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4Q 2019 and Full Year Earnings Presentation – California Resources Corp.

California Resources Corp. · Feb 26, 2020 · 36 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 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 1
    Fourth Quarter and Full Year 2019 Earnings Review February 26, 2020 Todd Stevens President & CEO Mark Smith Senior EVP & CFO
  2. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 2
    Key Highlights 4th Quarter 2019 104 Total Wells Drilled1 123 Mboe/d 146 Million2 308 Million 19 Million Includes 15 internally 62% Oil 62 million Reduction funded wells internally funded Adj.EBITDAX3 PRODUCTION TOTAL…
  3. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 3
    CRCs Value-Driven Strategic Approach Capture Value Ensure Effective Drive Operational Strengthen of Portfolio Capital Allocation Excellence Balance Sheet Pursue value-driven Utilize VCI-based Streamline processes Reinvest to grow…
  4. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 4
    Development Activity Driving Value San Joaquin Drilling Program Los Angeles HistoryAverage Well Depth Ventura Average Measured Well Depth (ft) Q4 2019 Operations Results 125 8,000 Total Wells Drilled2 100 6,000 75…
  5. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 5
    Unlocking Value with a Deep Inventory of Actionable Projects at 60 Brent 50 45 Steamflood Fully burdened, growth-focused 40 Waterflood Full Cycle Cost1 (/Boe) Primary portfolio 35 Shale Gas 30 Achieve a VCI of 1.3 or greater…
  6. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 6
    Elk Hills Carbon Capture and Sequestration (CCS) California Energy Commission: CCS+EOR Project Elements The Project identified the Elk Hills Field as one of the premier CO2 EOR and sequestration sites in the U.S. As described in…
  7. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 7
    Accelerating Value and Derisking Inventory through Development JVs Up to 140MM Total of 200MM fully funded 138MM funded through 2019 Up to 500MM Current commitment of 320MM, with 134MM funded through 2019 Focus on three fields…
  8. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 8
    JVs Provide Additional Capital Flexibility Net Production By Commodity (MBOEPD) Oil NGL Gas Total Capital1 CRC Capital (Internally Funded) 160 320 140 280 Production (MBOEPD) 120 240 Capital (MM) 100 200 80 160 60…
  9. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 9
    Disciplined Capital Plan Leveraged Project Portfolio 2019 Internally Funded 2019 Internally Funded Development 2019 Total Capital Development Capital By Basin Capital By Drive Mechanism Exploration Sacramento and 2% Other 1…
  10. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 10
    Consistent History of Capital Discipline 800 80 700 75 Results of Fully-Burdened2 600 70 2019 CRC Development Program Total: 455 million Brent Oil Price (/bbl) Total Capital (MM) 500 65 400 60 63.15 Brent/2.58 NYMEX…
  11. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 11
    2020 Dynamic Capital Plan 2020E Total Internal Capital 100 to 300 Million 2020 Estimated Total Capital Program Other 1 260 to 500 Million Exploration Expect to Remain within Drilling and Discretionary Cash Flow Facilities…
  12. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 12
    CRC Delivers Stable Adjusted EBITDAX1 Margins Adjusted EBITDAX1 by Quarter 350 55% Adj. EBITDAX Margin 1, 2 300 50% 1 Adjusted EBITDAX Margin1,2 Adj. EBITDAX Adjusted EBITDAX1 MM 250 45% 200 40% 150 35% 100 30% 50…
  13. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 13
    CRC Price Realizations Strong Brent Realizations Oil Price Realization (with Hedges) Gas Price Realization WTI Realizations Brent 3.77 NYMEX Realizations 80 4.00 70.66 70.21 3.43 /MMBtu & /Mcf 68.08 68.41 3.50 70 65.28 62.50…
  14. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 14
    4Q18 to 4Q19 Adj. EBITDAX1 Oil Price and Volume with NGL Price Gas Price 4Q18 Hedges and Volume and Volume Costs2 Other 3 4Q19 400 (19) 350 21 314 (17) 15 (6) 308 300 Adjusted EBITDAX1 (MM) 250 200 150 100 50 0…
  15. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 15
    Total Year Operating Cash Flow Working Capital 2018 Volume Price Costs1 Greenhouse Gas2 Other 3 2019 800 73 676 700 Operating Cash Flow (MM) 111 600 461 99 12 500 (80) 400 300 200 100 0 1 Costs includes changes…
  16. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 16
    Reserves Update Extensions Management and 2018 Production Price Technical Discretion1 5 Year Rule Divestiture Discoveries2 2019 800 712 (47) 700 644 (20) 15 (24) 36 (19) (10) 600 Reserves (MMBOE) 500 400 300 200…
  17. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 17
    Fourth Quarter 2019 Results Comparison 4Q18 3Q19 4Q19 Net Oil Production 86 MBbl/d 79 MBbl/d 76 MBbl/d Total Net Production 136 MBoe/d 128 MBoe/d 123 MBoe/d Realized Oil Price w/ Hedge (/Bbl) 59.97 68.41 70.21 Realized NGL Price…
  18. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 18
    Quarterly Cost Comparison 4Q18 3Q19 4Q19 Production costs (/Boe) 18.61 18.82 18.67 Production costs excluding PSC 17.44 17.44 17.32 effects1 (/Boe) Taxes other than on income 29 42 38 (MM) Exploration expense (MM) 16 5 4…
  19. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 19
    Strengthening the Balance Sheet Capitalization (MM) Debt Maturities (MM) As of 12/31/19 3,000 2020 Notes (Repaid) 1st Lien 2014 Revolving Credit Facility (RCF) 518 2nd Lien Notes 1st Lien 2017 Term Loan 1,300 1st Lien 2016 Term…
  20. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 20
    Strengthening the Balance Sheet Remains a Priority Target 2.5x 3x Leverage Ratio Continue to Employ Leverage ALL of the ABOVE 9.0x 8.0x Approach Total Debt / LTM Adj. EBITDAX1 7.0x 6.0x 5.0x Capital Disciplined Asset…
  21. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 21
    Debt Repurchases Second Lien Note Repurchases 180 CRC has opportunistically repurchased approximately 160 435MM in face value of Second 140 Face Value Repurchased (MM) Lien Notes since issuance including 23MM in the fourth…
  22. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 22
    First Quarter 2020 Guidance Anticipated Realizations Against the Prevailing Index Prices for 1Q20 Oil 96% to 101% of Brent NGLs 48% to 53% of Brent Natural Gas 110% to 120% of NYMEX Production, Capital and Income Statement Guidance…
  23. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 23
    Strategically Built Oil Hedge Portfolio Strategy Purchased 1Q20 2Q20 3Q20 4Q20 Protect cash flow, operating Sold Calls Calls margins and capital Purchased Barrels per Day 30,000 20,000 13,000 8,000 investment program Puts Weighted…
  24. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 24
    Current Enterprise Value Deeply Discounted 0 1 25 20 15 Value (B) Infrastructure and Other1 10 Surface Acreage2 Unproved3 Current EV of 6.3 Bn5 5 PUD4 PD4 0 55 Brent 65 Brent 75 Brent 1-5 See endnotes in…
  25. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 25
    Disciplined Execution on Highest Value Projects VALUE DRIVEN Balance capital investment with Financial Strengthening Efforts Portfolio of world-class assets investable for best long-term value creation throughout the commodity…
  26. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 26
    APPENDIX
  27. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 27
    Complex Road to Becoming a Law: Californias Legislative Process Less than 1% of the measures introduced in the 2019-20 legislative session currently mention oil and gas or crude oil anywhere in the text 1 Source:…
  28. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 28
    Demonstrated Experience Controlling Production Costs Through Price Cycle Annual Production Costs & Capital Investment1 1,200 Capital investment scales with commodity price changes 1,100 2014 Production Costs (MM) (Pre-spin)…
  29. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 29
    Pressure Tested Through the Commodity Price Cycle and Focused on Long-Term Value SEPARATION VALUE TRANSITION TO OFFENSE QUICK 30 ANNOUNCEMENT PRESERVATION RESPONSE TO 110 Spin PRICE CHANGE Brent Crude Oil Price (/BBL) Brent…
  30. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 30
    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 20 20 18 16 14 12 10 8 Source: EIA and SoCalGas…
  31. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 31
    CRCs Natural Gas Liquids Marketing CRC is the largest NGLs producer in California CRC Average of Proxy Peers Premium % Over Proxy Peers' Avg Approximately 15,000 bpd 50 180% Breakdown of CRCs NGLs production: NGL Realized Price…
  32. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 32
    Typical DrillCo JV Structure Hurdle Rate Reached Based on recent industry JV JV Share Typical E&P Share deals, a typical DrillCo structure is o Partner pays 80-100% Capital o Partner receives 80-100% Working Production…
  33. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 33
    Midstream Joint Venture 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 interests…
  34. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 34
    Wilmington Field Production Sharing Contracts LBU PSC 50,000 Over 90% of CRCs Long Beach production is Base Incremental covered under Production Sharing Contracts 40,000 (PSCs) with the State and the City of Long Beach 30,000 End of…
  35. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 35
    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…
  36. 4Q 2019 and Full Year Earnings Presentation – California Resources Corp. – slide 36
    End Notes From Slide 25 1Reflects the value of facilities and midstream assets, excluding assets owned by the Ares JV, at 50% of estimated replacement value. This discount is estimated to exceed the burden on reserves that would be…

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