0001609253-26-000106
SEC filingCRC reported a significant decline in revenue and profitability for Q1 2026 versus Q1 2025, driven by a material non-cash accounting reclassification affecting revenue and operating income; operating cash flow remained positive but declined year-over-year, while capital expenditures increased substantially.
Revenue for Q1 2026 was $119.0M, down 87.0% from $912.0M in Q1 2025. This decline was not attributable to lower production volumes or commodity price realizations, but rather to a non-cash accounting reclassification of commodity derivative losses into revenue under applicable GAAP guidance. As a result, operating income fell to -$711.0M, compared to $186.0M in the prior-year quarter — a shift of over $897M — directly tied to the same reclassification. The operating margin for the quarter was -597.5%, underscoring how the accounting treatment distorted traditional margin analysis without reflecting underlying operational performance.
Net income for Q1 2026 was -$711.0M, down 718.3% from $115.0M in Q1 2025. Diluted EPS was $-8.02, compared to $1.26 in the prior-year period — a decline of 736.5%. These metrics are fully aligned with the GAAP treatment driving the revenue and operating income results and do not indicate a deterioration in core earnings power from hydrocarbon operations or carbon management activities.
Net cash provided by operating activities totaled $99.0M, a decrease from $186.0M in Q1 2025. Management attributes this reduction primarily to changes in working capital, not to reduced operational cash generation. Capital expenditures rose to $131.0M, up from $55.0M YoY, reflecting continued execution of the company’s 2026 capital plan. This resulted in free cash flow of -$32.0M for the quarter. While negative, this reflects intentional investment pacing rather than liquidity stress, as noted in management’s ongoing assessment of macroeconomic conditions and flexibility to adjust cash uses.
The Berry Merger completed in December 2025 contributed to higher ad valorem and production taxes, consistent with management’s explanation of tax-related cost increases. Separately, cash-settled stock-based compensation increased due to March 31, 2026 stock price appreciation relative to December 31, 2025 — a non-operational, market-driven expense. Contractual production sharing arrangements remain in place, where CRC’s share of production and reserves adjusts inversely with commodity prices, assuming stable capital and operating costs — a structural feature influencing long-term reserve recovery and margin stability, though not a driver of the Q1 2026 variances.