What California Resources Corp. told the SEC could break it.

California Resources derives substantially all of its revenue from sales of oil, natural gas and NGLs (oil/gas/NGL sales were $2.91 billion of $3.67 billion total 2025 revenue), with production ~79% oil. As a price-taker on these commodities — California crude tied to global/Brent-linked pricing and gas to volatile SoCal Border pricing — its results move directly with oil and gas prices, so a downturn would materially reduce revenue, cash flow and reserve values.

“We derive substantially all of our revenue from sales of oil, natural gas and NGLs, with the remaining revenue generated from sales of electricity and marketing activities (related to storage and managing excess pipeline capacity).”

California Resources sells its crude oil, natural gas and NGLs to marketers, California refineries and other customers with transportation/storage access. In 2025, two customers of its oil and gas segment each accounted for at least 10% and collectively 51% of sales (before hedging). While the company believes loss of any single customer would not be material (alternative buyers exist), reliance on two buyers for roughly half of oil & gas sales is a meaningful concentration if one were to default or stop purchasing on acceptable terms.

“For the year ended December 31, 2025, two customers of our oil and gas segment each accounted for at least 10%, and collectively 51 %, of our sales (before the effects of hedging).”

California Resources is exposed to expanded U.S. tariffs — notably 50% tariffs on the steel and aluminum value of imported products implemented in 2025 — which are likely to increase its material costs. For a drilling-and-facilities-intensive oil & gas producer, steel is a major input (oil-country tubular goods, casing/tubing, line pipe, facility steel), so sustained steel tariffs raise well capital and operating costs. The scope and durability of U.S. tariff policy by country of origin and material type remains highly uncertain.

“While the extent and duration of the such tariffs remain uncertain, these measures, including 50% tariffs on imported steel, are likely to lead to increased material costs.”

Certain of California Resources' operations depend on a limited number of specialized vendors and service providers in California (oilfield services, equipment, specialized contractors). Because California's oil & gas service ecosystem has contracted under the state's restrictive regulatory environment, the exit or reduced availability of key suppliers could increase costs, disrupt operations or delay planned drilling and development activities — a concentrated, geography-specific supply-chain vulnerability.

“Certain of our operations depend on a limited number of specialized vendors and service providers in California, and the exit or reduced availability of key suppliers could increase costs, disrupt operations or delay planned activities.”