"I played pretty well on the back nine," Watney said after coming home in four-under 32 to end an overcast day at the base of the Santa Monica Mountains two ahead of compatriots Keegan Bradley and Jim Furyk, and Northern Ireland's Graeme McDowell.
McDowell signed for 69, including back-to-back birdies to finish his round. Bradley, one of the most vocal defenders of the now endangered belly putter, also shot three under as did his USA Ryder Cup team-mate Furyk.
Webb Simpson and Bo Van Pelt are another shot back alongside Tiger Woods, who birdied the second but struggled for fluency thereafter.
McDowell aside, there were only two other non-Americans in the field, with Australia's Jason Day in a share of eighth on one under and England's Ian Poulter tied for 11th with a 73.
Watney added: "The front nine was a little sloppy. My short game is definitely where I need it to improve for next year. I've kind of been getting into that a little bit, and it helped me today."
Asked what particular area of his short game he had been working on, Watney replied: "For me personally, I can always get better at chipping.
"I'm not at the top of the tour in chipping stats, that's for sure. So that is a huge key, especially in this month of December for me.
"But putting can hide a lot of things," said Watney, who totalled 27 putts in his first round. "If you make a lot of eight and 10-footers, you don't have to chip it as well as other guys, so that's definitely a huge key."
Watney's overall form improved markedly after he worked with swing coach Butch Harmon for a week before the US Open in June.
Following a string of consistent performances, he went on to win the fifth PGA Tour title of his career at the Barclays tournament in August, then triumphed at the PGA Tour co-sanctioned CIMB Classic in Malaysia last month.
"After spending some time with Butch, something kind of clicked there, and I started playing much better," the world number 16 said. "Now I want to keep going higher (in the rankings).
In-contention Bradley, who has spoken up on several occasions for those who use so-called 'pivot points' with long putters, was quizzed about the joint proposal by USGA and Royal & Ancient to outlaw the technique from 2016 at the end of his round.
He revealed he had received abuse for his favoured putting stroke on Twitter and called for a greater empathy from those within the game.
"I've been catching such flak on Twitter. I had a guy telling me to send my application in to Burger King for 2016," he said.
"I feel like the USGA has really put an 'X' on our back and shone a light on us, and I don't know if that's fair.
"When we started putting with it, they were legal, and they still are. It's a sticky situation, and I hope people can see through that."