California Resources Corporation · NYSE:CRC
California Resources — Investor Presentation (July 2015)
43 slides from California Resources's investor presentation, Jul 13, 2015
Slide 1: July Corporate Presentation
July Corporate Presentation Los Angeles, CA| July 2015
Slide 2: Forward-Looking / Cautionary Statements
Forward-Looking / Cautionary Statements This presentation contains forward-looking statements that involve risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects, and reported results should not be considered an indicatio
Slide 3: 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 4: Reserves and production by basin; investment highlights
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 5: Overview of California Resources Corporation
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 • Largest private mineral acreage-holder, with 2.4 million net acres1 • ~60% of total net mineral interests positi
Slide 6: Focus on Oil Enhances Base & Margins
Focus on Oil Enhances Base & Margins 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15E FY 2014 FY 2015E Production By Stream (MBoe/d) Oil NGL Gas Guidance Range Average Total Production 159 Mboe/d Average Oil Production 99 MBbl/d Resource base enables predictable production profile • Conventional assets have relativel
Slide 7: CRC Corporate LOE Costs Managed Down
CRC Corporate LOE Costs Managed Down 7 $0 $5 $10 $15 $20 $25 2011 2012 2013 2014 Steam Injectant Gas Plant Expense Energy Supports Downhole Maintenance Workovers / Well Enhancement Surface Operation and Maintenance $ /B o e
Slide 8: 2015 Capital Budget
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 expected to be di
Slide 9: Exploring adjustments to capital structure
• Exploring adjustments to capital structure Total long-term debt: ~$6.5 billion, net, at 3/31/2015 Proactively sought and received favorable amendment to revolver and term loan through end of 2016 Resource base enables a variety of alternatives, e.g. asset monetizations, JVs, MLPs and other o
Slide 10: Capital Structure & Hedges
• Deleveraging is a priority • Credit facility amendment provides additional financial flexibility • Strategic and opportunistic commodity hedging to support capital program Capitalization as of 3/31/15 ($MM) $25 $625 $1,000 $1,750 $2,250 $0 $500 $1,000 $1,500 $2,000 $2,500 Ja n -1 6 Ju l- 1 6 Ja n
Slide 11: Long Term Value Creation Driven by World Class Asset Base
Long Term Value Creation Driven by World Class Asset Base 11
Slide 12: CRC is the Leading Operator in California
0 50 100 150 200 250 300 G ro ss O p er at ed M B o e/ d Top California Producers in 2014* Growth of Top California Producers 195 159 139 37 35 - 20 40 60 80 100 120 140 160 180 200 CRC CVX Aera Energy FCX LINE G ro ss O p er at ed M B o e/ d Aera Chevron CRC *Gross operated production from DOGGR. C
Slide 13: World Class Assets with Significant Development Opportunities
As of 12/31/2014 Net Proved Reserves (MMBoe) 768 % Oil– Net Proved 72% Pre-Tax Proved PV-10 ($ millions)1 $16,091 2014 Avg. Net Production (MBoe/d) 159 % Oil 63% Net Acreage (‘000 acres) 2,400 Identified Gross Locations 19,800 1 PV-10 shown as of 12/31/14 based on SEC five-year rule applied to PUDs
Slide 14: 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 15: 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 16: 2014 Exploration Portfolio
16 2014 Exploration Portfolio Prospective Shale Plays San Joaquin Conventional San Joaquin Unconventional Sacramento Basin Conventional Ventura Basin Conventional Lower Monterey Kreyenhagen Moreno 2.0 Bn Boe Net Unrisked Prospective Resources San Joaquin Conventional San Joaquin Unconventional Sacra
Slide 17: CRC – Price Realizations
$95.12 $94.21 $97.97 $93.00 $48.63 $103.80 $104.02 $104.16 $92.30 $46.44 $110.90 $111.70 $108.76 $99.51 $55.17 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 2011 2012 2013 2014 1Q15 $ /B b l WTI Realizations Brent $4.11 $2.81 $3.66 $4.39 $3.06 $4.31 $2.94 $3.73 $4.34 $2.84 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3
Slide 18: 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 100 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 19: Building Life of Field Plans – Elk Hills Field
19 • Multiple mechanisms within Elk Hills Field Primary Waterflood Unconventional • Longer term base production decline ~15% • Transition to steam flood & EOR projects would further flatten declines Building Life of Field Plans – Elk Hills Field Life of field plans help optimize returns by ide
Slide 20: Effective Management of Elk Hills Field Operating Costs
20 Effective Management of Elk Hills Field Operating Costs* *Transition from primary to secondary production in Elk Hills has been occurring during this period. The Wilmington Field has similarly experienced declines in Opex per well and Opex per Boe despite a significantly higher WOR (~39 in 2014).
Slide 21: Wilmington Field 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 22: Big Fields Continue To Get Bigger
22 • Example of Wilmington (“mature waterflood”) • Growing Proven Reserves 168% Reserves Replacement since 2011 • Increased inventory of well locations Drilled 500 wells Additional 700 wells identified in mature field • Replaced 140% of wells drilled Big Fields Continue To Get Bigger…. Repleni
Slide 23: Conventional Waterflood Example
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 24: 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 35% in 2014 • 50% growth in steam generation • 800+ potential
Slide 25: Capital Efficient Growth Delivers Long Term Returns
0 2000 4000 6000 8000 10000 12000 14000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 N et B O P D Steamflood Example Kern Front 25 • Single digit base declines • Multi-year Investments of drilling and facilities spending • 2008-2014 Investment $530 million • Added reser
Slide 26: Proven Track Record in Sensitive Environments
Proven Track Record in Sensitive Environments • Operator of choice in coastal environments • Proven coexistence with sensitive environments • 2 billion gallons of water supplied to agriculture in 2014 • Committed to excellence in safety and mechanical integrity 26
Slide 27: Well Positioned for Growth in Recovery
• World-class asset base with diverse and rich resources. • Capacity for significant production growth at higher prices as we develop high-return, lower-risk opportunities. • Committed to capital budgets that live within our cash flows. • As we bring our capital structure in line with today’s prices
Slide 28: Appendix
California Resources Corporation Appendix 28
Slide 29: End Notes
End Notes: (1) The reserves replacement ratio is calculated for a specified period using the applicable proved oil-equivalent additions divided by oil-equivalent production. Company- wide 76% of the additions are proved undeveloped. There is no guarantee that historical sources of reserves additions
Slide 30: Non-GAAP Reconciliation for Adjusted EBITDAX
Non-GAAP Reconciliation for Adjusted EBITDAX For the First Quarter Ended March 31, For the Year Ended December 31, ($ in millions) 2015 2014 2014 2013 Net Income/(loss) ($100) $223 ($1,434) $869 Interest Expense 79 - 72 - Income taxes expense/(benefit) (69) 151 (987) 578 Depreciation, depletion and
Slide 31: Credit Facility Amendment Provides Additional Financial Flexibility
• Lender group approved several amendment provisions to provide CRC additional flexibility to manage our business through the challenging commodity price environment while remaining unsecured • Amended financial covenants that revert to original levels by end of 2016 Consolidated Leverage Ratio
Slide 32: 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 33: San Joaquin Basin
San Joaquin Basin • Oil and gas discovered in the late 1800s • 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 Formations
Slide 34: 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 35: 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 36: 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 37: Capex Reduction
Capex Reduction 2014 Actual 2015 Actual 2015 Expected Oct Nov Dec Jan Feb Mar Apr May Jun Rigs 28 25 6 4 3 3 3 3 3 Quarterly Operations CAPEX, $mm $520 $133 $110- $120* • Focus on investing within expected cash flows despite availability of additional investment opportunities that are economic at cu
Slide 38: Opex Reduction
Opex Reduction 2014 2015 Q1 Q2 Q3 Q4 Q1 Production costs $/boe 18.43 18.46 17.74 16.07 16.20 • Workforce redeployed to focus on reducing costs and building a robust project pipeline • Targeting 6-month payout on workovers at current prices • Downhole maintenance – reduced cycle times, ESP optimizati
Slide 39: Value Creation Index
• Measures value created per dollar investment (“Bang for the buck”) • Corporate Target 1.3 PV10 pre-tax cash flows PV10 of investments VCI = Project A Project B Project C Max IRR% Max VCI Max NPV Period Capital Cash Flow Capital Cash Flow Capital Cash Flow 0 1,000 (1,000) 1,000 (1,000) 2,500 (2,500
Slide 40: Exploration History of California
40 Exploration History of California 0 5 10 15 20 25 30 35 40 0.0 1.0 2.0 3.0 4.0 1 8 6 0 1 8 7 0 1 8 8 0 1 8 9 0 1 9 0 0 1 9 1 0 1 9 2 0 1 9 3 0 1 9 4 0 1 9 5 0 1 9 6 0 1 9 7 0 1 9 8 0 1 9 9 0 2 0 0 0 2 0 1 0 A n n u a lD is c o v e ri e s B n B o e Discovery Year C u m .D is c o v e rie s B n B o
Slide 41: Shale Geological Overview
Shale Geological Overview Major U.S. Shale PlaysCalifornia Unconventional Potential • Successful in upper Monterey using precise development approach • Expanding efforts into lower Monterey and other shales Play Depth (ft) Thickness (gross ft) Porosity (%) Permeability (mD) Total Organic Carbon (%)
Slide 42: A Net Water Supplier
A Net Water Supplier • Provide more reclaimed produced water to agriculture than the amount of fresh water we purchase for operations statewide • In 2014, we used approximately 79% of recycled produced water in improved or enhanced recovery operations • 3-year goal: Increase net water supply to agri
Slide 43: Non-GAAP Reconciliation for PV-10
Non-GAAP Reconciliation for PV-10 ($ in millions) At December 31, 2014 PV-10 $16,091 Present value of future income taxes discounted at 10% (5,263) Standardized Measure of Discounted Future Net Cash Flows $10,828 PV-10 is a non-GAAP financial measure and represents the year-end present value of esti
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