California Resources Corporation · NYSE:CRC
California Resources — Q2 2023 Earnings Presentation
35 slides from California Resources's earnings presentation, Aug 1, 2023
Slide 1: Second Quarter 2023 Results
Second Quarter 2023 Results July 31, 2023
Slide 2: Presenters
Presenters Francisco Leon President & Chief Executive Officer Nelly Molina EVP & Chief Financial Officer
Slide 3: Table of Contents
Table of Contents EXECUTIVE SUMMARY 2Q23 FINANCIAL & OPERATIONAL RESULTS BUSINESS TRANSFORMATION UPDATE CARBON MANAGEMENT UPDATE 2023E CORPORATE GUIDANCE APPENDIX
Slide 4: Executive Summary
Executive Summary , need
Slide 5: Our Strengths Are Clear
Our Strengths Are Clear CASHFLOW CARBON CALIFORNIA Strong operational execution on our low Premier carbon management platform Responsible operator with an extensive decline, low carbon intensity oil and gas focused on reducing carbon emissions track record of safe operations ready to assets provide
Slide 6: Executive Summary – Executing on Our Plan
Executive Summary– Executing on Our Plan 86 MBOE/D 1 2Q23 NET PRODUCTION ACTIVE DRILLING RIGS 61% 13% 26% DELIVERING CONSISTENT OPERATIONAL PERFORMANCE Oil NGLs Gas LA Basin AND STRONG FINANCIAL RESULTS IN 2Q23 ▪ Strong operational execution, in line production results on lower capital Sacramento Ba
Slide 7: 2Q23 Financial & Operational Results
2Q23 Financial & Operational Results
Slide 8: Delivering Consistent Operational & Financial Performance
Delivering Consistent Operational & Financial Performance GROWING CASH FLOW PER SHARE Strong 2Q23 Results $500 85MM Average Common Shares Outstanding Operating Cash Flow ($MM) $400 80MM $300 75MM 2Q23E1 2Q23 CRC GUIDANCE Guidance Results $200 70MM Net Total Production (MBOE/D) 86 – 88 86 $100 65MM N
Slide 9: Strong Balance Sheet Position, Ample Liquidity and Financial Flexibility
Strong Balance Sheet Position, Ample Liquidity and Financial Flexibility LIQUIDITY ROLL BACK1 6/30/23 NET DEBT3 SNAPSHOT $1,500 ($MM) $25 ($4) ($40) $1,200 $304 ($123) Revolving Credit Facility (RCF)2 $ 0 $927 7.125% Senior Notes 600 $900 $765 $MM Face Value of Debt $ 600 $600 Less Cash & Cash Equiv
Slide 10: Proven Commitment to Shareholder Returns
Proven Commitment to Shareholder Returns SINCE 4Q201: Returned nearly $1,500 Cumulative Amount Returned to Shareholders ($MM) ▪ Generated ~$1.8B of operating cash flow, delivered ~$1.1B of free cash flow2. and realized $77MM of proceeds from net asset divestitures $1,250 $700MM ▪ Returned ~60% or $6
Slide 11: Executing on our Low Carbon Intensity O&G Operations
Executing on our Low Carbon Intensity O&G Operations KEPT NET OIL PRODUCTION FLAT ON SIGNIFICANTLY LOWER CAPITAL Key Operational Results: 86 MBOE/D 2Q23 NET PRODUCTION 60 Oil NGLs Gas 61% 13% 26% $38MM 40 2Q23 E&P, CORP, & OTHER ADJ. CAPITAL1 (Mbo/d) D&C and Workovers Facilities 63% 26% 11% Corporat
Slide 12: Reservoirs are Performing As Expected
Reservoirs are Performing As Expected ▪ Across the portfolio, CRC’s assets performed in line with expectations ▪ 1H23 gross production decline rate remained flat ▪ 1H23 gross NGL production remained flat; began building NGL inventory for sale later in the year during higher demand periods ▪ For 2023
Slide 13: Business Transformation Update
Business Transformation Update
Slide 14: Transforming the Way We Operate for a Long-Term Outlook
Transforming the Way We Operate for a Long-Term Outlook ▪ Transforming the way we operate to improve margins and FOCUS AREAS: drive higher cash flows ▪ Utilizing Alvarez & Marsal’s industry experience and proprietary NON ENERGY OPERATING COSTS $50MM + PeerView E&P benchmarking and analytics ADJ. E&P
Slide 15: The Forefront of Carbon Management
THE FOREFRONT OF CARBON MANAGEMENT
Slide 16: Carbon TerraVault – California's Leading Carbon Management Platform
Carbon TerraVault – California’s Leading Carbon Management Platform CALIFORNIA LEADING CARBON MANAGEMENT PLATFORM Positioned to Be California’s Premier Carbon Management Provider ▪ Identified up to 1BMT1 CO2 storage in California ▪ Technological expertise, large scale project management, and financi
Slide 17: Strengthening The Expansion of Carbon Management Business
Strengthening The Expansion of Carbon Management Business Signed 1 additional storage only CDMA1 for an injection rate of 100KMTPA with Verde Clean Fuels and expanded Lone Cypress project to 205KMTPA from an initial 100KMTPA CO2 injection rate 5 vaults with Class VI permits submitted to EPA as we co
Slide 18: Building on Our Momentum by Accelerating the Carbon Management Business
Building on Our Momentum by Accelerating the Carbon Management Business WE HAVE ACHIEVED A LOT IN 2 YEARS: FORWARD OUTLOOK: Permitting: ▪ Announced 2045 Full Scope Net Zero & ESG Goals ▪ Targeting First Class VI EPA Draft Permit by YE20231 Positioned to Be California’s Premier ▪ 30% of CRC's executi
Slide 19: 2023E Corporate Guidance
£F 2023E Corporate Guidance ors "ea
Slide 20: Updated 2023E Corporate Guidance – Narrowing Our 2023E FCF Guide
Updated 2023E Corporate Guidance – Narrowing Our 2023E FCF3 Guide (as of August 1 , 2023) st FY 2023E 3Q23E FY23E 3Q23E CRC 2023E GUIDANCE1: E&P, Corp. & Other CMB E&P, Corp. & Other CMB Combined Combined Net Total Production1 (MBOE/D) 85 – 91 — 91 – 85 88 – 86 — 88 – 86 Net Oil Production1 (MBO/D)
Slide 21: 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 22: Appendix
Appendix
Slide 23: Welcoming Verde Clean Fuels to the Net Zero Industrial Park at Elk Hills
Welcoming Verde Clean Fuels to the Net Zero Industrial Park at Elk Hills CDMA DETAILS FOR VERDE RENEWABLE GASOLINE FACILITY1 ▪ Verde to construct a facility at the Net Zero Industrial Park at Elk Hills that will use proprietary gasification technology targeted to produce ~7.5 million gallons per yea
Slide 24: Decarbonizing California and Building a Diversified Portfolio of CO2 Emissions
Decarbonizing California and Building a Diversified Portfolio of CO2 Emissions Expecting to Further Diversify CTV’s Portfolio of Emitters Across The Energy Spectrum in California Positioned to Be California’s Premier Carbon Management Provider Continuing to attract new emissions sources due to ideal
Slide 25: Strategic Partnership – A Structural Capital Advantage
Strategic Partnership – A Structural Capital Advantage Illustrative 2027 CO2 Storage/Injection Goal Capital Funding Needs1 Improves & Increases Flexibility of CRC’s assumes Brookfield fully participates in 5MMTPA of CTV JV projects Capital Allocation Framework (5MMTPA of CO2 Injection by 2027) JV ▪
Slide 26: Illustrative CTV JV Type Curve Demonstrates Potential Valuation Upside
Illustrative CTV JV Type Curve Demonstrates Potential Valuation Upside First Full Year of Est. Impact 2026E 2028E Example Strategic Partnership Economics An average Est. CO2 Injection Rate per Year 1MMTPA 5MMTPA CTV project could generate on average $50 to $135 of EBITDA per Est. CTV JV EBITDA ($MM)
Slide 27: Large Opportunity Set With a Variety of Potential Emitters
Large Opportunity Set With a Variety of Potential Emitters ILLUSTRATIVE EBITDA1 VS CAPEX REQUIREMENTS FOR STORAGE ONLY PROJECTS ▪ CTV JV is the off-taker of CO2 at storage site through Storage Co. VARIOUS CO2 PROJECTS ▪ Lower expected capital requirements for project development, including injection
Slide 28: Long Durability, Low Decline & Low Carbon Intensity O&G Assets
Long Durability, Low Decline & Low Carbon Intensity O&G Assets ~13 years of low carbon 1H23 CI3 intensity multi year MMBoe % Oil Est. Annual Average Net R/P2 NRI (Scope 1+2) production runway2 LONG DURABILITY 1P ASSETS ($80 Brent)1 Decline Production2 ($80 Brent)1 (g CO2e/MJ) (MBOE/D) Sacramento Bas
Slide 29: 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 2Q23 firming slightly from 1Q. F
Slide 30: Hedging Program
Hedging Program OIL HEDGES1 Date as of June 30, 2023 3Q23 4Q23 1Q24 2Q24 2H 2024 2025 Barrels per 17,363 5,747 7,750 10,500 10,375 14,811 STRATEGY Day CRC’s hedging strategy seeks to mitigate our exposure SOLD CALLS Weighted- to commodity price volatility and ensure our financial Average Price $57.0
Slide 31: Glossary
Glossary Term Definition Term Definition BMT Billion Metric Tons FEED Front End Engineering and Design CARB California Air Resources Board FID Final Investment Decision CCS Carbon Capture and Storage GHG Greenhouse Gas CCS+ Carbon Capture and Storage + EOR KMTPA Thousand Metric Tons Per Annum CDMA C
Slide 32: Assumptions & Relevant Footnotes
Assumptions & Relevant Footnotes: Slide 8: ▪ (1) 2Q23E guidance assumed a 2Q23 Brent price of $79.69 per barrel of oil, NGL realizations consistent with prior years and an average daily NYMEX gas price of $2.22 per mcf. Generally, CRC’s share of production under production- sharing contracts (PSCs)
Slide 33: Assumptions & Relevant Footnotes (Cont.)
Assumptions & Relevant Footnotes (Cont.): Slide 26: The information on Slide 26 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 34: 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 35: 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