CRC Buys Crimson Midstream, Sees Transport Relief in Q4

California Resources Corporation struck a deal to buy Crimson’s roughly 2,000-mile crude pipeline network, the company disclosed on its second-quarter earnings call. The all-cash acquisition, priced at around 4.4 times estimated 2027 EBITDA, is expected to close after final CPUC approval, which CEO Francisco J. Leon said could come later this month.

“We have been thinking about midstream integration for some time,” Leon told analysts. “Crimson is doing exactly what an acquisition should be doing for us. It adds more stable contracted cash flow and makes the broader California platform even stronger.”

The deal comes as CRC navigates a temporary transport constraint that slashed earnings by roughly $25 million in the second quarter. A marketing dispute with a pipeline operator and certain offtakers limited takeaway capacity, forcing CRC to build inventory of about 1,500 barrels of oil per day. The company had sold most of that stockpile by the end of July, CFO Clio Crespy said.

“We view this as a temporary commercial issue, not a change in the underlying earnings power of our business,” Crespy said. The company guided third-quarter oil realizations at roughly 93% of Brent, which it expects to be the low point. Full-year realizations are still forecast at about 94%, within the original 94% to 98% range set before the disruption.

CRC’s operational momentum offered a counterweight. The company now expects to run an average of five rigs in California during the second half of 2026, down from six in its prior plan, while keeping production nearly flat. Time to market improved roughly 25%, and about 80% of wells drilled year-to-date have outperformed their type curve, with average initial production more than 10% above expectations.

Those gains translate into a lower maintenance capital requirement. Crespy said the company now estimates normalized annual drilling, completion, and workover capital at $450 million to $475 million, about 5% below previous projections. “Every rig dollar is buying more production than we underwrote on the deal,” Leon said.

On the carbon management front, CRC began CO2 injection and recorded first revenue at California’s first commercial carbon capture and sequestration project at Elk Hills. Leon said the project is capturing and injecting about 270 tons of CO2 per day, targeting annualized storage of roughly 100,000 tons. “Having this project live and operational really changes the conversations,” he said, noting increased engagement from emitters and technology partners.

The company also announced a partnership with Beacon Data Centers to develop the Golden Valley Technology Hub, a proposed 275-megawatt campus adjacent to Elk Hills. The behind-the-meter design would use the existing power plant and closed-loop cooling to minimize water use. Leon said the company has filed a conditional use permit and expects the environmental review to advance later this year.

Crespy stressed that the company’s capital allocation framework remains balanced. She noted that the absence of share repurchases in the quarter was a timing issue, not a shift in philosophy. “We continue to see compelling value in our shares at current prices,” she said.

Leon described the broader strategy as building an integrated California energy platform that is “nearly impossible to replicate.” He pointed to CRC’s 2-million-acre mineral position, surface acreage, pore space, and now a growing midstream footprint as assets that reinforce each other. “Every barrel we produce, every pipe we control, every megawatt we generate and every ton we sequester strengthens the underlying position,” he said.

The company reiterated its full-year production target of 153,000 barrels of oil equivalent per day, with entry-to-exit growth of roughly 1%. Updated 2026 guidance will follow the Crimson close.