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4Q and FY 2018 Earnings Presentation – California Resources Corp.

California Resources Corp. · Feb 27, 2019 · 34 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. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 1
    FOURTH QUARTER & FY 2018 EARNINGS REVIEW Todd Stevens President & CEO February 27th, 2019 Mark Smith Senior EVP & CFO
  2. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 2
    Key Highlights 4th Quarter 2018 2018 91 Gross Wells 343 Gross Wells Drilled1 ACTIVITY Drilled1 includes 86 CRC wells includes 237 CRC wells 136 Mboe/d PRODUCTION 132 Mboe/d 63% Oil 62% Oil 197 Million2 747 Million2 174…
  3. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 3
    CRCs Value-Driven Strategic Approach Capture Value of Ensure Effective Drive Operational Strengthen Portfolio Capital Allocation Excellence Balance Sheet Pursue value-driven Utilize VCI-based Streamline processes Reinvest to grow…
  4. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 4
    Development Results Driving Growth Drilling Program History Q4 2018 Operations Results 125 San Joaquin Los Angeles Ventura 100 Gross Wells Sacramento Basin Drilled 75 5,000 BOE per Day 50 No Drilling Rigs 25 0 1Q17…
  5. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 5
    Unlocking Value with a Deep Inventory of Actionable Projects at 65 Brent 50 Fully burdened, growth- Steamflood Full Cycle Cost1 (/Boe) focused portfolio 40 Waterflood Primary Shale Gas Achieve a VCI of 1.3 or 30 greater at 65…
  6. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 6
    Strategic Consolidation of Elk Hills Assets Annualized Elk Hills Synergies1 (MM) Initial Target 34MM Implemented 0 5 10 15 20 25 30 35 CRC acquired Chevrons non-operating working Existing CRC Surface Acreage interest ranging…
  7. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 7
    Resilient Resource Base Net Production By Stream (Mboe/d) 160 240 Oil NGL Gas Total Capital 1 CRC Capital (Internally Funded) mid-cycle scenario 140 210 120 180 100 150 Capital (MM) MBoe/d 80 120 60 90 low…
  8. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 8
    2018 Capital Investment Program Results Value Creation in 2018 CRC 2018 capital plan was directed to oil-weighted projects in our core fields: Elk Hills, Buena Vista, Wilmington, Kern Front, Huntington Beach, and continued delineation…
  9. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 9
    2018 Proved Reserves Increased 750 700 38 650 64 Proved Reserves (MMBOE) 600 48 34 21 27 550 500 712 618 450 400 350 300- Balance Production Management Performance Extensions Purchases Price Revisions Balance as…
  10. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 10
    Enhanced Inventory Growth and Expanded 3P Position 2018 Highlights Unproven Reserves1 Growth Proved reserves today only 7% lower despite 29% decrease in price from the YE 2014 2,500 Life-of-field studies increased unproven resources…
  11. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 11
    Disciplined 2019 Capital Plan Leverages Portfolio of Projects and Management Expertise Focus on 2019 Internally Funded Capital Program Core Program 300 to 385 Million Buena Vista Elk Hills Long Beach Kern Front 50-55% Mount Poso…
  12. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 12
    Dynamic Capital Allocation Through Commodity Cycle High-Price Scenario Invest to accelerate production growth and explore/pilot new resources Over Add facilities (steam and water handling) to support pace of growth 1.5B High cash…
  13. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 13
    Production Delivers Growth with Expanding Adjusted EBITDAX Margins Field Production1 Adjusted EBITDAX 450 90% Field Oil Prod (MBOPD) Field NGL Prod (MBPD) Field Gas Prod (MBOEPD) Adj. EBITDAX Margin 2 3 400 Impact of Accounting Change…
  14. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 14
    California Policies Impact Natural Gas Prices Aliso Canyon Effect on Inventory Lack of Natural Gas Storage and Peak Demand Daily SoCalGas natural gas inventories (Bcf) 20 14 12 10 8 6 Source: EIA and Impact of Solar…
  15. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 15
    CRC Price Realizations Oil Price Realization (with Hedges) Gas Price Realization WTI Realizations Brent NYMEX Realizations 80 74.90 75.97 4.00 3.77* 67.18 67.88 69.50 68.08 3.50 3.00 3.16* 70 2.87 2.75 61.54 3.00 3.40 59.97 60…
  16. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 16
    Strong Annual Cash Flow Growth Working FY2017 Volume Price Costs Interest Capital/Other FY2018 800 700 Operating Cash Flow 600 500 MM 400 300 461 200 248 100 0 4Q & YE 2018 Earnings 17
  17. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 17
    Increasing Efficiencies Lower Per Barrel Costs as Production Grows Total Production Oil Production 150 90 Total Production Oil Production (MBOPD) (MBOEPD) 125 80 100 70 75 60 1 18.50 0.87 per BOE Production…
  18. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 18
    Demonstrated Experience Controlling Production Costs Through Price Cycle Annual Production Costs & Capital Investment1 1,200 Capital investment scales with commodity price changes 1,100 Flexible operations and shallow 2014…
  19. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 19
    Quarterly Cost Comparison 4Q17 3Q18 4Q18 FY 17 FY 18 Production costs (/Boe) 19.64 18.92 18.61 18.64 18.88 Production costs excluding PSC effects 18.31 17.55 17.44 17.48 17.47 (/Boe) Taxes other than on 33 45 29 136 149 income…
  20. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 20
    4Q18 Results Summary Comparison 4Q17 3Q18 4Q18 Net Income (Loss) Attributable to Common Stock per (3.23) 1.32 7.00 Share Diluted Adjusted Net Income (Loss) 1 per Share Diluted (0.33) 0.81 0.53 Oil Production 80 MBbl/d 84 MBbl/d 86…
  21. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 21
    Recent Transactions - Improving Debt Metrics Capitalization (MM) Annual Highlights 1st Lien 2014 Revolving Credit Facility (RCF) 540 1st Lien 2017 Term Loan 1,300 Repurchased face value of 183 MM of 2nd Lien Notes and 49 MM of 1st…
  22. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 22
    1Q19 Guidance Anticipated Realizations Against the Prevailing Index Prices for 1Q19 Oil 94% to 99% of Brent NGLs 55% to 60% of Brent Natural Gas 100% to 110% of NYMEX Production, Capital and Income Statement Guidance Production1…
  23. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 23
    Opportunistically Built Oil Hedge Portfolio 1Q19 2Q19 3Q19 4Q19 1Q20 Strategy Sold Calls Barrels per Day 15,000 5,000 - - - Weighted Average Protect cash flow, Ceiling Price per Barrel 66.15 68.45 - - - operating margins,…
  24. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 24
    Opportunistically Built Oil Hedge Portfolio WTI-based Floor Price Brent Advantage Median Floor Price % Hedged Highest Floor Price 80.00 100% Among Peers % of 2019 Consensus Production Hedged at Floor Price 90% CRC has a…
  25. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 25
    Current Enterprise Value Deeply Discounted 24 20 16 Value (Billion) 12 Infrastructure & Other2 Surface & Minerals3 Unproved4 8 Current EV 1 PUD of 7.2 Bn5 4 1 PD 0 55 Brent 65 Brent 75 Brent 1-5 Seeendnotes…
  26. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 26
    Investment Proposition: Delivering Smart Growth and Real Value Portfolio of world- Deep operational Disciplined and Robust inventory Integrated and class assets knowledge and effective capital of high value complementary investable…
  27. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 27
    Appendix
  28. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 28
    Pressure Tested Through Cycle and Focused on Long-Term Value SEPARATION VALUE TRANSITION TO OFFENSE QUICK 30 ANNOUNCEMENT PRESERVATION RESPONSE TO 110 Brent Crude Price PRICE CHANGE Brent Crude Oil Price (/BBL) 25 Spin CRC +…
  29. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 29
    Accelerating Value and Derisking Inventory through JVs Highlights: Highlights: Up to 250MM over 2 years Up to 300MM o Three tranches of 50MM o Current commitment of 140MM o Total of 150MM funded DrillCo type structure where…
  30. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 30
    Typical Industry JV Structure 7,000.00 Hurdle Rate Based on recent industry JV Reached deals, a typical deal structure is o Partner pays 80-100% Capital 6,000.00 o Receives 80-100% Working Interest 5,000.00 o Typical hurdle…
  31. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 31
    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 owned by CRC Class A common…
  32. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 32
    Wilmington Field Production Sharing Contracts Over 90% of CRCs Long Beach production is covered LBU PSC under Production Sharing Contracts (PSCs) with the 50,000 Base Incremental State and the City of Long Beach 40,000 End of LBU…
  33. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 33
    Wilmington Production Sharing Contracts Effect of Oil Price on Net Production Over 25% of CRCs oil production is subject to Production Sharing Contracts Gross Production PSC Mechanics CRC pays our partners share of the Operating…
  34. 4Q and FY 2018 Earnings Presentation – California Resources Corp. – slide 34
    End Notes From Slide 27 1CRC estimate of reserves value as of December 31, 2018, including reserves acquired in the Elk Hills transaction, at the indicated Brent prices. Includes field-level operating expenses, G&A and taxes other than…

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