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Scotia Howard Weil 46th Energy Conference – California Resources Corp.

California Resources Corp. · Mar 28, 2018 · 51 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. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 1
    SCOTIA HOWARD WEIL 46TH ANNUAL ENERGY CONFERENCE Todd Stevens President and CEO March 28, 2018
  2. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 2
    Value Proposition Multiple Ways to Increase Valuation Regaining Momentum Disciplined Portfolio EBITDAX Growth* Through Increased Management Investment 400+ Increasing CRC 2,500 Investments and Deploying Rigs 2,000 Joint…
  3. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 3
    CRCs Large Resource Base with Advantaged Infrastructure World-Class Resource Base Sacramento Basin Operate 4 of the largest fields in the continental U.S. 14 MMBOE Proved Reserves 6 MBOE/d production (100% dry gas) Diversified,…
  4. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 4
    Largest California Producer with Deep Regional Insight Top California Producers in 2017*…
  5. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 5
    San Joaquin Basin An American Super Basin Overview Basin Map Oil and gas discovered in the late 1800s Legend 70% of CRC production is from San Joaquin Basin CRC Land Oil Field Cretaceous to Pleistocene sedimentary section (25,000…
  6. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 6
    Los Angeles Basin Kitchen is the Entire Basin Overview Basin Map World-class hydrocarbon-rich sedimentary basin with large quantities of Legend stacked pay CRC Land Oil Field 10 billion barrels OOIP in CRC fields Gas Field CRC…
  7. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 7
    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…
  8. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 8
    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,…
  9. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 9
    Value Additive Inventory Growth 3P Reserves Growth Since Spin Comprehensive technical review of 40% of CRCs fields. 2,250 2017 proved reserves of 618 million BOE and 450 2,000 million BOE of probable reserves. 350% 1,750 Growth…
  10. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 10
    Strategy at a Glance Short-Term Long-Term Value Directed Investments Enhancing Production Margin Expansion Live within Cash Flow Value Smart Growth (per share) Through managing cost and increasing oil weighting of commodity…
  11. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 11
    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…
  12. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 12
    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…
  13. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 13
    Strengthening the Balance Sheet - Improved Creditworthiness and Liquidity Pro Forma1 Total Debt Revolver Availability Available Cash2 4.9B 850MM 441MM Pro-Forma1 Debt Maturities (MM)* Increased Liquidity 4,000 1,400 1,200 3,000…
  14. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 14
    Development Joint Ventures: A Force Multiplier 550 Million Portfolio Flexibility Kettleman North Dome Total Potential JV Capital and Optionality Lost Hills Enables High Margin 154 Million Production Growth 260 MM Committed Mt…
  15. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 15
    Resilient Resource Base ) Production By Stream (Mboe/d) 180 200 Oil NGL Gas Total Capital* CRC Capital (Internally Funded) 160 175 140 150 120 125 Capital (MM) 100 MBoe/d 100 80 75 60 50 40 20 25 0 0 1Q16…
  16. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 16
    2017 Investment Delivered Solid Returns Moved from Defense to Offense 2017 Review CRC 2017 capital plan was directed to oil-weighted projects in our core fields: Elk Hills, Wilmington, Kern Front, Buena Vista, Mt. Poso, Pleito Ranch,…
  17. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 17
    Investment Allocation through the Commodity Cycle Bull Market Invest to accelerate production growth and explore/pilot new resources Add facilities (steam and water handling) to support pace of growth Cash generation is high VCI…
  18. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 18
    2018 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…
  19. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 19
    Deep Inventory of Actionable Projects at 65 50 Steamflood Portfolio Spectrum 45 Waterflood Growth portfolio focus, fully 40 Primary Shale Full Cycle Cost2 (/Boe) burdened 35 Gas 30 All projects meet a Value Creation Index…
  20. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 20
    Strong Returns Through the Commodity Cycle Total LOF Actionable Near Term Growth 17,055 Total Net Producer Locations 2,500 Total Near Term Growth Projects 2,800 Additional Actionable Projects 1.3 VCI Steamflood Waterflood Primary…
  21. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 21
    Midstream JV Provides Optionality to Create Maximum Value Invest in Resources Reduce Debt 750MM Mid-Stream Joint Venture Includes Elk Hills power plant, gas processing assets and related non- borrowing base infrastructure…
  22. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 22
    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…
  23. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 23
    Portfolio Flexibility Provides Range of Crude Oil Scenarios Estimated Crude Oil Production Outcomes 140 Oil Production MB/d 130 Combined with mid-cycle commodity 120 110 Portfolio prices, we are positioned for growth in: 100…
  24. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 24
    Margin Expansion Driven by Liquid-Rich Resource Base 75% As we develop our reserves we anticipate the oil weight of production to trend from 64% produced in 2017 toward the 72% reflected in our 2017 Proved Reserves The 2017 average…
  25. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 25
    2017 Reserves Value1 In Excess EV 20 16 12 (Billion) Infrastructure2 Surface & Minerals3 8 Unproved4 Current EV of 5.1 Bn5 4 Proved Value PDP Value 0 55 Brent 65 Brent 75 Brent 1-5 See endnotes in the…
  26. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 26
    Project Inventory Drives Organic Deleveraging Estimated Leverage Ratios 10.0x 8.0x Total Debt/LTM EBITDAX 6.0x 4.0x 2.0x 0.0x 2016 2017 2018E 2019E 2020E 2021E 55 65 75 Note: All cases are self-funding.…
  27. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 27
    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…
  28. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 28
    APPENDIX
  29. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 29
    Wilmington Field Production Sharing Contract LBU PSC Over 90% of CRCs Long Beach production is 50,000 Base Incremental covered under Production Sharing Contracts End of 40,000 (PSCs) with the State and the City of Long Beach LBU…
  30. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 30
    Wilmington PSC Illustration Total Production Brent Price Total Revenue Brent Price Gross Production Cost Recovery Barrels Mboepd MM Variable with price NPI Barrel Revenue Variable with Price Cost Recovery Revenue…
  31. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 31
    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…
  32. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 32
    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…
  33. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 33
    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) -…
  34. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 34
    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…
  35. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 35
    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…
  36. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 36
    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…
  37. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 37
    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%…
  38. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 38
    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…
  39. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 39
    Core Principle of Living within Cash Flow 1,000 2017 Unlevered Free Cash Flow 500 - Unlevered Free Cash Flow (MM) (500) Average: (341.5)MM (1,000) (1,500) (2,000) (2,500) CRC (3,000) Peers…
  40. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 40
    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…
  41. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 41
    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…
  42. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 42
    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…
  43. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 43
    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,…
  44. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 44
    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…
  45. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 45
    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…
  46. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 46
    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…
  47. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 47
    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…
  48. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 48
    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…
  49. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 49
    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.…
  50. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 50
    A Net Water Supplier 4% 2% WATER MANAGED IN CRC set a new company record for CRCs OPERATIONS water deliveries to agriculture in 2017, an 85% increase since 2015, Produced Water preserving farmland and jobs. Fresh Water Non-Fresh…
  51. Scotia Howard Weil 46th Energy Conference – California Resources Corp. – slide 51
    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. 2 Reflectsthe value of facilities and midstream assets at 50% of estimated…

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