California Resources Corporation First Quarter 2023 Results

Financial Highlights

• Reported net income of $301 million, or $4.09 per diluted share. When adjusted for items analysts typically exclude from estimates including mark-to-market adjustments and gains on asset divestitures, the Company's adjusted net income¹ was $193 million, or $2.63 per diluted share
• Generated net cash provided by operating activities of $310 million, adjusted EBITDAX¹ of $358 million and free cash flow¹ of $263 million
• Ended the quarter with $477 million of cash and cash equivalents and an undrawn $454 million Revolving Credit Facility, (net of $148 million of letters of credit), representing $931 million of total liquidity²

Operational Highlights

• Produced an average of 89,000 net barrels of oil equivalent per day (Boe/d), including 55,000 barrels of oil per day (Bo/d), with E&P capital expenditures of $40 million during the quarter
• Operated ~1.5 drilling rigs across CRC's asset base; drilled 9 wells and brought 10 wells online in 1Q23
• Operated 35 maintenance rigs in the first quarter

California Resources Corp., an independent energy and carbon management company committed to energy transition, reported first quarter 2023 operational and financial results.

Francisco Leon, President and Chief Executive Officer, said:"We're off to a great start this year with strong quarterly free cash flow driven by operational execution and natural gas markets in California, which underscores the quality of our asset portfolio and commodity diversification strategy, We made good progress in advancing the plan to reposition our business, reduce our costs by $25 to $50 million on an annual run-rate basis and expand our carbon management business. Our focus remains on driving cash flow generation, increasing our financial flexibility and delivering meaningful value to our shareholders while providing the energy that California needs."

Total Year 2023 Guidance and Capital Program³

CRC is reaffirming its total year 2023 capital program to a range between $200 and $245 million. The program includes $15 to $25 million of adjusted capital for carbon management projects⁴ and $185 to $220 million of E&P, Corporate and other adjusted capital, including procuring long-lead time items for planned maintenance at CRC's Elk Hills power plant in 2024. CRC's 2023 capital program related to oil and natural gas development to be focused primarily on executing projects using permits outside of Kern County.

CRC estimates average production between 85,000 and 91,000 Boe/d³ (~60% oil) for 2023. CRC expects to run a development program averaging 1.5 rigs for drilling locations where CRC has permits and plans to focus on workover and maintenance activity.

As a result of higher-than-expected natural gas market prices in the first quarter of 2023, CRC is raising its free cash flow¹ and lowering its operating costs guidance by 8% (to a range of $360 to $470 million) and 3% (to a range of $815 to $865 million) at the midpoint, respectively.

Second Quarter 2023 Guidance and Capital Program³

CRC expects its second quarter 2023 total capital program to range between $46 and $62 million under current operating conditions. This includes $1 to $2 million of adjusted capital¹ for carbon management projects.

At this level of spending, CRC expects to produce on average between 86,000 and 88,000 Boe/d³ (~61% oil) in the second quarter of 2023 and plans to run 1 drilling rig in the Los Angeles basin, where CRC plans to develop drilling locations for which it already has permits.

First Quarter 2023 E&P Operational Results

Total daily net production for the three months ended March 31, 2023, compared to the three months ended December 31, 2022 decreased by approximately 2 MBoe/d, or 2% largely due to higher amounts of rain and colder seasonal temperatures than normal in California, resulting in increased downtime in CRC's operations. Production-sharing contracts (PSCs) did not have an impact on production for the three months ended March 31, 2023 compared to the three months ended December 31, 2022.

During the first quarter of 2023, CRC operated an average of ~1.5 drilling rigs in the Los Angeles basin, drilled 9 wells and brought online 10 wells. See Attachment 3 for further information on CRC's production results by basin and Attachment 5 for further information on CRC's drilling activity.

Review of First Quarter 2023 Financial Results

Realized oil prices, excluding the effects of cash settlements on CRC's commodity derivative contracts, decreased by $8.47 per barrel from $87.15 per barrel in the fourth quarter of 2022 to $78.68 per barrel in the first quarter of 2023. The decrease was primarily due to recession concerns across Western economies and disappointment at the pace and scale of the post-COVID-19 reopening in China.

Realized oil prices, including the effects of cash settlements on CRC's commodity derivative contracts, increased by $1.71 from $61.33 in the fourth quarter of 2022 to $63.04 in the first quarter of 2023.

Adjusted EBITDAX¹ for the first quarter of 2023 was $358 million. See table below for the Company's net cash provided by operating activities, capital investments and free cash flow¹ during the same periods.

Energy operating costs for the first quarter of 2023 were $125 million, or $15.56 per Boe, an increase of $45 million or 56% from $80 million, or $9.56 per Boe, for the fourth quarter of 2022. This increase includes $38 million for purchased electricity and purchased natural gas, which CRC uses to generate electricity for its operations, and $7 million for purchased natural gas used to generate steam for its steamfloods. Natural gas used in CRC's operations is purchased at first-of-the-month prices, which were higher than average daily prices during the period due to significant volatility in the natural gas market during the first quarter of 2023.

Non-energy operating costs for the first quarter of 2023 were $124 million, or $15.43 per Boe, which was an increase of $8 million or 7% from $116 million, or $13.82 per Boe, for the fourth quarter of 2022. This increase was primarily a result of increased downhole maintenance activity from the prior quarter.

Carbon Management Business Update

In April 2023, CRC applied for a Class VI permit for 34 MMT of permanent CO₂ storage for a new CTV VI in the Sacramento basin, which, subject to approval, brings CTV's total potential permitted storage to 174 MMT.

Additionally, in April 2023, Carbon TerraVault Holdings, LLC (CTV), a subsidiary of CRC, reached new storage-only CDMAs for 40,000 and 100,000 MTPA of CO₂ injection, at CTV carbon storage vaults from two new facilities to be constructed in Northern and Central California. See CTV's 1Q23 press release for further information on these CDMA's.

The CDMA frames the contractual terms between parties by outlining the material economics and terms of the project and includes conditions precedent to close. The CDMA provides a path for the parties to reach final definitive documents and FID.

Balance Sheet and Liquidity Update

On April 26, 2023, CRC amended its existing Revolving Credit Facility. The amended Revolving Credit Facility provides for an initial aggregate commitment of $592 million and a borrowing base of $1.2 billion. CRC's borrowing base for the Revolving Credit Facility was also reaffirmed at $1.2 billion on April 26, 2023. The amendments included, among other things:

• Extending the maturity date to July 31, 2027 (subject to a springing maturity to August 4, 2025 if any of our Senior Notes are outstanding on that date);
• Increasing CRC's ability to make certain restricted payments (such as dividends and share repurchases) and certain investments (including in its carbon management business);
• Releasing liens on certain assets securing the loans made under the Revolving Credit Facility, including CRC's Elk Hills power plant;
• Extending the period for which we can enter into hedges on our production from 48 months to 60 months; and
• Increasing CRC's capacity to issue letters of credit from $200 million to $250 million.

CRC also amended the interest rates and fees it pays under its Revolving Credit Facility. At CRC's election, borrowings under the amended Revolving Credit Facility may be alternate base rate (ABR) loans or term SOFR loans, plus an applicable margin. ABR loans bear interest at a rate equal to the highest of (i) the federal funds effective rate plus 0.50%, (ii) the administrative agent prime rate and (iii) the one-month SOFR rate plus 1%. Term SOFR loans bear interest at term SOFR, plus an additional 10 basis points per annum credit spread adjustment. The applicable margin is adjusted based on the commitment utilization percentage and will vary from (i) in the case of ABR loans, 1.50% to 2.50% and (ii) in the case of term SOFR loans, 2.50% to 3.50%. CRC also pays customary fees and expenses. Interest is payable quarterly for ABR loans and at the end of the applicable interest period for term SOFR loans, but not less than quarterly. We also pay a commitment fee on unused capacity ranging from 37.5 to 50 basis points per annum, depending on the percentage of the commitment utilized.

As of March 31, 2023, CRC had liquidity of $931 million, which consisted of $477 million in unrestricted cash and $454 million of available borrowing capacity under its Revolving Credit Facility which is net of $148 million of letters of credit.

Leadership Changes

On February 24, 2023, CRC announced that Francisco J. Leon, its current Executive Vice President and Chief Financial Officer, will succeed Mark A. (Mac) McFarland as its President and Chief Executive Officer, and joined CRC's Board of Directors. Mr. McFarland will continue to serve as a non-executive member of CRC's Board of Directors and Chair of the Board of its Carbon TerraVault subsidiary. Manuela (Nelly) Molina has been appointed Executive Vice President and Chief Financial Officer, effective May 8, 2023.

Shareholder Return Strategy

CRC continues to prioritize shareholder returns and therefore dedicates a significant portion of its free cash flow to shareholders in the form of dividends and share repurchases.

During the first quarter of 2023, CRC repurchased 1.4 million shares for $59 million or an average price of $41.25 per share. Since the inception of the Share Repurchase Program in May 2021 through March 31, 2023, 12,880,024 shares have been repurchased for $519 million at an average price of $40.31 per share. These total repurchases represent 15% of CRC's shares outstanding at its bankruptcy emergence in October 2020.

On April 28, 2023, CRC's Board of Directors declared a quarterly cash dividend of $0.2825 per share of common stock. The dividend is payable to shareholders of record on June 1, 2023 and will be paid on June 16, 2023.

Through March 31, 2023, CRC has returned $612 million of cash to its shareholders, including $519 million in share repurchases and $93 million of dividends. These figures exclude share repurchases made after March 31, 2023 as well as the $20 million second quarter dividend declared and payable in June 2023.