California Resources Corp 10-Q

Item 1 Financial Statements CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets As of June 30, 2025 and December 31, 2024 (in millions, except share data) June 30, December 31, 2025 2024 (unaudited) (audited) CURRENT ASSETS Cash and cash equivalents $ 72 $ 372 Trade receivables 297 330 Inventories 93 90 Assets held for sale 8 10 Receivable from affiliate 31 46 Other current assets, net 227 176 Total current assets 728 1,024 PROPERTY, PLANT AND EQUIPMENT 6,874 6,738 Accumulated depreciation, depletion and amortization ( 1,314 ) ( 1,058 ) Total property, plant and equipment, net 5,560 5,680 INVESTMENT IN UNCONSOLIDATED SUBSIDIARY 93 86 DEFERRED INCOME TAXES 33 73 OTHER NONCURRENT ASSETS 298 272 TOTAL ASSETS $ 6,712 $ 7,135 CURRENT LIABILITIES Current portion of long-term debt $ 122 $ — Accounts payable 329 369 Accrued liabilities 477 611 Total current liabilities 928 980 NONCURRENT LIABILITIES Long-term debt, net 888 1,132 Asset retirement obligations 969 995 Deferred tax liabilities 185 113 Other long-term liabilities 335 377 STOCKHOLDERS' EQUITY Preferred stock ( 20,000,000 shares authorized at $ 0.01 par value) no shares outstanding at June 30, 2025 and December 31, 2024 — — Common stock ( 200,000,000 shares authorized at $ 0.01 par value) ( 105,031,217 and 109,613,585 shares issued; 83,679,985 and 91,100,322 shares outstanding at June 30, 2025 and December 31, 2024) 1 1 Treasury stock ( 21,351,232 shares held at cost at June 30, 2025 and 18,513,263 shares held at cost at December 31, 2024) ( 922 ) ( 796 ) Additional paid-in capital 2,359 2,578 Retained earnings 1,897 1,680 Accumulated other comprehensive income 72 75 Total stockholders' equity 3,407 3,538 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,712 $ 7,135 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited) For the three and six months ended June 30, 2025 and 2024 (dollars in millions, except share and per share data; shares in millions) Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 REVENUES Oil, natural gas and natural gas liquids sales $ 702 $ 412 $ 1,516 $ 841 Net gain (loss) from commodity derivatives 157 5 163 ( 66 ) Revenue from marketing of purchased commodities 56 51 120 125 Electricity revenue 58 36 80 51 Other revenue 5 10 11 17 Total operating revenues 978 514 1,890 968 OPERATING EXPENSES Operating costs 295 156 611 332 General and administrative expenses 79 63 151 120 Depreciation, depletion and amortization 128 53 259 106 Asset impairment — 13 — 13 Taxes other than on income 47 39 117 77 Costs related to marketing of purchased commodities 41 43 91 97 Electricity generation expenses 5 14 15 22 Transportation costs 20 17 40 37 Accretion expense 28 13 57 25 Net loss (gain) on natural gas purchase derivatives 3 1 ( 3 ) 2 Measurement period adjustments, net — — 1 — Other operating expenses, net 65 65 98 110 Total operating expenses 711 477 1,437 941 Gain on asset divestitures — 1 — 7 OPERATING INCOME 267 38 453 34 NON-OPERATING (EXPENSES) INCOME Interest and debt expense, net ( 25 ) ( 17 ) ( 52 ) ( 30 ) Loss on early extinguishment of debt — — ( 1 ) — Loss from investment in unconsolidated subsidiaries — ( 4 ) ( 1 ) ( 7 ) Other non-operating (expense) income, net — ( 6 ) 5 ( 5 ) INCOME (LOSS) BEFORE INCOME TAXES 242 11 404 ( 8 ) Income tax (provision) benefit ( 70 ) ( 3 ) ( 117 ) 6 NET INCOME (LOSS) $ 172 $ 8 $ 287 $ ( 2 ) Net income (loss) per share Basic $ 1.93 $ 0.12 $ 3.20 $ ( 0.03 ) Diluted $ 1.92 $ 0.11 $ 3.18 $ ( 0.03 ) Weighted-average common shares outstanding Basic 89.0 68.1 89.8 68.6 Diluted 89.4 70.0 90.3 68.6 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) For the three and six months ended June 30, 2025 and 2024 (in millions) Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 Net income (loss) $ 172 $ 8 $ 287 $ ( 2 ) Other comprehensive loss (a) : Actuarial gain associated with pension and postretirement plans — — ( 1 ) — Amortization of prior service cost credit included in net periodic benefit cost, net of tax ( 1 ) — ( 2 ) ( 2 ) Comprehensive income (loss) $ 171 $ 8 $ 284 $ ( 4 ) (a) Tax effects of the actuarial gain associated with pension and postretirement plans and amortization of prior service cost credit were insignificant for the three and six months ended June 30, 2025 and 2024. The accompanying notes are an integral part of these condensed consolidated financial statements. 6 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Stockholders' Equity (unaudited) For the three and six months ended June 30, 2025 and 2024 (in millions) Three months ended June 30, 2025 Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Total Equity Balance, March 31, 2025 $ 1 $ ( 897 ) $ 2,580 $ 1,759 $ 73 $ 3,516 Net income — — — 172 — 172 Share-based compensation — — 8 — — 8 Repurchases of common stock — ( 25 ) ( 228 ) — — ( 253 ) Cash dividend — — — ( 35 ) — ( 35 ) Other comprehensive income, net of tax — — — — ( 1 ) ( 1 ) Other — — ( 1 ) 1 — — Balance, June 30, 2025 $ 1 $ ( 922 ) $ 2,359 $ 1,897 $ 72 $ 3,407 Three months ended June 30, 2024 Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Total Equity Balance, March 31, 2024 $ 1 $ ( 662 ) $ 1,295 $ 1,387 $ 72 $ 2,093 Net loss — — — 8 — 8 Share-based compensation — — 7 — — 7 Repurchases of common stock — ( 35 ) — — — ( 35 ) Cash dividend — — — ( 21 ) — ( 21 ) Shares cancelled for taxes — — ( 1 ) — — ( 1 ) Other — — 1 $ — $ — 1 Balance, June 30, 2024 $ 1 $ ( 697 ) $ 1,302 $ 1,374 $ 72 $ 2,052 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Six months ended June 30, 2025 Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Total Equity Balance, December 31, 2024 $ 1 $ ( 796 ) $ 2,578 $ 1,680 $ 75 $ 3,538 Net income — — — 287 — 287 Share-based compensation — — 14 — — 14 Repurchases of common stock — ( 126 ) ( 228 ) — — ( 354 ) Issuance of common stock — — 6 — — 6 Cash dividend — — — ( 71 ) — ( 71 ) Shares cancelled for taxes — — ( 11 ) — — ( 11 ) Other comprehensive income, net of tax — — — — ( 3 ) ( 3 ) Other — — — 1 — 1 Balance, June 30, 2025 $ 1 $ ( 922 ) $ 2,359 $ 1,897 $ 72 $ 3,407 Six months ended June 30, 2024 Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Income Total Equity Balance, December 31, 2023 $ 1 $ ( 604 ) $ 1,329 $ 1,419 $ 74 $ 2,219 Net income — — — ( 2 ) — ( 2 ) Share-based compensation — — 14 — — 14 Repurchases of common stock — ( 93 ) — — — ( 93 ) Cash dividend — — — ( 43 ) — ( 43 ) Shares cancelled for taxes — — ( 42 ) — — ( 42 ) Other comprehensive income, net of tax — — — — ( 2 ) ( 2 ) Other — — 1 — — 1 Balance, June 30, 2024 $ 1 $ ( 697 ) $ 1,302 $ 1,374 $ 72 $ 2,052 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) For the three and six months ended June 30, 2025 and 2024 (in millions) Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 CASH FLOW FROM OPERATING ACTIVITIES Net income (loss) $ 172 $ 8 $ 287 $ ( 2 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion and amortization 128 53 259 106 Asset impairments — 13 — 13 Deferred income tax provision (benefit) 6 3 41 ( 6 ) Net (gain) loss from commodity derivatives ( 154 ) ( 4 ) ( 166 ) 68 Net payments on settled commodity derivatives 10 ( 10 ) ( 18 ) ( 24 ) Net loss on early extinguishment of debt — — 1 — Gain on asset divestitures — ( 1 ) — ( 7 ) Other non-cash charges to income, net 59 46 69 52 Net changes in operating assets and liabilities ( 56 ) ( 11 ) ( 122 ) ( 16 ) Net cash provided by operating activities 165 97 351 184 CASH FLOW FROM INVESTING ACTIVITIES Capital investments ( 56 ) ( 34 ) ( 111 ) ( 88 ) Changes in accrued capital investments 6 6 ( 15 ) 2 Proceeds from asset divestitures 1 2 1 12 Acquisitions — ( 6 ) — ( 6 ) Other, net ( 2 ) ( 1 ) ( 5 ) ( 2 ) Net cash used in investing activities ( 51 ) ( 33 ) ( 130 ) ( 82 ) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Revolving Credit Facility — 30 — 30 Proceeds from 2029 Senior Notes, net — 590 — 590 Repurchases of common stock ( 217 ) ( 35 ) ( 318 ) ( 93 ) Common stock dividends ( 35 ) ( 22 ) ( 70 ) ( 43 ) Dividend equivalents on equity-settled awards — — ( 1 ) ( 4 ) Issuance of common stock ( 4 ) 2 2 3 Bridge loan commitments — — — ( 5 ) Debt amendment costs — — — ( 3 ) Shares cancelled for taxes — ( 1 ) ( 11 ) ( 42 ) Debt redemption — — ( 123 ) — Net cash (used in) provided by financing activities ( 256 ) 564 ( 521 ) 433 Increase (decrease) in cash and cash equivalents ( 142 ) 628 ( 300 ) 535 Cash and cash equivalents—beginning of period 214 403 372 496 Cash and cash equivalents—end of period $ 72 $ 1,031 $ 72 $ 1,031 The accompanying notes are an integral part of these condensed consolidated financial statements. 9 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements June 30, 2025 NOTE 1 BASIS OF PRESENTATION 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, pursuant to the Agreement and Plan of Merger, dated as of February 7, 2024 (the Merger Agreement), we obtained all of the ownership interests in Aera Energy LLC (Aera) (Aera Merger). Our consolidated results of operations include the results of Aera beginning July 1, 2024, the closing date of the Aera Merger. The Aera Merger significantly impacted the comparability of our financial results for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024. See Note 2 Aera Merger for transaction details. 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. 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 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. Securities and Exchange Commission applicable to interim financial information which permit the omission of certain disclosures to the extent they have not changed materially since the latest annual financial statements. We believe our disclosures are adequate to make the information presented not misleading. 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. Actual results could differ. Management believes that these estimates and judgments provide a reasonable basis for the fair presentation of our condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2024 (2024 Annual Report). The carrying amounts of cash, cash equivalents and on-balance sheet financial instruments, other than debt, approximate fair value. Refer to Note 4 Debt for the fair value of our debt. 10 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 shares of common stock to the former Aera owners. 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. 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 former owners of Aera owned 24 % of CRC. For more information on the 2029 Senior Notes, refer to Note 4 Debt. See Note 10 Stockholders' Equity for details on a repurchase of shares during the second quarter of 2025 from one of the former Aera owners. We have measured assets and liabilities at acquisition date fair value on a nonrecurring basis. The following table summarizes the consideration transferred: Merger Consideration (in millions, except share and per share data) Shares of common stock (dividend adjusted) 21,422,972 Common stock per share fair value on July 1, 2024 $ 53.28 Fair value of share consideration 1,141 Settlement of Aera debt 990 Purchase price settlement ( 10 ) Total purchase consideration $ 2,121 11 The following table represents the final purchase price allocation to 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 as of December 31, 2024 Adjustments Purchase Price Allocation as of June 30, 2025 (in millions) Assets Acquired Cash $ 137 $ — $ 137 Accounts receivable 176 — 176 Inventories 30 ( 1 ) 29 Other current assets 49 13 62 Investment in unconsolidated subsidiary 59 ( 7 ) 52 Property, plant and equipment 3,048 32 3,080 Pension and other postretirement benefits 73 — 73 Other noncurrent assets 57 13 70 Total Assets Acquired 3,629 50 3,679 Liabilities Assumed Accounts payable ( 158 ) — ( 158 ) Accrued liabilities ( 157 ) ( 4 ) ( 161 ) Asset retirement obligations ( 646 ) 19 ( 627 ) Fair value of derivative contracts ( 351 ) — ( 351 ) Pension and other postretirement benefits ( 35 ) — ( 35 ) Deferred tax liability ( 101 ) ( 70 ) ( 171 ) Other long-term liabilities ( 37 ) ( 18 ) ( 55 ) Total Liabilities Assumed ( 1,485 ) ( 73 ) ( 1,558 ) Net Assets Acquired $ 2,144 $ ( 23 ) $ 2,121 Supplemental Pro Forma Information (unaudited) The following supplemental pro forma financial information presents the condensed consolidated results of operations for the three and six months ended June 30, 2024 as if the Aera Merger had occurred on January 1, 2024. Three months ended June 30, Six months ended June 30, 2024 2024 (in millions) Total operating revenue $ 1,045 $ 1,658 Net income (loss) (a) $ 168 $ ( 118 ) Net income (loss) per share Basic $ 1.88 $ ( 1.31 ) Diluted $ 1.84 $ ( 1.31 ) (a) The six months ended June 30, 2024 reflects a net loss of $ 118 million primarily resulting from a significant net loss on commodity derivatives related to hedge positions held by Aera. 12 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, 2024, nor is it necessarily indicative of future operating results of the combined entity. The pro forma financial information for the three and six months ended June 30, 2024 is a result of combining our three and six months statements of operations with Aera's pre-merger results from January 1, 2024 and the pro forma adjustments include estimates and assumptions based on currently available information. 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. 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. We also included pro forma adjustments for certain compensation-related costs and transaction costs we incurred related to the Aera Merger. 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 financial results reflected in the table above. NOTE 3 INVESTMENTS AND RELATED PARTY TRANSACTIONS The following tables present changes to our investments in unconsolidated subsidiaries for the periods presented: Carbon TerraVault JV (in millions) Investment, December 31, 2024 $ 27 Loss from investment in unconsolidated subsidiary ( 2 ) Contributions 15 Investment, June 30, 2025 $ 40 Midway Sunset Cogeneration Company (in millions) Investment, December 31, 2024 $ 59 Adjustment to the preliminary purchase price allocation (see Note 2 Aera Merger ) ( 7 ) Income from investment in unconsolidated subsidiary 1 Investment, June 30, 2025 $ 53 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. The Carbon TerraVault JV holds rights to inject CO 2 into the 26R reservoir in our Elk Hills field for permanent CO 2 storage (26R reservoir). 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 $ 107 million at December 31, 2024 and $ 112 million at June 30, 2025, inclusive of interest. The amount payable to Brookfield under the put and call rights, if exercised, includes additional capital contributions made by Brookfield to develop the 26R storage reservoir, inclusive of interest. This payment would differ from the contingent liability currently recognized because the contingent liability reported in other long-term liabilities on our condensed consolidated balance sheet relates solely to the initial investment and does not include capital contributions made by Brookfield for ongoing development activities to the Carbon TerraVault JV. 13 The table below presents the summarized financial information related to our equity method investment in the Carbon TerraVault JV (and does 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, 2025 2024 (in millions) Receivable from affiliate (a) $ 31 $ 46 Other long-term liabilities (b) $ 112 $ 107 (a) At June 30, 2025, the amount of $ 31 million includes the remaining $ 28 million of Brookfield's first and second installments of their initial investment which is available to us and $ 3 million related to the Master Service Agreement (MSA) and vendor reimbursements. At December 31, 2024, the amount of $ 46 million includes $ 43 million remaining of Brookfield's initial contribution available to us and $ 3 million related to the MSA and vendor reimbursements. (b) Other long-term liabilities include the contingent liability related to the Carbon TerraVault JV put and call rights. We recognized a loss of $ 1 million and $ 2 million for the three and six months ended June 30, 2025, respectively, and a loss of $ 4 million and $ 7 million for the three and six months ended June 30, 2024, respectively, related to our investment in the Carbon TerraVault JV. We are also performing well abandonment work at our Elk Hills field to prepare our 26R reservoir for injection of CO 2 . During the three and six months ended June 30, 2025, we performed abandonment work and sought reimbursement in the amounts of $ 6 million and $ 8 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. We recorded these reimbursements as a reduction to property, plant and equipment, net on our condensed consolidated balance sheets. Midway Sunset Cogeneration Company In July 2024, our merger with Aera led to our partial ownership of Midway Sunset Cogeneration Company, which owns, manages, and operates a cogeneration facility in Kern County, California. The Midway Sunset Cogeneration Company is owned 50 % by us and 50 % by San Joaquin Energy Company, a subsidiary of NRG Energy Inc. We recorded our investment in the Midway Sunset Cogeneration Company at $ 52 million as of July 1, 2024, which was $ 41 million in excess of the carrying value of the underlying assets held by the partnership. This difference is associated with property, plant and equipment and we expect this amount will reverse over the remaining useful life of the power plant. There are no significant transactions between us and Midway Sunset Cogeneration Company. Our 50 % share of the net income related to our investment in Midway Sunset Cogeneration Company for the three and six months ended June 30, 2025 was $ 1 million. 14 NOTE 4 DEBT As of June 30, 2025 and December 31, 2024, our long-term debt consisted of the following: June 30, December 31, 2025 2024 Interest Rate Maturity (in millions) Revolving Credit Facility $ — $ — SOFR plus 2.50 %- 3.50 % ABR plus 1.50 %- 2.50 % (a) March 16, 2029 2026 Senior Notes 122 245 7.125 % February 1, 2026 2029 Senior Notes 900 900 8.250 % June 15, 2029 Principal amount 1,022 $ 1,145 Unamortized debt discount and issuance costs ( 14 ) ( 16 ) Unamortized premium 2 3 Total debt, net 1,010 1,132 Less: Current maturities 122 — Long-term debt, net $ 888 $ 1,132 (a) At our election, borrowings under the amended Revolving Credit Facility may be alternate base rate (ABR) loans or term SOFR loans, plus an applicable margin. ABR loans bear interest at a rate equal to the highest of (i) the federal funds effective rate plus 0.50 % , (ii) the administrative agent prime rate and (iii) the one-month SOFR rate plus 1 % . 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 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 % . Revolving Credit Facility Our Amended and Restated Credit Agreement, dated April 26, 2023 (Revolving Credit Facility), consists of a senior revolving loan facility with an aggregate commitment of $ 1.15 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 includes a sub-limit of $ 300 million for the issuance of letters of credit. As of June 30, 2025, $ 167 million letters of credit were issued to support ordinary course marketing, insurance, regulatory and other matters. As of June 30, 2025, we had $ 983 million of availability on our Revolving Credit Facility after taking into account $ 167 million in letters of credit outstanding. Our borrowing base of $ 1.5 billion is redetermined semi-annually and was re-affirmed in April 2025. Fair Value 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). June 30, December 31, 2025 2024 (in millions) Fixed rate debt 2026 Senior Notes $ 123 $ 245 2029 Senior Notes 925 913 Fair Value of Long-Term Debt $ 1,048 $ 1,158 Other As of June 30, 2025, we were in compliance with all financial and other debt covenants under our Revolving Credit Facility, 2026 Senior Notes and 2029 Senior Notes. 15 Note Redemptions In February 2025, we redeemed $ 123 million of our 7.125 % senior notes due 2026 (2026 Senior Notes) at 100 % of the principal amount, resulting in an extinguishment loss in the amount of $ 1 million for the write-off of unamortized debt issuance costs. There were no repurchases or redemptions of our 2026 Senior Notes in the three months ended June 30, 2025 or the three and six months ended June 30, 2024. NOTE 5 LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES We are party to various legal and/or regulatory proceedings from time to time arising in the ordinary course of business. 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, 2025 and December 31, 2024 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. We believe that reasonably possible losses that we could incur in excess of reserves cannot be accurately determined. In October 2020, Signal Hill Services, Inc. defaulted on its decommissioning obligations associated with two offshore platforms. The Bureau of Safety and Environmental Enforcement (BSEE) determined that former lessees, including our former parent, Occidental Petroleum Corporation (Oxy) with a 37.5 % share, are responsible for accrued decommissioning obligations associated with these offshore platforms. Oxy sold its interest in the platforms approximately 30 years ago and it is our understanding that Oxy has not had any connection to the operations since that time and was challenging BSEE's order. Oxy notified us of the claim under the indemnification provisions of the Separation and Distribution Agreement between us and Oxy. In September 2021, we accepted the indemnification claim from Oxy and are challenging the order from BSEE. 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. Due to the preliminary stage of the process, no cost estimates to abandon the offshore platforms have been determined. For the three and six months ended June 30, 2025, other operating expenses, net on our condensed consolidated statement of operations includes $ 2 million for our ongoing share of maintenance costs during the pendency of the challenge to the BSEE order. In 2023 and 2024, the California Geologic Energy Management Division (CalGEM) plugged and abandoned approximately 120 "orphaned" oil and gas wells located in Cat Canyon, Santa Barbara County, at an aggregate cost of $ 25 million. These wells had previously been operated by us prior to being sold to their current operators. CalGEM is seeking to recover these costs from us due to our prior operatorship of the wells, and we are disputing these claims. In connection with this dispute, we were required to remit $ 25 million to CalGEM under protest pending the outcome of this matter. For the three and six months ended June 30, 2025, other operating expenses, net on our condensed consolidated statement of operations includes $ 25 million related to this matter. NOTE 6 DERIVATIVES We enter into commodity derivative contracts to help protect our cash flows, margins and capital program from the volatility of commodity prices. We primarily hedge a portion of our forecasted oil production and purchased natural gas used in our steamflood operations. We did not have any derivative instruments designated as accounting hedges as of and for the three and six months ended June 30, 2025 and 2024. Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to implement our hedging strategy. 16 Summary of Derivative Contracts We held the following Brent-based contracts as of June 30, 2025: Q3 2025 Q4 2025 Q1 2026 Q2 2026 2H 2026 2027 2028 Sold Calls Barrels per day 30,000 29,000 35,000 35,000 35,000 — — Weighted-average price per barrel $ 87.08 $ 87.13 $ 83.86 $ 83.86 $ 83.86 $ — $ — Purchased Puts Barrels per day 30,000 29,000 35,000 35,000 35,000 — — Weighted-average price per barrel $ 61.67 $ 61.72 $ 61.14 $ 61.14 $ 61.14 $ — $ — Swaps Barrels per day 45,001 43,376 36,444 29,399 28,036 34,382 1,697 Weighted-average price per barrel $ 70.63 $ 69.86 $ 68.98 $ 68.03 $ 67.25 $ 64.63 $ 65.00 At June 30, 2025, we also held the following swaps to hedge purchased natural gas used in our operations as shown in the table below. Q3 2025 Q4 2025 Q1 2026 Q2 2026 2H 2026 2027 2028 SoCal Border MMBtu per day 25,750 22,408 20,350 13,250 10,329 — — Weighted-average price per MMBtu $ 3.48 $ 3.53 $ 5.18 $ 4.82 $ 4.84 $ — $ — NWPL Rockies MMBtu per day 51,750 51,750 51,750 51,750 51,750 33,616 1,576 Weighted-average price per MMBtu $ 2.95 $ 4.22 $ 4.67 $ 3.64 $ 3.93 $ 4.12 $ 3.95 In the three and six months ended June 30, 2025 and 2024, we also had a limited number of derivative contracts related to our natural gas marketing activities that were intended to lock in locational price spreads. These derivative contracts were not significant to our results of operations or financial statements taken as a whole. The outcomes of the derivative positions shown in the tables above are as follows: • Sold calls – we make settlement payments for prices above the indicated weighted-average price per barrel. • Purchased puts – we receive settlement payments for prices below the indicated weighted-average price per barrel. • Swaps – with respect to swaps for crude oil, 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. With respect to swaps for purchased natural gas, we receive settlement payments for prices above the indicated weighted-average price per MMBtu and we make settlement payments for prices below the weighted-average price per MMBtu. 17 Fair Value of Derivatives Derivative instruments not designated as hedging instruments are required to be recorded on the balance sheet at fair value. We report gains and losses on our derivative contracts 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 June 30, Six months ended June 30, 2025 2024 2025 2024 (in millions) (in millions) Non-cash commodity derivative gain (loss) $ 140 $ 11 $ 162 $ ( 48 ) Net settlements and amortized premiums 17 ( 6 ) 1 ( 18 ) Net gain (loss) from commodity derivatives $ 157 $ 5 $ 163 $ ( 66 ) We report gains and losses on our commodity derivative c ontracts related to purchases of natural gas in operating expenses on our condensed consolidated statement s of operations as shown in the table below: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 (in millions) (in millions) Non-cash gain on natural gas purchase derivatives $ ( 4 ) $ ( 3 ) $ ( 22 ) $ ( 4 ) Settlements 7 4 19 6 Net loss (gain) on natural gas purchase derivatives $ 3 $ 1 $ ( 3 ) $ 2 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, 2025 and December 31, 2024. June 30, 2025 Classification Gross Amounts at Fair Value Netting Net Fair Value (in millions) Other current assets, net $ 110 $ ( 8 ) $ 102 Other noncurrent assets 61 ( 11 ) 50 Current liabilities ( 15 ) 8 ( 7 ) Noncurrent liabilities ( 25 ) 11 ( 14 ) $ 131 $ — $ 131 18 December 31, 2024 Classification Gross Amounts at Fair Value Netting Net Fair Value (in millions) Other current assets, net $ 26 $ ( 12 ) $ 14 Other noncurrent assets 32 ( 16 ) 16 Current liabilities ( 62 ) 12 ( 50 ) Noncurrent liabilities ( 61 ) 16 ( 45 ) $ ( 65 ) $ — $ ( 65 ) NOTE 7 INCOME TAXES The following table presents the components of our income tax provision (benefit) and effective tax rate: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 (in millions) (in millions) Income (loss) before income taxes $ 242 $ 11 $ 404 $ ( 8 ) Current income tax provision 64 — 76 — Deferred income tax provision (benefit) 6 3 41 ( 6 ) Income tax provision (benefit) $ 70 $ 3 $ 117 $ ( 6 ) Effective tax rate 29 % 27 % 29 % 75 % Our income tax provision or benefit for interim periods is determined by applying an estimated annual effective tax rate to income (loss) before income taxes with the result adjusted for discrete items, if any, in the relevant period. Our annual effective tax rate of 29 % and 27 % for the three months ended June 30, 2025 and 2024, respectively, differed from the U.S. statutory rate of 21% primarily due to state taxes. Our annual effective tax rate of 29 % for the six months ended June 30, 2025 differed from the U.S. statutory rate of 21% primarily due to state taxes. Our annual effective tax rate of 75 % differed from the U.S. 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. The difference resulted in a tax benefit and had the effect of increasing our effective tax rate for the six months ended June 30, 2024. On July 4, 2025, An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14th and commonly referred to as the One Big Beautiful Bill Act was signed into law. This law contains several legislative changes including the reinstatement of full expensing for qualified assets placed in service after January 19, 2025. This law also reinstated the expensing of all domestic research and development costs, including favorable transition rules, and increases the limitation on the amount of annual business interest expense which can be deducted each year. Management expects to realize the recorded 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. 19 NOTE 8 DIVESTITURES 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 $ 10 million and recognized a $ 6 million gain. Carbon Management Assets In 2022, we acquired properties for carbon management activities with the intent to divest a portion of these assets. The assets are carried at fair value and classified as held for sale as of June 30, 2025 on our condensed consolidated balance sheet. In May 2025, we sold a portion of these properties for $ 1 million. We did not recognize a gain or loss on this transaction. NOTE 9 SEGMENT INFORMATION We conduct our business primarily through two reportable segments: (1) oil and natural gas and (2) carbon management. We identified these segments based on the nature of their activities, the types of products sold and services to be provided. Our oil and natural gas segment explores for, develops, and produces oil and condensate, natural gas liquids and natural gas. Our carbon management segment, that we refer to as Carbon TerraVault, is primarily expected to build, install, operate and maintain CO 2 capture equipment, transportation assets and storage facilities. Our oil and natural gas segment and carbon management segment operate exclusively in California. Revenues related to sales of produced natural gas to our Elk Hills power plant are included in oil, natural gas and natural gas liquids sales in the table below. Direct labor-related costs are allocated to our reportable segments based on job function. General and administrative expenses are allocated to a segment if they directly support a segment's activities. We do not allocate income taxes to our segments. We use proportionate consolidation to account for our share of oil and natural gas producing activities. The following tables provide segment profit or loss and reconciliations of segment profit or loss to total operating revenues and consolidated income before income taxes for the three and six months ended June 30, 2025 and 2024. Three months ended June 30, 2025 Oil and Natural Gas Carbon Management Total Reportable Segments Elimination Total (in millions) Oil, natural gas and natural gas liquids sales $ 711 $ — $ 711 $ ( 9 ) $ 702 Other revenue 3 — 3 — 3 Segment operating revenues $ 714 $ — $ 714 Other revenues and income (a) 273 Total operating revenues $ 978 (a) Other revenues and income includes net gain from commodity derivatives, revenue from marketing of purchased commodities, electricity revenue, interest income and unallocated other revenue. 20 Three months ended June 30, 2025 Oil and Natural Gas Carbon Management Total Reportable Segments Reconciliation (Income)/Expense Total (in millions) Segment operating revenues $ 714 $ — $ 714 $ — $ 714 Less: Operating costs: Energy operating costs 85 — 85 ( 7 ) 78 Gas processing costs 5 — 5 — 5 Non-energy operating costs 212 — 212 — 212 General and administrative expenses 9 3 12 67 79 Depreciation, depletion and amortization 121 — 121 7 128 Taxes other than on income 41 — 41 6 47 Interest expense — 2 2 23 25 Loss from investment in unconsolidated subsidiaries — 1 1 ( 1 ) — Other segment expenses (a) 47 14 61 — 61 Segment profit or (loss) $ 194 $ ( 20 ) $ 174 Other profit or loss (b) ( 59 ) ( 59 ) Unallocated amounts (c) ( 104 ) ( 104 ) Income before income taxes $ 242 (a) Other segment expenses for our oil and natural gas segment includes transportation costs, accretion expense, and other operating expenses, net. Other segment expenses for our carbon management segment primarily includes operating lease costs. (b) Other profit or loss includes the margin we earn from marketing activities and the margin we earn on sales of electricity from our Elk Hills power plant to customers. (c) Unallocated amounts include net gain from commodity derivatives, net loss on natural gas purchase derivatives, transportation costs, other operating expenses, net, interest income and unallocated other revenue. Three months ended June 30, 2024 Oil and Natural Gas Carbon Management Total Reportable Segments Elimination Total (in millions) Oil, natural gas and NGL sales to external customers $ 416 $ — $ 416 $ ( 4 ) $ 412 Other revenue 2 — 2 — 2 Segment operating revenues $ 418 $ — $ 418 Other revenues and income (a) 100 Total operating revenues $ 514 (a) Other revenue and income includes net gain from commodity derivatives, revenue from marketing of purchased commodities, electricity revenue, interest income and unallocated other revenue. 21 Three months ended June 30, 2024 Oil and Natural Gas Carbon Management Total Reportable Segments Reconciliation (Income)/Expense Total (in millions) Segment operating revenues $ 418 $ — $ 418 $ — $ 418 Less: Operating costs: Energy operating costs 44 — 44 ( 3 ) 41 Gas processing costs 3 — 3 — 3 Non-energy operating costs 112 — 112 — 112 General and administrative expenses 9 3 12 51 63 Depreciation, depletion and amortization 47 — 47 6 53 Taxes other than on income 33 — 33 6 39 Interest expense — 2 2 15 17 Loss from investment in unconsolidated subsidiary — 4 4 — 4 Other segment expenses (a) 53 15 68 — 68 Segment profit or (loss) $ 117 $ ( 24 ) $ 93 Other profit or loss (b) ( 26 ) ( 26 ) Unallocated amounts (c) 33 33 Income before income taxes $ 11 (a) Amounts for our oil and natural gas segment include transportation costs, accretion expense, asset impairment, and other operating expenses, net. Amounts for our carbon management segment primarily include operating lease costs. (b) Other profit or loss includes margin from purchased commodities and the margin we earn on sales of electricity from our Elk Hills power plant to customers. (c) Unallocated amounts include net gain from commodity derivatives, transportation costs, interest and debt expense, other operating expenses, net, other non-operating loss, interest income, unallocated other revenue, and gain on asset divestitures. Six months ended June 30, 2025 Oil and Natural Gas Carbon Management Total Reportable Segments Elimination Total (in millions) Oil, natural gas and natural gas liquids sales $ 1,539 $ — $ 1,539 $ ( 23 ) $ 1,516 Other revenue 5 — 5 — 5 Segment operating revenues $ 1,544 $ — $ 1,544 Other revenues and income (a) 369 Total operating revenues $ 1,890 (a) Other revenues and income includes net gain from commodity derivatives, revenue from marketing of purchased commodities, electricity revenue, interest income and unallocated other revenue. 22 Six months ended June 30, 2025 Oil and Natural Gas Carbon Management Total Reportable Segments Reconciliation (Income)/Expense Total (in millions) Segment operating revenues $ 1,544 $ — $ 1,544 $ — $ 1,544 Less: Operating costs: Energy operating costs 196 — 196 ( 15 ) 181 Gas processing costs 9 — 9 — 9 Non-energy operating costs 421 — 421 — 421 General and administrative expenses 21 6 27 124 151 Depreciation, depletion and amortization 247 — 247 12 259 Taxes other than on income 100 — 100 17 117 Interest expense — 5 5 47 52 Loss from investment in unconsolidated subsidiaries — 2 2 ( 1 ) 1 Other segment expenses (a) 90 32 122 — 122 Segment profit or (loss) $ 460 $ ( 45 ) $ 415 Other profit or loss (b) ( 71 ) ( 71 ) Unallocated amounts (c) ( 102 ) ( 102 ) Income before income taxes $ 404 (a) Other segment expenses for our oil and natural gas segment includes transportation costs, accretion expense, and other operating expenses, net. Other segment expenses for our carbon management segment primarily includes operating lease costs. (b) Other profit or loss includes the margin we earn from marketing activities and the margin we earn on sales of electricity from our Elk Hills power plant to customers. (c) Unallocated amounts include net gain from commodity derivatives, net gain on natural gas purchase derivatives, transportation costs, other operating expenses, net, other non-operating losses, loss on early extinguishment of debt, interest income and unallocated other revenue. Six months ended June 30, 2024 Oil and Natural Gas Carbon Management Total Reportable Segments Elimination Total (in millions) Oil, natural gas and NGL sales to external customers $ 851 $ — $ 851 $ ( 10 ) $ 841 Other revenue 3 — 3 — 3 Segment operating revenues $ 854 $ — $ 854 Other revenues and income (a) 124 Total operating revenues $ 968 (a) Other revenue and income includes net loss from commodity derivatives, revenue from marketing of purchased commodities, electricity revenue, interest income and unallocated other revenue. 23 Six months ended June 30, 2024 Oil and Natural Gas Carbon Management Total Reportable Segments Reconciliation (Income)/Expense Total (in millions) Segment operating revenues $ 854 $ — $ 854 $ — $ 854 Less: Operating costs: Energy operating costs 100 — 100 ( 6 ) 94 Gas processing costs 7 — 7 — 7 Non-energy operating costs 231 — 231 — 231 General and administrative expenses 18 5 23 97 120 Depreciation, depletion and amortization 96 — 96 10 106 Taxes other than on income 65 — 65 12 77 Interest expense — 3 3 27 30 Loss from investment in unconsolidated subsidiary — 7 7 — 7 Other segment expenses (a) 88 23 111 — 111 Segment profit or (loss) $ 249 $ ( 38 ) $ 211 Other profit or loss (b) ( 47 ) ( 47 ) Unallocated amounts (c) 126 126 Income before income taxes $ ( 8 ) (a) Amounts for our oil and natural gas segment include transportation costs, accretion expense, asset impairment and other operating expenses, net. Amounts for our carbon management segment primarily include operating lease costs. (b) Other profit or loss includes margin from purchased commodities and the margin we earn on sales of electricity from our Elk Hills power plant to customers. (c) Unallocated amounts include net loss from commodity derivatives, transportation costs, interest and debt expense, other operating expenses, net, other non-operating loss, interest income, unallocated other revenue, and gain on asset divestitures. The following table provides capital investment by segment and a reconciliation to our consolidated capital investment for the three and six months ended June 30, 2025 and 2024. We do not provide total assets by segment because this is not used by our Chief Operating Decision Maker. See Note 3 Investments and Related Party Transactions for information on our investment in the Carbon TerraVault JV, which is part of our carbon management segment. Oil and Natural Gas Carbon Management Corporate and Other Total (in millions) Three months ended June 30, 2025 $ 51 $ 5 $ — $ 56 Three months ended June 30, 2024 $ 46 $ ( 2 ) $ ( 10 ) $ 34 Oil and Natural Gas Carbon Management Corporate and Other Total (in millions) Six months ended June 30, 2025 $ 93 $ 7 $ 11 $ 111 Six months ended June 30, 2024 $ 82 $ 2 $ 4 $ 88 24 NOTE 10 STOCKHOLDERS' EQUITY Share Repurchase Program Our Board of Directors authorized a Share Repurchase Program to acquire up to $ 1.35 billion of our common stock through December 31, 2025. The total value of shares that may yet be purchased under the Share Repurchase Program totaled $ 205 million as of June 30, 2025. Refer to Note 16 Subsequent Events for more information on a recent extension to our Share Repurchase Program. The repurchases may be effected from time-to-time through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, accelerated stock repurchases, derivative contracts or otherwise in compliance with Rule 10b-18, subject to market conditions. 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. Pursuant to our Share Repurchase Program, we repurchased 5,516,050 shares of common stock during the three months ended June 30, 2025, including 4,950,000 shares from IKAV Impact S.a.r.l. (IKAV) at a price of $ 46.00 per share in a privately negotiated transaction. For the three months ended June 30, 2025, the aggregate purchase price consideration, inclusive of excise tax, for our shares was $ 253 million, including $ 228 million for the repurchase of the shares held by IKAV. We funded our share repurchases with available cash. Simultaneously with the consummation of the stock repurchase from IKAV, the lock-up restrictions applicable to sales of common stock by IKAV and its affiliates IKAV Energy, Inc. and Simlog Inc. pursuant to a Registration Rights Agreement, dated July 1, 2024, with the sellers party thereto ceased to be effective. This transaction did not impact any other terms of the Aera Merger. The following is a summary of our share repurchases, 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, 2024 703,839 $ 35 $ 49.71 Three months ended June 30, 2025 5,516,050 $ 253 $ 45.73 Six months ended June 30, 2024 1,769,603 $ 93 $ 51.85 Six months ended June 30, 2025 7,787,969 $ 354 $ 45.23 Note: The total value of shares purchased includes accrued excise taxes, which are generally paid in the year following the share repurchase. Commissions paid on share repurchases were not significant in all periods presented. 25 Dividends Our Board of Directors declared the following cash dividends for each of the periods presented. Total Dividend Rate Per Share (in millions) ($ per share) 2025 Three months ended March 31, 2025 $ 35 $ 0.3875 Three months ended June 30, 2025 35 $ 0.3875 Six months ended June 30, 2025 $ 70 2024 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 In addition to dividends on our common stock shown in the table above, we paid $ 1 million of dividend equivalents on equity-settled stock-based compensation awards in the six months ended June 30, 2025 . We paid $ 4 million of dividend equivalents 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. See Note 16 Subsequent Events for information on future cash dividends. NOTE 11 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, 2025 and 2024. 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. For basic EPS, the weighted-average number of common shares outstanding excludes shares underlying our equity-settled awards and warrants. For diluted EPS, the basic shares outstanding are adjusted by adding potential common shares, if dilutive. 26 The following table presents the calculation of basic and diluted EPS, for the three and six months ended June 30, 2025 and 2024: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 (in millions, except per-share amounts) Numerator for Basic and Diluted EPS Net income (loss) $ 172 $ 8 $ 287 $ ( 2 ) Denominator for Basic EPS Weighted-average shares 89.0 68.1 89.8 68.6 Potential common shares, if dilutive: Warrants — 1.2 — — Restricted stock units 0.3 0.4 0.3 — Performance stock units 0.1 0.3 0.2 — Denominator for Diluted EPS Weighted-average shares 89.4 70.0 90.3 68.6 EPS Basic $ 1.93 $ 0.12 $ 3.20 $ ( 0.03 ) Diluted $ 1.92 $ 0.11 $ 3.18 $ ( 0.03 ) The potentially dilutive weighted-average common shares of 6 million which were excluded from the denominator of diluted EPS for the six months ended June 30, 2024 included (i) 4.2 million for shares issuable upon exercise of warrants, (ii) 800,000 for shares issuable upon settlement of RSUs and (iii) 1 million shares issuable upon settlement of PSUs. NOTE 12 PENSION AND POSTRETIREMENT BENEFIT PLANS 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 six months ended June 30, 2025 and 2024: Three months ended June 30, Three months ended June 30, 2025 2024 Pension Benefit Postretirement Benefit Pension Benefit Postretirement Benefit (in millions) (in millions) Service cost - benefits earned during the period $ — $ — $ — $ 1 Interest cost on projected benefit obligation 3 2 1 1 Expected return on plan assets ( 5 ) ( 1 ) ( 1 ) — Settlement loss 1 — — — Amortization of net actuarial loss — — — ( 1 ) Amortization of prior service cost credit — ( 1 ) — ( 1 ) Net periodic benefit costs $ ( 1 ) $ — $ — $ — 27 Six months ended June 30, Six months ended June 30, 2025 2024 Pension Benefit Postretirement Benefit Pension Benefit Postretirement Benefit (in millions) (in millions) Service cost - benefits earned during the period $ — $ 1 $ — $ 1 Interest cost on projected benefit obligation 7 3 1 1 Expected return on plan assets ( 11 ) ( 2 ) ( 1 ) — Settlement loss 1 — — — Amortization of net actuarial loss — ( 1 ) — ( 1 ) Amortization of prior service cost credit — ( 2 ) — ( 2 ) Net periodic benefit costs $ ( 3 ) $ ( 1 ) $ — $ ( 1 ) Contributions to our pension benefit plans were insignificant during the three and six months ended June 30, 2025. During the three and six months ended June 30, 2024, we contributed $ 2 million to our pension benefit plans . We do not expect to need to make any contributions to our qualified pension plans to satisfy minimum funding requirements during the remainder of 2025 . We expect to contribute an insignificant amount to fund our pension benefit distributions during the remainder of 2025 . NOTE 13 SUPPLEMENTAL ACCOUNT BALANCES Restricted cash — Cash and cash equivalents includes restricted cash of $ 16 million and $ 18 million at June 30, 2025 and December 31, 2024, respectively. Restricted cash 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. Revenues — We derive most of our revenue from sales of oil, natural gas and natural gas liquids, with the remaining revenue primarily generated from sales of electricity and revenue from resource adequacy contracts in addition to revenue from marketing activities related to storage and managing excess pipeline capacity. The following table provides disaggregated revenue for sales of produced oil, natural gas and natural gas liquids to customers: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 (in millions) (in millions) Oil $ 644 $ 353 $ 1,380 $ 701 Natural gas 19 14 47 46 Natural gas liquids 39 45 89 94 Oil, natural gas and natural gas liquids sales $ 702 $ 412 $ 1,516 $ 841 28 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 marketing oil sales that have resulted from third-party purchases. The following table provides disaggregated revenue for sales to customers related to our marketing activities: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 (in millions) (in millions) Oil $ 24 $ 28 $ 46 $ 48 Natural gas 32 23 68 71 Natural gas liquids — — 6 6 Revenue from marketing of purchased commodities $ 56 $ 51 $ 120 $ 125 Inventories — Materials and supplies, which primarily consist of well equipment and tubular goods used in our oil and natural gas operations and critical spares related to our cogeneration power plants, are valued at weighted-average cost and are reviewed periodically for obsolescence. Finished goods include produced oil and natural gas liquids in storage, which are valued at the lower of cost or net realizable value. Inventories, by category, are as follows: June 30, December 31, 2025 2024 (in millions) Materials and supplies $ 90 $ 86 Finished goods 3 4 Inventories $ 93 $ 90 Other current assets, net — Other current assets, net include the following: June 30, December 31, 2025 2024 (in millions) Net amounts due from joint interest partners (a) $ 42 $ 41 Fair value of commodity derivative contracts 102 14 Prepaid expenses 25 28 Greenhouse gas allowances 9 27 Income tax receivable 22 50 Other 27 16 Other current assets, net $ 227 $ 176 (a) The amounts due from joint interest partners include insignificant amounts of allowances for credit losses for each period presented. 29 Other noncurrent assets — Other noncurrent assets include the following: June 30, December 31, 2025 2024 (in millions) Operating lease right-of-use assets $ 93 $ 105 Deferred financing costs - Revolving Credit Facility 22 23 Emission reduction credits 11 11 Fair value of commodity derivative contracts 50 16 Funded pension 67 67 Postretirement plan 13 13 Other 42 37 Other noncurrent assets $ 298 $ 272 Accrued liabilities — Accrued liabilities include the following: June 30, December 31, 2025 2024 (in millions) Compensation-related liabilities $ 88 $ 177 Taxes other than on income 86 100 Asset retirement obligations - current portion 134 134 Operating lease liability 22 15 Fair value of derivative contracts 7 50 Premiums due on commodity derivative contracts 17 14 Withholding tax on IKAV stock repurchase ( Note 10 Stockholders' Equity ) 34 — Advanced payments 17 25 Payable to the former owners of Aera 9 29 Other 63 67 Accrued liabilities $ 477 $ 611 Other long-term liabilities — Other long-term liabilities include the following: June 30, December 31, 2025 2024 (in millions) Compensation-related liabilities $ 39 $ 50 Postretirement and pension benefit plans 55 59 Operating lease liability 60 76 Fair value of commodity derivative contracts 14 45 Contingent liability ( Note 3 Investments and Related Party Transactions ) 112 107 Other 55 40 Other long-term liabilities $ 335 $ 377 30 NOTE 14 SUPPLEMENTAL CASH FLOW INFORMATION Supplemental disclosures to our condensed consolidated statements of cash flows are presented below: Three months ended June 30, Six months ended June 30, 2025 2024 2025 2024 (in millions) (in millions) Supplemental cash flow information Interest paid, net of amounts capitalized $ 36 $ ( 1 ) $ 45 $ 19 Income taxes paid $ 39 $ 4 $ 39 $ 26 Interest income $ 3 $ 8 $ 5 $ 14 Supplemental disclosure of non-cash investing and financing activities Contributions to the Carbon TerraVault JV $ 11 $ 5 $ 15 $ 5 Issuance of shares for stock-based compensation awards $ — $ 1 $ 21 $ 88 Dividends accrued for stock-based compensation awards $ 1 $ — $ 1 $ 1 Excise tax on share repurchases $ 2 $ — $ 2 $ 1 Withholding tax on the Stock Repurchase $ 34 $ — $ 34 $ — NOTE 15 CONDENSED CONSOLIDATING FINANCIAL INFORMATION We have designated certain of our subsidiaries as Unrestricted Subsidiaries under the indenture governing our 2026 Senior Notes (2026 Senior Notes Indenture) and the indenture governing our 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, 2025 and December 31, 2024 and the condensed consolidating statements of operations for the three and six months ended June 30, 2025 and 2024, 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. 31 Condensed Consolidating Balance Sheets As of June 30, 2025 and December 31, 2024 As of June 30, 2025 Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated (in millions) Total current assets $ 102 $ 32 $ 594 $ — $ 728 Total property, plant and equipment, net 20 37 5,503 — 5,560 Investments in consolidated subsidiaries 5,521 ( 41 ) 16,356 ( 21,836 ) — Deferred tax asset 33 — — 33 Investment in unconsolidated subsidiaries — 40 53 — 93 Other assets 112 51 135 — 298 TOTAL ASSETS $ 5,788 $ 119 $ 22,641 $ ( 21,836 ) $ 6,712 Total current liabilities 272 19 637 — 928 Long-term debt 888 — — — 888 Asset retirement obligations — — 969 — 969 Other long-term liabilities 101 131 103 — 335 Deferred tax liability 185 — — — 185 Amounts due to (from) affiliates 935 44 ( 979 ) — — Total equity 3,407 ( 75 ) 21,911 ( 21,836 ) 3,407 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,788 $ 119 $ 22,641 $ ( 21,836 ) $ 6,712 32 As of December 31, 2024 Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated (in millions) Total current assets $ 437 $ 46 $ 541 $ — $ 1,024 Total property, plant and equipment, net 14 31 5,635 — 5,680 Investments in consolidated subsidiaries 4,869 ( 32 ) 15,050 ( 19,887 ) — Deferred tax asset 73 — — — 73 Investment in unconsolidated subsidiary — 27 59 — 86 Other assets 113 58 101 — 272 TOTAL ASSETS $ 5,506 $ 130 $ 21,386 $ ( 19,887 ) $ 7,135 Total current liabilities 224 14 742 — 980 Long-term debt 1,132 — — — 1,132 Asset retirement obligations — — 995 — 995 Other long-term liabilities 114 138 125 — 377 Amounts due to (from) affiliates 385 — ( 385 ) — — Deferred tax liability 113 — — — 113 Total equity 3,538 ( 22 ) 19,909 ( 19,887 ) 3,538 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,506 $ 130 $ 21,386 $ ( 19,887 ) $ 7,135 Condensed Consolidating Statement of Operations For the three and six months ended June 30, 2025 and 2024 Three months ended June 30, 2025 Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated (in millions) Total operating revenues $ 2 $ — $ 992 $ ( 16 ) $ 978 Total costs and other 109 16 602 ( 16 ) 711 Non-operating (loss) income ( 26 ) ( 3 ) 4 — ( 25 ) (LOSS) INCOME BEFORE INCOME TAXES ( 133 ) ( 19 ) 394 — 242 Income tax provision ( 70 ) — — — ( 70 ) NET (LOSS) INCOME $ ( 203 ) $ ( 19 ) $ 394 $ — $ 172 33 Three months ended June 30, 2024 Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated (in millions) Total operating revenues $ 7 $ — $ 513 $ ( 6 ) $ 514 Total costs and other 77 18 388 ( 6 ) 477 Gain on asset divestitures — — 1 — 1 Non-operating (loss) income ( 21 ) ( 7 ) 1 — ( 27 ) (LOSS) INCOME BEFORE INCOME TAXES ( 91 ) ( 25 ) 127 — 11 Income tax provision ( 3 ) — — — ( 3 ) NET (LOSS) INCOME $ ( 94 ) $ ( 25 ) $ 127 $ — $ 8 Six months ended June 30, 2025 Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated (in millions) Total operating revenues $ 5 $ — $ 1,925 $ ( 40 ) $ 1,890 Total costs and other 175 34 1,268 ( 40 ) 1,437 Non-operating (loss) income ( 48 ) ( 7 ) 6 — ( 49 ) (LOSS) INCOME BEFORE INCOME TAXES ( 218 ) ( 41 ) 663 — 404 Income tax provision ( 117 ) — — — ( 117 ) NET (LOSS) INCOME $ ( 335 ) $ ( 41 ) $ 663 $ — $ 287 Six months ended June 30, 2024 Parent Combined Unrestricted Subsidiaries Combined Restricted Subsidiaries Eliminations Consolidated (in millions) Total operating revenues $ 13 $ — $ 971 $ ( 16 ) $ 968 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 benefit 6 — — — 6 NET (LOSS) INCOME $ ( 151 ) $ ( 39 ) $ 188 $ — $ ( 2 ) NOTE 16 SUBSEQUENT EVENTS Dividend On August 5, 2025 , 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 27, 2025 and is expected to be paid on September 12, 2025 . Share Repurchase Program On July 30, 2025 the Board of Directors authorized an extension of our Share Repurchase Program through June 30, 2026. Refer to Note 10 Stockholders' Equity for more information on our Share Repurchase Program . 34