Analyst and Investor Day Presentation – California Resources Corp.

California Resources Corp. · Oct 31, 2014 · 105 slides

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Analyst & Investor Day Presentation October 31, 2014 0
Presenters Bill Albrecht Executive Chairman Todd Stevens President and Chief Executive Officer Shawn Kerns EVP - Corporate Development Robert Barnes EVP - Northern Operations Frank Komin EVP - Southern Operations Darren…
Agenda PAGE Executive Summary and Transaction Overview 5 Strategy and Investment Highlights 11 California Growth Potential 29 Northern Operations 45 Southern Operations 57 Exploration Overview 68 Regulatory and…
Separation Overview Creates industry leading California-focused E&P Allows CRC to reinvest substantially all cash flow after debt service to grow its business Enables CRCs management team to focus on and accelerate the development and…
Operating Independently Occidental systems and processes have been cloned to provide the basis for independent operations Ready for Avoids business interruption introduced by changing systems Independence The CRC organizational structure…
CRCs Board of Directors (12/1/14) Name Position Experience Former President OXY O&G Americas; President OXY Oil and Gas USA; VP Bill Albrecht Executive Chairman California Operations OXY Director, President and Chief Executive…
Corporate Governance 8 members; 6 that qualify as independent Board of Highly experienced executives and oil and gas professionals Directors Classified board until annual meeting in 2018 Nominating and Governance Key Audit…
Transaction Timeline October 2014 November 2014 December 2014 S M T W T F S S M T W T F S S M T W T F S 1 2 3 4 1 1 2 3 4 5 6 5 6 7 8 9 10 11 2 3 4 5 6 7 8 7 8 9 10 11 12 13 12 13 14 15 16 17 18 9 10 11 12 13 14 15 14 15 16 17 18 19…
California Resources Corporation Vision: To be the premier company providing Californians with long- term ample, affordable and reliable energy exclusively from California resources Mission Statement: To maximize stockholder returns…
Key Investment Highlights World Class Resource Base Interests in 4 of the 12 largest fields in the lower 48 states 744 MMBoe proved reserves Largest producer in California on a gross operated basis with significant exploration and…
Focused Business Strategy Grow NAV per share through exploration and development of under-exploited resources Self-funding capital program eliminates reliance on external capital Disciplined Capital Allocation Rigorously review…
The State of California is a World Class Oil Province Over 35 billion Boe produced since 18761 Pico Canyon y 4 was the first well with 2 billion Boe commercial production west of the Rockies and produced from 1876 to 1992 Rich…
Overview of California Resources Corporation California Pure-Play Net Resource Overview Total proved reserves by basin Avg. net production by CRC will be an independent E&P company focused (12/31/2013) basin (YTD Q314) on high-return…
CRC is the Leading Operator in California Top California Producers in 2013* 85% of CA production from top 5 operators* 200 188 180 Top 25 Companies MBoe/d % of CA 166 160 CRC 188.0 29% 147 oss Operated MBoe/d Chevron 166.2…
Acquisitions Over the Years 1998 2009 2014 SJV North 2,500,000 Kettleman North Dome SJV Central 2,000,000 40M acres 1.2MM acres 2.3MM acres Elk Hills and Kern Front Acquisition of Vintage and Leading privately held…
Stable Leasehold Position San Joaquin Los Angeles Ventura Sacramento Basin Basin Basin Basin Total CRC Net acreage held in fee (000s) 943 13 212 195 1,363 % net acreage held in fee 63% 45% 83% 36% 60% Undeveloped acreage, net (000s)…
Substantial Opportunity and Resource Rich Asset Base Total California 2013 Reserves Net Proved Reserves (MMBoe) 744 Sacramento Basin % Liquids Net Proved 81% Pre-Tax Pre Tax Proved PV PV-10 10 ( millions)1 14 018 14,018 S…
Robust Returns Across Multiple Drive Mechanisms Single Well/Pattern Economics by Drive Mechanism: Before Tax IRR1 80%-100%+ per well 50%+ per pattern 50%+ 30%-50% per pattern per well Conventional Waterflood Steamflood…
Upgrade to Current Technology to Drive High Margin Growth Oil NGLs Gas 250 200 155 1581 150 oe/d (Net) MBo 100 50 - - 1H'14 1H 14 2014 2015 2016 Longer-term Longer term CRC has a significant portfolio…
Shale Geological Overview 0 GR 150 Successful in upper Monterey using precise development approach 3,000 Expanding efforts into lower Monterey and other shales Total Organic g N Depth Thickness Porosity Permeability Carbon Play…
Strong Returns Through the Commodity Cycle Oil Prices / Gas Prices Oil Prices / Gas Prices Invest in steam floods (above 5x Oil/Gas ratio) Gas price is a cost for steam floods. Invest in steam floods above 5x Oil/Gas ratio…
CRC Achieves Premium Pricing and Recycle Ratio 70.00 Cash Margins for FY 2013 (/Boe) Recycle ratio: 2.4x 1 60 00 60.00 49.66 50.00 40.00 30.00 20.00 10.00 0.00 A B C D CRC E F G H Source: Company 2013 SEC…
Captive Infrastructure Integral to Operations The Elk Hills 200 MMScf/d Cryogenic gas plant is part of the largest gas processing complex in California, with a combined capacity of 540 MMScf/d Gas Processing CRC also owns and operates a…
Proven Track Record in Sensitive Environments Operator of choice in coastal environments Proven coexistence with sensitive environmental receptors Excellence in safety and mechanical integrity 25
Reversing Californias Energy Trade Deficit California imports 885 MBoe/d via marine tankers and railcars The source country or state reaps all the benefits California communities bear the transportation risk CRC already produces…
CRCs Strong, Highly Experienced Management Team Name Position Prior Experience Todd Stevens President and Chief Executive Officer VP Corporate Development OXY; VP California Operations OXY President OXY O&G Americas; President OXY Oil…
The CRC Opportunity World Class Resource Base Portfolio of Lower-Risk, High-Growth Opportunities M Management E Expertise i California Heritage Shareholder Value Focus 28
California Resources Corporation California Growth P t ti l Potential 29
Brief History of California Development Oil has been an important part of California economy for over a century and remains so today g basins, vast deposits Large p of rich source rock 1876: First commercial production at Pico…
The Advancement of Oil Field Technology in California Majors In California Majors Pull Out of CA CRC Growth Implementation Fields left undeveloped Improving deep drilling F Focus on Shallow Sh ll StSteam efficiency ffi i IOR /…
Production in All Four Basins 130 Fields throughout California Production by Major Basin (YTD Q314) Ventura Deep California knowledge 5% Both conventional and unconventional Los Angeles 18% Growing conventional plays Field…
Reservoir Types California basins have significant resource potential in Heavy oil trend stacked conventional and unconventional reservoirs 500 ETCHEGOIN Conventional production Conventional reservoirs: 500 3,500 thick…
Creating a Recovery Value Chain Conventional fields in various stages of Typical Recoveries by Mechanism Type development 80 Base assets in place advancing recovery 70 with traditional means Moving recoveries from primary…
Conventional Primary Projects Ventura Basin 90+ fields with conventional opportunities Over 8 Bn Boe original in place LA Basin Over 6,400 identified / 200 proven locations Typical completed cost 1.5 MM/well Depths vary…
Conventional Primary Example Field discovered in 1950s by a major oil company Pleito Ranch Historical Production Multiple stacked producing zones 9,000 14,500 , Major Producer 250 MMBoe in place at 4% RF CRC Acquired Acquired…
Conventional Waterflood Projects Waterflood Recovery Areas 17+ fields with waterflood opportunities Ventura Basin Over 22 Bn Boe original in place Over 3,500 identified / 669 proven locations LA Basin Typical completed cost 1.7…
Conventional Waterflood Example Field discovered in 1920s by a major oil company Mount Poso Multiple stacked zones 1,200 2,000 Ownership by Other Companies 150 MMBoe in place at 6% RF Acquired property in 2009 Geologic…
Conventional Steamflood Projects Steamflood Recovery Areas 12+ fields with steamflood opportunities Oxnard Field Ventura Nearly 2 Bn Boe original in place Low risk projects with proven technology Over 3,000 identified / 994…
Conventional Steamflood Example Year to Year Performance Year to Year Performance Eastern San Joaquin Valley Steamflood 15,000 110,000 Two major intervals 1,500 2,500 14,000 100,000 13,000 500 MMBoe in place at 35% RF 90,000…
California Unconventional Projects Unconventional reservoirs have produced in California for many years California shale expertise Steady, commercial growth Over 50,000 50 000 Boe/d from upper Monterey Confidence in our…
Unconventional Primary Project Unconventional Recovery Areas Leading unconventional position in California Over 9 Bn Boe in place Unconventional targets in over 70 fields Locations 4,600+ identified / 278 proven locations…
Unconventional Example Discovered in 1950s by a major oil company Buena Vista Historical Net Production Multiple stacked producing zones 4,000 7,500 7000 300 Other Owner 3 Bn Boe original in place at 2% oil RF 6000 CRC Acquired 250…
Large in Place Volumes with Significant Upside Recovery Factors for Discovered Fields Leading asset position to exploit Billion Boe 45 In place volumes of 40 Bn Boe at 40 low recovery factor (22%) to date 35 Conventional value chain…
California Resources Corporation Asset Overview Northern Operations 45
Sacramento Basin 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, Winters, Forbes, Kione, and the…
San Joaquin Basin Overview Basin Map Oil and gas discovered in the late 1800s Currently accounts for 70% 70% of CRC production Kettleman 25 billion barrels OOIP in CRC fields Cretaceous to Pleistocene sedimentary section (25,000…
Steamfloods: Pattern Developments over Multiple Years Patterns are the Fundamental Building Blocks Production well 2011 2013 2012 Injection well 5-spot 5 spot Pattern Displacement Project Field Development Typical 5…
Thermal Process: Pattern Life Cycle Ramp-up Peak Mature Steam Injection Rate Facilities established Maximum oil rate Stable oil decline Maximize injection Steam breakthrough Injection reduction 6 months 2 2+ yrs 49
Pattern Profit Delivery (MM) (MM) 120 OPEX 200 Steam 105 150 Capital and Operatingg Costs Drilling 90 100 Positive Cash Facilities Cash Flow 75 Cash Flow 50 60 0 45 50 30 100 15 150 0 200 1 2 3 4 5 6 7 8 9 10…
Elk Hills Field Overview Overview Field Map CRCs flagship asset, a 103-year old field with exploration opportunities1 RR Gap Large fee property with multiple stacked reservoirs GS Light oil from conventional and unconventional…
Elk Hills at a Glance 3,627 active wells 3,244 producers 383 injection/disposal wells 89% production by beam pump Infrastructure Consolidated control facility 3 gas plants (CGP1, LTS1, LTS2) 540 MMcf/d processing capacity p 131…
Elk Hills Field Development Activities 72% of wellbores have been drilled after field was purchased in 1998 Wells Drilled CUM % of Total Wells 350 100% 90% 300 80% 250 70% 60% 200 50% 150 40% 100 30% 20% 50 10% 0 0% 1919…
Elk Hills Field Stacked Pay Zones Dry Shallow Deep Discovery Gas Oil Stevens Carneros Exploratory Wells Producing Well Zone Zone Zone Zone 2009 Age 1910 1919 954-4G 987-25R Formations 1941 1941 934-29R 1977 1978 1988…
Elk Hills Field Identified Projects Shallow Oil Zone Monterey and Carneros Formations Primary Waterflood Net Production C4D Shale 29R Waterflood 100.0 Asphalto, Railroad Gap, 31S Waterflood 90.0 & N. Midway-Sunset 80.0 Gas…
Kettleman North Dome Elk Hills Analog OOIP of 3 Bn Bbls 1,000s of feet of stacked pay API = 36 36 WI = 100% and NRI = 80.3% Shooting 3D in preparation of development Modern formation evaluation, new wells, and WOs Advancing the…
California Resources Corporation Asset Overview Southern Operations 57
Ventura Basin Overview Basin Map Estimated 3.5 billion barrels OOIP in CRC fields1 Operate 25 fields (about 40% of basin) 257,500 net acres Multiple source rocks: Miocene (Monterey and Rincon Formations) Formations), Eocene…
Los Angeles Basin Overview Basin Map Large, world class basin with thick deposits Kitchen is the entire basin, basin hydrocarbons did not migrate laterally; basin depth (30,000 ft) 10 billion barrels OOIP in CRC fields Most…
Wilmington Field Overview Overview Field Map CRCs flagship coastal asset: acquired in 2000 Field discovered in 1932; 3rd largest field in the U.S. Over 7 billion barrels OOIP (34% recovered to date)1 Depths 2,000 10,000 (TVDSS)…
Wilmington Field Geology Stratigraphic Column Shallow Gas Upper Fan reservoirs Middle Fan Upper Ranger g reservoirs Fan Middle Fan Terminal reservoirs Middle Fan Lower Fan Lower Fan Beaubouef et al, 1999 UP-Ford…
Wilmington Field Geosteering Technology Well complexity State of the art, proprietary directional drilling technology Over 8,000 wellbores since 1930s Small surface footprint, reach far out into reservoirs Well placement…
Wilmington Field Production Sharing Contracts Over 90% of CRCs Long Beach LBU PSC production is covered under Production 50,000 Base Incremental Sharing Contracts (PSCs) with the State 40 000 40,000 and City of Long Beach 30,000…
Wilmington Field Future Drilling Opportunities Over 1,000 future drilling locations identified 80% of 2014 wells drilled are PUD locations aimed at rate growth Remaining P2 and P3 locations strategically located for optimal…
Wilmington Field Summary Production (MBoe/d) Summary 25 Base Growth Waterflood development 20 15 Majority of production covered by Production Sharing Contracts 10 5 Infill drilling targeting unswept intervals, attic oil, and…
Proven Track Record in Sensitive Environments Operator of choice in coastal environments Proven coexistence with sensitive environmental receptors Excellence in mechanical integrity is essential 66
Huntington Beach Field Wilmington Analog Overview Production (MBoe/d) Waterflood redevelopment 4.0 Base Growth 3.5 2 25 Bn Boe OOIP 2.25 3.0 Oil gravity: 13-30 API; Depths 1,800 4,800 2.5 (TVDSS) 2.0 Wee acquired acqu ed in…
California Resources Corporation Exploration Overview 68
Exploration History of California California Exploration History Multiple 1 Bn Boe+ discoveries Drill Oil and Gas Drill Surface Small 2D Seismic from 1880s to 1940s based 4.0 Seeps Features Discoveries 40 upon surface…
Exploration Program Prioritized and balanced portfolio approach: Sacramento Basin Dry gas & shale High-return, lower-risk near field exploration program in proven play trends Impact exploration program in high- San Joaquin Basin…
Successful Exploration Program Driving Growth 2007 2013 Performance Chance of Encountering Hydrocarbons Activity: 118 wells Investment: 682 MM Discovered 3P Reserves: 187 MMBoe Finding cost: 3.65 / Boe 2014 production: 18,000 18…
Successful Exploration Through Application of Technology Producing oil well No reservoir -Legend- CRC 3D SURVEYS CRC Land Oil Fields Gas Fields Oil reservoir i No reservoir Largest seismic data owner in…
Exploration Portfolio Near Field Exploration in Proven Play Trends 1.5 Bn Boe Net 5,117 Net Drilling Locations Unrisked Resource San Joaquin San Joaquin Conventional Conventional San Joaquin San Joaquin Unconventional…
San Joaquin Basin Exploration Fields Cenozoic age basin with 19 Bn Boe Heavy oil trend Elk Hills produced to date Semitropic Midway Sunset Midway-Sunset Multiple, M l i l stacked k d conventional i l and d Elk Hills Buena…
San Joaquin Basin: Near Field Exploration 5,000 GROSS RESERVOIR POTENTIAL High-return, lower-risk growth program in proven play trends Multiple, M l i l stacked k d conventional i l and d MONTEREY unconventional reservoirs in…
San Joaquin Basin: Shale Play Exploration 2,500 EXPLORATION SHALE RESERVOIR POTENTIAL UPPER MONTEREY Multiple organic-rich shale reservoirs in structural and basinal settings - 4,000 8,000 Exploration targets in Lower Monterey,…
Ventura Basin Exploration Assets Overview Basin Map 6 Bn Boe OOIP, 2.2 Bn Boe produced to date1 Multiple, stacked conventional reservoirs in structural play trends, deep reservoirs are underexplored Predominantly light oil at…
Sacramento and LA Basin Exploration Sacramento Basin Overview Basin Map Dry gas basin with multiple, stacked conventional reservoirs in proven play trends Deep reservoirs are underexplored with only 4% of wells in the basin drilled…
Exploration Summary Outstanding exploration portfolio in Sacramento Basin underexplored, world class Dry gas & shale hydrocarbon province Proven track record of exploration success San Joaquin Basin Heavy oil, light oil, dry…
California Resources Corporation Regulatory and Community I l Involvementt 80
CRCs Regulatory Program Demonstrate CRCs strong commitment to safety and environmental responsibility Proactively engage in transparent and constructive dialogue with communities and regulators Serve as an active community partner…
Safeguarding People and the Environment Safety Performance California operations achieved record safety performance in 2013 using a key OSHA metric1, with continuing improvement through Q3 2014 The Elk Hills Field received the…
Delivering Economic Benefits to California Stakeholders Direct economic contributions 2.6 2 6 billion spent on 2 2,000 000 vendors for California operations in 2013 Revenues to California governments of 600 MM 300 MM generated…
Experienced in Californias Permitting Process CRC participates actively with federal, state and local agencies that oversee our operations through: Education and advocacy Coalition building Regulatory development Community…
CRCs Unique Regulatory Flexibility Long and distinguished regulatory track record Leading acreage position and diversity of opportunities Core operations in longstanding oil & gas fields Primary production, IOR and EOR All grades…
California Resources Corporation Financial Overview 86
Marketing Oil Oil prices strongly linked to international price benchmarks due to reliance on imports California refineries source 50% of crude supplies from California Refining Capacity non-US imports, 38% of crude supplies from…
Marketing Oil SF Bay Area Refineries California is heavily reliant on CVO 260 imported sources of energy P66 120 TSO 165 62% of oil consumed VLO 170 during 2013 was imported Shell 165 from outside the state, mostly from…
Marketing Gas California Gas Delivery Overview California consumes 6.7 Bcf/d of natural gas (11 Bcf/d peak Winter) California produces 0 0.65 65 Bcf/d Remaining supply comes from the Permian, San Juan, Canada 30/d and Rockies 3rd…
Marketing NGLs Largest NGL producer in CA at 20,000 Boe/d CRC processes substantially all of its NGLs through its processing plants, plants which facilitate access to third-party third party delivery points near the Elk Hills…
Financial Strength Provides Flexibility to Drive Growth Capital program: Invest within cash flow Capitalization as of 10/1/14 (MM) 1 Growth strategy based on re-investment in 2.0Bn Senior Unsecured R C F 65 Senior Unsecured T erm…
Significant Free Cash Flow ( in millions) 800 CRC Positive free cash flow gives opportunity to 400 accelerate growth without impairing credit 0/14 Free Cash Flow (1) metrics 0 10.00 20.00 30.00 40.00 50.00 60.00 Cash…
Self-Funded Capital Investment Program Commentary 2014 Total Capital Budget 2014 capital budget of 2.1 billion is an Other 1 Exploration 145 increase of 24% from 2013 95 7% 5% 5% CRC plans to reinvest excess free cash flow…
Key Investment Highlights World Class Resource Base Interests in 4 of the 12 largest fields in the lower 48 states 744 MMBoe proved reserves Largest producer in California on a gross operated basis with significant exploration and…
California Resources Corporation Question & Answer 95
California Resources Corporation Appendix 96
Historical Financials Income Statement For the Three Months Ended For the Nine Months For the Year Ended December September 30, Ended September 30, 31, ( in millions) 2014 2013 2014 2013 2013 2012 Revenues Oil and gas net sales to…
Historical Financials Balance Sheet ( in millions) September 30, 2014 December 31, 2013 December 31, 2012 Current assets Cash and cash equivalents 105 - - Trade receivables, net 441 30 22 Inventories 72 75 81 Other current assets…
Historical Financials Cash Flow Statement For the Nine Months For the Year Ended Ended September 30, December 31, ( in millions) 2014 2013 2013 2012 Cash flow from operating activities Net Income 657 657 869 699 Adjustments to…
Non-GAAP Reconciliation for EBITDAX For the Year Ended December Last Twelve Months 31, 9 Months Ended, Ended, ( in millions) 2012 2013 9/30/2013 9/30/2014 9/30/2014 Net Income 699 869 657 657 869 Interest Expense - - - - -…
Endnotes 1) As of 12/31/13, CRCs probable reserves were 218 MMBoe (87% liquids) with a PV-10 of 4 billion and possible reserves were 136 MMBoe (83% liquids) with a PV-10 of 3 billion, each based on SEC pricing. 2) CRC's recycle ratio is…