California Resources’ third quarter results drew a negative market reaction as revenue fell short of Wall Street expectations, despite strong year-on-year sales growth and a solid non-GAAP profit performance. Management attributed the quarter’s mixed outcome primarily to higher operating costs, particularly energy and fuel expenses, coupled with transportation constraints that limited its ability to access higher-value oil markets. CEO Francisco Leon highlighted that, while production volumes increased and integration of recent acquisitions progressed, short-term contracts and infrastructure bottlenecks weighed on oil price realizations, dampening the overall financial impact of production growth.
Is now the time to buy CRC? Find out in our full research report (it’s free for active Edge members).
California Resources (CRC) Q3 2026 highlights:
- Revenue $961 million vs S&P analysts’ estimates of $966.9 million (9.1% year-on-year growth, 0.6% miss)
- Adjusted EPS $1.17 vs S&P analysts’ estimates of $0.97 (21.1% beat)
- Operating margin -42.4%, down from 11.2% in the same quarter last year
- Oil production per day up 13.1% year on year
- Market capitalization $4.56 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from California Resources’s Q3 earnings call
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Scott Hanold (RBC Capital Markets) asked about the timeline and customer interest for the Bloom Energy collaboration. CEO Francisco Leon detailed that demand is strong across utilities and data centers, with third-party developers expected to own the projects while California Resources supplies gas and storage.
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Betty Jiang (Barclays) inquired about the Golden Valley Data Center’s permitting and commercialization. Leon confirmed a key permitting milestone was reached and outlined a twelve- to eighteen-month permit timeline, with customer negotiations ongoing and a memorandum of understanding with a hyperscaler targeted for early 2027.
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Josh Silverstein (UBS) probed incremental integration opportunities and required capital. CFO Clio Crespy explained that further integration projects are under evaluation, some needing modest investments while others require more significant capital, with prioritization based on potential cash flow and execution risk.
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Nate Pendleton (Texas Capital) questioned buyback pace and use of Uinta sale proceeds. Crespy reiterated that capital allocation will remain balanced between reinvesting in California operations and opportunistic share repurchases, considering market conditions and business needs.
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Scott Gruber (Citigroup) asked how management decides between internal investment and external partnerships. Crespy emphasized selectivity, stating each opportunity is weighed against reinvestment in the core business and shareholder returns, with value creation prioritized over ownership percentage.
Catalysts in upcoming quarters
In coming quarters, the StockStory team will monitor (1) progress toward restarting the San Pablo Bay Pipeline and the resulting impact on oil price realizations, (2) execution of cost reduction and digitalization initiatives across the organization, and (3) milestones in power and carbon project development, including permit advancements for the Golden Valley Technology Hub and agreements with new commercial partners. Updates on asset monetization and capital allocation will also be important indicators.
California Resources currently trades at $51.40, down from $52.54 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free).
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