California Resources Corporation · NYSE:CRC
California Resources — Investor Presentation (May 2024)
36 slides from California Resources's investor presentation, May 9, 2024
Slide 1: Investor Presentation May 2024
Investor Presentation May 2024
Slide 2: Forward-looking statements
2 • fluctuations in commodity prices, including supply and demand considerations for our products and services; • decisions as to production levels and/or pricing by OPEC or U.S. producers in future periods; • government policy, war and political conditions and events, including the military conflic
Slide 3: Additional Information and Where to Find It
3 Additional Information and Where to Find It This communication may be deemed to be solicitation material in respect of the transactions contemplated by the merger agreement pursuant to which California Resources Corporation (“CRC”) has agreed to combine with Aera Energy, LLC (“Aera”) (the “Merger
Slide 4: CRC: Strong Foundation Creates Quality Investment Opportunity
4See Slide 31 “Assumptions, Estimates and Endnotes” CRC: Strong Foundation Creates Quality Investment Opportunity Integrated Asset Prioritizes Cash Generation ▪ Conventional assets with predictable production and low reinvestment ratio ▪ High margins: Oil weighted with pricing based on local third-p
Slide 5: CRC: Robust 1Q24 Results, Strong Balance Sheet Position, Ample Liquidity
CRC: Robust 1Q24 Results, Strong Balance Sheet Position, Ample Liquidity and Financial Flexibility ▪ Generated $149MM in Adj. EBITDAX*; $33MM in free cash flow* ▪ Net Production: 76MBoe/d (63% oil); Reservoirs performed as expected with flat entry to exit gross production ▪ CRC has filed the Aera Me
Slide 6: Reliance on Imports Creates Strong Commodity Price Realizations
14.1% 7.8% 9.4% 5.8% 3.9% Note: 5 largest contributors to domestic GDP. Source: BEA, preliminary data for 4Q23; EIA Reliance on Imports Creates Strong Commodity Price Realizations for Local Production CRC’s commodity realizations continue to trend above domestic averages See Slide 31 “Assumptions, E
Slide 7: California Needs Low Carbon Intensity Domestic Natural Gas
0 50 100 150 200 250 300 2023 2035 2045 Solar - All Battery Storage Gas Wind - All Hydro - All Hydrogen CT Other California Needs Low Carbon Intensity Domestic Natural Gas See Slide 31 “Assumptions, Estimates and Endnotes” 7 1.2 1.3 1.3 1.2 1.1 0.7 0.7 0.6 0.7 0.7 2.1 2.1 1.9 1.9 1.6 1.7 1.6 1.7 1.7
Slide 8: CRC's Natural Gas Inventory Depth – 1Tcf Opportunity
CRC’s Natural Gas Inventory Depth – 1Tcf1 Opportunity See Slide 31 “Assumptions, Estimates and Endnotes” 8 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Socal Border $/MMBtu Socal CG $/MMBtu PGE CG $/MMBtu NYMEX HENRY HUB $/MMBtu CRC’s Opport
Slide 9: Delivered a Valuation Marker for Huntington Beach Real Estate Asset
Delivered a Valuation Marker for Huntington Beach Real Estate Asset ▪ Fort Apache: 1810 Pacific Coast Highway, Huntington Beach, CA ▪ CRC sold the real estate asset for total proceeds of $10MM ▪ Remediation work: • Plugged and abandoned (P&A) six wells • Minimal surface infrastructure removal Over 1
Slide 10: CRC Pursues Multiple Paths to Permits in 2025
CRC Pursues Multiple Paths to Permits in 2025 10 ▪ PRELIMINARY REVIEW determines if an activity is a project requiring CEQA review ▪ INITIAL STUDY, if deemed to require further CEQA review, an initial study will assess environmental effects. Projects may choose to go to EIR if known effects exist. ▪
Slide 11: Proven Management Team Positioned to Deliver on the CRC Value Proposition
Proven Management Team Positioned to Deliver on the CRC Value Proposition 11 Experienced Energy sector management team with decades of California experience, across CRC and other firms Diverse skillset leading oil and gas assets, infrastructure and energy transition businesses Proven leadership with
Slide 12: Experienced Board of Directors
Experienced Board of Directors 12 Summary of Director and Director Qualifications and Experience Andrew B. Bremner Tiffany (TJ) Thom Cepak James N. Chapman Francisco J. Leon Mark A. (Mac) McFarland Nicole Neeman Brady Christian S. Kendall William B. Roby Alejandra (Ale) Veltmann Board of Directors E
Slide 13: California Resources Will Continue to Deliver on Strategic Goals
California Resources Will Continue to Deliver on Strategic Goals Source: CRC estimates. Timeline is not to scale. See Slide 31 “Assumptions, Estimates and Endnotes” 13 ▪ Grow free cash flow through optimization of current asset base ▪ Natural gas opportunity set presents upside potential ▪ Creating
Slide 14: Pro Forma CRC
Pro Forma CRC
Slide 15: Aera Merger – Highly Accretive, Complements CRC Assets
15 See Slide 31 “Assumptions, Estimates and Endnotes” Northern California: Sacramento Basin; Central California: San Joaquin, Salinas & Ventura Basins; Southern California: Los Angeles Basin Aera Merger – Highly Accretive, Complements CRC Assets ATTRACTIVELY PRICED AND ACCRETIVE TO KEY FINANCIAL MET
Slide 16: Transformational Transaction Creates Leading California Operator
’23 Adj. EBITDAX*,1 ($MM) $1,775 Combined ‘23 Net Production (MBoe/d) 160 ’23 Gross Production Decline (%) 6% ‘23 Reserves3 (MMBoe) 605 SJB Storage Capacity4 (MMT) 100 Potential Class VI Vault Permits Filed with the EPA4 8 San Ardo Combining with CA’s 2nd Largest Oil Producer2 Salinas Basin Net Acre
Slide 17: Productive Assets Support Strong Combination: Reserves Overview
17 92% 8% PD PUD 80% 14% 6% Oil Natural Gas NGL 90% 10% PD PUD Productive Assets Support Strong Combination: Reserves Overview1 Note: Closing is subject to customary closing conditions, regulatory approvals and CRC shareholder approval. See Slide 32 “Assumptions, Estimates and Endnotes” Category Net
Slide 18: Aera's Reservoirs and Operations Performed Similar to CRC
18 50 55 60 65 70 85 90 95 100 105 January December 103.3 96.9 IN 2023, AERA'S RESERVOIRS AND OPERATIONS PERFORMED SIMILAR TO CRC CRC Gross Production (MBoe/d) January December CRC Gross Oil Production (Mbbl/d) ~6% '23 Base Decline ~7% '23 Base Decline 64.8 60.2 Low Decline Asset Base… 70 75 80 85 9
Slide 19: Low Capital Intensity Reservoirs
29.0% 55.0% 28.0% 2021 2022 2023 10.0% 18.0% 39.0% 2021 2022 2023 Available Activity Net Production impact (% Decline per Year) Pro Forma Combined Capital ($MM per year) Targeted Near Term Planned Activity Base Decline of 10% to 13% 1 rig Through 2025 ~3% - 5% $50 - $65 per rig Plus $80 - $100 in wo
Slide 20: Substantial and Resilient PDP Base Provides Robust Asset Coverage
20 Note: Closing is subject to customary closing conditions, regulatory approvals and CRC shareholder approval. See Slide 32 “Assumptions, Estimates and Endnotes” Substantial and Resilient PDP Base Provides Robust Asset Coverage KEY POINTS ▪ Pro Forma combined PD production expected to provide resil
Slide 21: PD Reserves Free Cash Flow Further Enhanced with Targeted Synergies
PD Reserves Free Cash Flow* Further Enhanced with Targeted Synergies PRO FORMA 5 YEAR CUMULATIVE PD RESERVES FREE CASH FLOW* DISCOUNTED AT 10%1 PLUS HEDGES $B 21 AERA MERGER EST. ANNUAL SYNERGIES TARGETED AREAS G&A Infrastructure Sourcing & Supply Chain Operational Excellence $570MM See Slide 32 “As
Slide 22: Superior Leverage Profile vs. Peer Group
22 SUPERIOR LEVERAGE PROFILE VS. PEER GROUPCREDIT HIGHLIGHTS Strong Support From Banking & Credit Institutions 2024E Leverage Ratio*, 2 Significant Bank Market Support1 ▪ RBL elected commitments upsized from $630MM to $1,100MM ▪ Pro forma borrowing base increased from $1,200MM to $1,500MM Rating Age
Slide 23: Combined Pro Forma Hedge Book
Combined Pro Forma Hedge Book Note: Strip pricing as of April 22, 2024. See Slide 32 “Assumptions, Estimates and Endnotes” 23 2H24 1H25 2H25 1H26 2H26 2027 SOLD CALLS Barrels per Day 29,500 30,000 29,500 - - - Weighted- Average Price per Barrel $90.07 $87.08 $87.11 - - - SWAPS Barrels per Day 59,088
Slide 24: Cash Flow Priorities and Credit Highlights
Cash Flow Priorities and Credit Highlights
Slide 25: Capital Allocation Priorities Centered on Balance Sheet Strength
Capital Allocation Priorities Centered on Balance Sheet Strength 25 Maintain Fortress Balance Sheet ▪ Targeting leverage ratio* of <0.5x within 12 months post close through further debt reduction1 ▪ Maintain robust liquidity* Return Cash to Shareholders ▪ Enhancing equity value via fixed dividend an
Slide 26: California Resources Credit Highlights
California Resources Credit Highlights LARGE, STABLE PRODUCTION BASE WITH LOW DECLINES AND STRONG COLLATERAL COVERAGE ROBUST FREE CASH FLOW GENERATION SUPPORTED WITH OPPORTUNISTIC HEDGING PREMIUM PRICING ADVANTAGED BUSINESS WITH GROWTH STRONG AND PROTECTED BALANCE SHEET PROVEN MANAGEMENT TEAM WITH T
Slide 27: Appendix
Appendix
Slide 28: CRC Advantage: Local Production with Low Carbon Intensity
28 CRC Advantage: Local Production with Low Carbon Intensity Source: Boston Consulting Group. Note: Data for CRC standalone only. Chevron reflects California operations only. Petroleum Refinery Life-Cycle Inventory Model (PRELIM) model covers midstream operations and Oil Products Emissions Module (O
Slide 29: 2023: Sustainability & Social Responsibility Is In Our Business Model
2023: Sustainability & Social Responsibility Is In Our Business Model 29 ▪ Achieved our second-best TRIR1 in the Company’s history (CRC’s best since 2020 COVID period) ▪ Qualified for 22 National Safety Awards for 2023 safety performance ▪ Donated $2.5MM in total charitable giving to non-profit orga
Slide 30: Disclosures
Disclosures
Slide 31: Slide footnotes and disclosures (Slides 4 onward)
Slide 4: (1) Reserves information shown as of December 31, 2023 using SEC Prices (after factoring in price realizations) of $82.84 per barrel for oil and $2.64 per MMbtu for natural gas. PV-10 is a non-GAAP measure. (2) Electricity Margin is calculated as the difference between Electricity Sales and
Slide 32: Slide footnotes and disclosures (Slide 17 onward)
Slide 17: (1) See “The California Resources and Aera Energy Merger” announcement presentation from February 7, 2024, for calculation of transaction value and other important information. See Aera Merger definitive proxy statement filed May 7, 2024 for additional information. Closing is subject to cu
Slide 33: Adjusted EBITDAX Reconciliation
Adjusted EBITDAX Reconciliation 33 For the Year Ended December 31, 2023 For the Year Ended December 31, 2023 For the 58-days Ended February 27, 2023 For the Year Ended December 31, 2023 For the Year Ended December 31, 2023 ($MM) CRC Aera Aera Aera Combined Transaction Adjustments - Disposals Transac
Slide 34: Adjusted EBITDAX Reconciliation (cont.)
Adjusted EBITDAX Reconciliation (cont.) 34 For the Year Ended December 31, 2023 For the Year Ended December 31, 2023 For the 58-days Ended February 27, 2023 For the Year Ended December 31, 2023 For the Year Ended December 31, 2023 ($MM) CRC Aera Aera Aera Combined Transaction Adjustments - Disposals
Slide 35: Non-GAAP Reconciliations
Non-GAAP Reconciliations 35 The following table presents a reconciliation of the GAAP financial measure of Standardized Measure of discounted future net cash flows (Standardized Measure) to the non-GAAP financial measure of PV-10. PV-10 is a non-GAAP financial measure and represents the year-end pre
Slide 36: Investor Relations and Media Contacts
. Joanna Park (Investor Relations) 818-661-3731 Joanna.Park@crc.com Richard Venn (Media) 818-661-6014 Richard.Venn@crc.com CaliforniaCashflow Carbon Higher Less Better
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