California Resources Corporation · NYSE:CRC
California Resources — Q2 2021 Earnings Presentation
28 slides from California Resources's earnings presentation, Aug 6, 2021
Slide 1: 2Q21 Earnings Presentation
“Charting a new course” 2Q21 Earnings Presentation August 5, 2021
Slide 2: Presenters: Mac McFarland and Francisco Leon
Mac McFarland President & CEO Francisco Leon EVP & CFO
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 include thos
Slide 4: 2Q21 Highlights
2Q21 Highlights 2Q21 SNAPSHOT Continued Strong Core Financial & Operational Performance Sacramento Basin ~3,300 BOE per day Announcing Strategic A&D Transactions San Joaquin Basin ~74,500 BOE per day Further Optimizing Operations & Raising FCF Guidance + Acquired 1,600 BOE per day (~100% Oil)1 Incre
Slide 5: Executing On Our Strategy & Delivering on Our Priorities
Executing On Our Strategy & Delivering on Our Priorities 1 COST & OPERATIONAL EXCELLENCE 2 DISCIPLINED INVESTING 3 PORTFOLIO MANAGEMENT Prudent Investment and Responsible, Value-Focused Efficient Operating Model Prioritization of Best Projects Stewardship Sustained G&A and Non-Energy Cost Structure
Slide 6: Positioning for the Future
Positioning for the Future CO2 CARBON OPPORTUNITIES SOLAR OPPORTUNITIES Up to 1 BMT of Potential CO2 300 to 1,000 MW Solar Opportunity Permanent Storage Capacity for CRC Front-of-the-Meter Solar for Grid Supply Strategically Placed Infrastructure Across CA 3 Projects Identified | 5,000 Acres Suitabl
Slide 7: Stewarding Our Returns-Focused Business Model
STEWARDING OUR RETURNS-FOCUSED BUSINESS MODEL
Slide 8: Continued Operational Excellence
Continued Operational Excellence Second Quarter 2021 First Half 2021 PRODUCTION PRODUCTION 101 Mboe/d 100 Mboe/d 60% Oil 60% Oil OPERATIONS OPERATIONS 21 Drilled1 38 Drilled1 21 Online | 48 Workover Wells 36 Online | 88 Workover Wells 2 Drilling | 35 Maintenance Rigs 2 Drilling | 33 Maintenance Rigs
Slide 9: Emphasizing CRC's Asset Quality
Emphasizing CRC’s Asset Quality 6-Month Program Highlights (avg. per well) Mount Poso 2021 YTD DEVELOPMENT PERFORMANCE: Wells Drilled & Completed 22 ▪ 2 rigs running in San Joaquin basin during Q2 TMD (ft.) 2,630 ▪ Focused on shallow, high margin oil projects in the Mt. Poso, Elk Hills, and Buena Vi
Slide 10: CRC Price Realizations Remained Strong in CA's Improving Market Dynamics
CRC Price Realizations Remained Strong in CA’s Improving Market Dynamics ▪ Realized oil prices increased due to stronger Brent pricing and an CALIFORNIA IS AN ENERGY ISLAND AND THE LARGEST U.S. GDP CONTRIBUTOR almost full return to pre-COVID market conditions. ▪ Realized natural gas prices remained
Slide 11: Second Quarter 2021 Highlights
Second Quarter 2021 Highlights REDUCED MAINTENANCE PRUDENT MAINTENANCE SPENDING SPENDING 2Q201 1Q211 2Q211 RETAINING COST FOCUS TO ENABLE MARGIN EXPANSION Predecessor Successor Successor Energy operating costs2 ($/Boe) $3.51 $4.70 $4.70 $60 $54.10 $60 $53.73 Gas processing costs ($/Boe) $0.46 $0.53
Slide 12: Second Quarter 2021 Highlights (cont.)
Second Quarter 2021 Highlights (cont.) MAINTAINING PRODUCTION WITH LIMITED DRILLING ACTIVITY DUE TO STRONG MAINTENANCE OPPORTUNITIES 120 60 2Q201 1Q211 2Q211 Predecessor Successor Successor 80 40 Wells Drilled MBOEPD Net Oil Production (MBbl/d) 70 60 61 Total Net Production (MBoe/d) 112 99 101 40 20
Slide 13: Raising the Bar on Guidance & Improving Shareholder Returns
Raising the Bar on Guidance & Improving Shareholder Returns CRC IS NET LONG IN NATURAL GAS PRIOR REVISED GUIDANCE GUIDANCE FY 2021E1 FY 2021E1 Total Production (Mboepd)2 96 – 99 97 - 100 Bcf/year 0 10 20 30 40 50 60 Oil Production (Mbopd)2 60 – 62 Reaffirmed ADJUSTING $35 MM FOR INCREASE 4 Internal
Slide 14: CRC's Low Valuation Provides Equity Upside: Increasing SRP to $250MM
CRC’s Low Valuation Provides Equity Upside: Increasing SRP to $250MM MULTIPLES COMPARED TO PEERS1 SHOW STRONG CURRENT OIL PRICING OFFERS ROBUST UPSIDE INVESTMENT OPPORTUNITY 30% PV-10 Reserves High FCF / Low Leverage High FCF / High Leverage Value3 and $5,720 MM5 25% Metrics At SEC Price Deck and ~1
Slide 15: Value Through Core A&D Transactions
Value Through Core A&D Transactions BOLT-OFF THROUGH VENTURA BASIN EXIT BOLT-ON ACQUISITON IN OUR CORE ASSET ▪ Signed PSAs for a full basin divestiture1 ▪ Purchase of MIRA’s2 Working Interest ▪ Removes high-cost fields ▪ Simplifies business model and high grades barrel produced ▪ Simplifies CRC’s op
Slide 16: Maintaining Balance Sheet Strength, Liquidity, and Financial Flexibility
Maintaining Balance Sheet Strength, Liquidity, and Financial Flexibility ESTIMATED LIQUIDITY ROLL FORWARD1 6/30/21 DEBT SNAPSHOT $1,000 ~$770 MM ($ in millions) $800 Revolving Credit Facility (RCF) $ 0 ~$250 MM 7.125% Senior Notes 600 $600 $ Millions $518 MM Face Value of Debt $ 600 $400 Less Availa
Slide 17: Hedging Program Protects Cash Flow
Hedging Program Protects Cash Flow OIL HEDGE PROTECTION1 as of June 30, 2021 3Q21 4Q21 1Q22 2Q22 2H22 FY23 Barrels per 36,688 37,037 35,347 35,343 28,773 14,790 Day STRATEGY SOLD CALLS Weighted- Average Price $50.47 $60.75 $60.37 $60.63 $59.07 $58.01 ▪ CRC hedging strategy typically utilizes a mixtu
Slide 18: Hedging Program Changes Since April 30, 2021
Hedging Program Changes Since April 30, 2021 Downside Protection (Swaps Ceiling (Sold Calls) + Purchased Puts) Barrels per Day 1,326 326 3Q 2021 Weighted Avg. Price per Barrel $67.91 $67.95 Barrels per Day 1,337 337 4Q 2021 Weighted Avg. Price per Barrel $66.68 $66.00 Barrels per Day 3,000 1,000 1Q
Slide 19: New Chapter: Low Carbon Opportunities
New Chapter : Low Carbon Opportunities 19
Slide 20: Understanding California's Full CCS Potential
Understanding California’s Full CCS Potential 5th LARGEST ECONOMY WORLDWIDE1 BIGGEST DOMESTIC GDP POWERHOUSE STATE ▪ 424 MMT of CO2 e in 20172 CCS TECHNOLOGY HAS THE POTENTIAL TO REDUCE ~ 15% OF THE CO2 EMISSIONS NEEDED FOR CA TO MEET ITS 2030 TARGET2 ~ 2 - 5 BMT3 of O&G GEOLOGICAL STORAGE POTENTIAL
Slide 21: Defining CRC's Strategic Decarbonization Advantage
Defining CRC’s Strategic Decarbonization Advantage CALIFORNIA HAS THE MOST SUPPORTIVE REGULATORY CA’S DEPLETED O&G RESERVOIRS PROVIDE ENORMOUS ENVIRONMENT FOR DECARBONIZATION, INCLUDING PERMANENT CARBON STORAGE POTENTIAL FINANCIAL CCS INCENTIVES CRC Has Up to 1 BMT2 of ~2 – 5 BMT CO21 Estimated CO2
Slide 22: Validating CRC's New Chapter
Validating CRC’s New Chapter Est. CRC O&G RESERVOIR CCS STORAGE CAPACITY1 MMT of CO2 0 200 400 600 800 1,000 Permitting & Near- Probable Possible Term Focus Carbon TerraVault I: New ~40 MMT CCS Project1,2 Elk Hills CalCapture ~1.4 MMT/year CCUS Project1 ▪ Filed for up to 10 MMT Class VI EPA well per
Slide 23: Strengthening Solar Capability
Strengthening Solar Capability SELF SUPPLY | BEHIND THE METER: ▪ Advancing an agreement with SunPower for a 12 MW behind-the-meter solar project at Mt. Poso, expected to be LCFS eligible ▪ Targeting up to 45 MW Solar PV installations in five fields located in San Joaquin and LA Basin with constructi
Slide 24: Introducing New Board Member
Introducing New Board Member ▪ Appointed as a member of the Sustainability & Compensation Committees on August 5, 2021 ▪ Over 20 years of experience in strategic planning and sustainability roles Nicole Neeman Brady ▪ Currently serves as the Chief Executive Officer and a Director of Sustainable Deve
Slide 25: Supplemental Materials
ENTAL MATERIALS EM ) SUPPLI
Slide 26: 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 informatio
Slide 27: Leverage & Free Cash Flow Reconciliation
Leverage & Free Cash Flow Reconciliation 2Q 2021E Leverage and Net Debt ($ in millions) Low High We calculate the leverage ratio by dividing net debt by adjusted EBITDAX for Face value of debt $600 $600 the applicable period. We define net debt as the face value of our debt less Available cash (151)
Slide 28: 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