California Resources Corporation Announces All-Stock Combination with Berry Corporation

Core Viewpoint - The merger between California Resources Corporation (CRC) and Berry Corporation is expected to create a stronger and more efficient leader in the California energy sector, enhancing shareholder value through significant operational synergies and a robust financial position [2][3]. Transaction Overview - The all-stock transaction values Berry at approximately $717 million, including net debt, with CRC shareholders expected to own about 94% of the combined entity upon closing [1][5]. - The transaction is anticipated to close in the first quarter of 2026, pending regulatory and shareholder approvals [6]. Financial Metrics - The merger is projected to be immediately accretive to key financial metrics, with an estimated enterprise value of more than $6 billion for the combined entity [5][9]. - The transaction is priced at approximately 2.9x enterprise value to 2025E adjusted EBITDAX, with expected per share accretion to net cash provided by operating activities and free cash flow of over 10% before synergies [3][9]. Synergies and Cost Savings - CRC expects to achieve annual synergies of $80 to $90 million within 12 months post-closing, representing about 12% of the transaction value [3][9]. - Approximately 50% of these synergies are expected to be realized within six months of closing, primarily through corporate synergies, lower interest costs, and operational improvements [3][9]. Production and Reserves - On a pro forma basis, the combined company would have produced approximately 161 thousand barrels of oil equivalent per day (Mboe/d) in Q2 2025, with 81% being oil, and held around 652 million barrels of oil equivalent in proved reserves as of year-end 2024 [3][11]. - The merger will also enhance CRC's operational capabilities through the acquisition of C&J Well Services, improving well maintenance and operational efficiency [3][4]. Strategic Positioning - Berry's Uinta Basin position, comprising approximately 100,000 net acres, provides additional operational and financial optionality, with significant production potential [3][4]. - The combined company aims to leverage regulatory tailwinds to ensure safe, reliable, and affordable energy production while maximizing long-term shareholder value [2][3].