AERA MERGER

3 Months Ended

Mar. 31, 2025

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

On July 1, 2024, we obtained by way of merger all of the ownership interests in Aera. Aera is a leading operator of mature fields in California, primarily in the San Joaquin and Ventura basins, with high oil-weighted production. The Aera Merger adds significant proved developed reserves to CRC. In connection with the closing of the Aera Merger, we issued 21,315,707 shares of common stock to the former Aera owners (Sellers). We issued an additional 107,265 shares in February 2025 and we expect to issue an additional 238,828 shares for deferred consideration. This deferred consideration is related to pre-effective date and restructuring income taxes of the Sellers. We also paid approximately $990 million in connection with the extinguishment of all of Aera's outstanding indebtedness using the proceeds from the issuance of our 8.25% senior notes due 2029 (2029 Senior Notes) and cash on hand. For more information on the 2029 Senior Notes, refer to Note 4 Debt.

As of July 1, 2024, and immediately following closing of the Aera Merger, our existing stockholders prior to the Aera Merger owned 76% of CRC and the Sellers owned 24% of CRC.

At the date of this filing, our assessment of the fair value of assets acquired and liabilities assumed is not complete. Certain data necessary to complete the purchase price allocation is not yet available, and includes, but is not limited to, final appraisals of Aera's assets, measurement of leases, valuation of certain accrued liabilities, determination of Aera's asset retirement obligations and preparation of tax returns that will provide underlying tax basis of the assets acquired and liabilities assumed. We expect to complete the purchase price allocation during the 12-month period subsequent to the Aera Merger closing date and adjustments may be made to the provisional amounts recorded as of March 31, 2025.

We have measured assets and liabilities at acquisition date fair value on a nonrecurring basis.

The following table summarizes the consideration transferred:


	Merger Consideration
	(in millions, except share and per share data)
Shares of common stock (dividend adjusted)	21,422,972
Common stock per share fair value on July 1, 2024	$	53.28
Fair value of share consideration	$	1,141
Settlement of Aera debt	990
Deferred consideration obligation	13
Total purchase consideration	$	2,144

The following table represents the preliminary purchase price allocation of the identifiable assets acquired and the liabilities assumed based on their estimated fair values as of the closing date of the Aera Merger:


	Preliminary Purchase Price Allocation as of December 31, 2024		Adjustments		Preliminary Purchase Price Allocation as of March 31, 2025
	(in millions)
Assets Acquired
Cash	$	137	$	—	$	137
Accounts receivable	176		—		176
Inventories	30		(1)		29
Other current assets	49		1		50
Investment in unconsolidated subsidiary	59		(7)		52
Property, plant and equipment	3,048		14		3,062
Pension and other postretirement benefits	73		—		73
Other noncurrent assets	57		13		70
Total Assets Acquired	3,629		20		3,649

Liabilities Assumed
Accounts payable	(158)		—		(158)
Accrued liabilities	(157)		(3)		(160)
Asset retirement obligations	(646)		—		(646)
Fair value of derivative contracts	(351)		—		(351)
Pension and other postretirement benefits	(35)		—		(35)
Deferred tax liability	(101)		1		(100)

Other long-term liabilities	(37)		(18)		(55)
Total Liabilities Assumed	(1,485)		(20)		(1,505)
Net Assets Acquired	$	2,144	$	—	$	2,144

Supplemental Pro Forma Information (unaudited)

The following supplemental pro forma financial information presents the condensed consolidated results of operations for the three months ended March 31, 2024 as if the Aera Merger had occurred on January 1, 2024.



	Three months ended March 31,
	2024

	(in millions)
Total operating revenue	$	613
Net loss(a)	$	(286)

Net loss per share
Basic	$	(3.17)
Diluted	$	(3.17)

(a)Reflects a net loss of $286 million primarily resulting from a significant net loss on commodity derivatives related to hedge positions held by Aera during the three months ended March 31, 2024.

The pro forma information is presented for illustration purposes only and is not necessarily indicative of the operating results that would have occurred had the Aera Merger been completed on January 1, 2024, nor is it necessarily indicative of future operating results of the combined entity. The pro forma financial information for the three months ended March 31, 2024 is a result of combining our three months statements of operations with Aera's pre-merger results from January 1, 2024 and the pro forma adjustments include estimates and assumptions based on currently available information. The pro forma results do not reflect any cost savings anticipated as a result of the Aera Merger and exclude the impact of any severance. The pro forma results include adjustments to depreciation, depletion and amortization (DD&A) based on the purchase price allocated to property, plant, and equipment and the estimated useful lives as well as adjustments to interest and accretion expense. We also included pro forma adjustments for certain compensation-related costs and transaction costs we incurred related to the Aera Merger. Management believes the estimates and assumptions are reasonable, and the relative effects of the Aera Merger are properly reflected. Future results may vary significantly from the results reflected in the following pro forma information.