On August 6, 2024, California Resources Corp (CRC, Financial) released its 8-K filing detailing the financial and operating results for the second quarter of 2024. California Resources Corp is an independent oil and natural gas exploration and production company operating properties exclusively within California. It provides affordable and reliable energy in a safe and responsible manner, to support and enhance the quality of life of Californians and the local communities in which the company operates. It has some of the lowest carbon intensity production in the United States and is focused on maximizing the value of its land, mineral, and technical resources for decarbonization by developing carbon capture and storage (CCS) and other emissions-reducing projects.
Performance and Challenges
California Resources Corp (CRC, Financial) reported a net income of $8 million, or $0.11 per fully diluted share, missing the analyst estimate of $1.92 per share. However, the company missed revenue expectations, reporting $514 million against the estimated $977.81 million. The company's performance was impacted by scheduled maintenance and unplanned downtime at its Elk Hills power plant, which negatively affected net production by approximately 3 Mboe/d.
Financial Achievements
Despite the challenges, CRC achieved several financial milestones. The company generated $97 million of net cash provided by operating activities and $63 million of free cash flow. Additionally, CRC returned 142% of year-to-date free cash flow to shareholders, including $93 million in share repurchases and $43 million in dividends. The company also increased its quarterly dividend by 25%, declaring a dividend of $0.3875 per share to be paid in the third quarter of 2024.
Income Statement Highlights
| Metric | Q2 2024 | Q1 2024 |
|---|---|---|
| Total Operating Revenues | $514 million | $454 million |
| Operating Costs | $156 million | $176 million |
| Net Income | $8 million | $(10) million |
| Adjusted Net Income | $42 million | $54 million |
| Free Cash Flow | $63 million | $33 million |
Balance Sheet and Liquidity
As of June 30, 2024, CRC had liquidity of $1.5 billion, which included $1.0 billion in cash and cash equivalents and $600 million of available borrowing capacity under its Revolving Credit Facility. The company completed an offering of $600 million in senior notes due 2029, using the proceeds to repay all of Aera’s outstanding debt, reducing annual interest payments by $60 million.
Analysis
California Resources Corp (CRC, Financial) demonstrated resilience in the face of operational challenges, maintaining strong cash flow and liquidity. The successful merger with Aera Energy is expected to double cash flow and add quality assets to CRC's carbon business platform. The company's focus on shareholder returns, evidenced by the increased dividend and share repurchases, underscores its commitment to enhancing shareholder value.
Overall, while CRC missed EPS estimates, the company's robust revenue performance and strategic initiatives position it well for future growth. Investors should monitor CRC's integration of Aera Energy and its progress in carbon capture and storage projects, which are critical to its long-term strategy.
Explore the complete 8-K earnings release (here) from California Resources Corp for further details.
