California Resources Corporation · NYSE:CRC
California Resources — Barclays CEO Energy & Power Conference 2015
46 slides from California Resources's conference presentation, Sep 9, 2015
Slide 1: Barclays CEO Energy & Power Conference
Barclays CEO Energy & Power Conference Todd Stevens| President & CEO | New York, NY| September 10, 2015
Slide 2: Forward-Looking / Cautionary Statements
Barclays 0915 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 considere
Slide 3: Cautionary Statements Regarding Hydrocarbon Quantities
Barclays 0915 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 acc
Slide 4: NY00813G / 589203_1.WOR Sacramento Basin MMBoe Proved Reserves 9 MBoe/d production San Joaquin Basin
Barclays 0915 NY00813G / 589203_1.WOR 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-Cl
Slide 5: Overview of California Resources Corporation
Barclays 0915 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 in
Slide 6: Resource Base Enables Resilient Production Profile
Barclays 0915 Resource Base Enables Resilient Production Profile 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15E 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 Rich asset portfolio and thoughtful capital allocation d
Slide 7: Best in Class Corporate Decline Rate
Barclays 0915 Best in Class Corporate Decline Rate 7 Unlabeled operators include : AMXG, AREX, BBG, BCEI, CLR, CPE, CRK, CWEI, CXO, EGN, EOG, EPE, EXXI, FANG, GDP, HK, JONE, LPI, MPO, NFX, OAS, PDCE, PE, PVA, PXD, ROSE, RSPP, SFY, SM, SN, TPLM, WTI, XEC Source: ITG IR, raw data provided by Drilling
Slide 8: Capital Efficient Portfolio Outperforms in 'Lower For Longer'
Barclays 0915 0 20 40 60 80 100 120 2011 2012 2013 2014 2015 2016E 2017E 2018E M b o /d CRC Historical Maintenance CRC Decline Average Peer Company Median Peer ~35% Corporate Decline CRC ~15% Corporate Decline Capital Efficient Portfolio Outperforms in ‘Lower For Longer’ 8 CRC Oil Production Hypothe
Slide 9: High Return Inventory Across Price Environments
Barclays 09159 • Capital associated with currently identified projects delivering VCI >1.3* • Average well cost ~$1.1 MM • Multi-year inventory to maintain flat production at different points in the price curve High Return Inventory Across Price Environments * Does not include injectors $0.0 $1.0 $2
Slide 10: Defending Margins by Managing Costs
Barclays 0915 Defending Margins by Managing Costs 10 $0 $5 $10 $15 $20 $25 2011* 2012* 2013* 2014* YTD 2015** Steam Injectant Gas Plant Expense Energy Supports Downhole Maintenance Workovers / Well Enhancement Surface Operation and Maintenance ~17% Decrease $/ B o e * Adjusted to include a G&A recla
Slide 11: Self-Funded Capital Investment Program
Barclays 0915 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 • 2015 capital budget of $440 million expected to be directed almost entirely towa
Slide 12: Exploring adjustments to capital structure
Barclays 0915 • Exploring adjustments to capital structure Total long-term debt: ~$6.5 billion, net, at 6/30/2015 Proactively sought and received favorable amendment to revolver and term loan through end of 2016 Resource base enables a variety of alternatives, e.g. asset monetizations, JVs, ML
Slide 13: Capital Structure & Hedges
Barclays 0915 • Deleveraging is a priority • Credit facility amendment provides additional financial flexibility • Strategic and opportunistic commodity hedging to support capital program Capitalization as of 6/30/15 ($MM) Capital Structure & Hedges $25 $625 $1,000 $1,750 $2,250 $0 $500 $1,000 $1,50
Slide 14: Long Term Value Creation Driven by World Class Asset Base
Long Term Value Creation Driven by World Class Asset Base 14
Slide 15: CRC is the Leading Operator in California
Barclays 0915 NY00813G / 589203_1.WOR 0 50 100 150 200 250 300 G ro ss O p era te d MB o e/ d Top California Producers in 2014* Growth of Top California Producers 195 159 139 37 35 - 20 40 60 80 100 120 140 160 180 200 CRC CVX Aera Energy FCX LINE G ro ss O p era te d MB o e/ d Aera Chevron CRC *Gro
Slide 16: World Class Assets with Significant Development Opportunities
Barclays 0915 2014 Net Proved Reserves (MMBoe) 768 2014 % Oil– Net Proved 72% Pre-Tax Proved PV-10 ($ millions)1 $16,091 2015 Avg. Net Production (MBoe/d)2 163 2015 % Oil2 65% 2014 Net Acreage (‘000 acres) 2,400 2014 Identified Gross Locations 19,800 1 PV-10 shown as of 12/31/14 based on SEC five-ye
Slide 17: Large in Place Volumes with Significant Upside for CRC
Barclays 0915 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 r
Slide 18: Creating a Recovery Value Chain
Barclays 0915 • 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) • Incr
Slide 19: CRC – Price Realizations
Barclays 0915 $95.12 $94.21 $97.97 $93.00 $53.29 $103.80 $104.02 $104.16 $92.30 $51.51 $110.90 $111.70 $108.76 $99.51 $59.33 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 2011 2012 2013 2014 1H15 $ /B b l WTI Realizations Brent $4.11 $2.81 $3.66 $4.39 $2.90 $4.31 $2.94 $3.73 $4.34 $2.67 0.0 0.5 1.0 1.5
Slide 20: Elk Hills Field Overview
Barclays 0915 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
Slide 21: Building Life of Field Plans – Elk Hills Field
Barclays 091521 • 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 r
Slide 22: Effective Management of Elk Hills Field Operating Costs
Barclays 091522 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 (
Slide 23: Wilmington Field Overview
Barclays 0915 - 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
Slide 24: Big Fields Continue To Get Bigger
Barclays 091524 • Example of Wilmington (“mature waterflood”) • Growing Proven Reserves 168% Reserves Replacement since 2011 • Increased inventory of well locations Drilled 500 wells Additional 774 wells identified in mature field • Replaced 155% of wells drilled Big Fields Continue To Get Big
Slide 25: Capital Efficient Growth Delivers Long Term Returns
Barclays 0915 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 BOP D Steamflood Example Kern Front 25 • Single digit base declines • Multi-year Investments of drilling and facilities spending • 2008-2014 Investment $530 million •
Slide 26: Proven Track Record in Sensitive Environments
Barclays 0915 Proven Track Record in Sensitive Environments • Operator of choice in coastal environments • Proven coexistence with sensitive environments • 2 billion gallons of reclaimed water supplied to agriculture in 2014 • Committed to excellence in safety and mechanical integrity 26
Slide 27: Well Positioned for Growth in Recovery
Barclays 0915 • World-class asset base with diverse and rich resources. • Capacity for significant production growth at higher prices as we develop high-return, lower-risk opportunities. • Committed to capital budgets that live within our cash flows. • As we bring our capital structure in line with
Slide 28: Appendix
Barclays 0915 California Resources Corporation Appendix 28
Slide 29: End Notes
Barclays 0915 End Notes: (1) The reserves replacement ratio is calculated for a specified period using the applicable proved oil-equivalent additions divided by oil-equivalent production. Company- wide 76% of 2014 additions were proved undeveloped. There is no guarantee that historical sources of re
Slide 30: Non-GAAP Reconciliation for Adjusted EBITDAX
Barclays 0915 Non-GAAP Reconciliation for Adjusted EBITDAX For the Second Quarter Ended June 30, For the Six Months Ended June 30, Full Year ($ in millions) 2015 2014 2015 2014 2014 Net Income/(loss) ($68) $246 ($168) $469 ($1,434) Interest expense 83 - 162 - 72 Income taxes expense/(benefit) (46) 1
Slide 31: Approved Credit Facility Amendment Provides Additional Financial Flexibility
Barclays 0915 • Lender group approved several amendment provisions to provide CRC additional flexibility to manage our business through the challenging commodity price environment • Amended financial covenants that revert to original levels by end of 2016 Consolidated Leverage Ratio Consolidated
Slide 32: Acquisitions Over the Years
Barclays 0915 Acquisitions Over the Years ~40M acres Elk Hills and Kern Front 1.2MM acres Acquisition of Vintage and CA EOG assets 2.26M acres Leading privately held acreage position in the state 1998 2009 2015 32 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 Acquisition Date San Joaquin and Sac
Slide 33: San Joaquin Basin
Barclays 0915 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 Monter
Slide 34: Conventional Waterflood Example
Barclays 0915 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 el ls B O P D BOPD Well Count Ownership by Other
Slide 35: Conventional Steamflood Example
Barclays 0915 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 •
Slide 36: Los Angeles Basin
Barclays 0915 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 seep
Slide 37: Sacramento Basin
Barclays 0915 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
Slide 38: Ventura Basin
Barclays 0915 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) • YTD 2Q 2015 average net production of 9 MBoe/d (
Slide 39: Capex Reduction
Barclays 0915 Capex Reduction 2014 Actual 2015 Actual 2015 Expected Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Rigs 28 25 6 4 3 3 3 3 3 3 3 3 Quarterly Operations CAPEX, $mm $520 $133 $95 $105-$115* • Focus on investing within expected cash flows despite availability of additional investment o
Slide 40: Opex Reduction
Barclays 0915 Opex Reduction 2014 2015 Q1 Q2 Q3 Q4 Q1 Q2 Production costs $/boe 19.00 19.03 18.35 16.65 16.20 16.59 • 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 cycl
Slide 41: Value Creation Index
Barclays 0915 • 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
Slide 42: Exploration History of California
Barclays 091542 Exploration History of California 0 5 10 15 20 25 30 35 40 0.0 1.0 2.0 3.0 4.0 18 60 18 70 18 80 18 90 19 00 19 10 19 20 19 30 19 40 19 50 19 60 19 70 19 80 19 90 20 00 20 10 An nu al Di sc ov eri es B n B oe Discovery Year Cum. Discoveries Bn Boe• Multiple 1 Bn Boe+ discoveries from
Slide 43: 2014 Exploration Portfolio
Barclays 091543 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 Unconve
Slide 44: Shale Geological Overview
Barclays 0915 Shale Geological Overview Major U.S. Shale PlaysCalifornia Unconventional Potential 0 GR 150 0 GR 150 0 GR 150 0 GR 150 0 GR 150 0 GR 150 3,000 2,000 1,000 Kreyenhagen Productive interval Target interval Moreno Bakken Barnett Eagle Ford N A B C D PG • Successful in upper Monterey using
Slide 45: A Net Water Supplier
Barclays 0915 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
Slide 46: Non-GAAP Reconciliation for PV-10
Barclays 0915 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
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