California Resources (CRC) FY2025 10-K Risk Factors: 11 New, 11 Dropped

What the changes say

Berry Merger added Utah operations, integration execution risk and broader acquisition and divestiture exposure.
California refining and pipeline reductions now threaten crude marketing access and realized prices.
Permitting, local restrictions and federal or tribal-land regulation remain major constraints on development.
Cybersecurity, inflation and lender borrowing-base risks broadened operational and liquidity concerns.

What changed since the prior 10-K

New

NewRisks Related to Our Oil and Gas Business
Reductions in California refining and pipeline capacity could adversely affect our ability to market our production and our realized prices
California refinery and pipeline closures could restrict crude transportation and purchasers, forcing alternative marketing arrangements and lowering realized prices.
NewRisks Related to Our Oil and Gas Business
We may be negatively impacted by inflation, including through increased operating, capital and financing costs
Inflation could raise electricity, natural gas, steel, operating, capital and financing costs beyond available hedging or fixed-price protection.
NewRisks Related to Our Oil and Gas Business
Estimating proved reserves and related future net cash flows involves significant judgment and uncertainty, and our assumptions may ultimately prove to be inaccurate. In addition, reserve estimates may change over time as additional data becomes available through development and appraisal activities
Reserve additions depend on successful drilling, improved recovery and permitting, while reservoir, technology, commodity-price and cost assumptions may prove inaccurate.
NewRisks Related to Carbon TerraVault and Our Carbon Management Segment
Changes in expectations as to ESG matters may adversely impact our business, reputation and access to capital
Changing ESG expectations could reduce oil and natural gas demand, increase investigations or litigation, and limit reputation or capital access.
NewRisks Related to Carbon TerraVault and Our Carbon Management Segment
Mergers, acquisitions and dispositions, including the integration of the Berry Merger completed in December 2025, involve substantial risks
The December 2025 Berry Merger may bring integration costs, operational challenges, unexpected liabilities and delayed or unrealized synergies.
NewRisks Related to Carbon TerraVault and Our Carbon Management Segment
In connection with mergers and acquisitions, we are often only able to perform limited due diligence, and assessments of reserves, production, costs and liabilities may be inaccurate or incomplete
Limited acquisition due diligence may misstate reserves, production, costs or liabilities, while unsuccessful deals or asset sales could constrain growth and cash flow.
NewRisks Related to Carbon TerraVault and Our Carbon Management Segment
We rely on electronic systems and networks to manage our operations, financial reporting, data storage and communications with employees, service providers and customers. Systems failures, data inaccuracies or outages could impair our ability to operate efficiently and make timely business decisions
Failures or cyberattacks affecting operational, financial, data and communications systems could cause outages, data loss, regulatory scrutiny, litigation and remediation costs.
NewRisks Related to Carbon TerraVault and Our Carbon Management Segment
Energy-related assets may be at a heightened risk of cybersecurity or other malicious attacks. Such attacks could disrupt energy markets, delay or prevent product delivery, impair accounting or settlement processes or result in environmental or safety incidents
Attacks on energy assets could disrupt markets, product deliveries, accounting or settlement, and potentially cause environmental or safety incidents.
NewRisks Related to Regulation and Government Action
While recent legislation, including Senate Bill 237, has provided greater regulatory clarity for certain permitting activities in Kern County, we cannot predict the scope, timing or cumulative impact of future state actions or whether such actions may offset or limit the benefits of recent legislative developments
Despite Senate Bill 237, future California actions could alter permitting requirements, restrict operations or offset benefits from recent Kern County legislation.
NewRisks Related to Regulation and Government Action
Our operations in Utah are subject to additional regulatory, permitting and legal risks, including risks associated with federal and tribal lands
Utah operations on federal and potentially tribal lands face more complex permitting, environmental review, litigation, royalty, bonding and leasing requirements.
NewRisks Related to Our Indebtedness
The lenders under our Revolving Credit Facility could limit our ability to borrow and restrict our use or access to capital
Lenders can reduce the Revolving Credit Facility borrowing base or commitments, limiting liquidity and the ability to execute the business strategy.

Dropped

DroppedRisks Related to Our Oil and Gas Business
Any of the forgoing operational risks could cause actual results to differ materially from the expected payback or cause a well or project to become uneconomic or less profitable than forecast
DroppedRisks Related to Our Oil and Gas Business
We may be negatively impacted by inflation
DroppedRisks Related to Our Oil and Gas Business
Estimates of proved reserves and related future net cash flows are not precise. The actual quantities of our proved reserves and future net cash flows may prove to be higher or lower than estimated
DroppedRisks Related to Our Oil and Gas Business
In addition, our reserves information represents estimates prepared by internal engineers. Although 85% of our estimated proved reserve volumes as of December 31, 2024, were audited by our independent petroleum engineer, NSAI, we cannot guarantee that the estimates are accurate
Drilling projects could deliver insufficient production or reserves, forcing development cutbacks and making wells or projects uneconomic.
DroppedRisks Related to Carbon TerraVault and Our Carbon Management Segment
whether we will be able to access CO2 emissions in sufficient quantities or on terms that are acceptable to us
DroppedRisks Related to Carbon TerraVault and Our Carbon Management Segment
Increased attention to ESG matters may adversely impact our business
Inflation could increase electricity, natural gas and steel-related operating and capital costs.
DroppedRisks Related to Carbon TerraVault and Our Carbon Management Segment
Acquisition and disposition activities, including continued integration of the Aera Merger, involve substantial risks
DroppedRisks Related to Carbon TerraVault and Our Carbon Management Segment
Cybersecurity attacks, systems failures, and other disruptions could adversely affect us
DroppedRisks Related to Regulation and Government Action
The Inflation Reduction Act could accelerate the transition to a low-carbon economy and could impose new costs on our operations
DroppedRisks Related to our Indebtedness
Our Revolving Credit Facility is an important source of our liquidity. Our ability to borrow under our Revolving Credit Facility is limited by our borrowing base, the size of our lenders’ commitments and our ability to comply with covenants
DroppedRisks Related to our Indebtedness
The Revolving Credit Facility also requires us to comply with certain financial maintenance covenants, including a leverage ratio and current ratio
Proved reserve and future cash-flow estimates could be inaccurate as assumptions and reservoir data change.

Reworded

100% rewrittenRisks Related to Regulation and Government Action
Recent and future actions by the State of California could reduce both the demand for and supply of oil and natural gas within the state and consequently have a material adverse effect on our business, results of operations and financial condition
The emphasis shifted from California’s tightening trend to specific effects of emissions policies: higher compliance costs, restricted development, infrastructure limits and reduced oil and gas consumption.
Was: Recent and future actions by the State of California could reduce both the demand for and supply of oil and natural gas within the state and consequently have a material and adverse effect on our business, and financial condition and results of operations
100% rewrittenRisks Related to Regulation and Government Action
We may face increased local restrictions on oil and gas exploration and production operations or even be prohibited from operating in certain areas as a result of recently enacted California legislation
The update expands local-government authority, warns restrictions may apply despite state permitting, and adds jurisdiction-by-jurisdiction compliance complexity, cost and production uncertainty.
99% rewrittenRisks Related to Carbon TerraVault and Our Carbon Management Segment
Our Carbon TerraVault business and other CCS projects depend on financial and tax incentives to be economical, and these incentives may be insufficient, unavailable, delayed, reduced or terminated
The CCS incentive risk now identifies Section 45Q, the One Big Beautiful Bill Act and California LCFS credits, plus detailed eligibility, guidance and enforcement uncertainty.
Was: Our Carbon TerraVault business and other CCS projects depend on financial and tax incentives to be economical, and these incentives may not currently be sufficient for our Carbon TerraVault business and other CCS projects to be economical, may not be fully realized, or could be changed or terminated
98% rewrittenRisks Related to Carbon TerraVault and Our Carbon Management Segment
Our ability to achieve our emissions goals, including our Responsible Net Zero objective, and other carbon management objectives is subject to significant risks and uncertainties
The objective now covers Scope 1 and 2 emissions rather than Scope 1, 2 and 3, and depends substantially on Carbon TerraVault and CCS projects.
Was: Our ability to achieve our emissions and other goals related to our carbon management activities is subject to risks and uncertainties
95% rewrittenRisks Related to Regulation and Government Action
We may face material delays related to our ability to timely obtain permits necessary for our operations or be unable to secure such permits on favorable terms or at all as a result of numerous California political, regulatory, and legal developments
The update adds actual CalGEM delays for new wells, sidetracks, deepening and workovers, citing environmental review, litigation, agency constraints and policy changes.
95% rewrittenRisks Related to Our Oil and Gas Business
Prices for our products are volatile and a substantial decline in prices over an extended period could have a material adverse effect on our financial condition, results of operations, cash flow and ability to invest in our assets
The price-risk factors now specifically include Venezuela, climate-related energy policies, transportation and storage constraints, weather, natural disasters and market speculation.
95% rewrittenRisks Related to Our Oil and Gas Business
The conflicts in Ukraine and Israel and the geopolitical uncertainty in the Middle East and Venezuela have caused price volatility and geopolitical instability which impact our business
The update adds possible Venezuelan sanctions relief, global shipping and infrastructure disruptions, and transportation-corridor constraints as sources of supply and price volatility.
Was: The military conflicts in Ukraine, Israel and other countries in the Middle East have caused price volatility and geopolitical instability which impact our business
92% rewrittenRisks Related to Our Indebtedness
Restrictive covenants in our Revolving Credit Facility and the indentures governing our Senior Notes may limit our financial and operating flexibility and adversely affect our ability to execute our business strategy
The covenant discussion now adds leverage and current-ratio tests and expressly describes default risk and possible acceleration of all facility borrowings.
Was: Restrictive covenants in our Revolving Credit Facility and the indentures governing our Senior Notes may limit our financial and operating flexibility
86% rewrittenRisks Related to Regulation and Government Action
Our operations and financial performance may be negatively affected directly or indirectly by changes in trade policies and tariffs
83% rewrittenRisks Related to Carbon TerraVault and Our Carbon Management Segment
We may not be able to grow our Carbon TerraVault business and develop large scale CCS projects
81% rewrittenRisks Related to Our Indebtedness
Our existing and future indebtedness may adversely affect our business, financial condition and financial flexibility
Was: Our existing and future indebtedness may adversely affect our business and limit our financial flexibility
78% rewrittenRisks Related to Carbon TerraVault and Our Carbon Management Segment
Risk Factors Related to Our Business Generally
78% rewrittenRisks Related to Our Common Stock
The trading price of our common stock may decline, and you may not be able to resell shares of our common stock at prices equal to or greater than the price you paid or at all
69% rewrittenRisks Related to Our Oil and Gas Business
Our business involves substantial capital investments, and we may be unable to fund these investments which could lead to a decline in our oil and natural gas reserves or production
68% rewrittenRisks Related to Carbon TerraVault and Our Carbon Management Segment
Increasing activism against the industries in which we operate, including the oil and gas industry and our involvement in carbon capture, storage, utilization and sequestration, presents risks to our business
64% rewrittenRisks Related to Our Common Stock
Future issuances of our common stock could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us
64% rewrittenRisks Related to Our Oil and Gas Business
We are subject to economic downturns and the effects of public health events which may materially and adversely affect the demand and the market price for our products
57% rewrittenRisks Related to Our Oil and Gas Business
From time to time we may engage in step-out drilling, or drilling in new or emerging plays, which involves heightened uncertainty and may reduce the value of undeveloped acreage if unsuccessful
Was: From time to time we may engage in step-out drilling or drilling in new or emerging plays. Our drilling results are uncertain, and the value of our undeveloped acreage may decline if drilling is unsuccessful
57% rewrittenRisks Related to Our Indebtedness
We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy the obligations under our indebtedness, which may not be successful
55% rewrittenRisks Related to Our Oil and Gas Business
Our producing properties are located primarily in California, making us vulnerable to risks associated with having operations concentrated in this geographic area, including drought, earthquake and wildfire risks
Was: Our producing properties are located exclusively in California, making us vulnerable to risks associated with having operations concentrated in this geographic area, including drought, earthquake and wildfire risks
50% rewrittenRisks Related to Our Common Stock
The ownership position of certain of our stockholders limits other stockholders’ ability to influence corporate matters and could affect the price of our common stock
50% rewrittenRisks Related to Regulation and Government Action
New and developing regulations related to the CO2 unitization, permitting and pipeline safety could negatively impact our business, financial condition and results of operations
41% rewrittenRisks Related to Carbon TerraVault and Our Carbon Management Segment
Our Carbon TerraVault JV with Brookfield is subject to inherent uncertainties that could adversely affect our ability to implement our carbon management strategy
Was: Our Carbon TerraVault JV with Brookfield is subject to inherent uncertainties which could adversely affect our ability to implement our carbon management strategy
35% rewrittenRisks Related to Carbon TerraVault and Our Carbon Management Segment
We may incur substantial losses and be subject to substantial liability claims as a result of pollution, environmental conditions or catastrophic events such as wildfires. We may not be insured for, or our insurance may be inadequate to protect us against, these risks
Was: We may incur substantial losses and be subject to substantial liability claims as a result of pollution, environmental conditions or catastrophic events. We may not be insured for, or our insurance may be inadequate to protect us against, these risks
35% rewrittenRisks Related to Our Common Stock
Our ability to pay dividends and repurchase shares of our common stock is subject to certain risks
31% rewrittenRisks Related to Regulation and Government Action
Our operations are subject to complex and stringent federal, state, local and other laws and regulations relating to the exploration and development of our properties, as well as the production, transportation, marketing and sale of our products
24% rewrittenRisks Related to Regulation and Government Action
Concerns about climate change and other environmental issues may prompt governmental action that could have a material adverse effect on our operations or results

All 45 risk factors

Headings as the filing states them, in filing order.

Risks Related to Carbon TerraVault and Our Carbon Management Segment

01Risk Factors Related to Our Business Generally78% rewritten
13We may not be able to grow our Carbon TerraVault business and develop large scale CCS projects83% rewritten
14Our ability to achieve our emissions goals, including our Responsible Net Zero objective, and other carbon management objectives is subject to significant risks and uncertainties98% rewritten
15Our Carbon TerraVault business and other CCS projects depend on financial and tax incentives to be economical, and these incentives may be insufficient, unavailable, delayed, reduced or terminated99% rewritten
16Our Carbon TerraVault JV with Brookfield is subject to inherent uncertainties that could adversely affect our ability to implement our carbon management strategy41% rewritten
17Increasing activism against the industries in which we operate, including the oil and gas industry and our involvement in carbon capture, storage, utilization and sequestration, presents risks to our business68% rewritten
18Changes in expectations as to ESG matters may adversely impact our business, reputation and access to capitalNew
19Mergers, acquisitions and dispositions, including the integration of the Berry Merger completed in December 2025, involve substantial risksNew
20In connection with mergers and acquisitions, we are often only able to perform limited due diligence, and assessments of reserves, production, costs and liabilities may be inaccurate or incompleteNew
21We may incur substantial losses and be subject to substantial liability claims as a result of pollution, environmental conditions or catastrophic events such as wildfires. We may not be insured for, or our insurance may be inadequate to protect us against, these risks35% rewritten
22We rely on electronic systems and networks to manage our operations, financial reporting, data storage and communications with employees, service providers and customers. Systems failures, data inaccuracies or outages could impair our ability to operate efficiently and make timely business decisionsNew
23Energy-related assets may be at a heightened risk of cybersecurity or other malicious attacks. Such attacks could disrupt energy markets, delay or prevent product delivery, impair accounting or settlement processes or result in environmental or safety incidentsNew

Risks Related to Our Oil and Gas Business

02Prices for our products are volatile and a substantial decline in prices over an extended period could have a material adverse effect on our financial condition, results of operations, cash flow and ability to invest in our assets95% rewritten
03Our producing properties are located primarily in California, making us vulnerable to risks associated with having operations concentrated in this geographic area, including drought, earthquake and wildfire risks55% rewritten
04Our business involves substantial capital investments, and we may be unable to fund these investments which could lead to a decline in our oil and natural gas reserves or production69% rewritten
05Reductions in California refining and pipeline capacity could adversely affect our ability to market our production and our realized pricesNew
06We may be negatively impacted by inflation, including through increased operating, capital and financing costsNew
07We are subject to economic downturns and the effects of public health events which may materially and adversely affect the demand and the market price for our products64% rewritten
08The conflicts in Ukraine and Israel and the geopolitical uncertainty in the Middle East and Venezuela have caused price volatility and geopolitical instability which impact our business95% rewritten
09Some of our competitors have greater resources than us and we may not be able to successfully compete in acquiring and developing new properties
10Our hedging activities limit our ability to realize the full benefits of increases in commodity prices
11Estimating proved reserves and related future net cash flows involves significant judgment and uncertainty, and our assumptions may ultimately prove to be inaccurate. In addition, reserve estimates may change over time as additional data becomes available through development and appraisal activitiesNew
12From time to time we may engage in step-out drilling, or drilling in new or emerging plays, which involves heightened uncertainty and may reduce the value of undeveloped acreage if unsuccessful57% rewritten

Risks Related to Regulation and Government Action

24We may face material delays related to our ability to timely obtain permits necessary for our operations or be unable to secure such permits on favorable terms or at all as a result of numerous California political, regulatory, and legal developments95% rewritten
25We may face increased local restrictions on oil and gas exploration and production operations or even be prohibited from operating in certain areas as a result of recently enacted California legislation100% rewritten
26Recent and future actions by the State of California could reduce both the demand for and supply of oil and natural gas within the state and consequently have a material adverse effect on our business, results of operations and financial condition100% rewritten
27While recent legislation, including Senate Bill 237, has provided greater regulatory clarity for certain permitting activities in Kern County, we cannot predict the scope, timing or cumulative impact of future state actions or whether such actions may offset or limit the benefits of recent legislative developmentsNew
28Our operations are subject to complex and stringent federal, state, local and other laws and regulations relating to the exploration and development of our properties, as well as the production, transportation, marketing and sale of our products31% rewritten
29New and developing regulations related to the CO2 unitization, permitting and pipeline safety could negatively impact our business, financial condition and results of operations50% rewritten
30Our operations and financial performance may be negatively affected directly or indirectly by changes in trade policies and tariffs86% rewritten
31Concerns about climate change and other environmental issues may prompt governmental action that could have a material adverse effect on our operations or results24% rewritten
32We are subject to taxation by various tax authorities at the federal, state and local levels where we do business. New legislation could be enacted by any of these government authorities that could adversely affect our business
33Financial assurance requirements related to plugging and abandonment costs, decommissioning, and site restoration on those who acquire the right to operate wells and production facilities could impact our ability to sell or acquire assets in California or increase our costs in connection with the same
34Our operations in Utah are subject to additional regulatory, permitting and legal risks, including risks associated with federal and tribal landsNew

Risks Related to Our Indebtedness

35We may not be able to amend or refinance our existing debt to create more operating and financial flexibility and to enhance shareholder returns
36Our existing and future indebtedness may adversely affect our business, financial condition and financial flexibility81% rewritten
37We may not be able to generate sufficient cash to service all of our indebtedness, and may be forced to take other actions to satisfy the obligations under our indebtedness, which may not be successful57% rewritten
38The lenders under our Revolving Credit Facility could limit our ability to borrow and restrict our use or access to capitalNew
39Restrictive covenants in our Revolving Credit Facility and the indentures governing our Senior Notes may limit our financial and operating flexibility and adversely affect our ability to execute our business strategy92% rewritten
40Variable rate indebtedness under our Revolving Credit Facility subjects us to interest rate risk, which could cause our debt service obligations to increase significantly

Risks Related to Our Common Stock

41Our ability to pay dividends and repurchase shares of our common stock is subject to certain risks35% rewritten
42The trading price of our common stock may decline, and you may not be able to resell shares of our common stock at prices equal to or greater than the price you paid or at all78% rewritten
43Future issuances of our common stock could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us64% rewritten
44The ownership position of certain of our stockholders limits other stockholders’ ability to influence corporate matters and could affect the price of our common stock50% rewritten
45Sales of shares of our common stock by our executive officers could negatively impact the market price for our common stock

Other California Resources 10-Ks

FY2024 10-K risk factors
45 risks
Geographic concentration of producing properties exclusively in California creates severe exposure to regional climate and regulatory risks. Development of the Carbon TerraVault business faces unique scaling and permitting uncertainties. Heavy reliance on volatile commodity prices and strict debt covenants impacts financial flexibility.
Filed Mar 03, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.