California Resources (CRC) M&A Announcement summary

Deal rationale and strategic fit

• All-stock combination creates California's leading energy platform, enhancing scale, operational flexibility, and efficiency by combining complementary assets and operational strengths.

• Adds 20,000 barrels/day of Brent-linked production, high-quality conventional reserves, and permits for a one-rig drilling program through 2026.

• Integration of well services and Berry's Uinta Basin assets provides operational and financial optionality, supply chain security, and development upside.

• The deal aligns with recent legislative support for local energy production and decarbonization in California.

• Positions the company to support California's energy security, emission reduction, and transition goals.

Financial terms and conditions

• All-stock transaction values Berry at approximately $717 million, including 5.8 million shares and $408 million of assumed net debt; Berry shareholders receive 0.0718 CRC shares per Berry share, a 15% premium to pre-announcement prices.

• Combined entity enterprise value exceeds $6 billion; CRC shareholders will own about 94% and Berry shareholders 6% of the new company.

• Valued at approximately 2.9x 2025 consensus EBITDAX and $30,000 per flowing barrel.

• Pro forma company will have 161 MBoe/d total net production and 652 MMBoe proved reserves.

• Pro forma leverage ratio expected to be about 0.8x, maintaining a strong balance sheet; CRC plans to refinance Berry's debt with cash and credit facilities.

Synergies and expected cost savings

• Targeting $80–$90 million in annual synergies within 12 months, about 12% of transaction value, with 50% realized within six months.

• Synergies expected from corporate staff reductions, debt refinancing, operating improvements, and supply chain efficiencies.

• Discounted annual run rate of synergies valued at $500 million NPV (at 10%) over 10 years, with minimal capital required.

• Pro forma free cash flow per share expected to improve by ~14% before synergies.

• Synergies are expected to effectively pay for the deal over time.