focus is more on oil but we will be looking at gas opportunities in the year Part of our mix of projects this year has natural gas projects, because this asymmetry in the market means that we need to be very well-positioned when conditions shift, and we believe they will be shifting in the near term. part of our mix of projects this year has natural gas projects because this asymmetry in the market means that we need to be very well-positioned when conditions shift and we believe they will be shifting in the near term

Speaker 6: Got it. I appreciate that. My very quick follow-up is on Elk Hills Power. That business receives a benefit from the state's Resource Adequacy program. Can you simply quantify the benefit for 2026? Got it. got it I appreciate that. i appreciate that My very quick follow-up is on Elk Hills Power. my very quick follow-up is on elk hills power That business receives a benefit from the state's Resource Adequacy program. that business receives a benefit from the state's resource adequacy program Can you simply quantify the benefit for 2026? can you simply quantify the benefit for 2026

Speaker 4: Resource Adequacy, the capacity programs in the state, very highly regulated, from the procurement of power. As the state started making their capacity requirements for 2026, they came in well below expectations. Pricing pullback, I think we've been signaling this, since last November, where we can see where the contracts were heading. We really had a period where we had really big spikes, and now we're seeing much more of a normalized level as historical. much more historical, in a lot of ways. What we're seeing for this year is a $25 million-$50 million, annually RA, under current conditions. We're looking to, as we discuss later in contract the revenue to the PPA. But we're well set up, right? Resource Adequacy, the capacity programs in the state, very highly regulated, from the procurement of power. resource adequacy the capacity programs in the state very highly regulated from the procurement of power As the state started making their capacity requirements for 2026, they came in well below expectations. as the state started making their capacity requirements for 2026 they came in well below expectations Pricing pullback, I think we've been signaling this, since last November, where we can see where the contracts were heading. pricing pullback i think we've been signaling this since last november where we can see where the contracts were heading We really had a period where we had really big spikes, and now we're seeing much more of a normalized level as historical. much more historical, in a lot of ways. we really had a period where we had really big spikes and now we're seeing much more of a normalized level as historical much more historical in a lot of ways What we're seeing for this year is a $25 million-$50 million, annually RA, under current conditions. what we're seeing for this year is a $25 million-$50 million annually ra under current conditions We're looking to, as we discuss later in contract the revenue to the PPA. we're looking to as we discuss later in contract the revenue to the ppa But we're well set up, right? but we're well set up right You know, ultimately, there's a lot of things that could happen in a market like California. You know, there could be plant retirements, you know, demand that is beyond expectations, which is likely the case. You can have some reserve margin adjustment. We don't underwrite those scenarios in our base case, but they're real optionality over time. It's gonna be really interesting to watch. California grid is now very heavy on solar and wind that just have never been tested under stress conditions. If those resources underperform during extreme heat or there's a failure somewhere in the system, the value of reliable dispatchable capacity could shift quickly. We're well-positioned for that RA market if that were to happen. You know, ultimately, there's a lot of things that could happen in a market like California. you know ultimately there's a lot of things that could happen in a market like california You know, there could be plant retirements, you know, demand that is beyond expectations, which is likely the case. you know there could be plant retirements you know demand that is beyond expectations which is likely the case You can have some reserve margin adjustment. you can have some reserve margin adjustment We don't underwrite those scenarios in our base case, but they're real optionality over time. we don't underwrite those scenarios in our base case but they're real optionality over time It's gonna be really interesting to watch. it's gonna be really interesting to watch California grid is now very heavy on solar and wind that just have never been tested under stress conditions. california grid is now very heavy on solar and wind that just have never been tested under stress conditions If those resources underperform during extreme heat or there's a failure somewhere in the system, the value of reliable dispatchable capacity could shift quickly. if those resources underperform during extreme heat or there's a failure somewhere in the system the value of reliable dispatchable capacity could shift quickly We're well-positioned for that RA market if that were to happen. we're well-positioned for that ra market if that were to happen

Speaker 8: The next question comes from Josh Silverstein with UBS. Please go ahead. The next question comes from Josh Silverstein with UBS. the next question comes from josh silverstein with ubs Please go ahead. please go ahead

Speaker 5: Yeah. Thanks, everyone. I wanted to ask when Uinta Basin, you know, now that you have it in-house, how are you thinking about the asset? You know, is it viewed as non-core? I mean, you want to develop and then, you know, maybe just a little bit more details on it, you know, higher or lower cost relative to the California operations and what inventory depth looks like. Thanks. Yeah. yeah Thanks, everyone. thanks everyone I wanted to ask when Uinta Basin, you know, now that you have it in-house, how are you thinking about the asset? i wanted to ask when uinta basin you know now that you have it in-house how are you thinking about the asset You know, is it viewed as non-core? you know is it viewed as non-core I mean, you want to develop and then, you know, maybe just a little bit more details on it, you know, higher or lower cost relative to the California operations and what inventory depth looks like. i mean you want to develop and then you know maybe just a little bit more details on it you know higher or lower cost relative to the california operations and what inventory depth looks like Thanks. thanks

Speaker 4: Thanks, Josh. Yeah, Utah came through our acquisition and merger with Berry. Oil weighted, a lot of STACK reservoir as well. We like the position. It's 100,000 contiguous net acreage. The Berry drilled 4 horizontals in the Uteland Butte that are all tracking around type curve, which gives us conviction around the repeatability and technical merit of the asset. We also see some promising benches, the Castle Peak and the Wasatch, to name 2 incremental areas of interest. It's a nice asset. We see it strategically as a high quality option. Right now we're focusing on optimization, well-designed ways where as we take control of the assets, where we can improve the capital efficiency. Thanks, Josh. thanks josh Yeah, Utah came through our acquisition and merger with Berry. yeah utah came through our acquisition and merger with berry Oil weighted, a lot of STACK reservoir as well. oil weighted a lot of stack reservoir as well We like the position. we like the position It's 100,000 contiguous net acreage. it's 100,000 contiguous net acreage The Berry drilled 4 horizontals in the Uteland Butte that are all tracking around type curve, which gives us conviction around the repeatability and technical merit of the asset. the berry drilled 4 horizontals in the uteland butte that are all tracking around type curve which gives us conviction around the repeatability and technical merit of the asset We also see some promising benches, the Castle Peak and the Wasatch, to name 2 incremental areas of interest. we also see some promising benches the castle peak and the wasatch to name 2 incremental areas of interest It's a nice asset. it's a nice asset We see it strategically as a high quality option. we see it strategically as a high quality option Right now we're focusing on optimization, well-designed ways where as we take control of the assets, where we can improve the capital efficiency. right now we're focusing on optimization well-designed ways where as we take control of the assets where we can improve the capital efficiency Ultimately, though, in order for us to scale it has to compete with full cycle returns across the broader portfolio and against the California assets. That's a really high bar. As we mentioned, we see about four times money on invested capital for California. Uinta Basin will have to compete for capital in that way. We'll continue to evaluate it. We've only been operating it for a couple months. Whether that's scaling it through development or partnership or other value-creating paths, we don't know yet, but we're keeping all options on the table. Ultimately it's gonna be returns and value creation that will guide the decision. Ultimately, though, in order for us to scale it has to compete with full cycle returns across the broader portfolio and against the California assets. ultimately though in order for us to scale it has to compete with full cycle returns across the broader portfolio and against the california assets That's a really high bar. that's a really high bar As we mentioned, we see about four times money on invested capital for California. as we mentioned we see about four times money on invested capital for california Uinta Basin will have to compete for capital in that way. uinta basin will have to compete for capital in that way We'll continue to evaluate it. we'll continue to evaluate it We've only been operating it for a couple months. we've only been operating it for a couple months Whether that's scaling it through development or partnership or other value-creating paths, we don't know yet, but we're keeping all options on the table. whether that's scaling it through development or partnership or other value-creating paths we don't know yet but we're keeping all options on the table Ultimately it's gonna be returns and value creation that will guide the decision. ultimately it's gonna be returns and value creation that will guide the decision

Speaker 5: Got it. Then I also wanted to ask just on the Huntington Beach asset, any update there in terms of how you guys are thinking about kind of optimizing the value of that? Thanks. Got it. got it Then I also wanted to ask just on the Huntington Beach asset, any update there in terms of how you guys are thinking about kind of optimizing the value of that? then i also wanted to ask just on the huntington beach asset any update there in terms of how you guys are thinking about kind of optimizing the value of that Thanks. thanks

Speaker 4: 90 acres of beachfront property in one of the most expensive ZIP codes in California. It's an asset that we continue to advance. It's, you know, exciting to own this asset in the portfolio. We're executing our plan. A lot of the plugging and abandonment, it's been happening as we continue to produce. It's a cash flow positive asset, we are effectively paying the P&A with that production. We have made good progress in terms of working with the City of Huntington Beach, advancing the entitlements. We expect formal review in late 2026, that will be followed by approximately 2 year of review by the Coastal Commission. 90 acres of beachfront property in one of the most expensive ZIP codes in California. 90 acres of beachfront property in one of the most expensive zip codes in california It's an asset that we continue to advance. it's an asset that we continue to advance It's, you know, exciting to own this asset in the portfolio. it's you know exciting to own this asset in the portfolio We're executing our plan. we're executing our plan A lot of the plugging and abandonment, it's been happening as we continue to produce. a lot of the plugging and abandonment it's been happening as we continue to produce It's a cash flow positive asset, we are effectively paying the P&A with that production. it's a cash flow positive asset we are effectively paying the p&a with that production We have made good progress in terms of working with the City of Huntington Beach, advancing the entitlements. we have made good progress in terms of working with the city of huntington beach advancing the entitlements We expect formal review in late 2026, that will be followed by approximately 2 year of review by the Coastal Commission. we expect formal review in late 2026 that will be followed by approximately 2 year of review by the coastal commission Once the entitlement is approved by the city and Coastal Commission, then we have, we will do the site redevelopment and remediation. We expect to have about 80 wells, active wells remaining to plug at that stage. We will look to ultimately, we're looking to optimize value. We see, if you look at comparables and the scarcity of land and high quality, development areas in the state, we see the, you know, some of the comparables going higher. We like where we sit, and we will go through the process, obviously look for ways to accelerate the process to the extent that we can. You know, we'll monetize it when we see the value, right? Right now the value as we abandon and entitle, shifts to the developer. Once the entitlement is approved by the city and Coastal Commission, then we have, we will do the site redevelopment and remediation. once the entitlement is approved by the city and coastal commission then we have we will do the site redevelopment and remediation We expect to have about 80 wells, active wells remaining to plug at that stage. we expect to have about 80 wells active wells remaining to plug at that stage We will look to ultimately, we're looking to optimize value. we will look to ultimately we're looking to optimize value We see, if you look at comparables and the scarcity of land and high quality, development areas in the state, we see the, you know, some of the comparables going higher. we see if you look at comparables and the scarcity of land and high quality development areas in the state we see the you know some of the comparables going higher We like where we sit, and we will go through the process, obviously look for ways to accelerate the process to the extent that we can. we like where we sit and we will go through the process obviously look for ways to accelerate the process to the extent that we can You know, we'll monetize it when we see the value, right? you know we'll monetize it when we see the value right Right now the value as we abandon and entitle, shifts to the developer. right now the value as we abandon and entitle shifts to the developer We would like more of the value to accrue to our shareholders. We're working diligently in putting things forward, but we see a lot of significant value creation opportunity in a few years related to this asset base. We would like more of the value to accrue to our shareholders. we would like more of the value to accrue to our shareholders We're working diligently in putting things forward, but we see a lot of significant value creation opportunity in a few years related to this asset base. we're working diligently in putting things forward but we see a lot of significant value creation opportunity in a few years related to this asset base

Speaker 8: I understand there is time for one last questioner. We have Nate Pendleton with Texas Capital. Please go ahead. I understand there is time for one last questioner. i understand there is time for one last questioner We have Nate Pendleton with Texas Capital. we have nate pendleton with texas capital Please go ahead. please go ahead

Speaker 7: Good morning, and congrats on the strong quarter. Referencing slide 10 and the potential storage of up to 1 billion tons of CO2 with the 350 submitted for CTV II and more in the works. How do you think about the timeline to develop the additional projects to reach that 1 billion ton marker? Should we think about that total number representing total potential or just what the team has de-risked at this point? Good morning, and congrats on the strong quarter. good morning and congrats on the strong quarter Referencing slide 10 and the potential storage of up to 1 billion tons of CO2 with the 350 submitted for CTV II and more in the works. referencing slide 10 and the potential storage of up to 1 billion tons of co2 with the 350 submitted for ctv ii and more in the works How do you think about the timeline to develop the additional projects to reach that 1 billion ton marker? how do you think about the timeline to develop the additional projects to reach that 1 billion ton marker Should we think about that total number representing total potential or just what the team has de-risked at this point? should we think about that total number representing total potential or just what the team has de-risked at this point

Speaker 4: Hey, Nate. Thanks for the question. Yeah, our CTV business continues to be a really bright spot in terms of the way the state is progressing through their net zero targets. We're seeing not only we talked a lot about today about the data center opportunity and how that part of the business can unlock CTV. The one area we didn't highlight today is through what is called the RCPP, which is the Reliable and Clean Power Procurement of the state. There's advanced discussions happening and a lot of advocacy trying to add carbon capture into the mix for procurement. Whether it's data centers or the state making it a requirement, we think CCS will be the solution for the state and that will bring the market forward. Hey, Nate. hey nate Thanks for the question. thanks for the question Yeah, our CTV business continues to be a really bright spot in terms of the way the state is progressing through their net zero targets. yeah our ctv business continues to be a really bright spot in terms of the way the state is progressing through their net zero targets We're seeing not only we talked a lot about today about the data center opportunity and how that part of the business can unlock CTV. we're seeing not only we talked a lot about today about the data center opportunity and how that part of the business can unlock ctv The one area we didn't highlight today is through what is called the RCPP, which is the Reliable and Clean Power Procurement of the state. the one area we didn't highlight today is through what is called the rcpp which is the reliable and clean power procurement of the state There's advanced discussions happening and a lot of advocacy trying to add carbon capture into the mix for procurement. there's advanced discussions happening and a lot of advocacy trying to add carbon capture into the mix for procurement Whether it's data centers or the state making it a requirement, we think CCS will be the solution for the state and that will bring the market forward. whether it's data centers or the state making it a requirement we think ccs will be the solution for the state and that will bring the market forward It's gonna be important to watch both progress this year. We have 2 very large markets, one behind the meter, one in front of the meter, that we're gonna tap. If that were all to come into fruition, we would that would fill up every single reservoir that we have. We continue to work on incremental capacity and bringing those permits forward. That's been a core strength of our team, is to advance those permits better than anyone else can in the state. We're well-situated for those market updates and for that market to unfold. We think this is the year where it all comes together. It's gonna be important to watch both progress this year. it's gonna be important to watch both progress this year We have 2 very large markets, one behind the meter, one in front of the meter, that we're gonna tap. we have 2 very large markets one behind the meter one in front of the meter that we're gonna tap If that were all to come into fruition, we would that would fill up every single reservoir that we have. if that were all to come into fruition we would that would fill up every single reservoir that we have We continue to work on incremental capacity and bringing those permits forward. we continue to work on incremental capacity and bringing those permits forward That's been a core strength of our team, is to advance those permits better than anyone else can in the state. that's been a core strength of our team is to advance those permits better than anyone else can in the state We're well-situated for those market updates and for that market to unfold. we're well-situated for those market updates and for that market to unfold We think this is the year where it all comes together. we think this is the year where it all comes together

Speaker 8: Just a moment. This concludes our question and answer session. I would like to turn the conference back over to Francisco Leon for any closing remarks. Just a moment. just a moment This concludes our question and answer session. this concludes our question and answer session I would like to turn the conference back over to Francisco Leon for any closing remarks. i would like to turn the conference back over to francisco leon for any closing remarks

Speaker 4: Thank you so much for joining us today. We really look forward to connecting with many of you in the coming weeks. Thanks, and have a great day. Thank you so much for joining us today. thank you so much for joining us today We really look forward to connecting with many of you in the coming weeks. we really look forward to connecting with many of you in the coming weeks Thanks, and have a great day. thanks and have a great day