California Resources Corporation · NYSE:CRC

California Resources — Investor Day (October 2015)

101 slides from California Resources's investor day presentation, Oct 13, 2015

1. Slide 1: Long Beach Analyst Day & Site Tour Day 1

   Long Beach ANALYST DAY & SITE TOUR Day 1 | October 13, 2015

2. Slide 2: Forward-Looking / Cautionary Statements

   Analyst Presentation – Day 1 FORWARD-LOOKING / CAUTIONARY STATEMENTS This presentation contains forward-looking statements that involve risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects, and reported results should n

3. Slide 3: Cautionary Statements Regarding Hydrocarbon Quantities

   Analyst Presentation – Day 1 CAUTIONARY STATEMENTS REGARDING HYDROCARBON QUANTITIES We have provided internally generated estimates for proved reserves and aggregated proved, probable and possible reserves (“3P Reserves”) as of December 31, 2014 in this presentation, with each category of reserves e

4. Slide 4: CRC Agenda

   Analyst Presentation – Day 1 3 • Day One  Strategic Overview of CRC – Todd Stevens, President & CEO  Marketing Overview – Carlos Contreras, VP Marketing  Regulatory Overview – Charlie Weiss, EVP – Public Affairs  Waterflood Primer – Jerry Foster, Manager IOR/EOR  Los Angeles and Ventura Basins

5. Slide 5: World Class Resource Base and Investment Highlights

   Analyst Presentation – Day 1 World Class Resource Base • Interests in 4 of the 12 largest fields in the lower 48 states • 768 MMBoe proved reserves (12/31/2014) • Largest producer in California on a gross operated basis with significant exploration and development potential California Heritage • Str

6. Slide 6: CRC Strategic Overview

   CRC STRATEGIC OVERVIEW Todd Stevens | President & CEO | October 13, 2015

7. Slide 7: Basin Reserves and Production Overview

   Analyst Presentation – Day 1 Sacramento Basin 19 MMBoe Proved Reserves 7 MBoepd production San Joaquin Basin 525 MMBoe Proved Reserves 114 MBoepd production Ventura Basin 58 MMBoe Proved Reserves 9 MBoepd production Los Angeles Basin 166 MMBoe Proved Reserves 33 MBoepd production • World-Class Resou

8. Slide 8: CRC Overview: California Pure-Play

   Analyst Presentation – Day 1 CRC OVERVIEW California Pure-Play Net Resource Overview • An independent E&P company spun off by Occidental  Focused on high-return assets in California • Largest private mineral acreage-holder, with 2.3 million net acres1  ~60% of total net mineral interests position

9. Slide 9: CRC Is the Leading Operator in California

   Analyst Presentation – Day 1 8 CRC IS THE LEADING OPERATOR IN CALIFORNIA 0 50 100 150 200 250 300 G ro ss O p er at ed M B o ep d • 86% of CA production from top 5 operators*Top California Producers in 2014* Growth of Top California Producers 195 159 139 37 35 - 20 40 60 80 100 120 140 160 180 200 C

10. Slide 10: Capital Structure

    Analyst Presentation – Day 1 9 • Deleveraging is a priority • February credit facility amendment provides additional financial flexibility • Ratings trigger provides security on Bank Facility – Confident in asset coverage • Current Liquidity of >$750 Million, at September 30 • Strategic and opportun

11. Slide 11: 2015-16 Strategic Focus

    Analyst Presentation – Day 1 10 • Priorities and Response • Deleverage the Balance Sheet for Flexibility • Protect the Base • Defend our Margins • Prepare for Change in Cycle 2015-16 STRATEGIC FOCUS

12. Slide 12: CRC 2015 YTD Priority Delivery

    Analyst Presentation – Day 1 11 CRC 2015 YTD PRIORITY DELIVERY 1. Address Balance Sheet 2. Adjust Activity Levels for Current Environment • Live within means and bring capital investments in line with projected cash flow 3. Focus on base production and protecting our margins 4. Align costs for the c

13. Slide 13: 2015-16 Strategic Focus

    Analyst Presentation – Day 1 12 2015-16 STRATEGIC FOCUS • Priorities and response • Deleverage the Balance Sheet for Flexibility • Protect the Base • Defend our Margins • Prepare for Change in Cycle

14. Slide 14: Capital Allocation Priority: De-leveraging Balance Sheet

    Analyst Presentation – Day 1 • Exploring adjustments to capital structure  Total long-term debt: ~$6.5 billion, net, at 6/30/2015  Proactively sought and received favorable amendment to revolver and term loan through end of 2016  Resource base enables a variety of alternatives  Given the long ti

15. Slide 15: Deleveraging Options

    Analyst Presentation – Day 1 14 • We have accessed various deleveraging alternatives and are taking decisive steps to delever the balance sheet DELEVERAGING OPTIONS UPSTREAM • JV • M&A MIDSTREAM • MLP • Drop into Existing MLP • Sale • Triple Net Lease CAPITAL MARKETS AVAILABLE ASSETS • 14 Gas Plants

16. Slide 16: 2015-16 Strategic Options

    Analyst Presentation – Day 1 15 2015-16 STRATEGIC OPTIONS • Priorities and response • Deleverage the Balance Sheet for Flexibility • Protect the Base • Defend our Margins • Prepare for Change in Cycle

17. Slide 17: Capital Allocation Approach

    Analyst Presentation – Day 1 16 CAPITAL ALLOCATION APPROACH • Portfolio Management since spin-off • Three principal drivers: o Maximize long-term value – VCI > 1.3 o Oil production growth o Financial discipline – self-funding business • Results in combination of projects that provide quick payback (

18. Slide 18: Flexible High Return Inventory

    Analyst Presentation – Day 1 17 • Capital associated with currently identified projects delivering VCI >1.3* • Current average well cost ~$1.1 MM • Multi-year inventory to maintain flat production at different points in the price curve FLEXIBLE HIGH RETURN INVENTORY $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.

19. Slide 19: Best in Class Corporate Decline Rate

    Analyst Presentation – Day 1 18 BEST IN CLASS CORPORATE DECLINE RATE Unlabeled operators include : AMXG, AREX, BBG, BCEI, CLR, CPE, CRK, CWEI, CXO, EGN, EOG, EPE, EXXI, FANG, GDP, HK, JONE, LPI, MPO, NFX, OAS, PDCE, PE, PVA, PXD, ROSE, RSPP, SFY, SM, SN, TPLM, WTI, XEC Source: ITG IR, raw data provi

20. Slide 20: Capital Efficient Portfolio Outperforms in Lower for Longer

    JRCO 0915Analyst Presentation – Day 1 0 20 40 60 80 100 120 2011 2012 2013 2014 2015 2016E 2017E 2018E M b o p d CRC Historical Maintenance CRC Decline Average Peer Company Median Peer ~35% Corporate Decline CRC ~15% Corporate Decline CAPITAL EFFICIENT PORTFOLIO OUTPERFORMS IN ‘LOWER FOR LONGER’ 19

21. Slide 21: Resource Base Enables Resilient Production Profile

    JRCO 0915Analyst Presentation – Day 1 Rich asset portfolio and thoughtful capital allocation deliver high margin production and operational flexibility through the price cycle • Conventional assets have relatively low decline rates, long production life • Steamflood and waterflood investments will d

22. Slide 22: Diversified Production – Top Fields

    Analyst Presentation – Day 1 21 DIVERSIFIED PRODUCTION – TOP 10 FIELDS 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 2011 2012 2013 2014 1H 2015 B o e p d Production by Field Unconventional Waterflood Conventional Steamflood Gas Other Fields

23. Slide 23: 2015-16 Strategic Focus

    Analyst Presentation – Day 1 22 2015-16 STRATEGIC FOCUS • Priorities and response • Deleverage the Balance Sheet for Flexibility • Protect the Base • Defend our Margins • Prepare for Change in Cycle

24. Slide 24: Strong Returns Through the Commodity Cycle

    Analyst Presentation – Day 1 23 STRONG RETURNS THROUGH THE COMMODITY CYCLE Oil Prices ↑ / Gas Prices ↓ • Invest in steam floods (above 5x Oil/Gas ratio) • Conventional, waterflood and unconventional oil opportunities • Gas used at the Elk Hills power plant (electricity) • San Joaquin and Ventura Con

25. Slide 25: CRC Executing on Controllables

    JRCO 0915Analyst Presentation – Day 1 CRC EXECUTING ON CONTROLLABLES 24 1236 232 0 200 400 600 800 1000 1200 1400 1600 1H14 Volume Price Costs Interest Tax Working Capital and Other 1H15 $ M M O p e ra ti n g C a sh F lo w

26. Slide 26: Stable Leasehold Position

    Analyst Presentation – Day 1 25 STABLE LEASEHOLD POSITION 41,757 46,768 137,858 96,872 937 391 2,192 7,638 9,626 8,336 18,422 24,557 0 500,000 1,000,000 1,500,000 2,000,000 2014 2015 2016 2017 N e t A cr e s San Joaquin Basin Ventura Basin Sacramento Basin Note: Los Angeles Basin has no net undevelo

27. Slide 27: 2015-16 Strategic Focus

    Analyst Presentation – Day 1 26 2015-16 STRATEGIC FOCUS • Priorities and response • Deleverage the Balance Sheet for Flexibility • Protect the Base • Defend our Margins • Prepare for Change in Cycle

28. Slide 28: Lower for Longer?

    Analyst Presentation – Day 1 27 LOWER FOR LONGER? 0 0.2 0.4 0.6 0.8 1 1.2 1.4 8/12/1985 8/12/1986 8/12/1987 8/12/1988 8/12/1989 8/12/1990 WTI Crude Price Index 1986 Price Decline 2014 Price Decline Source: Bloomberg 2014 Price Series begins at June 1, 2014.

29. Slide 29: Can We Trust the Curve?

    Analyst Presentation – Day 1 28 CAN WE TRUST THE CURVE? 0 20 40 60 80 100 120 140 1 /1 /2 0 0 0 9 /1 /2 0 0 0 5 /1 /2 0 0 1 1 /1 /2 0 0 2 9 /1 /2 0 0 2 5 /1 /2 0 0 3 1 /1 /2 0 0 4 9 /1 /2 0 0 4 5 /1 /2 0 0 5 1 /1 /2 0 0 6 9 /1 /2 0 0 6 5 /1 /2 0 0 7 1 /1 /2 0 0 8 9 /1 /2 0 0 8 5 /1 /2 0 0 9 1 /1 /2

30. Slide 30: What Is the New Normal?

    Analyst Presentation – Day 1 29 WHAT IS THE NEW NORMAL? Conventional/Pre-Shale Tight Spare Capacity Political PremiumsNew Normal Source: Bloomberg, WTI (1/1995 – 9/2015) WTI $/Bbl F re q u e n cy (D a ys ) WTI Daily Price Frequency

31. Slide 31: Marginal Supply Needs $70+ (Brent)

    Analyst Presentation – Day 1 30 MARGINAL SUPPLY NEEDS $70+ (BRENT) Goldman Sachs estimates for breakeven prices do not include the costs of acreage acquisition or exploration that, if included, would lead to higher breakeven commodity prices. This can be particularly material for North American onsh

32. Slide 32: California Is a World-Class Oil Province

    Analyst Presentation – Day 1 31 CALIFORNIA IS A WORLD-CLASS OIL PROVINCE 1 Produced volumes: California Division of Oil, Gas & Geothermal Resources (“DOGGR”). • Over 35 billion Boe produced since 18761 • Pico Canyon #4 was the first well with commercial production west of the Rockies and produced fr

33. Slide 33: Large In Place Volumes with Significant Upside

    JRCO 0915Analyst Presentation – Day 1 Recovery Factors for Discovered Fields¹ 9 40 0 5 10 15 20 25 30 35 40 45 Cum Recovered to Date Remaining 3P + Contingent RF + 10% RF + 15% RF + 20% Original in Place Billion Boe 1 Does not include undiscovered unconventional resource potential. • In place volume

34. Slide 34: Creating a Recovery Value Chain

    JRCO 0915Analyst Presentation – Day 1 • Conventional fields in various stages of development • Base assets in place – advancing recovery with traditional means • Moving recoveries from primary through EOR • Primary (94 fields) • Production with natural energy of reservoir or gravity drainage • Water

35. Slide 35: Multiple Stacked Pay Opportunities

    Analyst Presentation – Day 1 34 MULTIPLE STACKED PAY OPPORTUNITIES • California basins have significant resource potential in stacked conventional and unconventional reservoirs • Conventional reservoirs: • Reservoirs that are capable of natural flow and will produce economic volumes of oil and gas w

36. Slide 36: Advancement of Oil Field Technology in California

    Analyst Presentation – Day 1 35 THE ADVANCEMENT OF OIL FIELD TECHNOLOGY IN CALIFORNIA 1930 1940 1950 1960 1970 1980 19901910 1920 2000 2010 2020 Majors In California Focus on Shallow Steam Fields left undeveloped CRC Growth Hand-drawn maps Open Hole Completions 3D Seismic and Microseismic Cable Dril

37. Slide 37: World Class Assets with Significant Development Opportunities

    Analyst Presentation – Day 1 36 2014 Net Proved Reserves (MMBoe) 768 2014 % Oil– Net Proved 72% Pre-Tax Proved PV-10 ($ millions)1 $16,091 2015 Avg. Net Production (MBoepd)2 163 2015 % Oil2 65% 2015 Net Acreage (‘000 acres) 3 2,350 2014 Identified Gross Locations 19,800 1 PV-10 shown as of 12/31/14

38. Slide 38: Well Positioned for Growth in Recovery

    Analyst Presentation – Day 1 • World-class asset base with diverse and rich resources. • Capacity for significant production growth at higher prices as we develop high-return, lower-risk opportunities. • Committed to capital budgets that live within our cash flows. • As we bring our capital structur

39. Slide 39: Marketing

    MARKETING Carlos Contreras | VP Commercial | October 13, 2015

40. Slide 40: Key Takeaways: Crude, Natural Gas, NGLs

    Analyst Presentation – Day 1 39 • Crude • With the isolating factors of infrastructure and necessity for waterborne crude in the CA crude market, postings tend to follow the Brent benchmark along with the Brent WTI spread • Natural Gas • CRC produces 1/3 of the natural gas in California • CRC has th

41. Slide 41: California Is an Island

    Analyst Presentation – Day 1 40 Waterborne crude imported into the Gulf and East Coast can flow through the center and east regions of the country with the advanced pipe and rail network. 71% of waterborne crude is imported into these two regions. Unlike California where limited infrastructure inves

42. Slide 42: CRC – Price Realizations

    Analyst Presentation – Day 1 41 CRC – PRICE REALIZATIONS $95.12 $94.21 $97.97 $93.00 $53.29 $103.80 $104.02 $104.16 $92.30 $51.51 $110.90 $111.70 $108.76 $99.51 $59.33 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 2011 2012 2013 2014 1H15 $ /B b l WTI Realizations Brent $4.11 $2.81 $3.66 $4.39 $2.90 $4

43. Slide 43: CRC Crude – Daily Marketed Barrels

    Analyst Presentation – Day 1 42 CVO 260 P66 120 TSO 165 VLO 170 Shell 165 SF Bay Area Refineries CVX 290 TSO 265 TSO 100 P66 140 VLO 135 XOM 155 LA Area Refineries 72M 6.5M 40M SJ Valley Refineries CRC crude California Refining Capacity: 13 total Refineries, 2.0 MMBopd Kern 25 SJVR 10 CRC CRUDE – DA

44. Slide 44: Waterborne Imports Dominate CA Supply

    Analyst Presentation – Day 1 800 909 1,049 1,037 1,087 1,005 1,068 1,014 941 1,070 538 547 547 548 551 559 564 565 566 55851 50 52 51 48 51 53 50 50 46 8 13 16 32 16 19 13 15 8 3 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 1Q 2013 2Q 2013 3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2

45. Slide 45: California Crude by Rail

    Analyst Presentation – Day 1 44 Source: California Energy Commission Energy Almanac, Oil Change International • Rail meets <1% of refined crude demand • Some infrastructure built, many projects on hold • High transport costs impair arbitrage CALIFORNIA CRUDE BY RAIL Plains Terminal

46. Slide 46: Opportunistically Built Hedge Portfolio

    Analyst Presentation – Day 1 45 OPPORTUNISTICALLY BUILT HEDGE PORTFOLIO • Hedge book started at zero post spin target hedges on 50% of production • Strategy focuses on protecting cash flow for capital investments • Hedge transactions completed with multiple counterparties $40 $45 $50 $55 $60 $65 $70

47. Slide 47: CRC Natural Gas Market

    Analyst Presentation – Day 1 46 • CRC produces ~230,000 Mcf/d (4% of CA demand) • Ability to service markets throughout CA as well as others • 80% sold to Southern CA markets via SoCal Gas, Kern, Mojave • 20% sold to Northern CA market via PG&E, other direct markets • CRC’s Elk Hills Power Plant con

48. Slide 48: SoCal Border Basis Comparison to NYMEX Henry Hub

    Analyst Presentation – Day 1 47 SOCAL BORDER BASIS COMPARISON TO NYMEX HENRYHUB Historical: 2011-2014: New supply outside California causes NYMEX prices to weaken relative to California prices 1H15: Cold temps and higher demand in East keeps NYMEX prices high relative to California prices Forward: 2

49. Slide 49: Internal Hedge on Natural Gas

    Analyst Presentation – Day 1 48 INTERNAL HEDGE ON NATURAL GAS • 60,000 mmbtu/d Natural Hedge with thermal operations  Thermal Operations buys 60,000 mmbtu/d  When prices fall, Thermal Ops benefits from lower gas cost • More than 50% of our natural gas production is either internally hedged or fina

50. Slide 50: CRC Natural Gas Liquids Marketing

    Analyst Presentation – Day 1 49 • Largest NGL producer in CA ~20,000 bpd • Breakdown of NGL production:  Propane – 53%  Butane – 33%  Natural Gasoline – 14% • ~75% of the propane is sold into Mexican market  Balance sold locally • Normal and Iso Butane moves to LA and San Francisco Bay area refi

51. Slide 51: Summary

    Analyst Presentation – Day 1 50 • Crude • With the isolating factors of infrastructure and necessity for waterborne crude in the CA crude market, postings tend to follow the Brent benchmark along with the Brent WTI spread • Natural Gas • CRC produces 1/3 of the natural gas in California • CRC has th

52. Slide 52: Regulatory Overview

    REGULATORY OVERVIEW Charlie Weiss | EVP – Public Affairs | October 13, 2015

53. Slide 53: Proven Track Record in Sensitive Environments

    Analyst Presentation – Day 1 52 PROVEN TRACK RECORD IN SENSITIVE ENVIRONMENTS • Operator of choice in coastal environments • Proven coexistence with sensitive environmental receptors • Committed to excellence in safety and mechanical integrity

54. Slide 54: A Net Water Supplier

    Analyst Presentation – Day 1 53 A NET WATER SUPPLIER • Provide more reclaimed produced water to agriculture than the amount of fresh water we purchase for operations statewide • In 2014, we used approximately 79% of produced water in improved or enhanced recovery operations • 3-year goal: Increase n

55. Slide 55: Example: Long Beach Water Conservation

    Analyst Presentation – Day 1 54 EXAMPLE: LONG BEACH WATER CONSERVATION • Target 50% reduction in fresh water usage o Expect to reach 10 MBPD fresh water goal by YE15 o Compare to ~1.8 MMBPD water injected (~0.6%) o Remaining fresh water use by workers, power plant and island habitat • Economic ventu

56. Slide 56: Water Management Regulations

    Analyst Presentation – Day 1 55 WATER MANAGEMENT REGULATIONS • California is changing water rights and allocations o CRC’s water supplies have not been curtailed to date o CRC has reduced fresh water use through recycling and conservation measures o The state is reassessing longstanding permitted wa

57. Slide 57: Well Stimulation Regulations

    Analyst Presentation – Day 1 56 WELL STIMULATION REGULATIONS • 2015 regulations and studies should make hydraulic fracturing and well stimulation permitting more predictable o Final DOGGR well stimulation regulations in effect under Senate Bill 4 o State Water Board groundwater monitoring regulation

58. Slide 58: 2015 Legislative Developments

    Analyst Presentation – Day 1 57 2015 LEGISLATIVE DEVELOPMENTS • SB 350: Key state energy legislation enacted Governor’s goals to double electricity generation from renewables and energy efficiency of buildings by 2030 • State Assembly rejected other proposals this year to: o Restrict use of petroleu

59. Slide 59: Waterflooding

    WATERFLOODING Jerry Foster, PE | Reservoir Engineering Manager - IOR/EOR Team | October 13, 2015

60. Slide 60: Waterflood Primer Outline

    Analyst Presentation – Day 1 59  Definition  Recovery phases  Why waterflood?  Increase oil recovery  Key success factors  CRC portfolio  CRC demonstrates success  Take home messages Learn nomenclature & concepts Cliffs Notes

61. Slide 61: Definition: Waterflood

    Analyst Presentation – Day 1 60 DEFINITION: WATERFLOOD • Waterflooding is a process used to inject water into an oil- bearing reservoir for pressure maintenance as well as for displacing and producing incremental oil.

62. Slide 62: Recovery Phases – Oilfield Lifecycle

    Analyst Presentation – Day 1 61 RECOVERY PHASES – OILFIELD LIFECYCLE Conventional Recovery Enhanced Recovery Tertiary Recovery Other Polymer Solvent Thermal Pressure Maintenance Gas Reinjection Secondary Recovery Artificial Lift Pump - Gas Lift - Etc. Waterflood Natural Flow Primary Recovery

63. Slide 63: Recovery Phases – Oilfield Lifecycle

    Analyst Presentation – Day 1 62 RECOVERY PHASES – OILFIELD LIFECYCLE Primary Secondary Waterflood Tertiary Non Thermal Oil Rate Pressure Economic limit Time Average reservoir pressure Recovery Efficiencies (%OOIP) Source: U.S. Department of Energy 10% 20-40% +10% The oil rate decline for waterfloods

64. Slide 64: Waterflood Process

    Analyst Presentation – Day 1 63 WATERFLOOD PROCESS • Fill Up  Pressure up  Gas-oil ratio down  Oil decline rate slows  Averages 5 to 11% of project life • Inclining Production  Averages 6 to 30% of project life • Declining Production  Most of the project life is during this period  1.5 to 3 p

65. Slide 65: Waterflood Process

    Analyst Presentation – Day 1 64 WATERFLOOD PROCESS Source: Society of Petroleum Engineers – Waterflood Manual

66. Slide 66: Why Waterflood?

    Analyst Presentation – Day 1 65 WHY WATERFLOOD? • Most widely-used fluid injection process  Numerous successful smaller waterflood operators • It’s a “mature” technology  When were the first benefits of waterflooding reported in the literature? • Adequate produced water (recycled) readily availabl

67. Slide 67: Proven Method to Increase Oil Recovery

    Analyst Presentation – Day 1 66 PROVEN METHOD TO INCREASE OIL RECOVERY Primary + Waterflood Ultimate Recoveries 0 10 20 30 40 50 60 70 O il R e co ve ry (% O ri gi n a lO il- In -P la ce ) Primary Waterflood (Secondary) Each Bar Represents A Separate Field

68. Slide 68: Main Reasons for Increased Oil Recovery

    Analyst Presentation – Day 1 67 MAIN REASONS FOR INCREASED OIL RECOVERY 1. Pressure maintenance  Wells flow longer and at higher rates  Gas stays in the oil . . .  More gas in the oil results in lower viscosity  Less resistance to flow = more flow 2. Displacement of oil by water injection  We m

69. Slide 69: Displacement of Oil by Water – Continued

    Analyst Presentation – Day 1 68 DISPLACEMENT OF OIL BY WATER - CONTINUED • Injected water (blue truck) can efficiently displace oil in the water-wet system • Injected water (blue truck) cannot easily displace oil in the oil- wet system, unless . . . (see next slide) Oil-Wet Water-Wet Not so good Eas

70. Slide 70: Displacement of Oil by Water – Continued

    Analyst Presentation – Day 1 69 DISPLACEMENT OF OIL BY WATER - CONTINUED • Injected water (blue truck) “imbibes” into the reservoir rock • Tilted reservoir improves the “gravity-stability” Oil-Wet Better Traction Reservoir rock oil dropoil drop

71. Slide 71: Key Success Factors Are Well-Known

    Analyst Presentation – Day 1 70 KEY SUCCESS FACTORS ARE WELL-KNOWN • Reservoir Geometry • Lithology, Porosity, Permeability • Reservoir Depth • Continuity of Rock Properties • Fluid Saturations & Distributions • Fluid Properties • Relative Permeability • Primary Drive Mechanism(s) Source: Thomas, Ma

72. Slide 72: Geology – Depositional Environments

    Analyst Presentation – Day 1 71 GEOLOGY – DEPOSITIONAL ENVIRONMENTS Source: Waterflood A-Z Course OGCI

73. Slide 73: Complex Water Movement Mechanisms

    Analyst Presentation – Day 1 72 COMPLEX WATER MOVEMENT MECHANISMS Source: GeoArabia Special Publication 4, Volume 1: Barremian – Aptian Stratigraphy and Hydrocarbon Habitat of the Eastern Arabian Plate

74. Slide 74: Waterflood Optimization

    Analyst Presentation – Day 1 73 WATERFLOOD OPTIMIZATION • Pattern flood  appropriate for low dip • Peripheral flood (downdip)  fewer wells  better sweep when gravity stable injection well production well 5-spot 9-spot production well injection well 7-spot

75. Slide 75: Key Success Factors

    Analyst Presentation – Day 1 74 KEY SUCCESS FACTORS • Start the waterflood early in the field’s life • Understand the reservoir’s geology • Infill drill to reduce lateral pay discontinuities • Develop with 5-spot or line drive • Open all pay in both injectors and producers • Keep all producing wells

76. Slide 76: Surveillance and Waterflood Management

    Analyst Presentation – Day 1 75 SURVEILLANCE AND WATERFLOOD MANAGEMENT • Side view of water (blue) movement through vertical geologic layers • Orange/red = oil saturation Water production Oil production Water injection

77. Slide 77: Proper Integration Is a Key Success Factor

    Analyst Presentation – Day 1 76 PROPER INTEGRATION IS A KEY SUCCESS FACTOR TREATMENT -filtration INJECTION -pressures -rates -inj. index -profile SURVEILLANCE -diagnostic performance plots -pressure transient analysis -infill wells -cased hole logging -RFT pressures PRODUCTION -prod. index -lift met

78. Slide 78: CRC – Increasing Oil Recovery (Mount Poso)

    Analyst Presentation – Day 1 77 CRC – INCREASING OIL RECOVERY 0 1000 2000 3000 4000 5000 1-Feb-95 1-Feb-00 1-Feb-05 1-Feb-10 1-Feb-15 Mount Poso 20 Year Production Profile BOPD Well Count CRC Acquired 2007 • Field discovered by Shell in 1926 • CRC acquired in 2007 • Formations: Pyramid Hill and Vedd

79. Slide 79: CRC Recovery Value Chain

    Analyst Presentation – Day 1 78 CRC RECOVERY VALUE CHAIN • Primary production  94 Fields • Waterflood (secondary recovery)  17 Fields  250 MMBOE proved reserves 2014 • EOR including thermal methods  13 Fields

80. Slide 80: Waterflooding – Take Home Messages

    Analyst Presentation – Day 1 79 WATERFLOODING – TAKE HOME MESSAGES • Keeps oil rates higher for longer  Protect the base oil production • Mature technology  Critical success factors are well-known • Maintaining reservoir pressure  Allows oil to flow more easily – (i.e., lower oil viscosity)  Min

81. Slide 81: Southern Operations

    SOUTHERN OPERATIONS Frank Komin | EVP – Southern Operations | October 13, 2015

82. Slide 82: CRC South Key Takeaways

    Analyst Presentation – Day 1 Big fields get bigger! Focus: Sensitive environments, mature waterfloods, with generally low technical risk and proven repeatable technology across huge OOIP fields • Emphasize base management & maintaining low decline rates • Focus on reducing costs to defend margins •

83. Slide 83: CRC South Overview

    Analyst Presentation – Day 182 CRC SOUTH OVERVIEW Focus: Sensitive environments, mature waterfloods, with generally low technical risk and proven repeatable technology across huge OOIP fields • Emphasize base management & maintaining low decline rates • Focus on reducing costs to defend margins • We

84. Slide 84: CRC South Waterfloods

    Analyst Presentation – Day 1 83 CRC SOUTH WATERFLOODS 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 2011 2012 2013 2014 2015 B o e p d Net Rate from Waterfloods LONG BEACH TIDELANDS HUNTINGTON BEACH OTHER 1H

85. Slide 85: Los Angeles Basin

    JRCO 0915Analyst Presentation – Day 1 LOS ANGELES BASIN • Large, world class basin with thick deposits • Kitchen is the entire basin, hydrocarbons did not migrate laterally; basin depth (>30,000 ft) • ~10 billion barrels OOIP in CRC fields1 • Most significant discoveries date to the 1920s – past exp

86. Slide 86: Wilmington Field - Overview

    Analyst Presentation – Day 185 WILMINGTON FIELD - OVERVIEW Overview Field Map Proved Reserves & Cumulative Production Structure Map & Acquisition History • CRC’s flagship coastal asset: acquired in 2000 • Field discovered in 1932; 3 rd largest field in the U.S. • Over 7 billion barrels OOIP (34% rec

87. Slide 87: Big Fields Continue to Get Bigger

    Analyst Presentation – Day 186 • Example of Wilmington (“mature waterflood”) • Growing Proven Reserves  168% Reserves Replacement since 2011 • Increased inventory of well locations  Drilled 500 wells  Additional 774 wells identified in mature field BIG FIELDS CONTINUE TO GET BIGGER…. Replenishing

88. Slide 88: Wilmington Field – Geology

    Analyst Presentation – Day 1 WILMINGTON FIELD – GEOLOGY Stratigraphic Column Beaubouef et al, 1999 Upper Fan Middle Fan Lower Fan San Clemente, CA 237 Zone reservoirs Shallow Gas reservoirs Upper Fan Middle Fan Middle Fan Lower Fan Deep marine Siliclastics Ranger reservoirs Terminal reservoirs UP-Fo

89. Slide 89: Wilmington Field – Geosteering Technology

    Analyst Presentation – Day 1 WILMINGTON FIELD – GEOSTEERING TECHNOLOGY Well Complexity • State of the art, proprietary directional drilling technology • Over 8,000 wellbores since 1930s • Small surface footprint, reach far out into reservoirs • Well placement critical to maximizing value 88

90. Slide 90: Wilmington Field – Production Sharing Contracts

    Analyst Presentation – Day 1 WILMINGTON FIELD – PRODUCTION SHARING CONTRACTS • Over 90% of CRC’s Long Beach production is covered under Production Sharing Contracts (PSCs) with the State and City of Long Beach • CRC net production decreases when prices rise and increases when prices decline • “Base”

91. Slide 91: Ventura Basin

    JRCO 0915Analyst Presentation – Day 1 - 1,000 2,000 3,000 4,000 Potential Existing - 400 800 1,200 1,600 M ill io n B b ls Potential - Locations & Reserves VENTURA BASIN • Estimated ~3.5 billion barrels OOIP in CRC fields1 • Operate 29 fields (about 40% of basin) • ~300,000 net acres • Multiple sour

92. Slide 92: CRC South – 1st Half 2015 Results

    Analyst Presentation – Day 1 CRC SOUTH – 1ST HALF 2015 RESULTS • Production Growth • 3% Growth in total production (gross) – before PSC • 17% Growth in CRC Net production – after PSC • Significant Cost Reductions • Cash operating expenses per boe: 25% savings • Capital investment: nearly 80% reducti

93. Slide 93: CRC South Dashboard – Good Capital Efficiency

    Analyst Presentation – Day 1 CRC SOUTH DASHBOARD – GOOD CAPITAL EFFICIENCY YTD Drilling Results – Beating expectations 1H 2015 Drill Wells Costs 18% below AFE IP rate 9% above AFE* 1H15 Average Capital Efficiency - Drilling wells faster & cheaper than planned - Allows equivalent of 5 more wells - Al

94. Slide 94: Flat Production Profile – Focus on Base

    Analyst Presentation – Day 1 FLAT PRODUCTION PROFILE – FOCUS ON BASE Gross Production - 2015 gross oil decline of 13% 93 Results Units 1H15 1H14 Variance Gross Production Mboepd 53.1 51.4 3% Net Production Mboepd 42.5 36.5 17% Net Production - Strong performance, lifted by PSC 0.0 10.0 20.0 30.0 40.

95. Slide 95: Margin Focus – Delivering Cost Savings

    Analyst Presentation – Day 1 MARGIN FOCUS – DELIVERING COST SAVINGS 10.00 20.00 30.00 40.00 50.0 70.0 90.0 110.0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Operating Costs Pre-tax ($MM & $/boe) Opex/bblOpex Results Units 1H15 1H14 Variance Cash Opex (pre-tax) $/boe $22 $30 -25% • Activity reduction – Adjusted wo

96. Slide 96: Capital Investments – Living Within Cash Flows

    Analyst Presentation – Day 1 CAPITAL INVESTMENTS – LIVING WITHIN CASH FLOWS Results Units 1H15 1H14 Variance Capital Investment $MM $58 $285 -80% 0.0 50.0 100.0 150.0 200.0 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Capital Investment ($MM) 95 • Activity reduction – Lower rig count • Drilling capital efficiency

97. Slide 97: CRC South Summary

    Analyst Presentation – Day 1 Big fields get bigger! Focus: Sensitive environments, mature waterfloods, with generally low technical risk and proven repeatable technology across huge OOIP fields • Emphasize base management & maintaining low decline rates • Focus on reducing costs to defend margins •

98. Slide 98: California Resources Corporation Appendix

    Analyst Presentation – Day 1 97 CALIFORNIA RESOURCES CORPORATION APPENDIX

99. Slide 99: End Notes

    Analyst Presentation – Day 1 END NOTES: (1) The reserves replacement ratio is calculated for a specified period using the applicable proved oil-equivalent additions divided by oil-equivalent production. Company- wide 76% of 2014 additions were proved undeveloped. There is no guarantee that historica

100. Slide 100: Non-GAAP Reconciliation for Adjusted EBITDAX

     JRCO 0915Analyst Presentation – Day 1 Non-GAAP Reconciliation for Adjusted EBITDAX For the Second Quarter Ended June 30, For the Six Months Ended June 30, Full Year ($ in millions) 2015 2014 2015 2014 2014 Net Income/(loss) ($68) $246 ($168) $469 ($1,434) Interest expense 83 - 162 - 72 Income taxes

101. Slide 101: Non-GAAP Reconciliation for PV-10

     JRCO 0915Analyst Presentation – Day 1 Non-GAAP Reconciliation for PV-10 ($ in millions) At December 31, 2014 PV-10 $16,091 Present value of future income taxes discounted at 10% (5,263) Standardized Measure of Discounted Future Net Cash Flows $10,828 PV-10 is a non-GAAP financial measure and represe

California Resources — Investor Day (October 2015) on 6ix