DEAL ALERT (CRC BUYS BERRY)

Energy Advisors Group (EAG) has issued a Deal Alert, analyzing California Resources' deal to buy Berry Corporation at a 15% premium just days after Sacramento approved a set of reforms that seek to secure more local oil production. With the BRY purchase, CRC now operates ~140,000 BOPD or 50% of the state's total oil volumes. Chevron ranks second with ~70,000 BOPD gross volumes.

This $717 million deal consists of CRC offering 100% stock to BRY shareholders at a 15% premium at an exchange ratio of 0.0718 shares of CRC for each BRY share plus CRC's assumption of $408 million in BRY net debt. Pro forma ownership will be 96% CRC, 4% BRY. Closing is 1Q 2026.

The deal occurred just days after California approved a set of reforms designed to slow and reverse the growing dependence of foreign-sourced oil that serves as feedstock for its local refineries. Currently, the state sources just 22% of its needs locally and now seeks to raise that number to at least 25%. These reforms are set to kick in effective January 1, 2026. The backbone of the reforms calls for issuing up to 2,000 well permits annually in Kern County. For perspective, just 88 wells were brought online in this county which accounts for >70% of the Golden State's total oil volumes.

Contents and Insights:

------ California Wants More Local Oil: Beginning January 1, California will seek to issue up to 2,000 permits annually in Kern County, home to >70% of the state's oil production.

------ CRC Extends Its Lead As California's Top Operator: Analysis of the $717 million buy of Berry Corp.

------ Berry's Exit Ends 100+ Years in California: Clarence Berry brought on its first oil well in Kern County in 1909.

------ Three Key Takeaways: CRC buys PDP at attractive valuation, has proven track record (seen in AERA purchase) to deliver on cost synergies, and has an option with Berry's Uinta assets to sell or hold.

------ Historical Deal Analysis: A table identifying all transactions by CRC and BRY >$100 MM.

------ California Has Great Rock: Home to some of the country's largest elephant oilfields, the greenlight from Sacramento bodes well for CRC to get back to drilling and grow production through the drill bit."

------Berry Holds 100,000 Acres in Utah's Uinta Basin. The Uinta core has seen some excellent results from horizontal redevelopment and certainly grabbed headlines when SM & NOG (80/20) paid $2.5B for XCL's position and FourPoint paid $2.0B for OVV's position. Some analysts expect CRC to put Berry's position up for sale next year.

Here are our quick takeaways from our report along w/ two slides.

Quick Quotes:

------- "It's All About California" “Sacramento legislation clears way for MORE drilling in the State.”

------- Content:  “We rank top California operators, provide a history of deals for CRC & BRY, present California's and Kern County's share oil volumes & drilling since 1980. California oil volumes peaked 40 years ago at 1.1 MMBOPD and have since declined by 75% to ~280,000 BOPD.”

------- Contrast: “Just 88 wells were brought online in Kern County last year. Now the path is cleared is issue up to 2,000 Kern County permits annually.”

------- Context: “CRC also gets 100,000 acres in Utah's Uinta Basin which is seeing a major horizontal redevelopment across at least five reservoirs. Berry just completed its first horizontal pad development bring on four 3-mile laterals in the Uteland Butte which is producing ~3,900 BOEPD (93% oil). For perspective, Berry produced 4,200 BOEPD in legacy volumes in 1H25. "

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Here's an Overview

#2---

Here's our Insight & Intel on the Deal

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