California Resources Corporation · NYSE:CRC
California Resources — Investor Presentation (January 2024)
54 slides from California Resources's investor presentation, Jan 5, 2024
Slide 1: January 2024 Investor Presentation
January 2024 Investor Presentation
Slide 2: Table of Contents
Table of Contents ON PACE FOR STRONG YEAR END 2023 RESULTS CARBON MANAGEMENT BUSINESS APPENDIX • CENTRAL CALIFORNIA • NORTHERN CALIFORNIA • DAC HUB
Slide 3: Expecting Strong Quarterly Results
Expecting Strong Quarterly Results $40 – $60MM 4Q23E FCF1 82 – 84MBOE/D 4Q23E Total Production ~60% Oil $65 – $75MM 4Q23E Total Capital EXPECTING TO EXCEED QUARTERLY FCF1 AND TO BE IN LINE WITH PRODUCTION GUIDANCE2 ADVANCING CALIFORNIA’S LEADING CARBON MANAGEMENT BUSINESS Class VI Draft Permit EPA R
Slide 4: Preliminary 2024 E&P Business Outlook
Preliminary 2024 E&P Business Outlook 4 CASHFLOW CALIFORNIA CARBON (1) Capacity revenue is a part of electricity revenue on CRC’s income statement. (2) Includes YE2023 reduction in non energy operating costs and Adj. E&P corporate and other G&A. (3) Internal estimates. EXPECTED INVENTORY OF SIDETRAC
Slide 5: Why California Resources Corporation?
Why California Resources Corporation? LEADING CARBON MANAGEMENT BUSINESS STRONG SHAREHOLDER RETURNS STRATEGY PREMIER BALANCE SHEET WITH STRONG FREE CASH FLOW GENERATION DISCIPLINED CAPITAL ALLOCATION
Slide 6: The Forefront of Carbon Management
THE FOREFRONT OF CARBON MANAGEMENT
Slide 7: Carbon TerraVault – California's Leading Carbon Management Platform
Carbon TerraVault – California’s Leading Carbon Management Platform 7 Positioned to Be California’s Premier Carbon Management Provider CALIFORNIA LEADING CARBON MANAGEMENT PLATFORM ▪ Identified up to 1BMT1 CO2 storage in California ▪ Technological expertise, large scale project management, and finan
Slide 8: California Has the Largest Amount of Domestic Potential Incentives for CCS Growth
California Has the Largest Amount of Domestic Potential Incentives for CCS Growth CALIFORNIA LOW CARBON FUEL STANDARD (LCFS) FEDERAL 45Q TAX CREDIT Potential Economic Incentives (1) 45Q assumes wage and apprenticeship requirements are met. (2) Source: LCFS 2022 and 2023YTD average prices per MT of C
Slide 9: Application Requirements: Capture, Transportation, Storage
Application Requirements Capture ▪ In proximity to emitters eligible for LCFS and 45Q/V credits; and are also attracting greenfield projects focused on emerging energy technologies ▪ Strong historical relationships with major petrochemical complexes in CA ▪ Access to capital markets and innovation h
Slide 10: California's Brownfield Emitters and Marketplace Demand
California’s Brownfield Emitters California Marketplace Demand California Marketplace Demand California’s Brownfield Emitters New California Greenfield Emitters Largest Market Share Conventional Brownfield CCS Greenfield CCS Gray Emissions are displaced with Greenfield products through substitution
Slide 11: Solidifying CTV Class VI Permitting Leadership
Solidifying CTV Class VI Permitting Leadership 11 CTV Leads CA/Region 9 with EPA Class VI Permit Submissions (1) Subject to issuance of EPA class VI permits. (2) Source: EPA Tracker, https://www.epa.gov/uic/current-class-vi-projects-under-review-epa; one other project in Region 9 is under Completene
Slide 12: CTV Vaults and EPA Permit Status
145 MMT 46 MMT Vault CTV I CTV II CTV III CTV IV CTV V EPA Permit Application Administratively Complete Yes (26R) Yes (A1-A2) Yes Yes Yes In Progress Targeting Class VI Draft EPA Permit Receipt Released ~2024 ~2024 ~2024 ~2025 ~2025 California’s Basin SJ Basin Sacramento Basin Annual Regional CO2 Em
Slide 13: Central California
CENTRAL CALIFORNIA NORTHERN CALIFORNIA DAC HUB THE FOREFRONT OF CARBON MANAGEMENT
Slide 14: Leveraging CRC's Flagship Elk Hills Asset with a CTV Clean Energy Park
Leveraging CRC’s Flagship Elk Hills Asset with a CTV Clean Energy Park 14Note: The exact project location within CTV Clean Energy Park at Elk Hills is TBD. Elk Hills provides ideal conditions to attract greenfield projects, given ▪ Large 47,000 acres land position at Elk Hills for potential infrastr
Slide 15: On Path To First Injection at CTV I (26R) in 2025
$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 CRC Lone Cypress InEntec NLC Verde TBD On Path To First Injection at CTV I (26R) in 2025 15 ~$80MM Est. 26R reservoir’s EBITDA2 once fully subscribed U.S. EPA Released Draft Class VI Permit to CRC’s Carbon TerraVault 26R for CO2 Injection and Storage in Califor
Slide 16: CRC's First Capture to Storage Project at Elk Hills Gas Plant
Announcing CRC’s First Capture to Storage Project at Elk Hills Gas Plant 16 CTV’S FIRST CCS PROJECT TO CAPTURE AND STORE 100 KMTPA PROJECT DETAILS FOR CAPTURE TO STORAGE PROJECT AT ELK HILLS ▪ CTV to construct a pre-combustion project at the CTV Clean Energy Park at Elk Hills to remove CO2 from inle
Slide 17: Lone Cypress Clean Hydrogen Facility
▪ Lone Cypress Energy Services, LLC, (Lone Cypress) has executed projects on behalf of some of the majors and largest E&P/Midstream companies in the energy sector with a variety of well-established strategic partners and industry leaders ▪ Lone Cypress’ specialized projects span large midstream syst
Slide 18: InEnTec Renewable Dimethyl Ether Facility
Today’s Waste, Tomorrow’s Clean Energy ▪ InEnTec Inc. (InEnTec) is an industry leader in proprietary gasification systems that economically and responsibly turn the world's waste into valuable green products, fuels, and energy ▪ Headquartered in Richland, WA, InEnTec has a strong team of highly-skil
Slide 19: NLC Energy Greenfield RNG Facility
▪ NLC Energy LLC, (NLCE) designs, builds, owns, and operates RNG facilities that convert organic waste into useful commodities like clean Renewable Natural Gas (RNG) ▪ Low-carbon RNG replaces higher-carbon fossil fuels across the transportation, utilities, and manufacturing sectors ▪ The company is
Slide 20: Verde Renewable Gasoline Facility
▪ Verde Clean Fuels, Inc. (Verde) focuses on supplying gasoline and other fuels derived from renewable feedstocks or natural gas ▪ Verde utilizes its proprietary process to convert synthesis gas derived from biomass feedstocks, such as yard waste, agricultural waste, and sorted municipal solid waste
Slide 21: Northern California
CENTRAL CALIFORNIA THE FOREFRONT OF CARBON MANAGEMENT DAC HUB NORTHERN CALIFORNIA
Slide 22: CTV Storage Vaults in Northern California
(1) Includes CTV II, III, IV and V. (2) Source: CARB 2020, represents legacy emissions within 100 miles of CTV III CO2 storage vault. (3) Source: Oakland Sea Port. (4) Source: City of Sacramento. (5) Source: Colliers. (6) Source: Port of Stockton. 22 CTV Storage Vaults in Northern California ▪ ~145M
Slide 23: Grannus Clean Ammonia Facility
Grannus Clean Ammonia Facility 23 Note: The exact Grannus Clean Ammonia and Hydrogen Project location within CTV III is TBD. Clean ammonia is ammonia produced with near zero, or minimal carbon emissions. (1) Our CDMAs frame the anticipated contractual terms between parties and provide a path to reac
Slide 24: Clean Ammonia Will Help Accelerate Decarbonization of CA's Agricultural Sector
Clean Ammonia Will Help Accelerate The Decarbonization of CA’s Agricultural Sector 24 Note: Clean ammonia is ammonia produced with near zero, or minimal carbon emissions. (1) Source: EIA based on 2020 data; Economic Research Service - U.S. Department of Agriculture; U.S. Geological Survey, Mineral C
Slide 25: Yosemite Hydrogen Facility
▪ Yosemite to build and operate a 24 tons per day (TPD) hydrogen facility in the city of Oroville, California, using dual bed gasification technology with commercial operations targeted in 2026 ▪ CTV will provide truck offloading facility and permanent sequestration for the initial 40 KMTPA of CO2 e
Slide 26: DAC Hub
NORTHERN CALIFORNIA CENTRAL CALIFORNIA THE FOREFRONT OF CARBON MANAGEMENT DAC HUB
Slide 27: Accelerating Climate Leadership Through Direct Air Capture
Accelerating Climate Leadership and Energy Transition Through Direct Air Capture (DAC) ▪ WHAT IS DAC+S? Direct Air Capture plus Storage (DAC+S) is a technological solution that can remove and then permanently store decades-old atmospheric carbon in underground reservoirs using low carbon emission en
Slide 28: DOE Regional DAC Hubs Initiative Development Vision
Under the U.S. Department of Energy (DOE) Regional DAC Hubs Initiative Development Vision ▪ HOW WILL IT BE DEVELOPED? The first DAC Hub is targeted for Kern County and is expected to store CO2 at the CTV I reservoir1. The hub is expected to expand to other locations across the state to store CO2 in
Slide 29: Together We Can Achieve Bigger and DAC Things
ACADEMIA Together We Can Achieve Bigger and “DAC” Things INDUSTRY NATIONAL LABS DAC TECHNOLOGY COMMUNITY GOVERNMENT LABOR Lead DOE Applicant Represents a Public-Private Partnership of Leading CA Community, Academic, DAC, and Carbon Storage Organizations 29
Slide 30: California Is Leading the Climate Charge
“California is pioneering new solutions to fight climate change. It’s not enough to cut emissions – we have to go further by actively removing carbon pollution from the atmosphere. This project will be the first of its kind in our state and will help us meet our world-leading climate goals” Californ
Slide 31: Appendix
Appendix
Slide 32: Huntington Beach – Asset Optimization & Value Unlock
32 Huntington Beach – Asset Optimization & Value Unlock ▪ 1810 Pacific Coast Highway, Huntington Beach, CA ▪ Completed the abandonment of six wells ▪ In the process of completing surface abandonment ▪ Targeting call for offers for ~1 acre parcel of land (Fort Apache) in 1Q24 ▪ Planning to provide ad
Slide 33: Transforming the Way We Operate for a Long-Term Outlook
Transforming the Way We Operate for a Long-Term Outlook ▪ Implement identified cost saving opportunities ▪ Integrate process improvements into operating model OPPORTUNITY IDENTIFICATION DEPLOYMENT & INTEGRATION LONG-TERM VISION ▪ Identified major cost saving opportunities ▪ Evaluating additional ope
Slide 34: Sustainability Is In Our Business Model
Sustainability Is In Our Business Model Please visit CRC.com/ESG to view CRC’s 2022 Sustainability Update. 34 Submitted 191MMT of CO2 Reservoirs to EPA for Class VI permits in five carbon vaults with many more in development; leading the nation in Class VI permit applications 2022 Sustainability Upd
Slide 35: Differentiated and Diversified Asset Base Across California
35 Differentiated and Diversified Asset Base Across California Note: The above pictures were taken by CRC and represent its current properties and assets. THUMS Islands Huntington Beach LA BASIN SACRAMENTO BASIN Midstream Infrastructure at Elk Hills SAN JOAQUIN BASIN San Joaquin Valley NG Processing
Slide 36: Long Durability, Low Decline & Low Carbon Intensity O&G Assets
~13 Years ~86% 7.0 Long Durability, Low Decline & Low Carbon Intensity O&G Assets ~13 years of low carbon intensity multi year production runway2 13% 87% PUD PD $5.9B PV-10 OF 2022 PROVED RESERVES1 87% 13%San Joaquin Basin 85% 15% PDP PUD Los Angeles Basin 100%Sacramento Basin 9 0% ~13% 3 ~9 ~82% 9.
Slide 37: California Needs Low Carbon Intensity Domestic Natural Gas
California Needs Low Carbon Intensity Domestic Natural Gas 37(1) EIA; excludes Vehicle Fuel which was less than 0.029 mcf/d from 2018 to 2022 (2) CARB Scoping Plan 2022 (3) Other includes pumped storage, shed DR, geothermal, nuclear, biomass, CHP and coal (4) CARB (5) Internal estimates 1.2 1.3 1.3
Slide 38: CRC's Natural Gas Inventory Depth – 1Tcf Opportunity
CRC’s Natural Gas Inventory Depth – 1Tcf1 Opportunity CRC’s Opportunity Set1 by Basin >250 Bcf >800 Bcf Sacramento Basin Opportunity Set1 ▪ ~110Bcf of actionable inventory ▪ Resource: ▪ >250 Bcf of dry gas ▪ ~300 locations Up to 220Bcf of near-term actionable inventory potentially starting in 2H244
Slide 39: Exploring Technologies to Further Advance Net Zero Energy Pathways
Exploring Technologies to Further Advance Net Zero Energy Pathways Source: ICE Thermal Harvesting, CRC Internal ▪ Partnered with ICE Thermal Harvesting (“ICE”), who was awarded a ~$2MM “Wells of Opportunity” grant from the DOE ▪ Provides an avenue for CRC to pilot a new zero-carbon energy technology
Slide 40: Solar Developments on Track
Solar Developments on Track (1) Other includes sites across CRC’s asset base. (2) www.cpuc.ca.gov GRID SUPPLY | FRONT OF THE METER UPDATE: ▪ CRC has identified over 5,000 acres of surface potentially suitable for utility scale solar development that could present future value for CRC and investors ▪
Slide 41: Expecting to Further Diversify CTV's Portfolio of Emitters
Expecting to Further Diversify CTV’s Portfolio of Emitters Across The Energy Spectrum in California Continuing to attract new emissions sources due to ideal conditions for greenfield and existing sources projects (Subsurface knowledge, technical expertise, assets’ location, access to capital, permit
Slide 42: Strategic Partnership – A Structural Capital Advantage
Strategic Partnership – A Structural Capital Advantage (1) Assumes the average capital needs for 5MMTPA of Carbon Sequestration from the CTV JV economic “Type Curve”. See slides 44 and 45 for detailed information on the previously disclosed Type Curve. Brookfield made an initial commitment of $500 m
Slide 43: CTV JV – Vault Dropping Mechanism
~38MMT ~161MMT ~9 MMT Contributed ROFL Notice Delivered TBA CTV JV – Vault Dropping Mechanism Carbon TerraVault JV (“CTV JV”) JV A1-A2 CTV II Brookfield $46MM 26R1 Brookfield $46MM Brookfield: between $54 - $94MM2 Brookfield 49% Capital Call For Project Development Permit Public Comment Expiration F
Slide 44: Illustrative CTV JV Type Curve Demonstrates Potential Valuation Upside
$0 $100 $200 $300 $400 $500 2023E 2026E 2028E M id p o in t o f E s t. C T V J V E B IT D A ($ M M ) Illustrative CTV JV Type Curve Demonstrates Potential Valuation Upside Note: Please see Slide 51 for important information regarding the assumptions used in the preparation of the information show on
Slide 45: Storage Only Projects: Estimated EBITDA and CAPEX per Ton
$5 $10 $15 $20 $25 $30 $50 $60 $75 $90 $105 $120 $135 $150 $165 Not Likely Est. EBITDA1 ($/Ton) E s t. C A P E X ( $ / T o n ) Storage Only Low CO2 Concentration Large Opportunity Set With a Variety of Potential Emitters Note: Depicts illustrative examples of expected and estimated IRR, EBITDA and c
Slide 46: Wilmington Production Sharing Contracts at Higher Commodity Prices
$60 $65 $70 $75 $80 $85 $90 $95 $100 $105 $110 $115 $120 Brent ($/BBL) Wilmington Production Sharing Contracts (PSC) At Higher Commodity Prices Approximately 30% of CRC’s oil production is subject to PSCs Mechanics: ▪ As operator, CRC pays our partners’ share of the Operating and Capital Cost ▪ CRC
Slide 47: Commodity Price Commentary: Crude, NGLs, Natural Gas
▪ Crude: California crude prices continued move in tandem with the broader market with realizations for 3Q23 firming slightly from 2Q. For the balance of the year, local (permits, refining margins & outages) and geopolitical dynamics (OPEC+, central bank policies, Middle East tensions) remain key de
Slide 48: Hedging Program
CRC’s hedging strategy is designed to meet our business objectives should market prices decline and participate should market prices increase Hedging Program (1) Hedge position as of September 30, 2023. Includes deferred option premium payment. For the purposes of this example assumes CRC physical s
Slide 49: Glossary
Glossary Term Definition FID Final Investment Decision GHG Greenhouse Gas IRR Internal Rate of Return KMTPA Thousand Metric Tons Per Annum LCFS Low Carbon Fuel Standard MMT Million Metric Tons MMTPA Million Metric Tons Per Annum MRV Monitoring, Reporting and Verification Plan MT Metric Tons MTPA Met
Slide 50: Assumptions & Relevant Footnotes
Assumptions & Relevant Footnotes: Slide 7: ▪ (1) Source: Internal estimates. ▪ (2) EPA, source: www.epa.gov/uic/class-vi-wells-permitted-epa ▪ (3) The CTV JV partnership is targeting 5MMTPA of CO2 injection by YE 2027 which implies 200MMT of CO2 pore space under Class VI EPA permits. CTV JV is under
Slide 51: Assumptions & Relevant Footnotes (Cont.)
Assumptions & Relevant Footnotes (Cont.): Slide 44: The information on slide 44 is an example of project economics for the strategic partnership with Brookfield, which are shared 51% to CRC and 49% to Brookfield. The terms and availability of third-party sources of financing, if needed, could also a
Slide 52: Free Cash Flow Reconciliation
Free Cash Flow Reconciliation Management uses the non-GAAP measure of free cash flow, which is defined by us as net cash provided by operating activities less our capital investment, as a measure of liquidity. The table below presents a reconciliation of net cash provided by operating activities to
Slide 53: Forward-Looking Statements
• 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 war in Ukraine and
Slide 54: 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
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