California Resources Corporation · NYSE:CRC
California Resources — 43rd Annual Energy Conference, Scotia Howard Weil 2015
34 slides from California Resources's conference presentation, Mar 24, 2015
Slide 1: 43rd Annual Energy Conference Scotia Howard Weil
43RD ANNUAL ENERGY CONFERENCE Scotia Howard Weil Todd Stevens| President & CEO| New Orleans, LA| March 25, 2015
Slide 2: Forward-Looking / Cautionary Statements
Forward-Looking / Cautionary Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements included in this presentation that address activities, events or develo
Slide 3: CRC at a Glance
Sacramento Basin 19 MMBoe Proved Reserves 9 MBoe/d production San Joaquin Basin 525 MMBoe Proved Reserves 112 MBoe/d production Ventura Basin 58 MMBoe Proved Reserves 9 MBoe/d production Los Angeles Basin 166 MMBoe Proved Reserves 29 MBoe/d production • World-Class Resource Base In 4 of 12 largest
Slide 4: Overview of California Resources Corporation
14,450 73% 2,000 10% 2,350 12% 1,000 5% San Joaquin Basin Los Angeles Basin Sacramento Basin Ventura Basin Overview of California Resources Corporation California Pure-Play Net Resource Overview • An independent E&P company spun off by Occidental • Focused on high-return assets in California • Large
Slide 5: CRC's Average Production Expected to Be Essentially Flat in 2015
• Resource base enables predictable production profile Conventional assets have relatively low decline rates, long production life Steamflood and waterflood investments will deliver crude oil growth in 2015 with little new investment Large inventory of conventional development projects that ar
Slide 6: Self-Funded Capital Investment Program
Drilling ~$150 ~34% Dev. Facility ~$130 ~30% Workovers ~$50 ~11% Exploration ~$15 ~3% Other ~$95 ~22% Commentary 2015 Drilling Capital Budget – By Basin 2015 Total Capital Budget 2015 Capital Budget (MM)– By Drive San Joaquin $100 67% Los Angeles $50 33% • 2015 capital budget of $440 million expecte
Slide 7: Capital Allocation Priority: De-Leveraging Balance Sheet
• Exploring adjustments to capital structure Total long-term debt: ~$6.4 billion at Year-end 2014 Have received a 24-month amendment to revolver and term loan Resource base enables a variety of alternatives, e.g. asset monetizations, JVs, MLPs subject to loan and tax sharing agreement restrict
Slide 8: Deleveraging is a Priority
• Deleveraging is a priority • Recently approved credit facility amendment provides additional financial flexibility • Strategic and opportunistic commodity hedging to support capital program Capitalization as of 12/31/14 ($MM) $2.0Bn Senior Unsecured RCF 1 360 Senior Unsecured Term Loan 1,000 Senio
Slide 9: Long Term Value Creation Driven by World Class Asset Base
9 Long Term Value Creation Driven by World Class Asset Base
Slide 10: CRC is the Leading Operator in California
0 50 100 150 200 250 300 G ro ss O p er at ed M B o e/ d Top California Producers in 2014* Growth of Top California Producers 192 159 139 39 37 - 20 40 60 80 100 120 140 160 180 200 CRC CVX Aera Energy FCX LINE G ro ss O p er at ed M B o e/ d Aera Chevron CRC *Gross operated production from DOGGR, d
Slide 11: World Class Assets with Significant Development Opportunities
Total California as of 12/31/2014 Net Proved Reserves (MMBoe) 768 % Oil– Net Proved 72% Pre-Tax Proved PV-10 ($ millions)1 $16,091 2014 Avg. Net Production (MBoe/d) 159 % Oil 63% Net Acreage (‘000 acres) 2,407 Identified Gross Locations 19,800 1 PV-10 shown as of 12/31/14 based on SEC five-year rule
Slide 12: Large in Place Volumes with Significant Upside for CRC
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 volumes of ~40 Bn Boe at low recovery factor
Slide 13: Creating a Recovery Value Chain
• 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 • Waterflood (17 fields) • Incremental recove
Slide 14: Oil and Gas Price Realizations
$95.12 $94.21 $97.97 $93.00 $103.80 $104.02 $104.16 $92.30 $110.90 $111.70 $108.76 $99.51 $80 $90 $100 $110 $120 2011 2012 2013 2014 $ /B b l WTI Realizations Brent $4.11 $2.81 $3.66 $4.39$4.31 $2.94 $3.73 $4.34 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2011 2012 2013 2014 $ /M cf NYMEX Realizatio
Slide 15: Elk Hills Field - Overview
0 20 40 60 80 100 120 140 1998 2000 2002 2004 2006 2008 2010 2012 2014 N et M B o e/ d • CRC’s flagship asset, a 104-year old field with exploration opportunities • Large fee property with multiple stacked reservoirs • Light oil from conventional and unconventional production • Largest gas and NGL p
Slide 16: Wilmington Field - Long Beach Unit Overview
- 50 100 150 200 250 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 M M B o e Net Proved Reserves Production to Date Overview Field Map Proved Reserves & Cumulative Production Structure Map & Acquisition History * • CRC’s flagship coastal asset: acquired in 2000 • Field d
Slide 17: Conventional Waterflood Example - Mount Poso
0 50 100 150 200 250 300 350 400 450 500 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 5 # o f W e ll s B O P D BOPD Well Count Ownership by Other Companies ROR
Slide 18: Conventional Steamflood Example
Conventional Steamflood Example • Eastern San Joaquin Valley Steamflood • Two major intervals 1,500’ – 2,500’ • 500 MMBoe in place at 35% RF • Field extension • Geologic re-characterization • Facilities expansion in 2013 • Production grew at 35% in 2014 • 50% growth in steam generation • 800+ potent
Slide 19: Proven Track Record in Sensitive Environments
Proven Track Record in Sensitive Environments • Operator of choice in coastal environments • Proven coexistence with sensitive environmental receptors • 2 billion gallons of water supplied to agriculture in 2014 • Excellence in safety and mechanical integrity 19
Slide 20: Well Positioned for Growth in Recovery
• World-class asset base with diverse and rich resources. • Capacity for significant production growth at higher prices as we develop high-return, lower-risk development opportunities. • Committed to capital budgets that live within our cash flows. • As we bring our capital structure in line with to
Slide 21: Appendix
21 California Resources Corporation Appendix
Slide 22: Cautionary Statements Regarding Hydrocarbon Quantities
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 estimated in accordance with S
Slide 23: Cautionary Statements Regarding Hydrocarbon Calculations
Cautionary Statements Regarding Hydrocarbon Calculations 23 Finding and Development costs for the capital program are calculated by dividing the costs incurred from the capital program (development and exploration costs) by the amount of proved reserves added in the same year from improved recovery
Slide 24: Non-GAAP Reconciliation for Adjusted EBITDAX
Non-GAAP Reconciliation for Adjusted EBITDAX For the Year Ended December 31, ($ in millions) 2014 2013 Net Income/(loss) ($1,434) $869 Interest Expense 72 - Income taxes expense/(benefit) (987) 578 Depreciation, depletion and amortization 1,198 1,144 Exploration expense 139 116 Asset Impairments 3,4
Slide 25: Recently Approved Credit Facility Amendment Provides Additional Financial Flexibility
25 • Lender group approved several amendment provisions to provide CRC additional flexibility to manage our business through challenging commodity price environment while remaining unsecured • Amended financial covenants that revert to original levels over 24 months Consolidated Leverage Ratio C
Slide 26: Acquisitions Over the Years
Acquisitions Over the Years 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 Acquisition Date San Joaquin and Sacramento Basin Minerals San Joaquin MineralsSan Joaquin Basin Minerals and North Shafter SJV North SJV and Sac Stockdale SJV Central Huntington Beach Buena Vista Hills Kettleman North Dom
Slide 27: San Joaquin Basin
San Joaquin Basin • Oil and gas discovered in the late 1800s • Currently accounts for ~70% of CRC production • ~25 billion barrels OOIP in CRC fields1 • Cretaceous to Pleistocene sedimentary section (>25,000 feet) • Source rocks are organic rich shales from Moreno, Kreyenhagen, Tumey, and Monterey F
Slide 28: Los Angeles Basin
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 exploration focused on seeps & surface ex
Slide 29: Sacramento Basin
Sacramento Basin • Exploration started in 1918 and focused on seeps and topographic highs. In the 1970s the use of multifold 2D seismic led to largest discoveries • Cretaceous Starkey, Winters, Forbes, Kione, and the Eocene Domengine sands • Most current production is less than 10,000 feet • 3D seis
Slide 30: Ventura Basin
Ventura Basin • Estimated ~3.5 billion barrels OOIP in CRC fields1 • Operate 29 fields (about 40% of basin) • ~300,000 net acres • Multiple source rocks: Miocene (Monterey and Rincon Formations), Eocene (Anita and Cozy Dell Formations) • 2014 average net production of 9 MBoe/d • In 2013, shot 10 mi2
Slide 31: Capex Reduction
31 Capex Reduction 2014 2015 Oct Nov Dec Jan Feb Mar Rigs 28 25 6 4 3 3 Quarterly Operations CAPEX, $mm $520 $135-150 * • Focus on investing within expected cash flows despite availability of additional investment opportunities that are economic at current strip prices * - First Quarter 2015 Guidanc
Slide 32: Opex Reduction
32 Opex Reduction 2014 Q1 Q2 Q3 Q4 Production costs $/boe 18.43 18.46 17.74 16.07 • Workforce redeployed to focus on reducing costs and building a robust project pipeline • Targeting 6-month payout on workovers at current prices • Downhole maintenance – reduced cycle times, ESP optimization, reduced
Slide 33: Value Creation Index
33 • Measures value created per dollar investment (“Bang for the buck”) • Corporate Target 1.3 PV10 pre-tax cash flows PV10 of investments VCI = VALUE CREATION INDEX Project A Project B Project C Max IRR% Max VCI Max NPV Period Capital Cash Flow Capital Cash Flow Capital Cash Flow 0 1,000 (1,000) 1,
Slide 34: Shale Geological Overview
Shale Geological Overview Major U.S. Shale PlaysCalifornia Unconventional Potential 0 GR 150 0 GR 150 0 GR 150 0 GR 150 0 GR 150 0 GR 150 3,000 2,000 1,000 Kreyenhagen Productive interval Target interval Moreno Bakken Barnett Eagle Ford N A B C D PG • Successful in upper Monterey using precise devel
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