California Resources Corporation · NYSE:CRC
California Resources — Investor Day (March 2021)
30 slides from California Resources's investor day presentation, Mar 18, 2021
Slide 1: Charting a new course: 2021 Strategy Day
“Charting a new course” Wag cauronia > 2021 Strategy Day RESOURCES CORPORATION March 18, 2021
Slide 2: Presenters
Presenters: Mac McFarland Chairman & Interim CEO Francisco Leon EVP & CFO Also In Attendance: Shawn Kerns EVP, Operations & Engineering Michael Preston Senior EVP, CAO and General Counsel EES march 18, 2021
Slide 3: Forward Looking / Cautionary Statements - Certain Terms
) Forward Looking / Cautionary Statements - Certain Terms The information included herein contains forward-looking statements that involve risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects. Such statements are based
Slide 4: CRC: Strong Foundation and Quality Investment Opportunity
) CRC : Strong Foundation and Quality Investment Opportunity CASH ADVANTAGED BUSINESS MODEL 2020 AVERAGE PRODUCTION = Conventional, stacked pay assets offer low to mid-teens decline, low reinvestment = High margins: Oil weighted with Brent realizations = Stable foundation of 1P reserves even more ge
Slide 5: Optimizing the Business Model with a New Strategy
) OPTIMIZING THE BUSINESS MODEL WITH A yy STRATE:
Slide 6: CRC Strategic Evaluation Concluded Cash Generation Potential Is Robust
} CRC Strategic Evaluation Concluded Cash Generation Potential Is Robust Comprehensive strategic eraitauonorousiness CRC’s Board Operating Committee and executive leadership conducted a comprehensive strategic evaluation of CRC supported by independent advisors Focus areas of strategic evaluation Th
Slide 7: Strategic Repositioning Snapshot
) Strategic Repositioning Snapshot BEFORE 2020 2021 STRATEGY Grow state-wide position , : 7 — Business Use JV structures to leverage CRC capital V4 Focus on highest PCr generation flelds and Model simplified business model Buy and hold Financial Target FCF* neutrality Vv Target a robust & sustainabl
Slide 8: CRC's Three Strategic Pillars Built On Solid Financial Foundation
) CRC’s Three Strategic Pillars Built On Solid Financial Foundation 1 COST & OPERATIONAL EXCELLENCE DISCIPLINED INVESTING 3 PORTFOLIO MANAGEMENT Simplified, lower cost i i i ri Continuously optimize assets for operating model for mature Susann peodetn “an ow risk, CRC’s value proposition field manag
Slide 9: Rationalizing Spending Profile Across Categories
> Rationalizing Spending Profile Across Categories INTEREST SEA OPREX EXPENSE | Fr 2019 | $290 MM $895 MM $383 MM | | _Fy2020_| $252 MM $625 MM $217 MM | Targeted Savings / ~$70 MM ~$25 MM ~$160 MM Interest Reduction (~27%) (~4%) (75%) $180-$190MM | $600-$615MM $50 - $6OMM YD cRC’s 2021 plan targets
Slide 10: Yn oD
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Slide 11: Rationalized Spending Improves FCF Breakeven to ~$35 Brent
> Rationalized Spending Across Categories Improves FCF Breakeven to ~$35 Brent SIMPLIFIED DEBT STACK 9, alg eh ee % ANNUAL G&A DOWN 38% DRIVES INTEREST EXPENSE : FROM 2019-2021E DOWN ~$330MM FROM 2019 CRC Annual Operating Cost CRC Annual G&A Expense CRC's Transformed Debt Stack $ Millions $ Millions
Slide 12: FY 2021E Forecast Highlights Focus On Free Cash Flow
> FY 2021E Forecast Highlights Focus On Free Cash Flow rao | F200 = Total Production, Mboepd? 128 444 96-99 2021 estimates include ~ $125-$175 MM of negative Oil Production, Mbopd? 80 69 60 - 62 hedge impact i $895 $625 ~33% from 2019 Operating Costs, $MM enue Pye $600-$615 | $16.60 - $17.55 ~11%/bo
Slide 13: Disciplined 2021 Capital Program Within ~40% Of Discretionary Cash Flow
) Disciplined 2021 Capital Program Within ~40% Of Discretionary Cash Flow 2021E CAPITAL PROGRAM OF $200MM - $225MM DISCIPLINED CAPITAL SUPPORTS STABLE CRUDE VOLUMES 90 160% 80 no oer _ 2070 pirate ta $45-$50MM = 60 . zg Total 7 50 . son = $200-$225MM 3B 40 8 90% of D&C/ WO 3 J 3 Capital in core fiel
Slide 14: Core Fields Offer Significant Stacked Pay and Low Risk Development Opportunities
) Core Fields Offer Significant Stacked Pay and Low Risk Development Opportunities: NPV per well ($ MM)? San Joaquin Fields ~72% of YE 2020 Reserves Elk Hills | Buena Vista | Mt Poso Discovered in 1911, the Eastern Shallow Oil Zone (ESOZ) area is one of CRC's largest assets on a reserve basis. This
Slide 15: Low Leverage and Strong Balance Sheet = Winning Combination
> Low Leverage and Strong Balance Sheet = Winning Combination "= Acceleration of the Cash Return Business Model with robust leverage metrics should provide further equity support while demonstrating Balance Sheet Strength = Renewed & Consistent Focus on Operational Efficiencies = Balance Sheet Stren
Slide 16: Committed to ESG
) Committed to ESG | ENVIRONMENTAL Fiamma _ CRC’s 2030 Sustainability Goals align with California's landmark Goals as a signatory of the Paris Climate Accord CRC methane emissions declined by ~63% since 2013 CRC's values of Character, Responsibility and Commitment direct how we conduct our business,
Slide 17: Stewarding Our Returns-Focused Business Model
STEWARDING OUR ) RETURNS-FOCUSED Se eRe BUSINESS MODEL ~
Slide 18: CRC's Reserves Value at Current Prices Provides Equity Upside
) CRC’s Reserves Value at Current Prices Provides Equity Upside CURRENT OIL PRICING OFFERS ROBUST UPSIDE RESERVES MULTIPLE COMPARED TO PEERS* SHOWS STRONG INVESTMENT OPPORTUNITY 5.0x $5,720 MM? 4.0x PV-10 Reserves & 3.0x Value and Metrics $ At SEC Price Deck Sox and Today's Prices 96% a 1.3x of PV-1
Slide 19: CRC Targets ~$1.5 Billion of Sustainable Free Cash Flow Over Next Five Years
) CRC Targets ~$1.5 Billion of Sustainable Free Cash Flow Over Next Five Years SUSTAINABLE FREE CASH FLOW GENERATION AND DECREASING LEVERAGE FOR 2021 THROUGH 2025? PERIOD Sustainable free cash flow further underpins our $s STRONG financial health and paves a pathway to even greater 1 1 fi ial flexib
Slide 20: CRC's Optimized Strategy Provides a Quality Investment Opportunity
) CRC’s Optimized Strategy Provides a Quality Investment Opportunity 1 COST & OPERATIONAL EXCELLENCE It’s all about execution Build a track record of cash- optimized operations £0, Efficient Operating Model DISCIPLINED INVESTING Invest in our shallow decline asset base Target quick payback, high ret
Slide 21: Supplemental Materials
ENTAL MATERIALS __) SUPPLEME iidddadaaas mi i
Slide 22: CRC's Leading Safety Rating Better Than Ever
) CRC’s Leading Safety Rating Better Than Ever CRC had its Best-Ever Safety Performance in 2020, ..and Outperforming Most Other Industries Surpassing the Oil & Gas Industry... 10 40 2 08 g 3 ° 3 3.0 Ss & 8 B25 & B 2: 5B 06 ———— = & = gd = 20 = g = é 3 04 g 15 Q s g 0.28 3 CRC 2020 = S10 “Level 2 i 2
Slide 23: Hedging Program Provides Stable Cash Flow
) Hedging Program Provides Stable Cash Flow ) STRATEGY = CRC hedging strategy typically utilizes a mixture of Swaps, Puts and Collars to protect cash flow and to ensure CRC’s ability to live within cash flow, and is also aligned with CRC’s RBL requirements ) CASH FLOW PROTECTED = CRC has hedges in p
Slide 24: Stabilizing Production with Quick High Impact Well Work and Capital Workovers
>) Stabilizing Production with Quick High Impact Well Work and Capital Workovers >) INCREMENTAL BARRELS THROUGH MAINTENANCE = (3) Uoptinzaton- accelerating ol production = CRC has 9,490 net productive oil wells* of which ~90% are on artificial lift. Due toa backlog of wells accumulated in 2020, CRC
Slide 25: Leverage our Integrated Assets to Uplift Margins, Lower Costs, Improve Flexibility
>) Leverage our Integrated Assets to Uplift Margins, Lower Costs, Improve Flexibility STRATEGIC INTEGRATION & OPERATIONAL STREAMLINING = Elk Hills power plant reduces LOE ~$100mm/year, allows for more efficient operation of asset = Gathering Systems provide access to multiple delivery points * Gas c
Slide 26: Future Presents Significant Liquidity and Financial Flexibility
> Future Presents Significant Liquidity and Financial Flexibility ESTIMATED LIQUIDITY ROLL FORWARD $800 CRC 12/31/20 DEBT SNAPSHOT $700 eed iM PRO FORMA FOR JANUARY 2021 SENIOR NOTES OFFERING $600 2020 Revolving Credit Facility (RCF) $ 9 @ $500 7.125% Senior Notes 600 $400 $335. MM | i Total Debt $
Slide 27: Adjusted EBITDAX Reconciliation
) Adjusted EBITDAX Reconciliation We define adjusted EBITDAX as earnings before interest expense; income taxes; depreciation, depletion and amortization; exploration expense; other unusual, infrequent and out-of-period items; and other non-cash items. We believe this measure provides useful informat
Slide 28: Other Reconciliations
) Other Reconciliations Leverage and Net Debt We calculate the leverage ratio by dividing net debt by adjusted EBITDAX for the applicable period. We define net debt as the face value of our debt less available cash. We believe the leverage ratio is an important metric of the operational and financia
Slide 29: Other Reconciliations (cont'd)
) Other Reconciliations (cont’d) Discretionary Cash Flow & Free Cash Flow Management uses discretionary cash flow, which is defined as the cash available after distributions to noncontrolling interest holders, cash interest, ARO and idle well testing and the one-time costs to achieve the 2021 cost s
Slide 30: California Resources Corporation Investor Relations contacts
CALIFORNIA RESOURCES CORPORATION Joanna Park (Investor Relations) | Richard Venn (Media) 818-661-3731 818-661-6014 Joanna.Park@crc.com Richard.Venn@cre.com