California Resources Corporation · NYSE:CRC
California Resources — Investor Presentation (October 2014)
52 slides from California Resources's investor presentation, October 2014
Slide 1: Investor Presentation October 2014
Investor Presentation October 2014 0
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, other than statements of historical fact, included in this presentatio
Slide 3: Cautionary Statements Regarding Hydrocarbon Quantities
Cautionary Statements Regarding Hydrocarbon Quantities CRC has provided internally generated estimates for proved reserves and aggregated proved, probable and possible reserves (“3P Reserves”) as of December 31, 2013 in this presentation, with each category of reserves estimated in accordance with S
Slide 4: Summary of the Spin-Off
Summary of the Spin-Off Distributing Company: Occidental Petroleum Corporation (“OXY”) Distributed Company: California Resources Corporation (“CRC” or the “Company”) OXY will distribute at least 80.1% of the outstanding common shares of CRC Distributed Securities: common stock Following the spin-off
Slide 5: Separation Overview
Separation Overview • Creates industry leading California focused E&P • Allows CRC to reinvest substantially all cash flow after debt service to grow its business • Enables CRC’s management team to focus on and accelerate the development and execution of its business in Rationale its core areas of o
Slide 6: Management Presenters
Management Presenters Todd Stevens • President and Chief Executive Officer Mark Smith • Senior EVP and Chief Financial Officer Shawn Kerns • EVP — Corporate Development Charlie Weiss • EVP — Public Affairs Scott Espenshade • VP — Investor Relations 5
Slide 7: California Resources Corporation Introduction
California Resources Corporation Introduction 6
Slide 8: Key Investment Highlights
Key Investment Highlights World Class Resource Base •Interests in 4 of the 12 largest fields in the lower 48 states •744 MMBoe proved reserves •Largest producer in California on a gross operated basis with significant exploration and development potential Shareholder Value Focus Portfolio of Lower-R
Slide 9: Focused Business Strategy
Focused Business Strategy • Grow NAV per share through exploration and development of under-exploited resources • Self-funding capital program eliminates reliance on external capital Disciplined Capital Allocation • Rigorously review projects to allocate capital most efficiently • Drive down costs t
Slide 10: Overview of California Resources Corporation
Overview of California Resources Corporation California Pure-Play Net Resource Overview Total proved reserves by basin Avg. net production by • CRC will be an independent E&P company focused (12/31/2013) basin (1H’14) on high-return assets in California Los Angeles Basin San Joaquin Basin 70% Los An
Slide 11: California is a World Class Oil Province
California is a World Class Oil Province More than 35Bn Boe Produced in CA* Top California Producers in 2013* 200 188 180 166 160 147 Gross Operated MBoe/d 140 120 2 billion Boe 100 80 60 38 40 25 20 Sacramento - 19 billion Boe CRC Chevron USA Aera Energy Freeport LINN Energy San McMoRan Francisco G
Slide 12: Substantial Opportunity and Resource Rich Asset Base
Substantial Opportunity and Resource Rich Asset Base Total California 2013 Reserves Net Proved Reserves (MMBoe) 744 Sacramento Basin % Liquids – Net Proved 81% Pre-Tax Proved PV-10 ($ millions)1 $14,018 San Joaquin Basin Net 3P Reserves MMBoe 1,098 % Liquids – Net 3P 83% Pre-Tax 3P PV-10 ($ millions
Slide 13: Robust Returns Across Multiple Drive Mechanisms
Robust Returns Across Multiple Drive Mechanisms Single Well/Pattern Economics by Drive Mechanism: Before Tax IRR 1 80%-100%+ per well 50%+ per pattern 50%+ 30%-50% per pattern per well Conventional Waterflood Steamflood Unconventional Total California 2013 Reserves Conventional Waterflood Steamflood
Slide 14: Strong Returns Through the Commodity Cycle
Strong Returns Through the Commodity Cycle Oil Prices ↑ / Gas Prices ↓ Oil Prices ↑ / Gas Prices ↑ • Invest in steam floods (above 5x Oil/Gas ratio) • Gas price is a cost for steam floods. Invest in steam floods above 5x Oil/Gas ratio • Conventional, waterflood and unconventional oil opportunities •
Slide 15: Application of Technology Driving High Margin Growth
Application of Technology Driving High Margin Growth Oil NGLs Gas 250 200 155 1581 150 MBoe/d (Net) 100 50 - - 1H'14 2014 2015 2016 Longer term CRC has a significant portfolio of conventional and unconventional opportunities to generate double-digit production growth over the longer term 1 Based on
Slide 16: Significant Free Cash Flow
Significant Free Cash Flow ($ in millions) $800 CRC • Positive free cash flow gives opportunity to $400 accelerate growth without impairing credit LTM 6/30/14 Free Cash Flow (1) metrics $0 $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 • Cash margin on par with or exceeds peer group ($400) • Disciplined
Slide 17: CRC Achieves Premium Pricing and Recycle Ratio
CRC Achieves Premium Pricing and Recycle Ratio $70.00 Cash Margins for FY 2013 ($/Boe) Recycle ratio: 2.4x 1 $60.00 $49.66 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 A B C D CRC E F G H Source: Company 2013 SEC filings. Comparables consist of CLR, CXO, DNR, DVN, EOG, PXD, WLL and XEC. Note: Cash margi
Slide 18: CRC – Price Realizations
CRC – Price Realizations Oil Price Realization Gas Price Realization WTI Realizations Brent NYMEX Realizations $120 5.0 $4.61 $111.70 $4.31 $110.90 4.5 $4.53 $108.76 $109.02 $110 $3.73 4.0 $103.80 $104.02 $4.11 3.5 $2.94 $100.94 $3.66 3.0 $/Mcf $104.16 $/Bbl $100 2.5 $2.81 $99.61 $97.97 2.0 $95.12 $
Slide 19: Captive Infrastructure Integral to Operations
Captive Infrastructure Integral to Operations • The Elk Hills 200 MMScf/d Cryogenic gas plant is part of the largest gas processing complex in California, with a combined capacity of 540 MMScf/d Gas Processing • CRC also owns and operates a system of gas processing facilities in the Ventura Basin th
Slide 20: San Joaquin Basin
San Joaquin Basin Overview Basin Map • Oil and gas discovered in the late 1800s • Currently accounts for ~70% of CRC production • 25 billion barrels OOIP in CRC fields1 Kettleman • Cretaceous to Pleistocene sedimentary section (>25,000 feet) • Source rocks are organic rich shales from Moreno, Lost H
Slide 21: Elk Hills Field – Overview
Elk Hills Field – Overview Overview Field Map • CRC’s flagship asset, a 103-year old field with exploration opportunities1 RR Gap • Large fee property with multiple stacked reservoirs GS • Light oil from conventional and unconventional production Elk Hills • Largest gas and NGL producing field in CA
Slide 22: Elk Hills Field – Stacked Pay Zones
Elk Hills Field – Stacked Pay Zones Dry Shallow Deep Discovery Gas Oil Stevens Carneros Exploratory Wells Producing Well Zone Zone Zone Zone 2009 Age 1910 1919 954-4G 987-25R 934-29R Formations 1941 1941 1977 1978 1988 PLEISTOCENE Tulare Dry Gas Zone PLIOCENE 1610’ TD Shallow Oil Zone 2512’ TD Antel
Slide 23: Elk Hills Field – Identified Projects
Elk Hills Field – Identified Projects Shallow Oil Zone Monterey and Carneros Formations Primary Waterflood Net Production C4D Shale 29R Waterflood 100.0 Asphalto, Railroad Gap, 31S Waterflood 90.0 & N. Midway-Sunset 80.0 Gas Injection Opal CT 70.0 Mid Flank Water Injection 60.0 MBoe/d Compression Ex
Slide 24: Waterflood Project Type
Waterflood Project Type • Improving recovery from primary reservoirs Average Waterflood Pattern Production Response • Redeveloping existing asset base 100 > Wells already drilled 80 2012 2013 Average 2014 > Expand waterflood facilities Curve 60 Boe/d 40 • Already understand reservoir characteristics
Slide 25: Steamflood Projects
Steamflood Projects • Improving recovery from heavy oil reservoirs Example Kern Front Pattern > Add steam to make oil flow better 140 • Proven process 120 100 > Good quality reservoirs; high oil saturation 80 Bopd • Reliable execution 60 > Shallow reservoirs; inexpensive to drill 40 > High margins a
Slide 26: Los Angeles Basin
Los Angeles Basin Overview Basin Map • Large, world class basin with thick deposits • Kitchen is the entire basin, hydrocarbons did not migrate laterally; basin depth (>30,000 ft) • 10.5 billion barrels OOIP in CRC fields1 • Most significant discoveries date to the 1920s – past exploration focused o
Slide 27: Wilmington Field – Overview
Wilmington Field – Overview Overview Field Map • CRC’s flagship coastal asset: acquired in 2000 • Field discovered in 1932; 3rd largest field in the U.S. • Over 7 billion barrels OOIP (34% recovered to date)1 • Depths 2,000’ – 10,000’ (TVDSS) • 1H’14 avg. production of 36 MBoe/d (gross) • Over 8,000
Slide 28: Wilmington Field – Geology & Technology
Wilmington Field – Geology & Technology Stratigraphic Column Geosteering Technology Shallow Gas Upper Fan reservoirs Middle Fan Ranger reservoirs Terminal reservoirs Middle Fan Lower Fan UP-Ford reservoirs Deep marine 237 Zone reservoirs Siliclastics 27
Slide 29: Wilmington Field Project
Wilmington Field Project • Successful Redevelopment Example Pattern > Increasing waterflood performance 60 > Over 8,000 wells drilled since inception 40 • Continue to find new opportunities Boepd > Inventory of over 1,000 wells 20 > Production sharing contract • Solid reputation in urban area develo
Slide 30: Ventura Basin
Ventura Basin Overview Basin Map • Estimated ~3.5 billion barrels OOIP in CRC fields1 • Operate 25 fields (about 40% of basin) • 300,000 acres • Multiple source rocks: Miocene (Monterey and Rincon Formations), Eocene (Anita and Cozy Dell Formations) Key Assets Rincon Saticoy Shiells Canyon Ventura S
Slide 31: Sacramento Basin
Sacramento Basin Overview Basin Map • Cretaceous Starkey, Winters, Forbes, Kione, and the Eocene Domengine sands • Current production is almost exclusively limited to less than 10,000 feet • Exploration started in 1918 and focused on seeps and topographic highs. In the 1970s the use of multifold 2D
Slide 32: Shale Geological Overview
Shale Geological Overview 0 GR 150 • Successful in upper Monterey using precise development approach 3,000 • Expanding efforts into lower Monterey and other shales Total Organic N Depth Thickness Porosity Permeability Carbon Play (ft) (gross ft) (%) (mD) (%) Upper Monterey(1) 3,500' – 12,000' 250' –
Slide 33: CRC’s Regulatory Program
CRC’s Regulatory Program • Demonstrate CRC’s strong commitment to safety and environmental responsibility • Proactively engage in transparent and constructive dialogue with communities and regulators • Serve as an active community partner to build mutually beneficial relationships • Senior CRC leade
Slide 34: Proven Track Record in Sensitive Environments
Proven Track Record in Sensitive Environments • Operator of choice in coastal environments • Proven coexistence with sensitive environmental receptors • Excellence in safety and mechanical integrity 33
Slide 35: CRC’s Unique Regulatory Flexibility
CRC’s Unique Regulatory Flexibility Long and distinguished regulatory track record Leading acreage position and diversity of opportunities • Core operations in longstanding oil & gas fields • Primary production, IOR and EOR • All grades of oil, NGLs and natural gas • Government-operated fields and p
Slide 36: Financial Strength Provides Flexibility to Drive Growth
Financial Strength Provides Flexibility to Drive Growth • Capital program: Invest within cash flow Capitalization as of 10/1/14 ($MM) 1 • Growth strategy based on re-investment in $2.0Bn Senior Unsecured R C F $65 Senior Unsecured T erm Loan 1,000 opportunity rich portfolio of projects and disciplin
Slide 37: Self-Funded Capital Investment Program
Self-Funded Capital Investment Program Commentary 2014 Total Capital Budget • 2014 capital budget of $2.1 billion is an Other 1 Exploration ~$145 increase of 24% from 2013 ~$95 ~7% ~5% • CRC plans to reinvest excess free cash flow Workover ~$200 that prior to spin was sent to Occidental ~9% Dev. Fac
Slide 38: The CRC Opportunity
The CRC Opportunity World Class Resource Base Portfolio of Lower-Risk, High-Growth Opportunities Management Expertise California Heritage Shareholder Value Focus 37
Slide 39: Q&A
CALIFORNIA RESOURCES CORPORATION Q&A
Slide 40: Appendix
Appendix 39
Slide 41: CRC’s Strong, Highly Experienced Management Team
CRC’s Strong, Highly Experienced Management Team Name Position Prior Experience Todd Stevens President and Chief Executive Officer VP Corporate Development OXY; VP California Operations OXY President O&G Americas; President OXY Oil and Gas USA; Bill Albrecht Executive Chairman VP California Operatio
Slide 42: CRC’s Board of Directors (Effective 12/1/14)
CRC’s Board of Directors (Effective 12/1/14) Name Position Experience Former President O&G Americas; President OXY Oil and Gas USA; Bill Albrecht Executive Chairman VP California Operations OXY Director, President and Chief Executive Todd Stevens Former VP Corporate Development OXY; VP California Op
Slide 43: Non-GAAP Reconciliation for EBITDAX
Non-GAAP Reconciliation for EBITDAX $ millions Last Twelve For the Year Ended December 31, 9 Months Ended, Months Ended, 2011 2012 2013 9/30/2013 9/30/2014 9/30/2014 Net Income $971 $699 $869 $657 $657 $869 Interest Expense - - - - - - Provision for income taxes 670 482 578 438 444 584 Depreciation,
Slide 44: CRC Exploration Characteristics
CRC Exploration Characteristics Conventional • Complex California geology provides unique opportunities below existing fields and along trend • 3D seismic is helpful, but may not clearly define traps • In house regional experience and horizontal well technology improve our ability to explore for the
Slide 45: Largest CRC Fields Have World Class Oil-in-Place and Stacked Pay Potential
Largest CRC Fields Have World Class Oil-in-Place and Stacked Pay Potential Elk Hills Buena Vista Kettleman Wilmington Huntington Beach OOIP*: 8 billion Boe 7 billion Boe 4 billion Boe 7 billion Boe 2 billion Boe Proven pay zones: 6 4 6 8 8 5 Potential pay zones: 2 6 2 1 1 1 Offshore Onshore 0 Repett
Slide 46: CRC Highlights – Unconventional Opportunities
CRC Highlights – Unconventional Opportunities • Over the long-term, expect substantial production growth to come from unconventional reservoirs • CRC has mineral interests in ~1.1 million net acres Unconventional Potential with unconventional potential and 4,682 identified drilling locations, primar
Slide 47: 3D Seismic Coverage
3D Seismic Coverage • Experienced technical staff, leading acreage position and extensive 3D seismic library, covering over 2.7 million acres, including 47% of CRC’s acreage, results in a strong competitive advantage • Interpretation of this seismic data and extensive knowledge of California geology
Slide 48: Exploration Discoveries
Exploration Discoveries • Conventional Discovery California > New fault block in south San Joaquin Valley > Running room on trend Sacramento Basin • Unconventional Sand > Overlooked thin sand near Buena 2013: Unconventional shale Vista Hills > Multiple additional prospects San Joaquin Basin identifi
Slide 49: Historical Costs Incurred
Historical Costs Incurred • CRC has increased capital expenditure efficiency • In 2013, development costs decreased by nearly $500 million primarily related to a ~20% decline from 2012 drilling costs • As a result of recent investments in infrastructure, CRC does not anticipate substantial infrastru
Slide 50: Stable Leasehold Position
Stable Leasehold Position San Joaquin Los Angeles Ventura Sacramento Basin Basin Basin Basin Total CRC Held in fee acreage, net (000s) 943 13 212 195 1,363 % net acreage held in fee 63% 45% 83% 36% 60% Undeveloped acreage, net (000s) 1,110 10 196 288 1,604 Total acreage, net (000s) 1,485 30 257 533
Slide 51: Wilmington Field – Production Sharing Contracts
Wilmington Field – Production Sharing Contracts • Over 90% of CRC’s Long Beach LBU PSC production is covered under Production 50,000 Base Incremental Sharing Contracts (PSCs) with the State 40,000 and City of Long Beach 30,000 Incremental Boe/d profit split: • CRC’s net production decreases when 20,
Slide 52: Endnotes
Endnotes 1) As of 12/31/13, CRC’s probable reserves were 218 MMBoe (87% liquids) with a PV-10 of $4 billion and possible reserves were 136 MMBoe (83% liquids) with a PV-10 of $3 billion, each based on SEC pricing. 2) CRC's recycle ratio is equal to cash margin per barrel divided by F&D costs. CRC's
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