California Resources Corporation · NYSE:CRC
California Resources — Q3 2023 Earnings Presentation
33 slides from California Resources's earnings presentation, Nov 2, 2023
Slide 1: Third Quarter 2023 Results
Third Quarter 2023 Results November 01, 2023
Slide 2: Presenters
Presenters Francisco Leon President & Chief Executive Officer Nelly Molina EVP & Chief Financial Officer
Slide 3: Executive Summary – Delivering on Our Plan
Executive Summary– Delivering on Our Plan CASHFLOW ▪ Generated $71MM of free cash flow1 during the third quarter and $403MM year to date ▪ Year to date, returned ~52% or $207MM of free cash flow1 to stakeholders in form of ▪ share repurchases of $143MM, STRONG FINANCIAL & ▪ dividends of $59MM, and O
Slide 4: Cashflow
Cashflow.
Slide 5: Delivered Consistent Operational & Financial Performance
Delivered Consistent Operational & Financial Performance 3Q23E1 3Q23A Brent ($/bbl) Brent realized price with hedge ($/bbl) $75.28 $65.99 $85.95 $66.12 ~$11/bbl 62% rise in QoQ Brent prices contributed to of quarterly free cash flow3 CRC GUIDANCE Guidance1 Results an increase of ~$7MM in operating c
Slide 6: Proven Commitment to Shareholder Returns
Proven Commitment to Shareholder Returns Repurchased Above Average Fixed Return Yield vs. Market Participants & Peers $1.1B To-Date Existing $1.1B SRP with $497MM Remaining SRP AUTHORIZATION $497 Million Remaining Year to Date, Repurchased $35MM in Debt (Including Post 3Q23 Repurchases) RAISING FIXE
Slide 7: The Forefront of Carbon Management
THE FOREFRONT OF CARBON MANAGEMENT
Slide 8: Announcing 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 PROJECT DETAILS FOR CAPTURE TO STORAGE PROJECT AT ELK HILLS DECARBONIZING CRC’S OPERATIONS & TARGETING ▪ CRC to construct a pre-combustion project at the CTV Clean Energy Park at Elk Hills to remove CO2 from inlet gas, increasi
Slide 9: NLC Energy Greenfield Renewable Natural Gas (RNG) Facility
NLC Energy Greenfield Renewable Natural Gas (RNG) Facility CDMA DETAILS FOR NLCE GREENFIELD RNG FACILITY1 ▪ NLCE to construct a greenfield production facility at the CTV Clean Energy Park at Elk Hills that is expected to generate up to 7,000 MMBtu per day of RNG ▪ CTV JV will provide permanent seque
Slide 10: Solidifying CTV Class VI Permitting Leadership
Solidifying CTV Class VI Permitting Leadership CTV Leads CA/Region 9 with EPA Class VI Permit Submissions U.S. EPA Regions ~10% CTV Elk Hills 26R (CTV I) is expected to be receive draft permit before year end CTV Elk Hills 26R (CTV I) permit approval would be first in California and of Currently Sub
Slide 11: Positioned to Be California's Premier Carbon Management Provider
Positioned to Be California’s Premier Carbon Management Provider 100KMTPA for CRC’s own CCS brownfield project within the CTV Clean Energy Park at Elk Hills Signed an additional storage only CDMA1 for an injection rate of 150KMTPA with NLC Energy Targeting first CO2 injection at CTV I by the end of
Slide 12: California
California
Slide 13: California Needs Low Carbon Intensity Domestic Natural Gas
California Needs Low Carbon Intensity Domestic Natural Gas Canada / Rockies (~1.8 Bcf) POWER AND INDUSTRY CONSUME ~70% OF THE STATE’S NATURAL GAS1 California’s Natural Gas Demand (Bcf/d) 6.0 Residential Commerical Industrial Electric Power 5.0 1.6 1.7 1.7 1.7 1.8 California imports ~4.6 Bcf/d or ~90
Slide 14: CRC's Natural Gas Inventory Depth – 1Tcf Opportunity
CRC’s Natural Gas Inventory Depth – 1Tcf1 Opportunity CRC’s Incremental Inventory1 by Basin CRC is pursuing a Responsibly Sourced Gas2 (RSG) certification for the majority of its natural gas assets >250 Sacramento Basin Incremental Inventory1 San Joaquin Basin Incremental Inventory1 Bcf ▪ ~110Bcf of
Slide 15: Preliminary 2024 E&P Business Outlook
Preliminary 2024 E&P Business Outlook LINE OF SIGHT TO WELL PERMITTING PROGRESSION IN 2024 EXPECTED INVENTORY OF SIDETRACKS, WORKOVERS, NATURAL GAS TO INCREASE ACTIVITY IN 2H24 CONTRACTED CAPACITY REVENUE1 FROM EHPP TO INCREASE BY ~$45MM IN 2024 VS 2023E CASHFLOW CARBON ON PATH TO ACHIEVE $55MM + IN
Slide 16: 4Q23 Guidance
4Q23 Guidance
Slide 17: 2023E Corporate Guidance (as of November 1st, 2023)
2023E Corporate Guidance (as of November 1st, 2023) FY 2023E 4Q23E FY23E 4Q23E CRC 2023E GUIDANCE1: E&P, Corp. & Other CMB E&P, Corp. & Other CMB Combined Combined Net Total Production1 (MBOE/D) 85 – 87 — 85 – 87 82 – 85 — 82 – 85 Net Oil Production1 (MBO/D) 51 – 53 — 51 – 53 49 – 51 — 49 – 51 Opera
Slide 18: Appendix
Appendix
Slide 19: Why California Resources Corporation?
Why California Resources Corporation? LEADING CARBON MANAGEMENT BUSINESS PREMIER BALANCE SHEET WITH STRONG FREE CASH FLOW GENERATION STRONG SHAREHOLDER RETURNS STRATEGY DISCIPLINED CAPITAL ALLOCATION
Slide 20: Executing on our Low Carbon Intensity O&G Operations
Executing on our Low Carbon Intensity O&G Operations 3Q23 OPERATIONAL PERFORMANCE COMMENTARY: Key Operational Results: 85MBOED 3Q23 NET PRODUCTION ▪ Continue strong HSE performance above internal goals Oil NGLs Gas 60% 13% 27% ▪ Wells: Drilled3 9 wells in 3Q23 ▪ Rig Activity: Exited the quarter with
Slide 21: Wilmington Production Sharing Contracts (PSC) At Higher Commodity Prices
Wilmington Production Sharing Contracts (PSC) At Higher Commodity Prices EFFECT OF OIL PRICE ON NET PRODUCTION2 For every $1/BBL increase/decrease in Brent price, Net Production (BOD) we expect a ~90BOD decrease/increase in our net oil production related to PSCs1 -/+ $1/BBL +/- ~180 BOD -/+ $1/BBL +
Slide 22: Huntington Beach – Asset Optimization & Value Unlock
Huntington Beach – Asset Optimization & Value Unlock 1 ACRE PARCEL – FT APACHE ▪ 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) by YE23 S
Slide 23: Multiple Paths to Decarbonize
Multiples Paths to Decarbonize ▪ Brownfield emitters provide a decarbonized ▪ Greenfield projects provide product with an inherently product by capturing the CO2 molecules lower carbon intensity than gray products Conventional used in the creation of their products and Greenfield CCS ▪ Greenfield de
Slide 24: Illustrative CTV JV Type Curve Demonstrates Potential Valuation Upside
Illustrative CTV JV Type Curve Demonstrates Potential Valuation Upside Example Strategic Partnership Economics An average $500 CTV project could generate on average $50 to $135 of EBITDA per metric ton injected per annum depending on project structure $400 Midpoint of Est. CTV JV EBITDA ($MM) EXAMPL
Slide 25: Large Opportunity Set With a Variety of Potential Emitters
Large Opportunity Set With a Variety of Potential Emitters STORAGE ONLY PROJECTS ILLUSTRATIVE EBITDA1 VS CAPEX REQUIREMENTS FOR VARIOUS CO2 PROJECTS ▪ CTV JV is the off-taker of CO2 at storage site through Storage Co. ▪ Lower expected capital requirements for project development, including injection
Slide 26: Strong Price Realizations in CA's Unique Market Dynamics
Strong Price Realizations in CA’s Unique Market Dynamics CALIFORNIA IS AN OIL ISLAND AND THE LARGEST U.S. GDP CONTRIBUTOR (amounts shown as % of U.S. domestic GDP) ▪ Crude: California crude prices continued move in tandem with the broader market with realizations for 3Q23 firming slightly from 2Q. F
Slide 27: Hedging Program
Hedging Program OIL HEDGES2 STRATEGY As of September 30, 2023 CRC’s hedging strategy is designed to meet our business 4Q23 1Q24 2Q24 3Q24 4Q24 2025 objectives should market prices decline and participate should Barrels per 5,747 23,650 30,000 30,000 29,000 19,748 Day market prices increase SOLD CALL
Slide 28: Strong Balance Sheet Position, Ample Liquidity and Financial Flexibility
Strong Balance Sheet Position, Ample Liquidity and Financial Flexibility LIQUIDITY ROLL BACK1 9/30/23 NET DEBT2 SNAPSHOT $1,500 ($MM) $25MM $4MM $379MM $59MM Revolving Credit Facility (RCF)3 $ 0 $1,200 $143MM $5MM $958MM 7.125% Senior Notes 595 $900 $765MM Face Value of Debt $ 595 $MM $600 Less Cash
Slide 29: Glossary
Glossary Term Definition Term Definition Bcf Billion Cubic Feet FID Final Investment Decision BMT Billion Metric Tons GHG Greenhouse Gas CARB California Air Resources Board IRR Internal Rate of Return CCS Carbon Capture and Storage KMTPA Thousand Metric Tons Per Annum CCS+ Carbon Capture and Storage
Slide 30: Assumptions & Relevant Footnotes
Assumptions & Relevant Footnotes: Slide 3: ▪ (1) Represents a non-GAAP measure. For all historical non-GAAP financial measures please see the Investor Relations page at www.crc.com for a reconciliation to the nearest GAAP equivalent and other additional information. Free cash flow is equal to net ca
Slide 31: Assumptions & Relevant Footnotes (Cont.)
Assumptions & Relevant Footnotes (Cont.): Slide 14: ▪ (1) Internal estimates. The SEC prohibits oil and gas companies, in their filings with the SEC, from disclosing estimates of oil or gas resources other than “reserves,” as that term is defined by the SEC. This presentation includes estimates of q
Slide 32: Forward Looking / Cautionary Statements – Certain Terms
Forward Looking / Cautionary Statements – Certain Terms This document contains statements that we believe to be “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 other than historical fa
Slide 33: Investor Relations and Media Contacts
Joanna Park (Investor Relations) Richard Venn (Media) 818-661-3731 818-661-6014 Joanna.Park@crc.com Richard.Venn@crc.com