What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 316 added, 185 removed, 433 unchanged (54% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of March 31, 2024 and December 31, 2023

As of June 30, 2024 and December 31, 2023

(in millions, except share data)

March 31, December 31,

June 30, December 31,

CURRENT ASSETS

24 unchanged sentences

STOCKHOLDERS' EQUITY

Preferred stock ( 20,000,000 shares authorized at $ 0.01 par value) no shares outstanding at March 31, 2024 and December 31, 2023

Preferred stock ( 20,000,000 shares authorized at $ 0.01 par value) no shares outstanding at June 30, 2024 and December 31, 2023

Common stock ( 200,000,000 shares authorized at $ 0.01 par value) ( 84,510,451 and 83,557,800 shares issued;

68,530,744 and 68,693,885 shares outstanding at March 31, 2024 and December 31, 2023)

Treasury stock ( 15,929,679 shares held at cost at March 31, 2024 and 14,863,915 shares held at cost at December 31, 2023)

67,876,933 and 68,693,885 shares outstanding at June 30, 2024 and December 31, 2023)

Treasury stock ( 16,633,518 shares held at cost at June 30, 2024 and 14,863,915 shares held at cost at December 31, 2023)

( 697 ) ( 604 )

7 unchanged sentences

Condensed Consolidated Statements of Operations

For the three months ended March 31, 2024 and 2023

For the three and six months ended June 30, 2024 and 2023

(dollars in millions, except share and per share data;

1 unchanged sentence

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Oil, natural gas and NGL sales $ 412 $ 447 $ 841 $ 1,162

Net (loss) gain from commodity derivatives

Net gain (loss) from commodity derivatives

5 31 ( 66 ) 73

Revenue from marketing of purchased commodities

51 72 125 259

Electricity sales 36 34 51 102

16 unchanged sentences

Gain on asset divestitures

OPERATING (LOSS) INCOME

OPERATING INCOME

38 147 34 540

NON-OPERATING (EXPENSES) INCOME

1 unchanged sentence

Loss from investment in unconsolidated subsidiary ( 4 ) ( 1 ) ( 7 ) ( 3 )

Other non-operating income (loss)

(LOSS) INCOME BEFORE INCOME TAXES

Income tax benefit (provision)

NET (LOSS) INCOME

Other non-operating (loss) income

( 6 ) 3 ( 5 ) 2

Net (loss) income per share

INCOME (LOSS) BEFORE INCOME TAXES

11 135 ( 8 ) 511

Income tax (provision) benefit

( 3 ) ( 38 ) 6 ( 113 )

NET INCOME (LOSS)

$ 8 $ 97 $ ( 2 ) $ 398

Net income (loss) per share

Basic $ 0.12 $ 1.39 $ ( 0.03 ) $ 5.65

5 unchanged sentences

CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive (Loss) Income

For the three months ended March 31, 2024 and 2023

Condensed Consolidated Statements of Comprehensive Income (Loss)

For the three and six months ended June 30, 2024 and 2023

(in millions)

Three months ended

Net (loss) income

June 30, Six months ended

2024 2023 2024 2023

Other comprehensive income:

Net income (loss)

$ 8 $ 97 $ ( 2 ) $ 398

Other comprehensive income (loss):

Amortization of prior service cost credit included in net periodic benefit cost, net of tax (a)

Comprehensive (loss) income attributable to common stock

Comprehensive income (loss)

$ 8 $ 97 $ ( 4 ) $ 398

(a) Tax effects of the amortization of prior service cost credit were insignificant for the three months ended March 31, 2024.

(a) Tax effects of the amortization of the prior service cost credit was insignificant for the three and six months ended June 30, 2024.

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Stockholders' Equity

For the three months ended March 31, 2024 and 2023

For the three and six months ended June 30, 2024 and 2023

(in millions)

Three months ended March 31, 2024

Three months ended June 30, 2024

Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other

Comprehensive

Balance, December 31, 2023

Balance, March 31, 2024 $ 1 $ ( 662 ) $ 1,295 $ 1,387 $ 72 $ 2,093

Share-based compensation — — 7 — — 7

Repurchases of common stock — ( 35 ) — — — ( 35 )

Cash dividend ($ 0.31 per share)

— — — ( 21 ) — ( 21 )

Shares cancelled for taxes — — ( 1 ) — — ( 1 )

Balance, June 30, 2024 $ 1 $ ( 697 ) $ 1,302 $ 1,374 $ 72 $ 2,052

Three months ended June 30, 2023

Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other

Comprehensive

Balance, March 31, 2023 $ 1 $ ( 520 ) $ 1,311 $ 1,219 $ 81 $ 2,092

Net income — — — 97 — 97

Share-based compensation — — 7 — — 7

Repurchases of common stock — ( 64 ) — — — ( 64 )

Cash dividend ($ 0.2825 per share)

— — — ( 21 ) — ( 21 )

Shares cancelled for taxes — — ( 1 ) — — ( 1 )

Balance, June 30, 2023 $ 1 $ ( 584 ) $ 1,317 $ 1,295 $ 81 $ 2,110

The accompanying notes are an integral part of these condensed consolidated financial statements.

Six months ended June 30, 2024

Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other

Comprehensive Income Total

Balance, December 31, 2023 $ 1 $ ( 604 ) $ 1,329 $ 1,419 $ 74 $ 2,219

— — — ( 2 ) — ( 2 )

Share-based compensation — — 14 — — 14

5 unchanged sentences

— — — — ( 2 ) ( 2 )

Balance, March 31, 2024

$ 1 $ ( 662 ) $ 1,295 $ 1,387 $ 72 $ 2,093

Three months ended March 31, 2023

Other — — 1 — — 1

Balance, June 30, 2024 $ 1 $ ( 697 ) $ 1,302 $ 1,374 $ 72 $ 2,052

Six months ended June 30, 2023

Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other

Comprehensive

Comprehensive Income Total

Balance, December 31, 2022 $ 1 $ ( 461 ) $ 1,305 $ 938 $ 81 $ 1,864

$ 1 $ ( 461 ) $ 1,305 $ 938 $ 81 $ 1,864

Net income — — — 398 — 398

4 unchanged sentences

Shares cancelled for taxes

Balance, March 31, 2023

( 2 ) — — ( 2 )

Balance, June 30, 2023 $ 1 $ ( 584 ) $ 1,317 $ 1,295 $ 81 $ 2,110

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

For the three months ended March 31, 2024 and 2023

For the three and six months ended June 30, 2024 and 2023

(in millions)

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

CASH FLOW FROM OPERATING ACTIVITIES

Net (loss) income

Net income (loss)

$ 8 $ 97 $ ( 2 ) $ 398

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization 53 56 106 114

Deferred income tax (benefit) provision

Asset impairment — 3

Net loss (gain) from commodity derivatives

Deferred income tax provision (benefit)

Asset impairments

Net (gain) loss from commodity derivatives

( 4 ) ( 31 ) 68 ( 73 )

Net payments on settled commodity derivatives ( 10 ) ( 63 ) ( 24 ) ( 128 )

Gain on asset divestitures

( 1 ) — ( 7 ) ( 7 )

Other non-cash charges to income, net 46 30 52 51

5 unchanged sentences

Proceeds from asset divestitures, net 2 — 12 —

Acquisitions ( 6 ) ( 1 ) ( 6 ) ( 1 )

Other, net ( 1 ) ( 2 ) ( 2 ) ( 3 )

1 unchanged sentence

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from Revolving Credit Facility 30 — 30 —

Proceeds from 2029 Senior Notes, net

Repurchases of common stock ( 35 ) ( 64 ) ( 93 ) ( 123 )

2 unchanged sentences

Issuance of common stock 2 — 3 1

Bridge loan commitment and debt amendment costs

Bridge loan commitments

Debt amendment costs

— ( 8 ) ( 3 ) ( 8 )

Shares cancelled for taxes ( 1 ) ( 1 ) ( 42 ) ( 2 )

Net cash used in financing activities ( 131 ) ( 79 )

(Decrease) increase in cash and cash equivalents

Net cash provided by (used in) financing activities

564 ( 93 ) 433 ( 172 )

Increase (decrease) in cash and cash equivalents

628 ( 29 ) 535 141

Cash and cash equivalents—beginning of period 403 477 496 307

3 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

March 31, 2024

June 30, 2024

NOTE 1 BASIS OF PRESENTATION

We are an independent oil and natural gas exploration and production and carbon management company operating properties exclusively within California.

We are committed to energy transition and have some of the lowest carbon intensity production in the United States.

We are in the early stages of permitting several carbon capture and storage (CCS) projects in California.

Our carbon management business, which we refer to as Carbon TerraVault, is expected to build, install, operate and maintain CO 2 capture equipment, transportation assets and storage facilities in California.

In August 2022, we entered into a joint venture with BGTF Sierra Aggregator LLC (Brookfield) to pursue carbon management and storage activities (Carbon TerraVault JV) .

See Note 3 Investment in Unconsolidated Subsidiary and Related Party Transactions for more information on the Carbon TerraVault JV.

Except when the context otherwise requires or where otherwise indicated, all references to ‘‘CRC,’’ the ‘‘Company,’’ ‘‘we,’’ ‘‘us’’ and ‘‘our’’ refer to California Resources Corporation and its subsidiaries.

We are an independent energy and carbon management company committed to energy transition.

We are committed to environmental stewardship while safely providing local, responsibly sourced energy.

We are also focused on maximizing the value of our land, mineral ownership, and energy expertise for decarbonization by developing carbon capture and storage (CCS) and other emissions-reducing projects.

On July 1, 2024, we closed on transactions contemplated by the definitive agreement and plan of merger (Merger Agreement) to obtain all of the ownership interests in Aera Energy, LLC (Aera) with an effective date of January 1, 2024 (Aera Merger).

As such, the accompanying unaudited financial statements do not contain the results of Aera for the periods indicated.

In the opinion of our management, the accompanying unaudited financial statements contain all adjustments necessary to fairly present our financial position, results of operations, comprehensive income, equity and cash flows for all periods presented.

1 unchanged sentence

We account for our share of oil and natural gas producing activities, in which we have a direct working interest, by reporting our proportionate share of assets, liabilities, revenues, costs and cash flows within the relevant lines on our condensed consolidated financial statements.

In applying the equity method of accounting, our investment in an unconsolidated subsidiary ( Carbon TerraVault JV HoldCo, LLC) was initially recognized at cost and then adjusted for our proportionate share of income or loss in addition to contributions and distributions.

In applying the equity method of accounting, our investment in an unconsolidated subsidiary ( Carbon TerraVault JV HoldCo, LLC) was initially recognized at cost and then is adjusted for our proportionate share of income or loss in addition to contributions and distributions.

We have prepared this report in accordance with generally accepted accounting principles (GAAP) in the United States and the rules and regulations of the U.S.

8 unchanged sentences

Certain prior period balances related to natural gas liquid (NGL) marketing activities have been reclassified to conform to our 2024 presentation.

For the three months ended March 31, 2023, we reclassified $ 3 million related to NGL storage activities from other revenue to revenue from marketing of purchased commodities on our condensed consolidated statement of operations.

NOTE 2 PENDING AERA MERGER

On February 7, 2024, we entered into a definitive agreement and plan of merger (Merger Agreement) to combine with Aera Energy, LLC (Aera) in an all-stock transaction (Aera Merger) with an effective date of January 1, 2024.

Aera is a leading operator of mature fields in California, primarily in the San Joaquin and Ventura basins, with high oil-weighted production.

Pursuant to the Merger Agreement, we have agreed to issue 21,170,357 shares of common stock (subject to customary adjustments in the event of stock splits, dividend paid in stock and similar items) plus an additional number of shares determined by reference to the dividends declared by us having a record date between the effective date and closing as more fully described in the Merger Agreement.

Upon closing, Aera's $ 950 million outstanding long-term debt will become due as a result of a change in control provision within their legacy debt agreement.

We expect to repay a significant portion of this indebtedness with cash on hand and borrowings under our Revolving Credit Facility.

We intend to refinance the balance through one or more debt capital markets transactions and, only to the extent necessary, borrowings under a bridge loan facility provided by Citigroup Global Markets, Inc.

Under the terms of our debt commitment letter with the Bank, it has committed, subject to satisfaction of customary conditions, to provide us with an unsecured 364-day bridge loan facility in an aggregate principal amount of $ 500 million (Bridge Loan Facility).

Additionally, we have amended our Revolving Credit Facility as described in Note 4 Debt in connection with the pending Aera Merger.

During the three months ended March 31, 2024, we incurred $ 8 million related to the bridge loan commitment and amending our Revolving Credit Facility which is reported in other current assets, net on our condensed consolidated balance sheet.

Closing of the Aera Merger is subject to certain conditions, including, among others, approval of the stock issuance by our stockholders, expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (HSR Act), prior authorization by the Federal Energy Regulatory Commission under Section 203 of the Federal Power Act and other customary closing conditions.

The required waiting period under the HSR Act expired on March 25, 2024.

Upon completion of the transaction, we currently expect our existing stockholders to own approximately 77 % of the combined company and the existing Aera owners to own approximately 23 % of the combined company, on a fully diluted basis.

For the six months ended June 30, 2023, we reclassified $ 3 million related to NGL storage activities from other revenue to revenue from marketing of purchased commodities on our condensed consolidated statement of operations.

NOTE 2 INVESTMENT IN UNCONSOLIDATED SUBSIDIARY AND RELATED PARTY TRANSACTIONS

In August 2022, our wholly-owned subsidiary Carbon TerraVault I, LLC entered into a joint venture with Brookfield for the further development of a carbon management business in California.

In August 2022, our wholly-owned subsidiary Carbon TerraVault I, LLC entered into a joint venture with BGTF Sierra Aggregator LLC (Brookfield) for the further development of a carbon management business in California (Carbon TerraVault JV).

We hold a 51 % interest in the Carbon TerraVault JV and Brookfield holds a 49 % interest.

7 unchanged sentences

The third installment will be sized based on permitted storage capacity.

Brookfield contributed the first $ 46 million installment of their initial investment to the Carbon TerraVault JV in 2022 and the second $ 46 million installment was recorded as a receivable from affiliate on our condensed consolidated balance sheet as of March 31, 2024.

Brookfield contributed the first $ 46 million installment of their initial investment to the Carbon TerraVault JV in 2022 and the second $ 46 million installment in April 2024.

The remaining balance of the initial installment plus the second installment may, at our sole discretion, be distributed to us or used to satisfy future capital contributions, among other items.

Because the parties have certain put and call rights (repurchase features) with respect to the 26R reservoir if certain milestones are not met, the first and second installment of the initial investment by Brookfield is reflected as a contingent liability included in other long-term liabilities on our condensed consolidated balance sheets.

The contingent liability was $ 99 million and $ 52 million at March 31, 2024 and December 31, 2023, respectively.

The contingent liability was $ 102 million and $ 52 million at June 30, 2024 and December 31, 2023 , respectively, inclusive of interest.

The tables below present the summarized financial information related to our equity method investment in the Carbon TerraVault JV (and do not include amounts we have incurred related to development of our carbon management business, Carbon TerraVault), along with related party transactions for the periods presented.

June 30, December 31,

(in millions)

2 unchanged sentences

Other long-term liabilities - Contingent liability (related to Carbon TerraVault JV put and call rights)

(a) Reflects our investment less losses allocated to us of $ 3 million and $ 9 million for the three months ended March 31, 2024 and the year ended December 31, 2023, respectively.

(a) Reflects our investment less losses allocated to us of $ 7 million and $ 9 million for the six months ended June 30, 2024 and the year ended December 31, 2023 , respectively.

(b) The amount of Brookfield's contributions available to us and amounts due to us under the MSA (described further below) are reported as receivable from affiliate.

At March 31, 2024, the amount of $ 66 million includes the remaining $ 63 million of Brookfield's first and second installments of their initial investment which is available to us and $ 3 million related to the MSA and vendor reimbursements.

At June 30, 2024 , the amount of $ 61 million includes the remaining $ 58 million of Brookfield's first and second installments of their initial investment which is available to us and $ 3 million related to the MSA and vendor reimbursements.

At December 31, 2023 , the amount of $ 19 million includes $ 17 million remaining of Brookfield's initial contribution available to us and $ 2 million related to the MSA and vendor reimbursements.

Three months ended March 31,

(in millions)

Three months ended

June 30, Six months ended

2024 2023 2024 2023

(in millions) (in millions)

Loss from investment in unconsolidated subsidiary

$ 4 $ 1 $ 7 $ 3

General and administrative expenses (a)

$ 3 $ 2 $ 5 $ 3

(a) General and administrative expenses on our condensed consolidated statements of operations have been reduced by this amount which we have invoiced to the Carbon TerraVault JV under the MSA for back-office operational and commercial services.

We are also performing well abandonment work at our Elk Hills field as part of the permitting process for injection of CO 2 at the 26R reservoir.

During the three months ended March 31, 2024 and 2023, we performed abandonment work and sought reimbursement in the amounts of $ 4 million and $ 1 million , respectively, from the Carbon TerraVault JV.

During the three and six months ended June 30, 2024, we performed abandonment work and sought reimbursement in the amounts of $ 5 million and $ 9 million, respectively, from the Carbon TerraVault JV.

During the three and six months ended June 30, 2023, we performed abandonment work and sought reimbursement in the amounts of $ 1 million and $ 2 million, respectively, from the Carbon TerraVault JV.

The Carbon TerraVault JV has an option to participate in certain projects that involve the capture, transportation and storage of CO 2 in California.

3 unchanged sentences

The MSA may be terminated by mutual agreement of the parties, among other events.

As of March 31, 2024 and December 31, 2023, our long-term debt consisted of the following:

March 31, December 31,

As of June 30, 2024 and December 31, 2023, our long-term debt consisted of the following:

June 30, December 31,

2024 2023 Interest Rate Maturity

3 unchanged sentences

July 31, 2027 (b)

Senior Notes 545 545 7.125 % February 1, 2026

2026 Senior Notes 545 545 7.125 %

February 1, 2026

2029 Senior Notes 600 — 8.250 %

June 15, 2029

Principal amount $ 1,175 $ 545

Unamortized debt issuance costs ( 4 ) ( 5 )

Unamortized debt discount and debt issuance costs

Long-term debt, net $ 1,161 $ 540

2 unchanged sentences

Term SOFR loans bear interest at term SOFR, plus an additional 10 basis points per annum credit spread adjustment.

The applicable margin is adjusted based on the commitment utilization percentage and will vary from (i) in the case of ABR loans, 1.50 % to 2.50 % and (ii) in the case of term SOFR loans, 2.50 % to 3.50 %.

The applicable margin is adjusted based on a commitment utilization percentage and will vary from (i) in the case of ABR loans, 1.50 % to 2.50 % and (ii) in the case of term SOFR loans, 2.50 % to 3.50 % .

(b) The Revolving Credit Facility is subject to a springing maturity to August 4, 2025 if any of our 2026 Senior Notes are outstanding on that date.

On April 26, 2023, we entered into an Amended and Restated Credit Agreement (Revolving Credit Facility) with Citibank, N.A., as administrative agent, and certain other lenders, which amended and restated in its entirety the prior credit agreement dated October 27, 2020.

As of March 31, 2024, our Revolving Credit Facility consisted of a senior revolving loan facility with an aggregate commitment of $ 630 million.

As of June 30, 2024, our Revolving Credit Facility consisted of a senior revolving loan facility with an aggregate commitment of $ 630 million.

Our Revolving Credit Facility also included a sub-limit of $ 250 million for the issuance of letters of credit.

As of March 31, 2024, $ 153 million letters of credit were issued to support ordinary course marketing, insurance, regulatory and other matters.

As of March 31, 2024, we had $ 477 million of availability on our Revolving Credit Facility after taking into account the $ 153 million letters of credit outstanding.

In connection with the Merger Agreement in February 2024, we entered into a second amendment to our Revolving Credit Facility to, among other things, permit the incurrence of indebtedness under the Bridge Loan Facility.

In March 2024, we entered into the third amendment to our Revolving Credit Facility.

The amendment facilitated certain matters with respect to the Aera Merger, including the postponement of the regular spring borrowing base redetermination until the fall of 2024 and certain other amendments.

In March 2024, we obtained commitments from our existing lenders and certain new lenders to amend our Revolving Credit Facility upon the closing of the Aera Merger.

These commitments include increasing our borrowing base from $ 1.2 billion to $ 1.5 billion, increasing the aggregate commitment amount from $ 630 million to $ 1.1 billion and other matters.

These commitments are subject to certain conditions prior to becoming effective, including the closing of the Aera Merger.

The borrowing base is redetermined semi-annually and was reaffirmed at $ 1.2 billion on October 30, 2023.

The regular spring borrowing base redetermination for 2024 was postponed until the fall of 2024.

The borrowing base takes into account the estimated value of our proved reserves, total indebtedness and other relevant factors consistent with customary reserves-based lending criteria.

The amount we are able to borrow under our Revolving Credit Facility is limited to the amount of the commitment described above.

As of March 31, 2024, we were in compliance with all financial and other debt covenants under our Revolving Credit Facility and Senior Notes.

As of June 30, 2024, $ 130 million letters of credit were issued to support ordinary course marketing, insurance, regulatory and other matters.

As of June 30, 2024, we had $ 470 million of availability on our Revolving Credit Facility after taking into account a draw of $ 30 million and $ 130 million in letters of credit outstanding.

The borrowing base is redetermined semi-annually and the next determination will be on or about October 1, 2024.

In February 2024, in connection with the Aera Merger, we entered into a second amendment to our Revolving Credit Facility to, among other things, permit the incurrence of indebtedness under a bridge loan facility.

We did not utilize a bridge loan facility in connection with the Aera Merger and wrote-off $ 6 million of bridge loan and commitment fees during the three months ended June 30, 2024 included in other non-operating (loss) income on our condensed consolidated statement of operations.

In March 2024, we entered into a third amendment to our Revolving Credit Facility.

This amendment facilitated certain matters with respect to the Aera Merger, including the postponement of the regular spring borrowing base redetermination until the fall of 2024 and certain other amendments.

On July 1, 2024, we entered into a fourth amendment to our Revolving Credit Facility.

This amendment increased the aggregate revolving commitments available under the Revolving Credit Facility from $ 630 million to $ 1.1 billion.

The amount we are able to borrow under our Revolving Credit Facility is limited to the amount of these commitments.

This amendment also increased the borrowing base from $ 1.2 billion to $ 1.5 billion, among other matters.

For a discussion of the Aera Merger, see Note 13 Subsequent Events.

2029 Senior Notes

On June 5, 2024, we completed an offering of $ 600 million in aggregate principal amount of 8.25 % senior notes due 2029 (2029 Senior Notes).

The terms of the 2029 Senior Notes are governed by the Indenture, dated as of June 5, 2024, by and among us, the guarantors and Wilmington Trust, National Association, as trustee (2029 Senior Notes Indenture).

The net proceeds of $ 590 million, after $ 10 million of debt discount and issuance costs, were used along with available cash to repay all of Aera's outstanding debt at closing of the Aera Merger.

See Note 13 Subsequent Events for more information on the closing of the Aera Merger.

Security – Our 2029 Senior Notes are general unsecured obligations which are guaranteed on a senior unsecured basis by all of our existing subsidiaries that guarantee our obligations under the Revolving Credit Facility and our existing 2026 Senior Notes.

Redemption – We may redeem the 2029 Senior Notes at any time on or after June 15, 2026 at the redemption prices of (i) 104.125 % during the twelve-month period beginning on June 15, 2026, (ii) 102.063 % during the twelve-month period beginning on June 15, 2027 and (iii) 100 % after June 15, 2028 and before the maturity date.

Prior to June 15, 2026, we may redeem up to 35 % of the aggregate principal amount of the 2029 Senior Notes with an amount of cash not greater than the net cash proceeds from certain equity offerings at the redemption price of 108.250 %.

In addition, before June 15, 2026, we may redeem some or all of the 2029 Senior Notes at a redemption price equal to 100 % of the aggregate principal amount of the 2029 Senior Notes redeemed, plus the applicable premium as specified in the 2029 Senior Notes Indenture and accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, our 2029 Senior Notes were subject to a special mandatory redemption in certain circumstances if the Aera Merger did not close.

As of June 30, 2024, it was not probable that this redemption feature would be triggered and it is no longer effective.

Other Covenants – Our 2029 Senior Notes include covenants that, among other things, restrict our ability to incur additional indebtedness, issue preferred stock, grant liens, make asset sales and investments, repay existing indebtedness, make subsidiary distributions, and enter into transactions that would result in fundamental changes.

Events of Default and Change of Control – Our 2029 Senior Notes provide for certain triggering events, including upon a change of control, as defined in the indenture, that would require us to repurchase all or any part of the 2029 Senior Notes at a price equal to 101 % of the aggregate principal amount plus accrued and unpaid interest.

We estimate that the fair value of our variable rate debt approximates its carrying value because the interest rate approximates current market rates.

As shown in the table below, we estimate fair value of our fixed rate Senior Notes based on known prices from market transactions (using Level 1 inputs on the fair value hierarchy).

June 30, December 31,

(in millions)

Variable rate debt

Fixed rate debt

2026 Senior Notes

2029 Senior Notes

Fair Value of Long-Term Debt

$ 1,189 $ 554

As of June 30, 2024, we were in compliance with all financial and other debt covenants under our Revolving Credit Facility, 2026 Senior Notes and 2029 Senior Notes.

For more information on our 2026 Senior Notes, see Part II, Item 8 – Financial Statements and Supplementary Data, Note 4 Debt in our 2023 Annual Report.

The fair value of our fixed-rate debt at March 31, 2024 and December 31, 2023 was approximately $ 549 million and $ 554 million, respectively.

We estimate fair value based on known prices from market transactions (using Level 1 inputs on the fair value hierarchy).

NOTE 4 LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES

We are involved, in the normal course of business, in lawsuits, environmental and other claims, and other contingencies that seek, among other things, compensation for alleged personal injury, breach of contract, property damage or other losses, punitive damages, civil penalties or injunctive or declaratory relief.

We accrue reserves for currently outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated.

Reserve balances for these items at March 31, 2024 and December 31, 2023 were not material to our condensed consolidated balance sheets as of such dates.

We accrue reserves for currently outstanding lawsuits, claims and proceedings when we determine it is probable that a liability has been incurred and the liability can be reasonably estimated.

Reserve balances for these items at June 30, 2024 and December 31, 2023 were not material to our condensed consolidated balance sheets as of such dates.

We also evaluate the amount of reasonably possible losses that we could incur as a result of these matters.

7 unchanged sentences

In March 2024, we entered into a cost sharing agreement with former lessees to share in ongoing maintenance costs during the pendency of the challenge to the BSEE order.

We estimate our ongoing share of maintenance costs for the platforms could approximate $ 5 million to $ 8 million per year.

We estimate our ongoing share of maintenance costs for the platforms could be approximately $ 5 million per year.

Due to the preliminary stage of the process, no cost estimates to abandon the offshore platforms have been determined.

2 unchanged sentences

We also enter into natural gas swaps for the purpose of hedging our fuel consumption at one of our steamfloods as well as swaps for natural gas purchases and sales related to our marketing activities.

We did not have any derivative instruments designated as accounting hedges as of and for the three months ended March 31, 2024 and 2023.

We did not have any derivative instruments designated as accounting hedges as of and for the three and six months ended June 30, 2024 and 2023.

Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to implement our hedging strategy.

Summary of Derivative Contracts

We held the following Brent-based contracts as of March 31, 2024:

We held the following Brent-based contracts as of June 30, 2024:

Barrels per day 30,000 29,000 30,000 30,000 29,500

9 unchanged sentences

• Swaps – we make settlement payments for prices above the indicated weighted-average price per barrel and receive settlement payments for prices below the indicated weighted-average price per barrel.

At March 31, 2024, we also held the following swaps to hedge purchased natural gas used in our operations as shown in the table below.

At June 30, 2024, we also held the following swaps to hedge purchased natural gas used in our operations as shown in the table below.

MMBtu per day

2 unchanged sentences

$ 5.65 $ 5.65

We also have a limited number of derivative contracts related to our natural gas marketing activities are intended to lock in locational price spreads.

We also have a limited number of derivative contracts related to our natural gas marketing activities that are intended to lock in locational price spreads.

These derivative contracts are not significant to our results of operations or financial statements taken as a whole.

2 unchanged sentences

We report gains and losses on our derivative contracts which hedge commodity price risk related to our oil production and our marketing activities in operating revenue on our consolidated statements of operations as shown in the table below:

Three months ended March 31,

(in millions)

Non-cash commodity derivative (loss) gain

Three months ended

June 30, Six months ended

2024 2023 2024 2023

(in millions) (in millions)

Non-cash commodity derivative gain (loss)

$ 11 $ 94 $ ( 48 ) $ 201

Settlements and premiums

( 6 ) ( 63 ) ( 18 ) ( 128 )

Net (loss) gain from commodity derivatives

Net gain (loss) from commodity derivatives

$ 5 $ 31 $ ( 66 ) $ 73

We report gains and losses on our derivative contracts for purchased natural gas used to generate steam for our steamflood operations as a component of operating expense on our consolidated statement of operations.

For the three months ended March 31, 2024, we recognized a net loss of $ 1 million (which includes a non-cash gain of $ 1 million and $ 2 million of settlement payments) in other operating expenses, net on our consolidated statement of operations.

We did not have derivative contracts related to purchased natural gas for the three months ended March 31, 2023.

For the three and six months ended June 30, 2024, we recognized a net loss of $ 1 million (which includes a non-cash gain of $ 3 million and $ 4 million of settlement payments) and a net loss of $ 2 million (which includes a non-cash gain of $ 4 million and $ 6 million of settlement payments) in other operating expenses, net on our consolidated statement of operations.

We did not have derivative contracts related to purchased natural gas for our marketing activities during the three and six months ended June 30, 2023.

Our derivative contracts are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are classified as Level 2 in the required fair value hierarchy for the periods presented.

The following tables present the fair values of our outstanding commodity derivatives as of March 31, 2024 and December 31, 2023:

March 31, 2024

The following tables present the fair values of our outstanding commodity derivatives as of June 30, 2024 and December 31, 2023:

June 30, 2024

Classification Gross Amounts at Fair Value Netting Net Fair Value

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Current liabilities ( 41 ) 13 ( 28 )

( 46 ) 11 ( 35 )

Noncurrent liabilities ( 25 ) 15 ( 10 )

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Current liabilities ( 26 ) 18 ( 8 )

( 26 ) 18 ( 8 )

Noncurrent liabilities ( 34 ) 32 ( 2 )

3 unchanged sentences

Three months ended

(in millions)

(Loss) income before income taxes

June 30, Six months ended

2024 2023 2024 2023

(in millions) (in millions)

Income (loss) before income taxes

$ 11 $ 135 $ ( 8 ) $ 511

Current income tax provision — 29 — 57

Deferred income tax (benefit) provision

Total income tax (benefit) provision

Our income tax provision or benefit for interim periods is determined by applying an estimated annual effective tax rate to (loss) income before income taxes with the result adjusted for discrete items, if any, in the relevant period.

A reconciliation of the U.S.

federal statutory tax rate to effective tax rate, including discrete items, for the three months ended March 31, 2024 and 2023 is shown below:

Three months ended

U.S federal statutory tax rate

State income taxes, net

Annual effective tax rate

Discrete items:

Stock compensation and other

Change in the valuation allowance

Effective tax rate

Deferred income tax provision (benefit)

Total income tax provision (benefit)

$ 3 $ 38 $ ( 6 ) $ 113

Our annual effective tax rate of 27 % differed from the U.S.

federal statutory tax rate of 21 % for the three months ended March 31, 2024 primarily due to state taxes and disallowed executive compensation expense.

During the three months ended March 31, 2024, we recognized an income tax benefit related to the settlement of certain equity-settled stock-based compensation awards, which have the effect of increasing our effective tax rate by 16 %.

federal statutory tax rate of 21% for the three months ended June 30, 2024 primarily due to state taxes.

Our annual effective tax rate of 75 % differed from the U.S.

federal statutory tax rate of 21 % for the three months ended March 31, 2023 due to state taxes.

During the three months ended March 31, 2023 we recognized a tax benefit for the release of a valuation allowance which was recorded in 2022 related to a capital loss generated from the divestiture of oil and gas assets.

federal statutory rate of 21% for the six months ended June 30, 2024 primarily due to the settlement of stock-based compensation awards in the first quarter of 2024 at a share price which exceeded the grant date value used to recognize compensation expense for financial accounting.

This difference resulted in a tax benefit and had the effect of increasing our effective tax rate for the six months ended June 30, 2024.

Our annual effective tax rate of 28 % differed from the U.S.

federal statutory tax rate of 21% for the three and six months ended June 30, 2023 primarily due to state taxes.

During the six months ended June 30, 2023 we recognized a tax benefit for the release of a valuation allowance, which was recognized in 2022.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Income Taxes in our 2023 Annual Report for additional information.

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Realization of our existing deferred tax assets is not assured and depends on a number of factors including our ability to generate sufficient taxable income in future periods.

NOTE 8 DIVESTITURES AND ACQUISITIONS

NOTE 7 DIVESTITURES, ACQUISITIONS AND ASSETS HELD FOR SALE

Fort Apache in Huntington Beach

In March 2024, we sold our 0.9 -acre Fort Apache real estate property in Huntington Beach, California for a purchase price of $ 10 million and recognized a $ 6 million gain.

In March 2024, we sold our 0.9 -acre Fort Apache real estate property in Huntington Beach, California for purchase price of $ 10 million and recognized a $ 6 million gain.

During the three and six months ended June 30, 2024, we sold non-core assets recognizing a $ 1 million gain.

During the six months ended June 30, 2023, we sold a non-producing asset in exchange for the assumption of liabilities, recognizing a $ 7 million gain related to the liability reduction.

In the three and six months ended June 30, 2024, we acquired land for our carbon management business for approximately $ 6 million.

In the three and six months ended June 30, 2023, we acquired land for our carbon management business for approximately $ 1 million.

Assets Held for Sale

Ventura Basin Transactions

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The transaction contemplates multiple closings that are subject to customary closing conditions.

The closing of the sale of our remaining assets in the Ventura basin is subject to final approval from the State Lands Commission, which we expect could occur in 2024.

These remaining assets, consisting of property, plant and equipment, and associated asset retirement obligations are classified as held for sale on our condensed consolidated balance sheets at March 31, 2024 and December 31, 2023.

The transfer of the remaining assets in the Ventura basin was approved in June 2024 by the State Lands Commission.

We expect to close on the sale of these assets in the second half of 2024.

These remaining assets, consisting of property, plant and equipment and associated asset retirement obligations, are classified as held for sale on our condensed consolidated balance sheets at June 30, 2024 and December 31, 2023.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 8 Divestitures and Acquisitions in our 2023 Annual Report for additional information on the Ventura basin transactions.

During the three months ended March 31, 2023, we sold a non-producing asset in exchange for the assumption of liabilities, recognizing a $ 7 million gain related to the liability reduction.

In 2022, we acquired properties for carbon management activities for approximately $ 17 million.

We intend to divest a portion of these assets and recorded these assets at fair value recognizing an impairment of $ 3 million in the first quarter of 2023.

In 2022, we acquired properties for carbon management activities for approximately $ 17 million, with the intent to divest a portion of these assets.

We recorded these assets at fair value recognizing an impairment of $ 3 million in the first quarter of 2023.

The fair value, using Level 3 inputs in the fair value hierarchy, declined during the first quarter of 2023 due to market conditions (including inflation and rising interest rates).

The assets being divested are classified as held for sale as of March 31, 2024 on our condensed consolidated balance sheet.

The assets being divested are classified as held for sale as of June 30, 2024 on our condensed consolidated balance sheet.

NOTE 8 STOCKHOLDERS' EQUITY

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The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares and our Board of Directors may modify, suspend or discontinue authorization of the program at any time.

The following is a summary of our share repurchases, which is held as treasury stock, for the periods presented:

Total Number of Shares Purchased Total Value of Shares Purchased Average Price Paid per Share

(number of shares) (in millions) ($ per share)

Three months ended March 31, 2023

The following is a summary of our share repurchases, which are held as treasury stock, for the periods presented:

Total Number of Shares Purchased

Total Value of Shares Purchased

Average Price Paid per Share

(number of shares)

(in millions)

($ per share)

Three months ended June 30, 2023

1,618,746 $ 64 $ 39.12

Three months ended March 31, 2024

Three months ended June 30, 2024

703,839 $ 35 $ 49.71

Inception of Program (May 2021) through March 31, 2024

Six months ended June 30, 2023 3,042,510 $ 123 $ 40.12

Six months ended June 30, 2024 1,769,603 $ 93 $ 51.85

Inception of Program (May 2021) through June 30, 2024

16,633,518 $ 697 $ 41.74

The total value of shares purchased includes approximately $ 1 million in both the three months ended March 31, 2024 and 2023 related to excise taxes on share repurchases, which was effective beginning on January 1, 2023.

The total value of shares purchased includes approximately $ 1 million in both the six months ended June 30, 2024 and 2023 related to excise taxes on share repurchases, which was effective beginning on January 1, 2023.

Commissions paid on share repurchases were not significant in all periods presented.

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Three months ended March 31, 2024 $ 21 $ 0.31

Three months ended June 30, 2024 22 $ 0.31

Six months ended June 30, 2024 $ 43

Three months ended March 31, 2023 $ 20 $ 0.2825

In addition to dividends on our common stock shown in the table above, we paid $ 4 million on equity-settled stock-based compensation awards in the three months ended March 31, 2024.

Three months ended June 30, 2023 20 $ 0.2825

Six months ended June 30, 2023 $ 40

In addition to dividends on our common stock shown in the table above, we paid $ 4 million on equity-settled stock-based compensation awards in the six months ended June 30, 2024 .

Future cash dividends, and the establishment of record and payment dates, are subject to final determination by our Board of Directors each quarter after reviewing our financial performance and position.

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In October 2020, we reserved an aggregate 4,384,182 shares of our common stock for warrants, which are exercisable at $ 36 per share through October 2024.

As of March 31, 2024, we had outstanding warrants exercisable into 4,163,670 shares of our common stock (subject to adjustments pursuant to the terms of the warrants).

During the three months ended March 31, 2024, we issued 18,851 shares of our common stock in exchange for warrants.

During the three months ended March 31, 2023, we issued an insignificant number of shares of our common stock in exchange for warrants.

As of June 30, 2024, we had outstanding warrants exercisable into 4,119,144 shares of our common stock (subject to adjustments pursuant to the terms of the warrants).

During the three and six months ended June 30, 2024, we issued 34,474 and 53,325 shares of our common stock in exchange for warrants.

During the three and six months ended June 30, 2023, we issued an insignificant number of shares of our common stock in exchange for warrants.

See Part II, Item 8 – Financial Statements and Supplementary Data, Note 10 Stockholders' Equity in our 2023 Annual Report for additional information on the terms of our warrants.

NOTE 9 EARNINGS PER SHARE

Basic and diluted earnings per share (EPS) were calculated using the treasury stock method for the three months ended March 31, 2024 and 2023.

Basic and diluted earnings per share (EPS) were calculated using the treasury stock method for the three and six months ended June 30, 2024 and 2023.

Our restricted stock unit (RSU) and performance stock unit (PSU) awards are not considered participating securities since the dividend rights on unvested shares are forfeitable.

1 unchanged sentence

For diluted EPS, the basic shares outstanding are adjusted by adding potential common shares, if dilutive.

The following table presents the calculation of basic and diluted EPS, for the three months ended March 31, 2024 and 2023:

The following table presents the calculation of basic and diluted EPS, for the three and six months ended June 30, 2024 and 2023:

Three months ended

June 30, Six months ended

2024 2023 2024 2023

(in millions, except per-share amounts)

Numerator for Basic and Diluted EPS

Net (loss) income

Net income (loss)

$ 8 $ 97 $ ( 2 ) $ 398

4 unchanged sentences

Restricted stock units

0.4 0.9 — 0.9

Performance stock units

0.3 0.8 — 0.8

Denominator for Diluted EPS

3 unchanged sentences

The following table presents potentially dilutive weighted-average common shares which were excluded from the denominator for diluted EPS in periods of losses:

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

(in millions)

4 unchanged sentences

NOTE 10 SUPPLEMENTAL ACCOUNT BALANCES

Restricted cash — Cash and cash equivalents at June 30, 2024 included an insignificant amount that was restricted under oil and natural gas liens in favor of one of our suppliers.

We had no restricted cash at December 31, 2023.

Revenues — We derive most of our revenue from sales of oil, natural gas and NGLs, with the remaining revenue primarily generated from sales of electricity and marketing activities related to storage and managing excess pipeline capacity.

The following table provides disaggregated revenue for sales of produced oil, natural gas and NGLs to customers:

Three months ended March 31,

(in millions)

Three months ended

June 30, Six months ended

2024 2023 2024 2023

(in millions) (in millions)

Oil $ 353 $ 362 $ 701 $ 752

Natural gas 14 43 46 306

NGLs 45 42 94 104

Oil, natural gas and NGL sales $ 412 $ 447 $ 841 $ 1,162

From time-to-time, we enter into transactions for third-party production, which we report as revenue from marketing of purchased commodities on our condensed consolidated statement of operations.

Revenues from marketing of purchased commodities primarily results from the storage or transportation of natural gas to take advantage of differences in pricing or location or in the quality of other products.

From time-to-time, we enter into transactions for third-party production, which we report as revenue from marketing of purchased commodities on our condensed consolidated statements of operations.

Revenues from marketing of purchased commodities primarily results from the storage or transportation of natural gas to take advantage of differences in pricing or location, or in the quality of products other than natural gas.

The following table provides disaggregated revenue for sales to customers related to our marketing activities:

Three months ended March 31,

Three months ended

June 30, Six months ended

2024 2023 2024 2023

(in millions)

Oil $ 28 $ — $ 48 $ —

Natural gas 23 72 71 256

Revenue from marketing of purchased commodities

$ 51 $ 72 $ 125 $ 259

Inventories — Materials and supplies, which primarily consist of well equipment and tubular goods used in our oil and natural gas operations, are valued at weighted-average cost and are reviewed periodically for obsolescence.

1 unchanged sentence

Inventories, by category, are as follows:

March 31, December 31,

June 30, December 31,

(in millions)

2 unchanged sentences

Inventories $ 56 $ 72

In the three and six months ended June 30, 2024, we recorded an impairment of excess and obsolete materials and supplies of $ 13 million.

The impairment related to the write-down of obsolete materials and supplies to fair value using Level 3 inputs in the fair value hierarchy.

Other current assets, net — Other current assets, net include the following:

March 31, December 31,

June 30, December 31,

(in millions)

5 unchanged sentences

Other current assets, net $ 103 $ 113

(a) Included in the March 31, 2024 and December 31, 2023 net amounts due from joint interest partners are allowances of $ 3 million.

(a) Included in the June 30, 2024 and December 31, 2023 net amounts due from joint interest partners are allowances of $ 3 million.

Other noncurrent assets — Other noncurrent assets include the following:

March 31, December 31,

June 30, December 31,

(in millions)

7 unchanged sentences

Accrued liabilities — Accrued liabilities include the following:

March 31, December 31,

June 30, December 31,

(in millions)

12 unchanged sentences

Other long-term liabilities — Other long-term liabilities includes the following:

March 31, December 31,

June 30, December 31,

(in millions)

10 unchanged sentences

Three months ended

(in millions)

June 30, Six months ended

2024 2023 2024 2023

(in millions) (in millions)

Exploration and production, corporate and other

$ 60 $ 68 $ 115 $ 130

Carbon management business

1 unchanged sentence

NOTE 11 SUPPLEMENTAL CASH FLOW INFORMATION

federal and state income tax payments of $ 22 million during the three months ended March 31, 2024.

We did not make U.S.

federal or state income tax payments during the three months ended March 31, 2023.

Interest paid, net of capitalized amounts, was $ 20 million and $ 21 million for the three months ended March 31, 2024 and 2023, respectively.

Interest income was $ 6 million and $ 3 million for the three months ended March 31, 2024 and 2023, respectively.

Non-cash investing activities in the three months ended March 31, 2023 included $ 2 million related to our share of capital calls by the Carbon TerraVault JV.

See Note 3 Investment in Unconsolidated Subsidiary and Related Party Transactions for more information on the Carbon TerraVault JV.

Non-cash financing activities in the three months ended March 31, 2024 included approximately $ 87 million related to the issuance of shares for our stock-based compensation awards.

Non-cash financing activities in the three months ended March 31, 2024 also included approximately $ 1 million related to dividend equivalents accrued for stock-based compensation awards and approximately $ 1 million related to an excise tax on share repurchases.

Non-cash financing activities in the three months ended March 31, 2023 included an insignificant amount, for dividend equivalents accrued for stock-based compensation awards and approximately $ 1 million related to an excise tax on share repurchases.

Supplemental disclosures to our condensed consolidated statements of cash flows, excluding leases and ARO, are presented below:

Three months ended

June 30, Six months ended

2024 2023 2024 2023

(in millions) (in millions)

Supplemental Cash Flow Information

Interest paid, net of amount capitalized $ ( 1 ) $ 1 $ 19 $ 22

Income taxes paid $ 4 $ 51 $ 26 $ 51

Interest income

$ 8 $ 6 $ 14 $ 9

Supplemental Disclosure of Non-cash Investing and Financing Activities

Contribution to the Carbon TerraVault JV $ 5 $ 2 $ 5 $ 4

Issuance of shares for stock-based compensation awards

$ 1 $ 2 $ 88 $ 2

Dividends accrued for stock-based compensation awards

$ — $ 1 $ 1 $ 2

Excise tax on share repurchases

$ — $ — $ 1 $ 1

NOTE 12 CONDENSED CONSOLIDATING FINANCIAL INFORMATION

We have designated certain of our subsidiaries as Unrestricted Subsidiaries under the indenture governing our Senior Notes (Senior Notes Indenture).

Unrestricted Subsidiaries (as defined in the Senior Notes Indenture) are subject to fewer restrictions under the Senior Notes Indenture.

We are required under the Senior Notes Indenture to present the financial condition and results of operations of CRC and its Restricted Subsidiaries (as defined in the Senior Notes Indenture) separate from the financial condition and results of operations of its Unrestricted Subsidiaries.

The following condensed consolidating balance sheets as of March 31, 2024 and December 31, 2023 and the condensed consolidating statements of operations for the three months ended March 31, 2023 and 2024, as applicable, reflect the condensed consolidating financial information of our parent company, CRC (Parent), our combined Unrestricted Subsidiaries, our combined Restricted Subsidiaries and the elimination entries necessary to arrive at the information for the Company on a consolidated basis.

We have designated certain of our subsidiaries as Unrestricted Subsidiaries under the indenture governing our 2026 Senior Notes (2026 Senior Notes Indenture) and 2029 Senior Notes (2029 Senior Notes Indenture).

Unrestricted Subsidiaries (as defined in the 2026 Senior Notes Indenture and 2029 Senior Notes Indenture) are subject to fewer restrictions under the indentures.

We are required under the 2026 Senior Notes Indenture and 2029 Senior Notes Indenture to present the financial condition and results of operations of CRC and its Restricted Subsidiaries (as defined in the 2026 Senior Notes Indenture and 2029 Senior Notes Indenture) separate from the financial condition and results of operations of its Unrestricted Subsidiaries.

The following condensed consolidating balance sheets as of June 30, 2024 and December 31, 2023 and the condensed consolidating statements of operations for the three and six months ended June 30, 2024 and 2023, as applicable, reflect the condensed consolidating financial information of CRC (Parent), our combined Unrestricted Subsidiaries, our combined Restricted Subsidiaries and the elimination entries necessary to arrive at the information for the Company on a consolidated basis.

The financial information may not necessarily be indicative of the financial condition and results of operations had the Unrestricted Subsidiaries operated as independent entities.

Condensed Consolidating Balance Sheets

As of March 31, 2024 and December 31, 2023

As of March 31, 2024

As of June 30, 2024 and December 31, 2023

As of June 30, 2024

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

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Condensed Consolidating Statement of Operations

For the three months ended March 31, 2024 and 2023

Three months ended March 31, 2024

For the three and six months ended June 30, 2024 and 2023

Three months ended June 30, 2024

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

(in millions)

Total revenues

Total operating revenues

$ 7 $ — $ 513 $ ( 6 ) $ 514

2 unchanged sentences

Gain on asset divestitures — — 1 — 1

Non-operating income (loss)

( 21 ) ( 7 ) 1 — ( 27 )

INCOME (LOSS) BEFORE INCOME TAXES

( 91 ) ( 25 ) 127 — 11

Income tax benefit

( 3 ) — — — ( 3 )

NET INCOME (LOSS)

$ ( 94 ) $ ( 25 ) $ 127 $ — $ 8

Three months ended June 30, 2023

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

(in millions)

Total operating revenues

$ 5 $ — $ 586 $ — $ 591

Total costs and other

62 11 371 — 444

Non-operating (loss) income ( 11 ) ( 2 ) 1 — ( 12 )

(LOSS) INCOME BEFORE INCOME TAXES ( 68 ) ( 13 ) 216 — 135

Income tax benefit

Income tax provision ( 38 ) — — — ( 38 )

NET (LOSS) INCOME $ ( 106 ) $ ( 13 ) $ 216 $ — $ 97

Six months ended June 30, 2024

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

(in millions)

Total operating revenues

$ 13 $ — $ 971 $ ( 16 ) $ 968

Three months ended March 31, 2023

Total costs and other

136 28 793 ( 16 ) 941

Gain on asset divestitures — — 7 — 7

Non-operating (loss) income ( 34 ) ( 11 ) 3 — ( 42 )

(LOSS) INCOME BEFORE INCOME TAXES ( 157 ) ( 39 ) 188 — ( 8 )

Income tax provision 6 — — — 6

NET (LOSS) INCOME $ ( 151 ) $ ( 39 ) $ 188 $ — $ ( 2 )

Six months ended June 30, 2023

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

(in millions)

Total revenues

Total operating revenues

$ 9 $ — $ 1,606 $ — $ 1,615

7 unchanged sentences

NOTE 13 SUBSEQUENT EVENTS

On May 7, 2024, our Board of Directors declared a quarterly cash dividend of $ 0.31 per share of common stock.

The dividend is payable to shareholders of record at the close of business on May 31, 2024 and is expected to be paid on June 14, 2024.

On July 1, 2024, we obtained all of the ownership interests in Aera.

Aera is a leading operator of mature fields in California, primarily in the San Joaquin and Ventura basins, with high oil-weighted production.

In connection with the closing of the Aera Merger, we issued 21,315,707 shares of common stock to the Aera owners and paid $ 990 million in connection with the extinguishment of Aera's outstanding indebtedness using the proceeds from the issuance of the 2029 Senior Notes and cash on hand.

For more information on the 2029 Senior Notes and an amendment to our Revolving Credit Facility entered into at the closing of the Aera Merger, refer to Note 3 Debt.

As of July 1, 2024, immediately following closing of the Aera Merger, our existing stockholders prior to the Aera Merger owned approximately 76 % of CRC and the previous owners of Aera owned approximately 24 % of CRC.

In the three and six months ended June 30, 2024, we recognized $ 13 million and $ 26 million, respectively, of transaction and integration costs related to the Aera Merger which are included in other operating expenses, net on our condensed consolidated statement of operations.

In July 2024, we recognized additional transaction costs of $ 27 million which were conditioned upon closing.

We expect the Aera Merger to be accounted for as a business combination using the acquisition method of accounting in accordance with Accounting Standards Codification Topic 805, Business Combinations (ASC 805).

Due to the proximity of the acquisition date to the filing of the Quarterly Report on Form 10-Q for the period ended June 30, 2024, the initial accounting for the Aera Merger is incomplete, and therefore we are unable to disclose certain information required by ASC 805, including the provisional amounts recognized as of the acquisition date for fair value of consideration transferred, each major class of assets acquired and liabilities assumed, and goodwill, if any, due to the ongoing status of the valuation.

On August 2, 2024, our Board of Directors increased the cash dividend policy to anticipate a total annual dividend of $ 1.55 , payable to shareholders in quarterly increments of $ 0.3875 per share of common stock.

The actual declaration of future cash dividends, and the establishment of record and payment dates, is subject to final determination by our Board of Directors each quarter after reviewing our financial performance and position.

On August 5, 2024 , our Board of Directors declared a quarterly cash dividend of $ 0.3875 per share of common stock.

The dividend is payable to shareholders of record at the close of business on August 30, 2024 and is expected to be paid on September 16, 2024 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements