California Resources Corporation · NYSE:CRC
California Resources — Bank of America Merrill Lynch Global Energy Conference 2016
49 slides from California Resources's conference presentation, Nov 16, 2016
Slide 1: Global Energy Conference Bank of America Merrill Lynch
Global Energy Conference Bank of America Merrill Lynch Todd Stevens| President & CEO| Miami, FL| November 16-17, 2016
Slide 2: Forward-Looking / Cautionary Statements
BOAML 2016 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. Such statements specifically include our expect
Slide 3: Cautionary Statements Regarding Hydrocarbon Quantities
BOAML 2016 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, 2015 in this presentation, with each category of reserves estimated in accord
Slide 4: CRC Opportunity Defined; Priorities and Accomplishments
BOAML 2016 • CRC Opportunity Defined • Priorities and Accomplishments • Value Creation Focus – Doubles Inventory • Capital Allocation – Inflection Point 4
Slide 5: Reserve Value Well in Excess of EV
BOAML 2016 Reserve Value1 Well in Excess of EV 5 1,2,3,4,5 See End Notes in the Appendix. PDP Value Proved Value $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 Strip Price 8/23 $65 Brent $75 Brent ($MM ) Current EV of $5.7 Bn5 Infrastructure2 Surface & Minerals3 Unproved4
Slide 6: Project Inventory Drives Organic Deleveraging
BOAML 2016 Project Inventory Drives Organic Deleveraging 6 Surface & Minerals3 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 2016E 2017E 2018E 2019E 2020E To ta l D eb t/ LTM E B IT D A X Leverage Ratios Strip 10/10 $65 $75 Note: All cases are self-funding. Capital program in all cases assumes discretionary
Slide 7: CRC's Large Resource Base with Advantaged Infrastructure
BOAML 2016 NY00813G / 589203_1.WOR Sacramento Basin 14 MMBoe Proved Reserves 6 MBoe/d production San Joaquin Basin 451 MMBoe Proved Reserves 98 MBoe/d production Ventura Basin 47 MMBoe Proved Reserves 7 MBoe/d production Los Angeles Basin 132 MMBoe Proved Reserves 31 MBoe/d production World-Class Re
Slide 8: Largest California Producer with Deep Regional Insight
BOAML 2016 Largest California Producer with Deep Regional Insight 8 Surface & Minerals3 Top California Producers in 2015 196 161 134 35 34 - 20 40 60 80 100 120 140 160 180 200 CRC Chevron USA Aera Energy Freeport McMoRan LINN Energy G ro ss O p erat ed M b o e/ d Source: DOGGR, IHS, Wood Mackenzie,
Slide 9: California Stacked Reservoirs: Multiple opportunity sets
BOAML 2016 California Stacked Reservoirs: Multiple opportunity sets with large accumulations 9 Surface & Minerals3 Source: Information based on internal observed data and external published reports. TEMBLOR SANDS EOCENE SANDS AND SHALES UPPER CRETACEOUS SANDS AND SHALES MONTEREY SANDS AND SHALES 1 ,
Slide 10: Benefits of the Spin: Focus Led to Improvements
BOAML 2016 Benefits of the Spin: Focus Led to Improvements 10 Sac Valley Thermal PV10 pre-tax cash flows PV10 of investments VCI = Value Creation Index One CRC • Entrepreneurial culture • Disciplined capital allocation through portfolio management • Three principal drivers: o Maximize long-term valu
Slide 11: CRC Opportunity Defined; Priorities and Accomplishments
BOAML 2016 • CRC Opportunity Defined • Priorities and Accomplishments • Value Creation Focus – Doubles Inventory • Capital Allocation – Inflection Point 11
Slide 12: Strengthen the Balance Sheet
BOAML 2016 12 6,765(1) 5,247 4,000 5,000 6,000 7,000 2Q15 Debt Exchange for 2L Open Market Repurchases Equity for Debt Exchange Cash Tender for Unsecureds Operating Cash Flow 3Q16 To ta l D e b t ($ MM ) (2) Strengthen the Balance Sheet Significant Debt Reduction From Post-Spin Peak Chose options to
Slide 13: Protect the Base
BOAML 2016 Protect the Base Low Decline Asset Base Requires Low Levels of D&C* Capital Rich asset portfolio and thoughtful capital allocation deliver high margin production and operational flexibility through the price cycle • Conventional assets with long production life and relatively low decline
Slide 14: Defend Margins: Continued Operating Cost Reductions
BOAML 2016 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 2014 2015 2016 YTD P ro d u ct io n C o st s ($/Boe ) Steam Injectant Gas Plant Expense Energy Supports and Other Downhole Maintenance Workovers/Well Enhancement Surface Operations and Maintenance Pipeline/Transportation
Slide 15: Reduced Well Costs
BOAML 2016 15 Reduced Well Costs 2016 program has ~23% lower well costs compared to prior similar wells 0 300 600 900 1,200 1,500 1,800 Long Beach Horizontal Elk Hills ESOZ Mt. Poso Lost Hill Injector Kern Front Lost Hills Producer $ M Last Drilled (2014/2015) 2016 Efficiency drivers: Rig costs
Slide 16: Focus on Life of Field Plans
BOAML 2016 16 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 2015 2016 2015 2016 2015 2016 $55 $65 $75 D rilling and W or k o ve r Capital ( $ MM ) Brent Marker Price ($/BBL) VCI > 1.0 VCI > 1.3 Focus on Life of Field Plans Doubled project inventory at $55 Brent Actionable Economic Project
Slide 17: CRC Opportunity Defined; Priorities and Accomplishments
BOAML 2016 • CRC Opportunity Defined • Priorities and Accomplishments • Value Creation Focus – Doubles Inventory • Capital Allocation – Inflection Point 17
Slide 18: Value Chain Progress: Building Inventory Across Fields
BOAML 2016 Value Chain Progress: Building Inventory Across 135 Fields 18 Legacy Field Review - Paloma • Technical reevaluation doubled OOIP estimate • Analog field performance • Applying new technology and thinking to generate new opportunities Delineation - Pleito • Grew production since acquisitio
Slide 19: Updated Inventory by Project Type
BOAML 2016 Updated Inventory by Project Type 19 Actionable projects >1.3 VCI Table indicates the years of inventory available at each price deck and continuous activity level (active rig counts per year) Rigs/Year Years of Inventory 4 29 35 47 6 19 24 31 8 14 18 24 10 12 14 19 12 10 12 16 0 1,000 2,
Slide 20: Robust Returns Across Multiple Drive Mechanisms
BOAML 2016 Steamflood Primary- Conventional Waterflood Primary- Unconventional Primary-Gas 35-50+% Per Pattern 30-90+% Per Well 30-100+% Per Pattern 15-40+% Per Well 12-30+% Per Well 20 Robust Returns Across Multiple Drive Mechanisms Oxnard Oakridge Wilmington Asphalto Rio Vista Midway Sunset Montal
Slide 21: Elk Hills Adjacent Field: Buena Vista Field Development
BOAML 2016 Elk Hills Adjacent Field: Buena Vista Field Development 21 2500 TVD 2750 3000 3250 3750 4000 4250 3500 B V S ha le B V W at e rf loo d Effective Production Management • Current net production of ~10,000 Boe/d (no rigs since 2014) • Surveillance with modern tools • Daily exception reports/
Slide 22: Elk Hills Analog: Kettleman North Dome
BOAML 2016 Elk Hills Analog: Kettleman North Dome 22 • OOIP of 4 billion barrels, 14,000 Acres (2 mi. wide, 15 mi. long) • 1000’s of feet of stacked pay • Light oil – API > 36o • WI=100% and NRI=80% in KNDU • Modern formation evaluation, new wells, and workovers • Advancing the understanding and dev
Slide 23: Steamfloods
BOAML 2016 Steamfloods 23 AVG. DEPTH (True Vertical) 2,000 AVG. GROSS THICKNESS (feet) 1,000 # OF SECTIONS 20 Avg. OOIP/OGIP per Section (MMBOE) 40 Avg. EUR (MBOE) 270 AVG. SPACING (acres) 5 # OF LOCATIONS 2,560 % OF SECTIONS COVERED BY 3D SEISMIC 50% STEAM GENERATOR COST $4mm PATTERNS PER STEAM GEN
Slide 24: Waterfloods
BOAML 2016 Waterfloods 24 AVG. DEPTH (True Vertical) 5,000 AVG. GROSS THICKNESS (feet) 1,000 # OF SECTIONS 50 Avg. OOIP/OGIP per Section (MMBOE) 20 Avg. EUR (MBOE) 200 AVG. SPACING (acres) 10 # OF LOCATIONS 3,200 % OF SECTIONS COVERED BY 3D SEISMIC 80% • Potential to convert several primary fields t
Slide 25: CRC Opportunity Defined; Priorities and Accomplishments
BOAML 2016 • CRC Opportunity Defined • Priorities and Accomplishments • Value Creation Focus – Doubles Inventory • Capital Allocation – Inflection Point 25
Slide 26: Capital Allocation Strategies with Improving Strip
BOAML 2016 • Investment balanced against deleveraging opportunities with goal of high single-digit production growth • Existing Core Areas • Focus on 2-3 Growth Areas Elk Hills Analogs Elk Hills Adjacent Areas Heavy Oil • Joint Venture opportunities • Double-digit growth possible if supported
Slide 27: Portfolio Flexibility Provides Range of Crude Oil Scenarios
BOAML 2016 Portfolio Flexibility Provides Range of Crude Oil Scenarios 27 80 90 100 110 120 130 2016E 2017E 2018E 2019E 2020E O il P ro d u ct io n MB/ d Crude Oil Production Outcomes Portfolio Planning Scenarios 0 300 600 900 1200 Ca p it al ( $MM ) Estimated Capital Invested Note: Assumes $60 Bren
Slide 28: Double-Digit EBITDAX Growth
BOAML 2016 Double-Digit EBITDAX Growth 28 400 600 800 1000 1200 1400 1600 1800 2016E 2017E 2018E 2019E 2020E $M M Range of EBITDAX Outcomes Portfolio Planning Scenarios Note: See comments on previous slide.
Slide 29: Poised to Take Advantage of a Commodity Price Recovery
BOAML 2016 NY00813G / 589203_1.WOR Sacramento Basin 14 MMBoe Proved Reserves 6 MBoe/d production San Joaquin Basin 451 MMBoe Proved Reserves 98 MBoe/d production Ventura Basin 47 MMBoe Proved Reserves 7 MBoe/d production Los Angeles Basin 132 MMBoe Proved Reserves 31 MBoe/d production World-Class
Slide 30: Appendix
BOAML 2016 California Resources Corporation Appendix 30
Slide 31: Capitalization as of 9/30/16
BOAML 2016 Capitalization as of 9/30/16 ($MM) $18 $449 $193 $149 $1,000 $2,250 212 $0 $500 $1,000 $1,500 $2,000 $2,500 Jan-1 6 Ju l-1 6 Jan-1 7 Ju l-1 7 Jan-1 8 Ju l-1 8 Jan-1 9 Ju l-1 9 Jan-2 0 Ju l-2 0 Jan-2 1 Ju l-2 1 Jan-2 2 Ju l-2 2 Jan-2 3 Ju l-2 3 Jan-2 4 Ju l-2 4 Term Loan Debt Maturities ($
Slide 32: Living within Cash Flow Plus Additional Liquidity
BOAML 2016 Living within Cash Flow Plus Additional Liquidity 32 Based on our current capital program and at current price levels, we believe that we will have sufficient liquidity for the rest of this year, all of 2017 and well into 2018. Consensus2 EBITDA Consensus2 EBITDA Revolver Availability 1 R
Slide 33: Opportunistically Built Oil Hedge Portfolio
BOAML 2016 Opportunistically Built Oil Hedge Portfolio1 • Hedge book started at zero post spin; we target hedges on 50% of production • Strategy focuses on protecting cash flow for capital investments and covenant compliance Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 Cal
Slide 34: Diverse Assets with Flexible Development Opportunities
BOAML 2016 2015 Net Proved Reserves (MMBoe) 644 2015 % Oil – Net Proved1 72% Pre-Tax Proved PV-10 ($ billion)2 5.1 2015 Avg. Net Production (MBoe/d) 160 2015 % Oil Production 65% 2015 Net Acreage (million acres) 1 2.4 2015 Identified Gross Locations1 23,450 1 As of 12/31/15. Drilling locations exclu
Slide 35: Key CRC Fields by Drive Mechanism
BOAML 2016 35 Key CRC Fields by Drive Mechanism Oakridge Wilmington Montalvo Huntington Beach Rio Viejo San Miguelito Asphalto Pleito Ranch Mt. Poso Railroad Gap Wheeler Ridge Rincon BV Nose Saticoy S. Mountain Shale 29R Oxnard Bardsdale Buena Vista Buena Vista Midway Sunset Paloma Paloma N. Shafter
Slide 36: San Joaquin Basin
BOAML 2016 San Joaquin Basin • Oil and gas discovered in the late 1800s • Accounts for ~69% 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
Slide 37: Elk Hills Area - Overview
BOAML 2016 0 20 40 60 80 100 120 140 1998 2000 2002 2004 2006 2008 2010 2012 2014 N et MB 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
Slide 38: Los Angeles Basin
BOAML 2016 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 &
Slide 39: Wilmington Field Overview
BOAML 2016 - 50 100 150 200 250 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 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 i
Slide 40: Ventura Basin
BOAML 2016 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) • 3Q YTD 2016 average net production of 7 MBoe/d (69%
Slide 41: Sacramento Basin
BOAML 2016 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 fee
Slide 42: Shale Geological Overview
Shale Geological Overview Major U.S. Shale Plays Play Thickness (feet) Porosity (%) Permeability (mD) TOC (%) Maturity (%Ro) P (PSI/Ft) Monterey 200 – 3,500 5 - 30 0.0001 - 1.0 1 – 12 0.7 – 1.0 0.5 – 0.8 Kreyenhagen 250 – 1,000 5 - 12 0.001 – 0.1 2 – 18 0.7 – 1.2 0.5 – 0.8 Moreno 200 – 500 5 - 12 0.
Slide 43: Large in Place Volumes with Significant Upside for CRC
BOAML 2016 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 billion Boe at low
Slide 44: A Net Water Supplier
BOAML 2016 A Net Water Supplier • CRC’s delivery of reclaimed produced water to agriculture in 2015 exceeded the amount of fresh water we purchased by nearly 1 billion gallons • We expedited the North Kern Drought Relief project in 2015, achieving a 30% increase in our water supply to agriculture •
Slide 45: Diverse Resource Base
BOAML 2016 Diverse Resource Base • Interests in 4 of the 12 largest fields in the lower 48 states • 644 MMBoe proved reserves (12/31/2015) • Largest producer in California on a gross operated basis with significant exploration and development potential California Heritage • Strong track record of op
Slide 46: End Notes
BOAML 2016 End Notes: 46 1 Reflects CRC estimate of reserves value as of August 23, 2016 applying a 15% tax rate. Includes $125 MM of annual, non-field level G&A. 2 Reflects the value of facilities and midstream assets at 50% of estimated replacement value. This discount is estimated to exceed the b
Slide 47: Non-GAAP Reconciliation for Adjusted EBITDAX
BOAML 2016 Non-GAAP Reconciliation for Adjusted EBITDAX 47 Third Quarter Nine Months ($ in millions) 2016 2015 2016 2015 Net Income (loss) $546 ($104) $356 ($272) Interest and debt expense 95 82 243 244 Income tax benefit - (50) (78) (165) Depreciation, depletion and amortization 137 253 422 757 Exp
Slide 48: Non-GAAP Reconciliation for Adjusted Net Loss and Adjusted EPS
BOAML 2016 Non-GAAP Reconciliation for Adjusted Net Loss and Adjusted EPS 48 Third Quarter Nine Months ($ in millions) 2016 2015 2016 2015 Net Income (loss) $546 ($104) $356 ($272) Non-cash, unusual and infrequent items Non-cash derivative losses (gains) 25 (53) 243 (33) Severance and early retireme
Slide 49: Non-GAAP Reconciliation for PV-10
BOAML 2016 Non-GAAP Reconciliation for PV-10 ($ in millions) At December 31, 2015 PV-10 of Proved Reserves $5,059 Present value of future income taxes discounted at 10% (1,035) Standardized Measure of Discounted Future Net Cash Flows $4,024 PV-10 is a non-GAAP financial measure and represents the ye
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