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JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp.

California Resources Corp. · Feb 28, 2018 · 44 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 1
    J.P. Morgan 2018 Global High Yield & Leveraged Finance Conference Mark Smith Executive Vice President & CFO Miami, FL February 28, 2018
  2. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 2
    Value Proposition Multiple Ways to Increase Valuation Positioned to move Disciplined Portfolio EBITDAX Growth* from Defense to Management Offense Increasing 2,500 Investments and Deploying Rigs 2,000 Joint Ventures 1,500…
  3. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 3
    CRCs Large Resource Base with Advantaged Infrastructure World-Class Resource Base Operate in 4 of the largest fields in the continental U.S. Sacramento Basin 14 MMBOE Proved Reserves 618 MMBOE proved reserves 6 MBOE/d production (100%…
  4. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 4
    Largest California Producer with Deep Regional Insight Top California Producers in 2016*…
  5. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 5
    Post-Spin Transformation Culture Silo / Separate One CRC CRC Regulatory Engagement Reactive Proactive Focus Employee Engagement Low High Debt 7BN 4BN Financial Capital Efficiency Low High Priorities Annual Production Costs…
  6. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 6
    Life of Field Plans Growing Inventory 3P Reserves Growth Comprehensive technical review of 40% of CRCs fields 2,250 2,000 350% Updated Geologic models, OOIP Growth 1,750 1,500 1,129 Teams shared analog experience across…
  7. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 7
    Deep Inventory of Actionable Projects at 65 50 Portfolio Spectrum 45 Growth portfolio focus, fully 40 Full Cycle Cost2 (/Boe) burdened 35 30 All projects meet a Value Creation Index (VCI)1 25 threshold of 1.3 at 65 Brent 20…
  8. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 8
    Resilient Resource Base Production By) Stream (Mboe/d) 180 200 160 175 140 150 120 MBoe/d 125 Capital (MM) 100 100 80 75 60 50 40 20 25 0 0 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 FY FY FY 2015 2016…
  9. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 9
    Capital Investment Program Living Within Cash Flow Production Enhancement Plans for 2018 CRC 2018 capital plan will be directed to oil-weighted projects in our core fields: Elk Hills, The JV capital increases Wilmington, Kern Front,…
  10. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 10
    Development Joint Ventures: A Force Multiplier 550 Million Portfolio Flexibility Kettleman North Dome Total Potential JV Capital and Optionality Lost Hills Enables High 154 Million Margin Production 260 MM Committed Mt Poso…
  11. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 11
    San Joaquin Basin An American Super Basin Overview Basin Map Oil and gas discovered in the late 1800s 70% of CRC production is from San Joaquin Basin Cretaceous to Pleistocene sedimentary section (25,000 feet) Source rocks are…
  12. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 12
    Elk Hills Area CRCs Flagship Asset Overview Field Map CRCs flagship, a 100 year-old field with exploration opportunities Light oil from conventional and unconventional production Largest gas and NGL producing field in California, one…
  13. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 13
    Buena Vista Area Highly Prospective Area Overview Includes Buena Vista (BV) Hills and BV Nose JV capital applied to infill development program that led to improved operational efficiencies Organic capital deployed to expand the…
  14. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 14
    Los Angeles Basin Kitchen is the Entire Basin Overview Basin Map World-class hydrocarbon-rich sedimentary basin with large quantities of stacked pay 10 billion barrels OOIP in CRC fields Kitchen is the entire basin, hydrocarbons did…
  15. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 15
    Ventura Basin Birthplace of the California Oil Industry Overview Field Map Prolific basin with a long history, including the first commercial oil well in California 8 billion barrels OOIP in CRC fields Operate 28 fields (over half…
  16. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 16
    Sacramento Basin Significant Gas Optionality Overview Basin Map 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,…
  17. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 17
    History of Proactive Strategic Decisions Swift, decisive actions through the commodity downturn have positioned CRC for growth. Proactive discussions with lenders and solid asset base provide a path to recovery and an actionable…
  18. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 18
    Strengthening the Balance Sheet - Improved Creditworthiness and Liquidity Pro-Forma1 Capitalization (MM) Pro forma net results from the Ares transactions which closed on February 7, 2018: 1st Lien 2014 Revolving Credit Facility (RCF) -…
  19. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 19
    Example of Investment Alternatives for Asset Sale Proceeds PROJECT VS. SECOND LIEN (2L) NOTE REPURCHASE* 1.7 INVEST If the VCI of an investment opportunity falls above the indifference 1.6 curve, investing in the new project could…
  20. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 20
    2017 Reserves Value1 In Excess EV 24 20 16 (Billion) 12 Infrastructure2 Surface & Minerals3 8 Unproved4 Current EV of 6.4 Bn5 4 Proved Value PDP Value 0 55 Brent 65 Brent 75 Brent 1-5 See endnotes in the…
  21. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 21
    CRC Price Realizations Oil Price Realization (with Hedges) Gas Price Realization WTI Realizations Brent NYMEX Realizations 70 3.50 3.26 3.14 3.09 61.54 2.95 3.00 3.00 2.75 60 54.66 2.42 56.92 54.82 51.91 50.92 53.64 2.50 2.90…
  22. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 22
    Portfolio Flexibility Provides Range of Crude Oil Scenarios Estimated Crude Oil Production Outcomes 140 Oil Production MB/d 130 120 Combined with mid-cycle commodity 110 Portfolio Planning prices, we are positioned for growth…
  23. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 23
    The Case for CRC: Investment Thesis Overview Investment Case for CRC Competitive Advantages World-class assets Resilient model that Focused on value Grow within Clear runway and Industry leading Integrated and with significant…
  24. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 24
    Appendix
  25. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 25
    Summary of Amendment to the 2014 Credit Facility Description Revolver 2014 Credit Facility consisting of 1.0 billion 2014 Revolver Commitment Permit a 1.3 billion first lien term loan (the 2017 Term Loan) 2017 Term Loan Proceeds…
  26. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 26
    Strategic Partner Alignment Summary of Deal Partner Affiliate of Ares Management (Ares) Contributed Elk Hills power plant, gas processing assets and related non-borrowing base Assets infrastructure currently owned by CRC Class A…
  27. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 27
    CRC Midstream JV Structure with Ares Benefits Strategic alignment with Ares Provides CRC paths for opportunistic deleveraging through cash flow growth or debt reduction California Resources Elk Greatly enhances liquidity Hills,…
  28. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 28
    Updated Capital Structure from Recent Transactions Improved Liquidity 1,000 Reduced Revolver Borrowing Debt Hierarchy 2014 Revolving Credit Facility Capacity - 750 1 billion (MM) Added in 500 2017 Term Loan - 1.3 billion…
  29. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 29
    Significant Reduction in Net Debt from Post-Spin Peak Chose options to maximize deleveraging and minimize recurring cost to the income statement on a per share basis. Continue to seek opportunistic transactions that reduce overall…
  30. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 30
    Opportunistically Built Oil Hedge Portfolio Strategy Protect cash flow for capital investments and covenant compliance 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 Sold Calls Barrels per Day 9,000 6,200 16,100 16,100 1,100 Weighted Average…
  31. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 31
    Accelerating Production Decline in U.S. Onshore Lower 48 Development Wells 7,000,000 40% Normalized Decline Rates 30% 6,000,000 20% 5,000,000 10% Production (BOPD) 4,000,000 0% -10% 3,000,000 -20% 2,000,000 -30%…
  32. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 32
    Best In Class Corporate Decline Rates 1 Year Decline 3 Year Decline 50% 80% 70% 40% 60% 50% 30% Median: 49% Median: 29% 40% 20% 30% CRC 20% 10% CRC 10% 0% 0% FY 2016 Production Percentage Liquids Less than…
  33. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 33
    Core Principle of Living within Cash Flow 1,500 2016 Unlevered Free Cash Flow 1,000 500 Unlevered Free Cash Flow (MM) - Average: (293.5)MM (500) (1,000) (1,500) (2,000) (2,500) CRC Peers included:…
  34. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 34
    Accelerating Value and Derisking Inventory through JVs Highlights: Highlights: Up to 250MM over 2 years Up to 300MM Two tranches of 50MM Initial commitment of 160MM Total of 100MM funded DrillCo type structure where Investor funds…
  35. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 35
    Typical Industry JV Structure Hurdle Rate Based on recent industry JV 7,000.00 Production deals, a typical deal structure is Reached o Partner pays 80-100% Capital 6,000.00 o Receives 80-100% Working Interest 5,000.00 o…
  36. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 36
    Dynamic Portfolio Provides Flexibility Higher Oil to Gas Price Ratio Lower Oil to Gas Price Ratio 100% Gas 75% Unconventional Portfolio Mix Primary 50% Waterflood 25% Steamflood Workover 0% 800 800 800 600 600 600…
  37. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 37
    Multiple Recovery Methods with High Value Creation Steamfloods Waterfloods Primary Shales Gas 4.0 3.0 VCI 2.0 1.0 0.0 Kern Front Buena Vista Bardsdale Asphalto Grimes Lost Hills Elk Hills Buena Vista Nose Buena Vista…
  38. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 38
    Greenfield Steamflood Type Pattern 100 Kern Front Actuals 75 N. Antelope Lost Hills Hills Kern Front McDonald Composite Anticline NYMEX Type Curve Midway 50 McKittrick VCI 3.5 3 2.5 Sunset 50 1.0 1.1 1.2 25 55 1.3 1.4…
  39. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 39
    Waterflood New Pattern Composite Type Well 60 Kettleman Mount Poso Actuals Mount Poso 45 Buena Vista Actuals Elk Hills Paloma Buena Vista EUR 30 VCI 165 190 215 50 1.3 1.5 1.7 Composite Rincon South Mountain Type Curve 15…
  40. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 40
    Waterflood Redevelopment Type Well 160 Huntington Beach Actuals 120 Elk Hills EUR 80 Composite Type well VCI 140 165 190 East Wilmington Actuals San Miguelito 50 1.1 1.3 1.5 West Wilmington Actuals 40 Huntington 55 1.4…
  41. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 41
    Primary Type Well Deeper Horizons 900 Kettleman 750 BV Nose Actuals Elk Hills Paloma 600 Bardsdale BV Nose Rio Viejo Actuals Yowlumne Wheeler Ridge EUR 450 Pleito Ranch VCI 400 430 460 Pleito Ranch Bardsdale 50 1.5 1.6…
  42. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 42
    California Shale Type Well 500 Kettleman Rose 400 N. Shafter Elk Hills (2001-2003) Elk Hills Railroad Gap Asphalto 300 New Pool Type Curve Buena Vista Gunslinger VCI Infill New Pool Gunslinger Actuals 200 Rose/N.…
  43. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 43
    A Net Water Supplier 4% 2% WATER MANAGED IN CRCs OPERATIONS CRC set a new company record for water deliveries to agriculture in 2017, an 85% increase since 2015, Produced Water preserving farmland and jobs. Fresh Water Non-Fresh…
  44. JP Morgan 2018 Global High Yield and Leveraged Finance – California Resources Corp. – slide 44
    End Notes 1Current CRC estimate of reserves value as of December 31, 2017. Includes field-level operating expenses and G&A. Assumes 3.00/MMBTU NYMEX. 2Reflects the value of facilities and midstream assets at 50% of estimated…

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