California Resources to merge with Berry in $717m deal

Core Viewpoint - California Resources Corporation (CRC) is merging with Berry Corporation in an all-stock transaction valued at approximately $717 million, including net debt, which is expected to create a stronger energy leader in California [1][3]. Transaction Details - The merger will see Berry shareholders receive 0.0718 shares of CRC stock for each Berry share, representing a 15% premium based on closing prices from September 12 [1]. - The deal is anticipated to close in Q1 2026, pending regulatory and shareholder approvals, with CRC shareholders retaining 94% ownership of the combined entity [2]. Financial Implications - CRC plans to refinance Berry's debt using its cash reserves and credit facilities, with new debt issuance contingent on market conditions to optimize financial structure [2]. - The combined companies are projected to produce around 161,000 barrels of oil equivalent per day in Q2 2025, with CRC expecting annual cost savings of $80 million to $90 million within a year of closing due to operational synergies [4]. Strategic Benefits - The merger aims to leverage CRC's conventional assets alongside Berry's oil-weighted reserves to enhance operational efficiency and free cash flow generation [3]. - Berry's holdings in the Uinta Basin present strategic and developmental opportunities for the combined entity [5]. Advisory Roles - RBC Capital Markets and Petrie Partners acted as financial advisors for CRC, while Guggenheim Securities served as financial advisor for Berry, with legal counsel provided by Sullivan & Cromwell for CRC and Vinson & Elkins for Berry [5].