A new California bill could revitalize operations in the Golden State
Shortly after the California state legislature passed Senate Bill 237, which allows 20,000 new drill oil well permits over the next decade and is part of a six-bill package focused on energy and climate needs, California Resources Corporation (CRC) announced an all-stock merger agreement with Kern County neighbor Berry Petroleum. The deal is valued at $717 million, making the merged company value over $6 billion. Most of the region’s existing wells are long-producing conventional assets with proved reserves. California governor Gavin Newsom has since signed the package of bills into law.
Figure 1. Kern County locations and production for CRC and Berry.
Using TGS Well Data, we can analyze Berry’s production over time in Kern County. These wells are averaging a combined 22,000 bbl/d and 1,500 mcf/d amongst 2,400 active wells. This adds a significant amount of oil to CRC’s 90,000 bbl/d and 223,000 mcf/d output in the same area with 15,000 active wells.
Production in California has been on a steady decline for decades as the state has been well known for leading in energy transition initiatives and environmental protections that often cause increased regulations and costs for operators. However, rising prices at the pump combined with lower demand and possible refinery shutdowns have caused a change of heart amongst legislators to hopefully alleviate future financial pressure for residents with an increased local supply expected to lower costs. There is also the possibility that increased drilling may not increase profitability if demand remains low amongst consumers preferring to move to electric and hybrid vehicles. Although the state did not fully grant the industry’s demand for a complete exemption from the California Environment Quality Act for new wells, the SB237 has made it easier to permit and increase drilling in Kern County. This follows similar recent federal changes allowing streamlined permitting in New Mexico and the results of an environmental analysis in Wyoming.
In addition to Berry’s California assets, the company’s venture in Utah’s Uinta Basin, an area which has received a received boost to activity, is also a key contributor to the combined company’s cashflow. Berry recently revealed that they have lowered drilling costs by $500,000 per well by drilling three-mile laterals. Using TGS Well Data Analytics, we can see that the Uinta wells are averaging 2,400 bbl/d and 19,000 mcf/d. This inclusion of wells in a different state allows CRC to be more flexible with their funds and helps to diversify the company’s portfolio.
Figure 2. Berry’s Uinta assets.
While the deal is still pending with the expected closing in Q1 2026, CRC and Berry are looking to move quickly on the new allocations of permitting. It may take some time before the benefits are seen at the pump, but the new legislation is setting the groundwork for long-term energy security in the state.
To explore TGS available well data or schedule a demo, contact us at WDPSales@tgs.com.