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Item 1. Financial Statements

2024-11-06 compared with 2024-08-07 · 431 added, 186 removed, 563 unchanged (52% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of June 30, 2024 and December 31, 2023

As of September 30, 2024 and December 31, 2023

(in millions, except share data)

June 30, December 31,

September 30, December 31,

CURRENT ASSETS

21 unchanged sentences

Long-term debt, net 1,131 540

Fair value of derivative contracts 55 2

Asset retirement obligations 1,083 422

Deferred tax liability

Other long-term liabilities 337 199

STOCKHOLDERS' EQUITY

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

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

Common stock ( 200,000,000 shares authorized at $ 0.01 par value) ( 106,930,510 and 83,557,800 shares issued;

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)

89,461,673 and 68,693,885 shares outstanding at September 30, 2024 and December 31, 2023)

Treasury stock ( 17,468,837 shares held at cost at September 30, 2024 and 14,863,915 shares held at cost at December 31, 2023)

( 739 ) ( 604 )

5 unchanged sentences

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

CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES

CALIFORNIA R ESOURCES CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

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

For the three and nine months ended September 30, 2024 and 2023

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

1 unchanged sentence

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

15 unchanged sentences

Costs related to marketing of purchased commodities

43 31 140 182

Electricity generation expenses 9 23 31 85

5 unchanged sentences

Gain on asset divestitures

OPERATING INCOME

OPERATING INCOME (LOSS)

518 ( 15 ) 552 525

1 unchanged sentence

Interest and debt expense ( 29 ) ( 15 ) ( 59 ) ( 43 )

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

Other non-operating (loss) income

Loss on early extinguishment of debt

( 5 ) — ( 5 ) —

Loss from investment in unconsolidated subsidiaries

( 2 ) ( 3 ) ( 9 ) ( 6 )

Other non-operating income (loss)

INCOME (LOSS) BEFORE INCOME TAXES

13 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income (Loss)

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

For the three and nine months ended September 30, 2024 and 2023

(in millions)

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

1 unchanged sentence

$ 345 $ ( 22 ) $ 343 $ 376

Other comprehensive income (loss):

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

Other comprehensive income (loss) (a) :

Actuarial gain associated with pension and postretirement plans

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

( 4 ) ( 5 ) ( 6 ) ( 5 )

Comprehensive income (loss)

$ 350 $ ( 27 ) $ 346 $ 371

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

(a) Amounts are net of $ 2 million and $ 1 million in tax for the three and nine months ended September 30, 2024, respectively.

Amounts are net of $ 2 million in tax for the three and nine months ended September 30, 2023.

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 and six months ended June 30, 2024 and 2023

For the three and nine months ended September 30, 2024 and 2023

(in millions)

Three months ended June 30, 2024

Three months ended September 30, 2024

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

Comprehensive

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

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

— — — 345 — 345

Share-based compensation — — 5 — — 5

Repurchases of common stock — ( 42 ) — — — ( 42 )

Shares issued for warrants

— — 37 — — 37

Shares issued for Aera Merger

— — 1,135 — — 1,135

Cash dividend ($ 0.3875 per share)

— — — ( 36 ) — ( 36 )

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

Other comprehensive income, net of tax

Balance, September 30, 2024 $ 1 $ ( 739 ) $ 2,479 $ 1,683 $ 77 $ 3,501

Three months ended September 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

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

— — — ( 22 ) — ( 22 )

Share-based compensation — — 8 — — 8

3 unchanged sentences

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

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

Other comprehensive income, net of tax — — — — ( 5 ) ( 5 )

Balance, September 30, 2023 $ 1 $ ( 604 ) $ 1,324 $ 1,253 $ 76 $ 2,050

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

Six months ended June 30, 2024

Nine months ended September 30, 2024

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

4 unchanged sentences

Repurchases of common stock — ( 135 ) — — — ( 135 )

Shares issued for warrants

— — 37 — — 37

Shares issued for Aera Merger

— — 1,135 — — 1,135

Cash dividend ($ 1.0075 per share)

2 unchanged sentences

Other comprehensive income, net of tax

— — — — ( 2 ) ( 2 )

Other — — 1 — — 1

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

Six months ended June 30, 2023

Balance, September 30, 2024 $ 1 $ ( 739 ) $ 2,479 $ 1,683 $ 77 $ 3,501

Nine months ended September 30, 2023

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

8 unchanged sentences

( 3 ) — — ( 3 )

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

Other comprehensive income, net of tax — — — — ( 5 ) ( 5 )

Balance, September 30, 2023 $ 1 $ ( 604 ) $ 1,324 $ 1,253 $ 76 $ 2,050

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 and six months ended June 30, 2024 and 2023

For the three and nine months ended September 30, 2024 and 2023

(in millions)

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Deferred income tax provision (benefit)

90 ( 40 ) 84 16

Asset impairments

2 unchanged sentences

Net payments on settled commodity derivatives ( 29 ) ( 95 ) ( 53 ) ( 223 )

Net loss on early extinguishment of debt 5 — 5 —

Gain on asset divestitures

7 unchanged sentences

Proceeds from asset divestitures, net — — 12 —

Purchase of a business, net of cash acquired

( 853 ) — ( 853 ) —

Acquisitions — — ( 6 ) ( 1 )

3 unchanged sentences

Proceeds from Revolving Credit Facility — — 30 —

Repayments of Revolving Credit Facility ( 30 ) — ( 30 ) —

Proceeds from 2029 Senior Notes, net

6 unchanged sentences

( 7 ) — ( 10 ) ( 8 )

Stock warrants exercised

Shares cancelled for taxes — ( 1 ) ( 42 ) ( 3 )

Net cash provided by (used in) financing activities

Debt repurchases ( 303 ) ( 5 ) ( 303 ) ( 5 )

Net cash (used in) provided by financing activities

( 82 ) ( 45 ) 351 ( 217 )

6 unchanged sentences

Notes to the Condensed Consolidated Financial Statements

June 30, 2024

September 30, 2024

NOTE 1 BASIS OF PRESENTATION

3 unchanged sentences

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 as of the date presented.

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.

In the opinion of our management, the accompanying unaudited condensed consolidated 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.

We have eliminated all significant intercompany transactions and accounts.

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 is adjusted for our proportionate share of income or loss in addition to contributions and distributions.

In applying the equity method of accounting, our investments in our unconsolidated subsidiaries are recognized either at cost, as is the case with Carbon TerraVault JV HoldCo, LLC, or at fair value if acquired in a business combination, as is the case for Midway Sunset Cogeneration Company.

These investments are then 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.

1 unchanged sentence

We believe our disclosures are adequate to make the information presented not misleading.

On July 1, 2024, we closed on transactions pursuant to the definitive agreement and plan of merger (Merger Agreement) to obtain all of the ownership interests in Aera Energy, LLC (Aera) (Aera Merger).

Refer to Note 2 Aera Merger for further discussion of the Aera Merger.

The Aera Merger has been accounted for as a business combination in accordance with Accounting Standards Codification Topic 805, Business Combinations (ASC 805).

The merger consideration of $ 2.1 billion was allocated to individual assets acquired net of liabilities assumed based on their fair value as of July 1, 2024 and are not included on the comparative balance sheet presented.

The accompanying unaudited condensed consolidated statement of operations, comprehensive income and cash flows contain the results of Aera beginning on July 1, 2024.

The preparation of financial statements in conformity with GAAP requires management to select appropriate accounting policies and make informed estimates and judgments regarding certain types of financial statement balances and disclosures.

5 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 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 BGTF Sierra Aggregator LLC (Brookfield) for the further development of a carbon management business in California (Carbon TerraVault JV).

For the three and nine months ended September 30, 2023, we reclassified $ 1 million and $ 2 million, respectively, related to NGL storage activities from other revenue to revenue from marketing of purchased commodities on our condensed consolidated statement of operations.

Concentration of Customers

We sell crude oil, natural gas and NGLs to marketers, California refineries and other customers that have access to transportation and storage facilities.

In light of the ongoing energy deficit in California and strong demand for native crude oil production, we do not believe that the loss of any single customer would have a material adverse effect on our consolidated financial statements taken as a whole.

For the three months ended September 30, 2024, two California customers each accounted for at least 10%, and collectively 58 %, of our sales (before the effects of hedging).

NOTE 2 AERA MERGER

On July 1, 2024, we obtained by way of merger 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.

The Aera Merger adds significant proved developed reserves to CRC.

In connection with the closing of the Aera Merger, we issued 21,315,707 shares of common stock to the former Aera owners (Sellers).

We also paid approximately $ 990 million in connection with the extinguishment of all of Aera's outstanding indebtedness using the proceeds from the issuance of our 8.25 % senior notes due 2029 (2029 Senior Notes) and cash on hand.

For more information on the 2029 Senior Notes and recent amendments to our Revolving Credit Facility, refer to Note 4 Debt and Note 15 Subsequent Events.

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

At the date of this filing, our assessment of the fair value of assets acquired and liabilities assumed is not complete.

Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, final appraisals of Aera's assets, evaluation of Aera's materials and supplies inventory, measurement of leases and preparation of final tax returns that will provide underlying tax basis of the assets acquired and liabilities assumed.

We expect to complete the purchase price allocation during the 12-month period subsequent to the Aera Merger closing date and adjustments may be made to the provisional amounts recorded as of September 30, 2024.

The following table summarizes the consideration transferred:

Merger Consideration

(in millions, except share and per share data)

Shares of common stock (dividend adjusted)

Common stock per share fair value on July 1, 2024 $ 53.28

Fair value of share consideration $ 1,136

Settlement of Aera debt

Total purchase consideration

The following table represents the preliminary purchase price allocation of the identifiable assets acquired and the liabilities assumed based on their estimated fair values as of the closing date of the Aera Merger:

Preliminary Purchase Price Allocation

(in millions)

Assets Acquired

Other current assets

Investment in unconsolidated subsidiary

Property, plant and equipment 3,119

Pension and other postretirement benefits

Other noncurrent assets

Total Assets Acquired 3,657

Liabilities Assumed

Accounts payable ( 157 )

Accrued liabilities ( 132 )

Asset retirement obligations

Fair value of derivative contracts

Other long-term liabilities ( 192 )

Total Liabilities Assumed ( 1,532 )

Net Assets Acquired $ 2,125

We recorded cash based on Aera's bank balances as of July 1, 2024, which included restricted cash of $ 27 million.

The measurements for predominately all of the other current and other noncurrent assets acquired and accounts payable, accrued liabilities and other long-term liabilities assumed are based on contracts in place at Aera on the acquisition date.

Assets and liabilities related to Aera's pension and other postretirement benefit plans were measured based on actuarial valuations using Level 3 inputs.

For more information on Aera's pension and other postretirement benefit plans, see Note 11 Pension and Postretirement Benefit Plans .

The fair value of an investment in an unconsolidated subsidiary was based on a preliminary appraisal using both the cost approach and available market data.

The fair value of derivative instruments was based on observable inputs, primarily forward commodity-price curves.

These inputs are considered Level 2 inputs in the fair value hierarchy.

The fair value of certain acquired property, plant and equipment, primarily consisting of proved oil and natural gas properties, land, gas processing plants and corporate assets including software and computer equipment, was based on preliminary appraisals.

The fair value of proved oil and natural gas properties as of the acquisition date is based on estimated discounted future net cash flows incorporating market participant assumptions on an after-tax basis.

Significant inputs to the valuation include estimates of future production volumes, future operating and development costs, future commodity prices, a weighted average cost of capital and a projected inflation rate.

When estimating the fair value of proved properties, additional risk adjustments were applied to proved undeveloped reserves to reflect the relative uncertainty of the reserve class.

These inputs are classified as Level 3 unobservable inputs, including the underlying commodity price assumptions which are based on the five-year NYMEX forward strip prices, escalated for inflation thereafter, and adjusted for price differentials.

The liability for future asset retirement obligations was determined by calculating the present value of estimated future abandonment costs.

We utilized several assumptions, including a credit-adjusted risk-free interest rate, estimated remediation costs, estimated timing of when the work will be performed and a projected inflation rate.

Deferred income taxes, included in other noncurrent assets and long-term liabilities, represent the tax effects of differences in the tax basis and merger-date fair values of assets acquired and liabilities assumed.

Refer to Note 7 Income Taxes for additional information on the deferred tax liability.

Lease-related assets and liabilities acquired are remeasured as if the leases were new at the merger date.

These agreements are still under review for measurement at an updated incremental borrowing rate.

Lease assets are included in property, plant and equipment and the liabilities are included in accrued liabilities and other long-term liabilities.

Supplemental Unaudited Pro Forma Financial Information

The following supplemental unaudited pro forma financial information presents the condensed consolidated results of operations for the three and nine months ended September 30, 2024 and 2023 as if the Aera Merger had occurred on January 1, 2023.

Three months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

(in millions) (in millions)

Total operating revenue

$ 1,353 $ 438 $ 3,006 $ 3,165

$ 386 $ ( 459 ) $ 341 $ 43

Basic $ 4.32 $ ( 5.10 ) $ 3.53 $ 0.47

Diluted $ 4.23 $ ( 5.10 ) $ 3.45 $ 0.45

The pro forma information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the Aera Merger been completed on January 1, 2023, nor is it necessarily indicative of future operating results of the combined entity.

The pro forma financial information for the three and nine months ended September 30, 2024 and 2023 is a result of combining our three and nine months statements of operations with Aera's pre-merger results from January 1, 2024 and 2023 and includes adjustments for revenues and direct expenses.

The pro forma results do not reflect any cost savings anticipated as a result of the Aera Merger and exclude the impact of any severance and merger-related costs.

The pro forma results include adjustments to depreciation, depletion and amortization (DD&A) based on the purchase price allocated to property, plant, and equipment and the estimated useful lives as well as adjustments to interest and accretion expense.

The pro forma adjustments include estimates and assumptions based on currently available information.

Management believes the estimates and assumptions are reasonable, and the relative effects of the Aera Merger are properly reflected.

Future results may vary significantly from the results reflected in the following pro forma information.

For the period of July 1, 2024 through September 30, 2024, revenue and income before income taxes associated with Aera totaled $ 765 million and $ 400 million, respectively.

The following table summarizes the merger-related costs incurred:

Three months ended

September 30, 2024 Nine months ended

September 30, 2024

(in millions)

Employee severance and related costs

Transaction and integration costs

Total merger-related costs

Transaction and integration costs related to the Aera Merger and employee severance and related costs are included in other operating expenses, net on our condensed consolidated statement of operations.

In August 2024, management committed to a reduction in force as part of the integration process following the Aera Merger, which, when complete, will result in a 12 % reduction in the combined company's employee headcount.

We initiated this workforce reduction to align the size and composition of our workforce with expected future operating and capital plans.

In addition, employee severance and related costs includes expenses from a voluntary separation program for eligible employees.

The accelerated vesting of certain awards for former Aera executives was $ 7 million, and is included in general and administrative expenses for the three and nine months ended September 30, 2024.

This amount for accelerated vesting is not included in the table above.

The accelerated vesting was based on existing change of control provisions within the former Aera employee award agreements.

NOTE 3 INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES AND RELATED PARTY TRANSACTIONS

Midway Sunset Cogeneration Company

In July 2024, our merger with Aera led to our ownership of Midway Sunset Cogeneration Company, which is a partnership designed to own, manage, and operate a cogeneration facility in Kern County, California.

We hold a 50 % interest in Midway Sunset Cogeneration Company and San Joaquin Energy Company, a subsidiary of NRG Energy Inc.

(NRG), holds a 50 % interest.

We determined that Midway Sunset Cogeneration Company is a voting interest entity, where we share decision-making power with San Joaquin Energy Company, on all matters that most significantly impact the economic performance of the company.

Therefore, we account for our investment in Midway Sunset Cogeneration Company under the equity method of accounting.

We recorded our investment at a preliminary fair value of $ 59 million which was $ 48 million in excess of Aera's investment in the underlying assets of the partnership.

This difference is associated with PP&E and we expect this amount will reverse over the remaining useful life of the power plant.

There are no significant transactions between CRC and Midway Sunset Cogeneration Company.

As of September 30, 2024, the carrying value of our investment in Midway Sunset Cogeneration Company was $ 55 million.

Carbon TerraVault JV

In August 2022, we 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.

3 unchanged sentences

Transactions between us and the Carbon TerraVault JV are related party transactions.

Brookfield has committed an initial $ 500 million to invest in CCS projects that are jointly approved through the Carbon TerraVault JV.

As part of the formation of the Carbon TerraVault JV, we contributed rights to inject CO 2 into the 26R reservoir in our Elk Hills field for permanent CO 2 storage (26R reservoir) and Brookfield committed to make an initial investment of $ 137 million , payable in three installments with the last two installments subject to the achievement of certain milestones.

We achieved the milestone for the second installment in March 2024.

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

Brookfield committed an initial $ 500 million to invest in CCS projects that are jointly approved through the Carbon TerraVault JV.

Our initial contribution included rights to inject CO 2 into the 26R reservoir in our Elk Hills field for permanent CO 2 storage (26R reservoir).

Brookfield's initial investment is $ 137 million, of which $ 92 million has been contributed to date.

The remaining amount of Brookfield's initial investment will be sized based on permitted storage capacity.

Because the parties have certain put and call rights (repurchase features) with respect to the 26R reservoir if certain milestones are not met, 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 $ 104 million and $ 52 million at September 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,

September 30, December 31,

(in millions)

Investment in unconsolidated subsidiary (a)

Receivable from affiliate (b)

Investment in unconsolidated subsidiary

Receivable from affiliate (a)

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 $ 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 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.

(a) 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 September 30, 2024 , the amount of $ 46 million includes the remaining $ 43 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

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

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 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.

This option expires upon the earlier of (1) August 2027, (2) when a final investment decision has been approved by the Carbon TerraVault JV for storage projects representing in excess of 5 million metric tons per annum (MMTPA) in the aggregate, or (3) when Brookfield has made contributions to the joint venture in excess of $ 500 million (unless Brookfield elects to increase its commitment).

We entered into a Management Services Agreement (MSA) with the Carbon TerraVault JV whereby we provide administrative, operational and commercial services under a cost-plus arrangement.

Services may be supplemented by using third parties and payments to us under the MSA are limited to the amount in an approved budget.

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

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

June 30, December 31,

During the three and nine months ended September 30, 2024, we performed abandonment work and sought reimbursement in the amounts of $ 4 million and $ 13 million, respectively, from the Carbon TerraVault JV.

During the three and nine months ended September 30, 2023, we performed abandonment work and sought reimbursement in the amounts of $ 2 million and $ 4 million, respectively, from the Carbon TerraVault JV.

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

September 30, December 31,

2024 2023 Interest Rate Maturity

8 unchanged sentences

Principal amount $ 1,145 $ 545

Unamortized debt discount and debt issuance costs

Unamortized debt discount and issuance costs

Unamortized premium

Long-term debt, net $ 1,131 $ 540

3 unchanged sentences

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

(b) On November 1, 2024 the maturity date of the Revolving Credit Facility was extended to March 16, 2029, and the springing maturity date was also amended.

See Note 15 Subsequent Events for more information on the amendment.

Revolving Credit Facility

As of September 30, 2024, our Amended and Restated Credit Agreement, dated April 26, 2023 (Revolving Credit Facility), consisted of a senior revolving loan facility with an aggregate commitment of $ 1.1 billion.

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

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

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.

As of September 30, 2024, $ 175 million letters of credit were issued to support ordinary course marketing, insurance, regulatory and other matters.

As of September 30, 2024, we had $ 925 million of availability on our Revolving Credit Facility after taking into account $ 175 million in letters of credit outstanding.

Our borrowing base of $ 1.5 billion is redetermined semi-annually and was re-affirmed in November 2024 as part of our recent amendment.

For information on the fifth amendment to our Revolving Credit Facility, refer to Note 15 Subsequent Events.

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.

We capitalized approximately $ 3 million in deferred financing fees related to this amendment to other assets on our condensed consolidated statement of financial position during the nine months ended September 30, 2024.

We did not capitalize any deferred financing fees related to this amendment during the three months ended September 30, 2024.

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.

In July 2024, we entered into a fourth amendment to our Revolving Credit Facility as part of the Aera Merger.

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.

Our ability 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).

We capitalized approximately $ 7 million in deferred financing fees related to this amendment to other assets on our condensed consolidated statement of financial position during the three and nine months ended September 30, 2024.

On November 1, 2024, we entered into a fifth amendment to our Revolving Credit Facility which included extending the springing maturity of our Revolving Credit Facility and increasing the aggregate amount of our commitments by $ 50 million.

Refer to Note 15 Subsequent Events for additional information on the fifth amendment.

2029 Notes Offering and Follow-On Offering

On June 5, 2024, we completed the offering of $ 600 million in aggregate principal amount of the 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.

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 for approximately $ 990 million at closing of the Aera Merger.

See Note 2 Aera Merger for more information on the closing of the Aera Merger.

On August 22, 2024, we completed a follow-on offering of an additional $ 300 million in aggregate principal amount of 2029 Senior Notes.

The net proceeds from this offering of $ 298 million, after $ 3 million of debt premium and $ 5 million of debt issuance costs, were used to repurchase a portion of our 7.125 % senior notes due 2026 (2026 Senior Notes).

The 2029 Senior Notes issued on August 22, 2024 are governed by the same indenture as the $ 600 million of 2029 Senior Notes that were previously issued on June 5, 2024.

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.

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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,

Tender Offer and Note Repurchases

In the three and nine months ended September 30, 2024, we repurchased $ 300 million in face value of our 2026 Senior Notes for $ 303 million, resulting in a loss on early extinguishment of debt in the amount of $ 5 million which includes a $ 2 million write-off of unamortized debt issuance costs.

In the three and nine months ended September 30, 2023, we repurchased $ 5 million in face value of our 2026 Senior Notes at par, resulting in an insignificant extinguishment loss for the write-off of unamortized debt issuance costs.

Our 2026 Senior Notes are redeemable at any time prior to the maturity date at a redemption price equal to (i) 102 % of the principal amount if redeemed in the twelve months beginning February 1, 2024, and (ii) 100 % of the principal amount if redeemed after February 1, 2025, in each case plus accrued and unpaid interest.

As shown in the table below, we estimate the fair value of our fixed rate 2029 Senior Notes and 2026 Senior Notes based on known prices from market transactions (using Level 1 inputs on the fair value hierarchy).

September 30, December 31,

(in millions)

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$ 1,164 $ 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.

As of September 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.

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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.

Reserve balances for these items at September 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.

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

As of September 30, 2024 there were no material changes to our legacy purchase obligations disclosed in the 2023 Annual Report.

In connection with the Aera Merger, we assumed purchase obligations of approximately $ 50 million.

These purchase obligations are primarily related to natural gas transportation and a power purchase agreement for a future solar project.

NOTE 6 DERIVATIVES

We continue to maintain a commodity hedging program primarily focused on crude oil to help protect our cash flows, margins and capital program from the volatility of commodity prices.

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 and six months ended June 30, 2024 and 2023.

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

In connection with the Aera Merger, we also acquired swaps related to crude oil sales and natural gas purchases.

We did not have any derivative instruments designated as accounting hedges as of and for the three and nine months ended September 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 June 30, 2024:

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

2025 2026 2027 2028

Barrels per day 29,000 30,000 30,000 30,000 29,000 5,000 — —

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

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

2025 2026 2027 2028

MMBtu per day

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$ 5.49 $ 6.02 $ 3.44 $ 3.48 $ 3.53 $ — $ — $ —

MMBtu per day

50,999 50,999 51,750 51,750 51,750 35,336 12,616 9,613

Weighted-average price per MMBtu

$ 4.67 $ 5.48 $ 2.95 $ 2.95 $ 4.22 $ 4.04 $ 4.34 $ 3.95

PG&E Citygate

MMBtu per day

14,000 14,000 — — — — — —

Weighted-average price per MMBtu

$ 5.60 $ 6.10 $ — $ — $ — $ — $ — $ —

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.

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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 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.

For the three and nine months ended September 30, 2024, we recognized a net loss of $ 9 million (which includes a non-cash gain of $ 3 million and $ 12 million of settlement payments) and a net loss of $ 11 million (which includes a non-cash gain of $ 7 million and $ 18 million of settlement payments) in other operating expenses, net on our condensed consolidated statement of operations.

We did not have derivative contracts related to purchased natural gas for our marketing activities during the three and nine months ended September 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 June 30, 2024 and December 31, 2023:

June 30, 2024

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

See Note 2 Aera Merger for the fair value of Aera's acquired derivative contracts on July 1, 2024.

September 30, 2024

Classification Gross Amounts at Fair Value Netting Net Fair Value

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NOTE 7 INCOME TAXES

The following table presents the components of our total income tax provision:

The following table presents the components of our total income tax provision (benefit) and effective tax rate:

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Deferred income tax provision (benefit)

90 ( 40 ) 84 16

Total income tax provision (benefit)

$ 138 $ ( 8 ) $ 132 $ 105

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

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 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.

Management expects to realize the recorded deferred tax assets primarily through future income and reversal of taxable temporary differences.

Effective tax rate

29 % 27 % 28 % 22 %

The difference between our annual effective tax rate as shown in the table above and the U.S.

federal statutory tax rate of 21% is primarily due to state taxes where the state statutory tax rate is 7% (net of the federal tax deduction).

Our annual effective rate of 22 % differed from the U.S.

federal statutory rate of 21% for the nine months ended September 30, 2023 primarily due to state taxes and the recognition of 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 on the release of the valuation allowance.

We had net deferred tax assets of $ 50 million and net deferred tax liabilities of $ 124 million as of September 30, 2024.

As of December 31, 2023, we had a net deferred tax asset of $ 132 million.

The change of $ 206 million primarily relates to the assumption of a deferred tax liability estimated at $ 120 million upon the acquisition of Aera on July 1, 2024.

For further information on the acquisition of Aera, see Note 2 Aera Merger .

The remaining increase in our deferred tax liability primarily relates to Aera’s unrealized gains on derivative contracts during the three months ended September 30, 2024 which are not recognized for tax purposes until settlement.

Management expects to realize the deferred tax assets primarily through future income and reversal of taxable temporary differences.

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.

There are no ongoing examinations related to CRC or Aera.

As the surviving entity after the Aera Merger, we are responsible for managing Aera's examinations, if any, for years that remain subject to examination.

For Aera, years ending December 31, 2021 through December 31, 2023 remain subject to examination for U.S.

federal tax purposes and years ending December 31, 2020 through December 31, 2023 remain subject to examination for California tax purposes.

NOTE 8 DIVESTITURES, ACQUISITIONS AND ASSETS HELD FOR SALE

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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.

During the nine months ended September 30, 2024, we sold non-core assets recognizing a $ 1 million gain.

During the nine months ended September 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 nine months ended September 30, 2024, we acquired land for our carbon management business for approximately $ 6 million.

In the nine months ended September 30, 2023, we acquired land for our carbon management business for approximately $ 1 million.

Assets Held for Sale

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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.

We completed the sale of these assets in October 2024.

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.

See Note 15 Subsequent Events for information on the closing of the sale that occurred in October 2024.

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

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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 June 30, 2024 on our condensed consolidated balance sheet.

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

NOTE 9 STOCKHOLDERS' EQUITY

The following table is a summary of common stock issuances:

Balance at December 31, 2023

Issued as part of the Aera Merger

Shares repurchased

( 2,604,922 )

Shares issued for exercised warrants

Other shares issued, net

Balance at September 30, 2024

Share Repurchase Program

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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

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 September 30, 2023

365,145 $ 20 $ 54.75

Three months ended June 30, 2024

Three months ended September 30, 2024

835,319 $ 42 $ 50.23

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

Nine months ended September 30, 2023 3,407,655 $ 143 $ 41.69

Nine months ended September 30, 2024 2,604,922 $ 135 $ 51.33

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

17,468,837 $ 739 $ 42.14

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.

The total value of shares purchased includes approximately $ 1 million in both the nine months ended September 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.

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

Our Board of Directors declared the following cash dividends for each of the periods presented.

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Three months ended June 30, 2024 22 $ 0.31

Six months ended June 30, 2024 $ 43

Three months ended September 30, 2024 34 $ 0.3875

Nine months ended September 30, 2024

Three months ended March 31, 2023 $ 20 $ 0.2825

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 .

Three months ended September 30, 2023 19 $ 0.2825

Nine months ended September 30, 2023

In addition to dividends on our common stock shown in the table above, we paid $ 4 million of dividend equivalents on equity-settled stock-based compensation awards in the nine months ended September 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.

See Note 15 Subsequent Events for information on future cash dividends.

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 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.

In October 2020, we reserved an aggregate 4,384,182 shares of our common stock for issuance upon the exercise of warrants, which were exercisable at $ 36 per share through October 28, 2024.

As of September 30, 2024, we had outstanding warrants exercisable into 2,812,754 shares of our common stock (subject to adjustments pursuant to the terms of the warrants).

During the three and nine months ended September 30, 2024, we issued 1,085,838 and 1,139,163 shares of our common stock in exchange for warrants, respectively.

During the three and nine months ended September 30, 2023, we issued 1,958 and 2,179 shares of our common stock in exchange for warrants, respectively.

See Note 15 Subsequent Events for warrant exercises during October 2024.

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 10 EARNINGS PER SHARE

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.

Basic and diluted earnings per share (EPS) were calculated using the treasury stock method for the three and nine months ended September 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.

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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 and six months ended June 30, 2024 and 2023:

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

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(in millions)

(in millions) (in millions)

Shares issuable upon exercise of warrants — 4.3 — —

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Total antidilutive shares — 7.2 — —

NOTE 11 PENSION AND POSTRETIREMENT BENEFIT PLANS

Prior to the Aera Merger, we had two qualified defined benefit pension plans covering union employees and a postretirement health care plan for certain retired employees.

In connection with the Aera Merger, we acquired two defined benefit pension plans, a qualified retirement plan and a supplemental retirement plan.

We also acquired two plans that provide health care benefits for certain retired employees.

Certain of the postretirement benefit obligations are funded through 401(h) accounts under the defined benefit plans.

Aera's pension and postretirement obligations were remeasured as of the July 1, 2024 acquisition date.

At that time, we recognized a net benefit asset of $ 73 million, included in other noncurrent assets, and a net benefit liability of $ 35 million, included in other long-term liabilities, on our condensed consolidated statement of financial position.

Accumulated other comprehensive income balances were eliminated in purchase accounting.

In August 2024, we amended Aera's pension and postretirement benefit plans.

For Aera’s defined benefit pension plans and post age 65 postretirement benefit plan, participants no longer earn benefits for service after September 30, 2024.

However, future service will count towards vesting of benefits accumulated based on past service.

For Aera’s postretirement benefit plans, we expanded the eligibility provisions in the event of an involuntary layoff.

Following the Aera Merger, we recognized a curtailment gain of $ 4 million and a one-time cost of special termination benefits of $ 4 million included in net periodic benefit costs for the three and nine months ended September 30, 2024 as shown in the table below.

The following table sets forth the components of the net periodic benefit costs for our defined benefit pension and postretirement benefit plans for the three and nine months ended September 30, 2024 and 2023:

Three months ended September 30, Three months ended September 30,

Benefit Postretirement

Benefit Pension

Benefit Postretirement

(in millions) (in millions)

Service cost - benefits earned during the period $ 3 $ 1 $ — $ —

Interest cost on projected benefit obligation 4 1 — —

Expected return on plan assets ( 6 ) ( 1 ) — —

Curtailment gain — ( 4 ) ( 3 )

Cost of special termination benefits

Amortization of prior service cost credit — ( 1 ) — ( 1 )

Net periodic benefit costs $ 1 $ — $ — $ ( 4 )

Nine months ended September 30, Nine months ended September 30,

Benefit Postretirement

Benefit Pension

Benefit Postretirement

(in millions) (in millions)

Service cost - benefits earned during the period $ 3 $ 2 $ — $ 1

Interest cost on projected benefit obligation 4 2 1 2

Expected return on plan assets ( 7 ) ( 1 ) ( 1 ) —

Curtailment gain — ( 4 ) — ( 3 )

Recognized actuarial gain

— ( 1 ) — ( 1 )

Cost of special termination benefits

Amortization of prior service cost credit — ( 4 ) — ( 4 )

Net periodic benefit costs $ — $ ( 2 ) $ — $ ( 5 )

We made no contributions to our defined benefit pension plans during the three months ended September 30, 2024 and contributed $ 2 million to our defined benefit plans during the nine months ended September 30, 2024.

We made no contributions during the three and nine months ended September 30, 2023.

We do not expect to make any significant contributions to our defined benefit pension plans during the remainder of 2024.

NOTE 12 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.

Restricted cash — Restricted cash of $ 28 million at September 30, 2024 primarily includes funds held in an escrow account established to secure oil field well and infrastructure abandonment and habitat restoration at an oil and gas field previously owned by Aera.

Funds will be released from the escrow account as work is completed.

The Merger Agreement provides that 50 % of the amount by which released funds exceeds the cumulative abandonment and restoration expenditures from January 1, 2024 onward is payable to the Sellers.

We do not expect this amount to be significant.

Restricted cash 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.

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Oil, natural gas and NGL sales $ 870 $ 510 $ 1,711 $ 1,672

Since July 1, 2024, the closing date of the Aera Merger, the results of operations for Aera have been included in our consolidated financial statements.

For the period from July 1, 2024 to September 30, 2024, $ 475 million of oil, natural gas and NGL sales attributable to Aera's business has been included in the consolidated statements of operations.

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:

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(in millions)

(in millions) (in millions)

Oil $ 25 $ — $ 73 $ —

Natural gas 26 78 97 334

NGLs — ( 1 ) 6 2

Revenue from marketing of purchased commodities

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Inventories, by category, are as follows:

June 30, December 31,

September 30, December 31,

(in millions)

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Inventories $ 75 $ 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.

In the nine months ended September 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.

We also acquired inventory with an estimated value of $ 18 million in connection with the Aera Merger.

See Note 2 Aera Merger for additional information.

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

June 30, December 31,

September 30, December 31,

(in millions)

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Greenhouse gas allowances 49 12

Income tax receivable 8 —

Other current assets, net $ 184 $ 113

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

(a) Included in the September 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:

June 30, December 31,

September 30, December 31,

(in millions)

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Fair value of commodity derivative contracts 22 6

Funded pension

Deposits and other 34 11

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Accrued liabilities — Accrued liabilities include the following:

June 30, December 31,

September 30, December 31,

(in millions)

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

June 30, December 31,

September 30, December 31,

(in millions)

Compensation-related liabilities $ 48 $ 38

Postretirement benefit plan 33 36

Postretirement and pension benefit plans 68 36

Operating lease liability 71 55

Fair value of commodity derivative contracts

Premiums due on commodity derivative contracts 5 10

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

Since July 1, 2024, the closing date of the Aera Merger, the results of operations for Aera have been included in our consolidated financial statements.

The amounts shown for our exploration and production business includes $ 46 million related to Aera during the period of July 1, 2024 through September 30, 2024.

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September 30,

2024 2023 2024 2023

5 unchanged sentences

NOTE 13 SUPPLEMENTAL CASH FLOW INFORMATION

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

Supplemental disclosures to our condensed consolidated statements of cash flows are presented below:

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

17 unchanged sentences

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 following condensed consolidating balance sheets as of September 30, 2024 and December 31, 2023 and the condensed consolidating statements of operations for the three and nine months ended September 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 June 30, 2024 and December 31, 2023

As of June 30, 2024

As of September 30, 2024 and December 31, 2023

As of September 30, 2024

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

6 unchanged sentences

Deferred tax asset 50 — — — 50

Investment in unconsolidated subsidiary — 17 — — 17

Investment in unconsolidated subsidiaries

Other assets 19 51 216 — 286

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Other long-term liabilities 72 130 190 — 392

Deferred tax liability

124 — — — 124

Amounts due to (from) affiliates 410 19 ( 429 ) — —

Total equity 3,501 ( 41 ) 19,683 ( 19,642 ) 3,501

TOTAL LIABILITIES AND EQUITY $ 3,682 $ 120 $ 4,482 $ ( 3,794 ) $ 4,490

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 5,363 $ 123 $ 21,284 $ ( 19,642 ) $ 7,128

As of December 31, 2023

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Total equity 2,219 ( 10 ) 3,657 ( 3,647 ) 2,219

TOTAL LIABILITIES AND EQUITY $ 2,980 $ 76 $ 4,589 $ ( 3,647 ) $ 3,998

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 2,980 $ 76 $ 4,589 $ ( 3,647 ) $ 3,998

Condensed Consolidating Statement of Operations

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

Three months ended June 30, 2024

For the three and nine months ended September 30, 2024 and 2023

Three months ended September 30, 2024

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

4 unchanged sentences

86 16 818 ( 85 ) 835

Gain on asset divestitures — — 1 — 1

Non-operating income (loss)

Non-operating (loss) income

( 32 ) ( 5 ) 2 — ( 35 )

INCOME (LOSS) BEFORE INCOME TAXES

(LOSS) INCOME BEFORE INCOME TAXES

( 116 ) ( 21 ) 621 ( 1 ) 483

Income tax benefit

Income tax provision

( 138 ) — — — ( 138 )

NET INCOME (LOSS)

NET (LOSS) INCOME

$ ( 254 ) $ ( 21 ) $ 621 $ ( 1 ) $ 345

Three months ended June 30, 2023

Three months ended September 30, 2023

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

6 unchanged sentences

(LOSS) INCOME BEFORE INCOME TAXES ( 72 ) ( 16 ) 58 — ( 30 )

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

Income tax benefit

NET (LOSS) INCOME $ ( 64 ) $ ( 16 ) $ 58 $ — $ ( 22 )

Six months ended June 30, 2024

Nine months ended September 30, 2024

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

9 unchanged sentences

NET (LOSS) INCOME $ ( 405 ) $ ( 60 ) $ 808 $ — $ 343

Six months ended June 30, 2023

Nine months ended September 30, 2023

Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated

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NOTE 15 SUBSEQUENT EVENTS

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 .

Amendment to our Revolving Credit Facility

On November 1, 2024, we amended our existing Revolving Credit Facility.

The amendments included, among other things:

• increasing the amount of the revolving commitments by $ 50 million to $ 1,150 million to reflect changes to our lender group;

• extending the maturity date of the facility from July 31, 2027 to March 16, 2029;

• amending the springing maturity to permit our 2026 Senior Notes to remain outstanding past October 31, 2025 so long as the aggregate availability (less the outstanding 2026 Senior Notes) is not less than 25 % of the total revolving commitments;

• increasing our capacity to issue letters of credit from $ 250 million to $ 300 million;

• other technical amendments.

Borrowing Base Redetermination

The borrowing base under our Revolving Credit Facility is redetermined semi-annually and was reaffirmed at $ 1.5 billion on November 1, 2024.

On November 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 December 2, 2024 and is expected to be paid on December 16, 2024 .

Ventura Basin Divestiture

On October 14, 2024, we completed the sale of Ventura basin assets for net proceeds of $ 3 million.

See Note 8 Divestitures, Acquisitions and Assets Held for Sale above and 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 October 2024, we issued 2,630,540 shares of our common stock in connection with warrant exercises.

Since the issuance date of the warrants in October 2020, 3,856,833 shares have been issued upon the exercise of warrants and 469,429 shares were cancelled due to net settlement.

On October 28, 2024, any unexercised warrants expired in accordance with their terms and 57,920 shares underlying such warrants were never issued.

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