California Resources Corporation · NYSE:CRC
California Resources — Investor Day (October 2015)
88 slides from California Resources's investor day presentation, Oct 14, 2015
Slide 1: Analyst Day & Site Tour
Bakersfield ANALYST DAY & SITE TOUR October 14, 2015
Slide 2: Forward-Looking / Cautionary Statements
FORWARD-LOOKING / CAUTIONARY STATEMENTS This presentation contains forward-looking statements that involve risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects, and reported results should not be considered an indicatio
Slide 3: Cautionary Statements Regarding Hydrocarbon Quantities
CAUTIONARY STATEMENTS REGARDING HYDROCARBON QUANTITIES We have provided internally generated estimates for proved reserves and aggregated proved, probable and possible reserves (“3P Reserves”) as of December 31, 2014 in this presentation, with each category of reserves estimated in accordance with S
Slide 4: CRC Agenda
CRC AGENDA • Day One Strategic Overview of CRC – Todd Stevens, President & CEO Marketing Overview – Carlos Contreras, VP Marketing Regulatory Overview – Charlie Weiss, EVP – Public Affairs Waterflood Primer – Jerry Foster, Manager IOR/EOR Los Angeles and Ventura Basins – Frank Komin, EVP –
Slide 5: World Class Resource Base
World Class Resource Base • Interests in 4 of the 12 largest fields in the lower 48 states • 768 MMBoe proved reserves (12/31/2014) • Largest producer in California on a gross operated basis with significant exploration and development potential Shareholder Value Focus Portfolio of Lower-Risk, High-
Slide 6: Flexible High Return Inventory
FLEXIBLE HIGH RETURN INVENTORY • Capital associated with currently identified projects delivering VCI >1.3* • Current average well cost ~$1.1 MM • Multi-year inventory to maintain flat production at different points in the price curve Actionable Inventory at Various Price Levels $8.0 $7.0 $6.0 Drill
Slide 7: Self-Funded Capital Investment Program
SELF-FUNDED CAPITAL INVESTMENT PROGRAM Commentary 2015 Total Capital Budget • 2015 capital budget of $440 million expected to Other 1 Total: $440 million be directed almost entirely towards oil-weighted $95 22% Drilling investment $150 34% • Expect to grow oil production in 2015 without Exploration
Slide 8: Exploration Overview
EXPLORATION OVERVIEW Darren Williams | EVP – Exploration | October 14, 2015
Slide 9: Exploration Key Takeaways
EXPLORATION KEY TAKEAWAYS • Material growth portfolio in an Sacramento Basin underexplored, world-class Dry gas & shale hydrocarbon province • Proven value creation through exploration success San Joaquin Basin Heavy oil, light oil, dry • Unparalleled portfolio of conventional gas & shale exploratio
Slide 10: California Exploration History
CALIFORNIA EXPLORATION HISTORY CALIFORNIA EXPLORATION HISTORY • Multiple 1 Bn Boe+ Drill Oil and Gas Drill Surface Small discoveries from 1880s to 4.0 Seeps Features 2D Seismic Discoveries 40 1940s based upon surface Annual Discoveries Bn Boe Cum. Discoveries Bn Boe 35 information 3.0 30 Establish
Slide 11: Demonstrated Value Creation Through Exploration
DEMONSTRATED VALUE CREATION THRU EXPLORATION EXPLORATION DRIVEN PRODUCTION GROWTH • 2007-2014 exploration program • Activity: 130 wells • Geologic success rate: ~70% • Net 3P Reserves Adds: 218 MMBoe • 3P Finding cost: $3.55 / Boe • 2014 production: ~18,000 Boe/d CUMULATIVE 3P RESERVE ADDS • Key dis
Slide 12: Drivers for Success
DRIVERS FOR SUCCESS SAN JOAQUIN LAND & SEISMIC MAP EXPLORATION TEAM EXPERIENCE PROPRIETARY GEOLOGIC MODELS Shallow 4-way - Existing fields Deep 4-way – exploration • Largest land position in State • Highly experienced team • Proprietary geologic models integrating well, seismic, outcrop • Proprietar
Slide 13: Conventional Exploration Assets
CONVENTIONAL EXPLORATION ASSETS • Unparalleled portfolio of onshore US conventional exploration assets SAN JOAQUIN BASIN FIELDS & PLAY TYPES • Significant value creation opportunity from deep inventory of near-field exploration prospects • Analogous to producing assets & recent key exploration disco
Slide 14: Conventional Exploration Portfolio
CONVENTIONAL EXPLORATION PORTFOLIO EXPLORATION PORTFOLIO RISK vs RESOURCE • Unparalleled exploration assets • Material, low risk conventional onshore US exploration portfolio 125+ independent oil and gas prospects 10 key play trends across three world- class hydrocarbon basins 1+Bn BOE net, un
Slide 15: Recent >750 BOPD Exploration Success
RECENT >750 BOPD EXPLORATION SUCCESS • Conventional reservoir in structural trap within CRC Operated field area • Multiple, stacked deepwater sand reservoirs • Reservoir interval #1 (deepest zone) 58’ gross hydrocarbon bearing sand Peak daily flow rates > 200 BOPD • Reservoir interval #2 148’
Slide 16: Shale Resources
SHALE RESOURCES >2,500’ EXPLORATION SHALE RESERVOIR POTENTIAL • Multiple, regionally extensive UPPER MONTEREY organic-rich shale reservoirs - 4,000’ 8,000’ • Exploration targets in Lower LOWER MONTEREY Monterey, Whepley, Kreyenhagen and Moreno shales Individual shale reservoirs range in thickness
Slide 17: Shale Resources: Monterey
SHALE RESOURCES Monterey • Successful in upper Monterey using precise development approach • Expanding efforts into lower Monterey and other shales Total Organic Depth Thickness Porosity Permeability Carbon Play (ft) (gross ft) (%) (mD) (%) Upper Monterey1 3,500' – 12,000' 250' – 3,500' 5 – 30 <0.00
Slide 18: Kreyenhagen Reservoir
KREYENHAGEN RESERVOIR Vclay DlogR TOC HYDROCARBON MATURITY & TOC MAP • Type IIs organic black Vaqueros 0’ shale deposited in a Kr. Upper CORE restricted marine basin 100’ TOC 2% • Extensive, consistent 200’ reservoir mapped using log & 3D seismic data Kr. Middle 300’ CORE TOC 4% 500-1000’ gross th
Slide 19: Kreyenhagen Reservoir Properties
KREYENHAGEN RESERVOIR PROPERTIES • Reservoir properties key to storage capacity, Bed-limited fractures completion effectiveness & well drainage • Average porosity > 10% • High quartz content CORE INTERVAL 50-80% by volume Through- going fractures • Multiple quartz-rich, brittle zones > 100’ thick
Slide 20: Proven Kreyenhagen Reservoir Production
PROVEN KREYENHAGEN RESERVOIR PRODUCTION Vclay DlogR ORIGINAL OIL IN PLACE & VERTICAL PRODUCERS MAP • Production in ~20 vertical Vaqueros wells from Kreyenhagen 0’ Kr. Upper reservoir 100’ 30 Day IP’s: 10-300+ BOPD 200’ • CRC implementing deliberate & cost Kr. Middle 300’ effective approach to asse
Slide 21: Key Elements of Successful Resource Plays
KEY ELEMENTS OF SUCCESSFUL RESOURCE PLAYS CASHALES CA SHALES TOC & Thermal Maturity Hydrocarbon generation potential & type Reservoir Presence Hydrocarbon storage & repeatability & Extent Brittleness & Fractures Drainage area, completion effectiveness Hydrocarbons in Place Resource potential,
Slide 22: Exploration Summary
EXPLORATION SUMMARY • Material growth portfolio in an Sacramento Basin underexplored, world-class Dry gas & shale hydrocarbon province • Proven value creation through exploration success San Joaquin Basin Heavy oil, light oil, dry gas & shale • Unparalleled portfolio of conventional exploration asse
Slide 23: Northern Operations
NORTHERN OPERATIONS Robert Barnes | EVP – Northern Operations | October 14, 2015
Slide 24: CRC North Key Takeaways
CRC NORTH KEY TAKEAWAYS • World-Class Assets – Great Reservoirs • Base production surveillance is generating results • Cost reduction with minimal impact on production • Sustainable reduced costs and a culture of low cost operating • Expansive, integrated infrastructure with world-class reliability
Slide 25: CRC North Operations at Glance
CRC NORTH OPERATIONS AT GLANCE 8,098 active wells • 6,919 producers • 1,025 injection/disposal wells • 79% production by beam pump Infrastructure • Consolidated Control Facility • 3 gas plants (CGP1, LTS1, LTS2) • 520 MMCFD processing capacity • 195 units; 330K HP compression • 44 major fluid proces
Slide 26: CRC North Well Count
CRC NORTH WELL COUNT CRC - NORTHERN OPERATIONS ACTIVE WELL COUNT REPORT TOTAL PROD/INJ 7,944 Jun-2015 Beam ESP Flowing Prog Cavity Hydraulic Gas Lift Injection 5,454 184 958 188 79 56 1,025 Source: Weatherford, Company data BEAM ESP FLOWING GAS LIFT PCP HYDRAULIC INJECTION OTHER TOTAL NORTH 5,454 18
Slide 27: CRC North Performance Metrics
CRC NORTH PERFORMANCE METRICS 2014Q4 2015Q1 2015Q2 Total Hours (MM) 3.0 1.7 1.5 Net Production (MBOEPD) 123.4 121.4 120.2 Oil (MBD) 66.7 66.5 66.0 Capital ($MM) 372 90 50 Cash OPEX ($MM) 163 153 144 Realized Price ($/BOE) 50.97 34.61 39.44 Cash OPEX ($/BOE) 14.37 14.03 13.20 Cash Margin from Ops ($/
Slide 28: Defending Margins by Managing Costs
DEFENDING MARGINS BY MANAGING COSTS CRC NORTH COST TRENDS $25.00 $20.00 ~28% Decrease $15.00 $/BOE $10.00 $5.00 $- 2012 2013 2014 1H 2015 Surface Operations and Maintenance Downhole Maintenance Workovers/Well Enhancement Supports and Other Energy Gas Plant Expense Steam Injectant 27 Analyst Presenta
Slide 29: Well Servicing Scorecard
WELL SERVICING SCORECARD Waiting on Hoist Downtime 2,500 1,400 1,200 2,000 1,000 1,500 800 boepd boepd 1,000 600 400 500 200 0 0 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 Maintenance Rig Hours Job Efficiency 12,000 45 45 10,000 40 40 35 35 8,000 Hours per jo
Slide 30: World-Class Uptime
WORLD-CLASS UPTIME WELLS, PLANTS AND INFRASTRUCTURE 100% 99% 98% 97% Proudction Uptime 96% 95% 94% 93% 92% 91% 90% 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 29 Analyst Presentation – Day 2
Slide 31: Workovers – Low Capital, Great Returns
WORKOVERS – LOW CAPITAL, GREAT RETURNS CAPEX Incremental Rate Incremental Rate Payout ROR Description VCI 10 ($MM) (BOPD) (BOEPD) (YRS) (%) 8 - Artificial Lift Upgrade $7.6 662 914 1.3 155 5.3 18 - Add Perfs CRC Workover Net Incremental Rate 1000 Net Incremental Rate (BOEPD) 900 800 700 600 500 400
Slide 32: Defend CRC's Margins
DEFEND CRC’S MARGINS CRC North Operated Areas H1 2015 Production and Operating Margins 1000 $60 $50 55% Oil Field Operating Margin ($/BOE) 100 $40 40% Oil Net Rate (MBOE/D) $30 100% Oil 10 35% Oil $20 100% Oil 95% Oil 1% Oil 100% Oil $10 89% Oil 96% 1 $- Total Buena Rio Vista Elk Hills Lost Hills Ke
Slide 33: Elk Hills Area at a Glance
ELK HILLS AREA AT A GLANCE 3,726 active wells • 3,319 producers • 407 injection/disposal wells • 89% production by beam pump Infrastructure • Consolidated Control Facility • 3 gas plants (CGP1, LTS1, LTS2) • 520 MMCFD processing capacity • 148 units; 300K HP compression • 3 major fluid processing fa
Slide 34: Major Gas & Power Facilities
MAJOR GAS & POWER FACILITIES • Largest gas plant complex in California CGP1 (200 MMSCFD) LTS1 (160 MMSCFD) LTS2 (160 MMSCFD) – On Standby CGP1 Amine, GTU2 & GTU3 (CO2) • Consolidated Control Facility (CCF) • 550 Megawatt Power Plant (EHPP) – Supplies power and steam to Elk Hills facilities a
Slide 35: CGP1 Benefits
CGP1 BENEFITS • Cryogenic Gas Plant (CGP1) started up in mid-2012 • Added 3,000 bpd of NGL production due to improved recovery • Improved sales gas quality to consistently meet customer BTU and Dew Point specs • California’s largest natural gas and NGL plant - Processing 210 MMSCFD of wet gas 160
Slide 36: San Joaquin Basin West to East Seismic Cross-Section
SAN JOAQUIN BASIN WEST TO EAST SEISMIC CROSS-SECTION SW NE San Andreas Fault System 5 miles Belgian Elk Hills Bowerbank North Kern Mount Anticline & Shafter Front Poso Midway Sunset Etchegoin Deep Marine Upper Monterey Turbidites Lower Monterey Shallow Marine Temblor Kreyenhagen Shale Faults Basemen
Slide 37: Elk Hills Major Producing Zones
ELK HILLS MAJOR PRODUCING ZONES 6 Deep Expl. 36 Analyst Presentation – Day 2
Slide 38: Building Life of Field Plans – Elk Hills
BUILDING LIFE OF FIELD PLANS – ELK HILLS ELK HILLS FIELD DEVELOPMENT Multiple recovery mechanisms Primary 100,000 Waterflood Unconventional 80,000 Exploration Improved base decline 60,000 Discoveries Net BOEPD ~15%/yr In-Field Improved well uptime 40,000 Development Infrastructure Reliab
Slide 39: Effective Management of Elk Hills Operating Costs
EFFECTIVE MANAGEMENT OF ELK HILLS OPERATING COSTS* Elk Hills Field Water-Oil Elk Hills Field - Opex Elk Hills Field - Opex, $/boe Ratio (WOR) per Well $18.00 5,000 Opex, 15.0 160,000 $16.46 $/boe 136,00 $16.00 Well 14.5 0 Counts 4,500 140,000 $14.31 $14.00 14.0 120,000 Operating Cost / Well, $/well
Slide 40: Greater Elk Hills Area Reservoirs
GREATER ELK HILLS AREA RESERVOIRS 39 Analyst Presentation – Day 2
Slide 41: Progressing Inventory to VCI Threshold
PROGRESSING INVENTORY TO VCI THRESHOLD GEHA INVENTORY 2016 -2020 VCI >= 1.0 VCI >= 1.3 Plan Year 2016 to 2020 Plan Year 2016 to 2020 @ $50 Oil, $3.00 Gas ($3.50 Gas for >= 2017) @ $50 Oil, $3.00 Gas ($3.50 Gas for >= 2017) Prod Drill Inj Drill Prod Drill Inj Drill WO Net Capex Recovery Mechanism Cou
Slide 42: Mt Poso Redevelopment
MT POSO REDEVELOPMENT • Old steamfloods have hotplate heated Vedder generating drilling opportunities • Expanding waterflood development from North part to the South area of the field • 6 Recent wells (4 verticals and 2 horizontals) with good results • 400 bopd net at $3MM for a VCI10=3.5 and Payout
Slide 43: Pleito Ranch
PLEITO RANCH • Discovery date: 1957 • CRC Drilled 36 wells to date • Formations: Santa Margarita and Chanac • Complex Upturn Play Trap • Depths: 9,000 – 15,100’ MD • WI = 100% and P1 NRI = 96% • In place: 250 MMBO / Cum. Prod: 12 MMBO / ~5% RF • Current production: 3,200 BOEPD (27 API) Production (B
Slide 44: Improved Waterflood - Buena Vista
IMPROVED WATERFLOOD - BUENA VISTA 7,000 WF Base WF Dev Wedge 6,000 5,000 Oil Produciton Rate (BOPD) 4,000 3,000 2,000 Risked Potential of ~6,000 BOPD 1,000 Assumes Increm. RF ~7% - 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 • 1,300 bopd and 60,000 bwpd • 80 activ
Slide 45: CRC North Summary
CRC NORTH SUMMARY • World-Class Assets – Great Reservoirs • Base production surveillance is generating results • Cost reduction with minimal impact on production • Sustainable reduced costs and a culture of low cost operating • Expansive, integrated infrastructure with world-class reliability • Deep
Slide 46: Thermal EOR Overview
THERMAL EOR OVERVIEW Past, Present and Future Victor Ziegler, Ph.D. | Director – Corporate Development | October 14, 2015
Slide 47: Thermal EOR Overview
THERMAL EOR OVERVIEW • Provide an overview and update on the status of thermal enhanced oil recovery (TEOR) • Discussion includes: Thermal Process Historical Overview Economic Barometer Future Opportunities 46 Analyst Presentation – Day 2
Slide 48: Key Thermal Highlights
KEY THERMAL HIGHLIGHTS • Steam injection is the most successful EOR process • Up to 70% of the oil-in-place in a reservoir may be recovered by steamflooding • Application of new technologies has enhanced steamflooding even in mature areas such as the U.S. • TEOR operators focus on oil/gas price rati
Slide 49: Thermal EOR Processes: Cyclic Steam Injection
THERMAL EOR PROCESSES Source: Department of Energy Cyclic steam injection • A three-step well stimulation process • Used as a precursor and supplement to steamflood 48 Analyst Presentation – Day 2
Slide 50: Thermal EOR Processes: Steamflood
THERMAL EOR PROCESSES STEAMFLOOD Steamflood Source: Department of Energy • Continuous steam injection into a pattern • Rapid heating of the pattern area; steam over-rides oil column 49 Analyst Presentation – Day 2
Slide 51: Thermal EOR Processes: In Situ Combustion
THERMAL EOR PROCESSES Source: Department of Energy In situ combustion • Inject air, which reacts with the oil to generate high temperatures (~1,000 F) • Unstable process, which has poor reservoir sweep and oil recovery 50 Analyst Presentation – Day 2
Slide 52: Heavy Oil Recovery Efficiency
HEAVY OIL RECOVERY EFFICIENCY Steam has larger target oil recovery Steamflood High Reserves Hot Waterflood Combustion Med Cyclic Steam Cold Waterflood Low Natural Depletion Low Med High Investment 51 Analyst Presentation – Day 2
Slide 53: U.S. Thermal EOR (TEOR)
U.S. THERMAL EOR (TEOR) Source: Oil and Gas Journal April 2014 • Steam injection has been the most successful EOR process in the U.S. • High prices have kept production flat for the last 10 years 52 Analyst Presentation – Day 2
Slide 54: Typical Steamflood Field
TYPICAL STEAMFLOOD FIELD Kern Front 53 Analyst Presentation – Day 2
Slide 55: Effective Enhanced Recovery Method
EFFECTIVE ENHANCED RECOVERY METHOD • Long history with initial projects begun in the 1930’s • Implementation of multi-pattern pilots, however, did not begin until the 1950’s • Success of steam pilots minimized the use of air injection • Price decline of 1986 forced changes in steamflood design and m
Slide 56: Production Reflects Pattern Response
PRODUCTION REFLECTS PATTERN RESPONSE • 95% of U.S. steamfloods are in Kern County, CA • Typical steam pattern response stabilized plateau rate even though number of projects was decreasing 55 Analyst Presentation – Day 2
Slide 57: Key Improvements in Thermal Practices
KEY IMPROVEMENTS IN THERMAL PRACTICES • Reservoir heat management 1986 price decline triggered advances in steamflood management SFR = 2.5 bs/mcf; SOR ~ 5 bs/bo >>> steam fuel costs ~ $6/bo for $3/mcf • Multi-reservoir steamflood development Accelerate oil recovery and utilize hotplate heating
Slide 58: Reservoir Heat Management
RESERVOIR HEAT MANAGEMENT • Steamfloods are different than waterfloods >> waterfloods require a constant injection rate • Reducing steam injection in mature patterns keeps steam in pattern area, minimizes steam production and provides steam for pattern expansions • This provides an effective method
Slide 59: Multi-Reservoir Steamflood Development
MULTI-RESERVOIR STEAMFLOOD DEVELOPMENT • Multiple zones may be developed either simultaneously or sequentially (bottoms-up order) • Vertically expanding a steamflood pattern to an overlying reservoir greatly extends the productive life of the project with minimal additional capital costs 58 Analyst
Slide 60: Multi-Reservoir Steamflood Rate Profile
MULTI-RESERVOIR STEAMFLOOD RATE PROFILE Initial Steamflood Cyclic Steam Vertical Expansion Steamfloods • 9-pattern project at Kern Front • Initial steamflood was into Etchegoin sand in 1991 • Vertical expansion steamfloods were begun in 2005 • Oil recovery per zone approaches 70% of oil in place by
Slide 61: California Serves as Training Ground
CALIFORNIA SERVES AS TRAINING GROUND Source: Oil and Gas Journal April 2014 • Thermal EOR accounts for ~1.2 Mmbopd of world-wide oil production • Venezuela and Canada are the two largest TEOR producers • The US is the third largest TEOR producer 60 Analyst Presentation – Day 2
Slide 62: Main Economic Barometer
MAIN ECONOMIC BAROMETER Brent / Henry Hub Ratio 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 Ratio Economic Limit • Even with recent price drop, TEOR remains attractive investment with oil/gas ratio >5x (currently ~15x) • TEOR patterns compete favorably for capital since reservoirs are shallow wit
Slide 63: Regulatory Focus for Thermal in CA
REGULATORY FOCUS FOR THERMAL IN CA • Fresh water use, under drought conditions CRC is a net supplier of water to agriculture CRC provides more treated, reclaimed water from TEOR operations than the amount of fresh water we purchase statewide • State review of Underground Injection Control (UIC)
Slide 64: Steamflood Innovations
STEAMFLOOD INNOVATIONS Source: GlassPoint Source: IPTC 17407 • Enclosed parabolic solar troughs to pre-heat feedwater or generate steam • Permanently buried seismic sources and receivers to provide daily images of the movement of a steam front 63 Analyst Presentation – Day 2
Slide 65: Future Opportunities – New Reservoirs
FUTURE OPPORTUNITIES – NEW RESERVOIRS Heavy oil sand • Majority of known heavy oil sands are already developed • Carbonates, diatomite and siliceous shale reservoirs containing both light and heavy oils are the next targets 64 Analyst Presentation – Day 2
Slide 66: Potential Recovery Mechanisms
POTENTIAL RECOVERY MECHANISMS Capillary imbibition Viscosity reduction Thermal expansion • Viscosity reduction is the primary recovery mechanism • In fractured reservoirs, low matrix permeability means heat transfer is primarily by conduction • Oil recovery will be aided by counter-current imbibitio
Slide 67: Key Thermal Highlights
KEY THERMAL HIGHLIGHTS • Steam injection contributes over 1 million bopd worldwide • Up to 70% of the oil-in-place in a reservoir may be recovered by steamflooding • Reservoir heat management and multi-zone development have enhanced steamflooding even in mature areas such as the US • Economic driver
Slide 68: Thermal Operations - Steamflooding
THERMAL OPERATIONS - STEAMFLOODING Jeff Hatlen | Chief Reservoir Engineer – Thermal Operations | October 14, 2015
Slide 69: Key Steamflood Take-Aways
KEY STEAMFLOOD TAKE-AWAYS • Up-front Investment • Strong Margins • Stable/Long-Lived Declines • Strong Backside Cash Flow Creates Real Value 68 Analyst Presentation – Day 2
Slide 70: Introduction to Steamflooding
INTRODUCTION TO STEAMFLOODING • Steamfloods have a life cycle • Immature • High injection rate Steam • Steam build-out • Breakthrough • Mature • Oil drainage • Heat cuts • Strong cash flow Oil • Steamfloods follow a path • Primary production • Cyclic steam Immature Mature • Continuous steam injectio
Slide 71: Steamflood Targets
STEAMFLOOD TARGETS • Our reservoirs are like a layer cake of sandstone and clay • Each sandstone layer is important • To achieve the highest cash margins, we need to control each layer • Understanding how steam moves through these layers will drive success Common Conceptual Model Observation wel
Slide 72: Steam Movement and Impact
STEAM MOVEMENT AND IMPACT Oil & Water Oil & Water Steam Injection Start of steam injection Effluent Steam breakthrough Steam Heat management 71 Analyst Presentation – Day 2
Slide 73: Steamflooding: Pattern Developments Over Multiple Years
STEAMFLOODING: PATTERN DEVELOPMENTS OVER MULTIPLE YEARS Patterns are the Fundamental Building Blocks Production well 2014 2016 2015 Injection well 5-spot Pattern Displacement Project Field Development • Typical 5 acres • Common start-date • Several Projects • Contiguous patterns • Multi-year Drillin
Slide 74: Thermal Process: Pattern Life Cycle
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 6mo – 2+ yrs 73 Analyst Presentation – Day 2
Slide 75: Kern Front – Stacked Intervals
KERN FRONT – STACKED INTERVALS 74 Analyst Presentation – Day 2
Slide 76: Steamflood Surveillance
STEAMFLOOD SURVEILLANCE 75 Analyst Presentation – Day 2
Slide 77: Steam Management
STEAM MANAGEMENT 76 Analyst Presentation – Day 2
Slide 78: Steamflood Learnings
STEAMFLOOD LEARNINGS Kern Front 77 Analyst Presentation – Day 2
Slide 79: Lost Hills – Additional Opportunities
LOST HILLS – ADDITIONAL OPPORTUNITIES Cold Oil Short Circuiting Layer Cold Oil Previous Operator Pattern Group 78 Analyst Presentation – Day 2
Slide 80: Multi-Year Inventory of Patterns
MULTI-YEAR OF INVENTORY OF PATTERNS Lost Hills Kern Front 79 Analyst Presentation – Day 2
Slide 81: Deep Inventory Fuels Thermal Growth
DEEP INVENTORY FUELS THERMAL GROWTH 2011-2020 Thermal Operations Production 30,000 25,000 20,000 Net BOEPD 15,000 10,000 5,000 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Kern Front Lost Hills Adv. Properties 80 Analyst Presentation – Day 2
Slide 82: Robust Margins Despite Low Prices
ROBUST MARGINS DESPITE LOW PRICES 2015 Thermal Operations Op. Margin as % of Oil Price 100% $70 $60 $57 $55 Operating Margin as % of Oil Price 75% $50 $47 $47 $47 $42 $42 $41 $40 50% $30 58% 58% $20 25% 49% 48% 41% 43% 44% 33% $10 0% $0 Jan Feb Mar Apr May Jun Jul Aug 81 Analyst Presentation – Day 2
Slide 83: Strong Backside Cash Flow Creates Real Value
STRONG BACKSIDE CASH FLOW CREATES REAL VALUE Positive Cash 0 Representative example; based on CRC estimates. Kern Front Field Example 82 Analyst Presentation – Day 2
Slide 84: Key Steamflood Take-Aways
KEY STEAMFLOOD TAKE-AWAYS • Up-front Investment • Strong Margins • Stable/Long-Lived Declines • Strong Backside Cash Flow Creates Real Value 83 Analyst Presentation – Day 2
Slide 85: Appendix
CALIFORNIA RESOURCES CORPORATION APPENDIX 84 Analyst Presentation – Day 2
Slide 86: End Notes
END NOTES: (1) The reserves replacement ratio is calculated for a specified period using the applicable proved oil-equivalent additions divided by oil-equivalent production. Company- wide 76% of 2014 additions were proved undeveloped. There is no guarantee that historical sources of reserves additio
Slide 87: Non-GAAP Reconciliation for Adjusted EBITDAX
Non-GAAP Reconciliation for Adjusted EBITDAX For the For the Six Second Quarter Months Ended Full Ended June 30, June 30, Year ($ in millions) 2015 2014 2015 2014 2014 Net Income/(loss) ($68) $246 ($168) $469 ($1,434) Interest expense 83 - 162 - 72 Income taxes expense/(benefit) (46) 162 (115) 313 (
Slide 88: Non-GAAP Reconciliation for PV-10
Non-GAAP Reconciliation for PV-10 At December 31, ($ in millions) 2014 PV-10 $16,091 Present value of future income taxes discounted at 10% (5,263) Standardized Measure of Discounted Future Net Cash $10,828 Flows PV-10 is a non-GAAP financial measure and represents the year-end present value of esti