California Resources Corporation · NYSE:CRC
California Resources — IPAA OGIS New York (April 2015)
34 slides from California Resources's conference presentation, Apr 21, 2015
Slide 1: OGIS New York
INDEPENDENT PETROLEUM ASSOCIATION OF AMERICA OGIS New York Todd Stevens| President & CEO| New York, NY| April 21, 2015
Slide 2: Forward-Looking / Cautionary Statements
Forward-Looking / Cautionary Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements included in this presentation that address activities, events or develo
Slide 3: CRC at a Glance
CRC at a Glance • World-Class Resource Base Sacramento Basin In 4 of 12 largest fields in the 19 MMBoe Proved Reserves 9 MBoe/d production continental U.S. 768 MMBoe proved reserves • Capital Structure San Joaquin Basin 525 MMBoe Proved Reserves 112 MBoe/d production No near-term debt maturiti
Slide 4: Overview of California Resources Corporation
Overview of California Resources Corporation California Pure-Play Net Resource Overview Total proved reserves by basin Avg. net production by • An independent E&P company spun off by (12/31/2014) basin (12/31/2014) Occidental Los Angeles Basin San Joaquin Basin 70% Los Angeles Basin 22% 57% Oil 18%
Slide 5: CRC's Average Production Expected to Be Essentially Flat in 2015 versus 2014
CRC’s Average Production Expected to Be Essentially Flat in 2015 versus 2014 • Resource base enables predictable production profile Conventional assets have relatively low decline rates, long production life Steamflood and waterflood investments will deliver crude oil growth in 2015 with little
Slide 6: Self-Funded Capital Investment Program
Self-Funded Capital Investment Program Commentary 2015 Total Capital Budget • 2015 capital budget of $440 million expected to Other Total: $440 million ~$95 1 be directed almost entirely towards oil-weighted ~22% Drilling production ~$150 ~34% Exploration • Expect to keep production essentially flat
Slide 7: Capital Allocation Priority: De-Leveraging Balance Sheet
Capital Allocation Priority: De-Leveraging Balance Sheet • Exploring adjustments to capital structure Total long-term debt: ~$6.4 billion at Year-end 2014 Have received a 24-month amendment to revolver and term loan Resource base enables a variety of alternatives, e.g. asset monetizations, JVs
Slide 8: Capital Structure & Hedges
Capital Structure & Hedges • Deleveraging is a priority Capitalization as of 12/31/14 ($MM) 1 $2.0Bn Senior Unsecured RCF 360 • Recently approved credit facility amendment Senior Unsecured Term Loan 1,000 Senior Unsecured Notes 5,000 provides additional financial flexibility Total Debt 6,360 Equity
Slide 9: Long Term Value Creation Driven by World Class Asset Base
Long Term Value Creation Driven by World Class Asset Base 9
Slide 10: CRC is the Leading Operator in California
CRC is the Leading Operator in California Top California Producers in 2014* 200 192 180 159 160 Gross Operated MBoe/d 139 140 120 100 80 60 39 37 40 20 - CRC CVX Aera Energy FCX LINE Growth of Top California Producers 300 250 Gross Operated MBoe/d 200 CRC 150 Chevron Aera 100 50 0 *Gross operated pr
Slide 11: World Class Assets with Significant Development Opportunities
World Class Assets with Significant Development Opportunities Total California as of 12/31/2014 • Diversity of basins, drive mechanisms. Net Proved Reserves (MMBoe) 768 % Oil– Net Proved 72% • Predictable production, low decline rates. Pre-Tax Proved PV-10 ($ millions)1 $16,091 • Multi-stacked reser
Slide 12: Large in Place Volumes with Significant Upside for CRC
Large in Place Volumes with Significant Upside for CRC Recovery Factors for Discovered Fields¹ • In place volumes of ~40 Bn Boe at low Billion Boe recovery factor (22%) to date 45 40 • Conventional “value chain” approach to life of field development 35 30 • Unconventional success with great upside p
Slide 13: Creating a Recovery Value Chain
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 through 60 Recovery of Orig. in Place; RF% • EOR 50 • Primary (94 fields
Slide 14: CRC – Price Realizations
CRC – Price Realizations Oil Price Realization Gas Price Realization WTI Realizations Brent NYMEX Realizations $120 5.0 $4.31 $4.39 $111.70 $110.90 4.5 $108.76 $3.73 $110 4.0 $103.80 $104.02 $4.11 $4.34 3.5 $2.94 $99.51 3.0 $3.66 $/Mcf $100 $104.16 2.5 $2.81 $93.00 $/Bbl $97.97 2.0 $95.12 $94.21 1.5
Slide 15: Elk Hills Field - Overview
Elk Hills Field - Overview Overview Field Map • CRC’s flagship asset, a 104-year old field with exploration opportunities RR Gap • Large fee property with multiple stacked reservoirs • Light oil from conventional and unconventional production Elk Hills • Largest gas and NGL producing field in CA, on
Slide 16: Wilmington Field - Overview
Wilmington Field - Overview Overview Field Map • CRC’s 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) • 2014 avg. production of 36.0 MBoe/d (gross) • Over 8,00
Slide 17: Conventional Waterflood Example
Conventional Waterflood Example • Field discovered in 1920s by a major oil company Mount Poso • Multiple stacked zones 1,200’ – 2,000’ 5,000 BOPD 500 Ownership by Other Companies 4,500 450 • 150 MMBoe in place at 6% RF 4,000 Well Count 400 3,500 350 • Acquired property in 2009 # of Wells 3,000 300 B
Slide 18: Conventional Steamflood Example
Conventional Steamflood Example Year over Year Performance • Eastern San Joaquin Valley Steamflood 15,000 Net Oil (bopd) 110,000 • Two major intervals 1,500’ – 2,500’ 14,000 Steam (bspd) 100,000 13,000 • 500 MMBoe in place at 35% RF 90,000 12,000 • Field extension 11,000 2013 Avg 80,000 BOPD BSPD 10
Slide 19: Proven Track Record in Sensitive Environments
Proven Track Record in Sensitive Environments • Operator of choice in coastal environments • Proven coexistence with sensitive environmental receptors • 2 billion gallons of water supplied to agriculture in 2014 • Excellence in safety and mechanical integrity 19
Slide 20: Well Positioned for Growth in Recovery
Well Positioned for Growth in Recovery • World-class asset base with diverse and rich resources. • Capacity for significant production growth at higher prices as we develop high-return, lower-risk development opportunities. • Committed to capital budgets that live within our cash flows. • As we brin
Slide 21: Appendix
California Resources Corporation Appendix 21
Slide 22: 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 23: Cautionary Statements Regarding Hydrocarbon Calculations
Cautionary Statements Regarding Hydrocarbon Calculations Finding and Development costs for the capital program are calculated by dividing the costs incurred from the capital program (development and exploration costs) by the amount of proved reserves added in the same year from improved recovery and
Slide 24: Non-GAAP Reconciliation for Adjusted EBITDAX
Non-GAAP Reconciliation for Adjusted EBITDAX For the Year Ended December 31, ($ in millions) 2014 2013 Net Income/(loss) ($1,434) $869 Interest Expense 72 - Income taxes expense/(benefit) (987) 578 Depreciation, depletion and amortization 1,198 1,144 Exploration expense 139 116 Asset Impairments 3,4
Slide 25: Recently Approved Credit Facility Amendment Provides Additional Financial Flexibility
Recently Approved Credit Facility Amendment Provides Additional Financial Flexibility • Lender group approved several amendment provisions to provide CRC additional flexibility to manage our business through challenging commodity price environment while remaining unsecured • Amended financial covena
Slide 26: Acquisitions Over the Years
Acquisitions Over the Years 1998 2009 2014 SJV North 2,500,000 Kettleman North Dome 2,000,000 SJV Central ~40M acres 1.2MM acres 2.4M acres Elk Hills and Kern Front Acquisition of Vintage and Leading privately held acreage 1,500,000 CA EOG assets position in the state SJV and Sac Lost Hills San Joaq
Slide 27: San Joaquin Basin
San Joaquin Basin Overview Basin Map • Oil and gas discovered in the late 1800s • Currently accounts for ~70% of CRC production Kettleman • ~25 billion barrels OOIP in CRC fields1 • Cretaceous to Pleistocene sedimentary section (>25,000 feet) Lost Hills • Source rocks are organic rich shales from Mo
Slide 28: Los Angeles Basin
Los Angeles Basin Overview Basin Map • Large, world class basin with thick deposits • Kitchen is the entire basin, hydrocarbons did not migrate laterally; basin depth (>30,000 ft) • ~10 billion barrels OOIP in CRC fields1 • Most significant discoveries date to the 1920s – past exploration focused on
Slide 29: Sacramento Basin
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 Eocene Domengine sands • Most current production is less than 10
Slide 30: Ventura Basin
Ventura Basin Overview Basin Map • Estimated ~3.5 billion barrels OOIP in CRC fields1 • Operate 29 fields (about 40% of basin) • ~300,000 net acres • Multiple source rocks: Miocene (Monterey and Rincon Formations), Eocene (Anita and Cozy Dell Formations) Key Assets • 2014 average net production of 9
Slide 31: Capex Reduction
Capex Reduction 2014 2015 Oct Nov Dec Jan Feb Mar Rigs 28 25 6 4 3 3 Quarterly Operations $520 $135-150 * CAPEX, $mm • Focus on investing within expected cash flows despite availability of additional investment opportunities that are economic at current strip prices * - First Quarter 2015 Guidance 3
Slide 32: Opex Reduction
Opex Reduction 2014 Q1 Q2 Q3 Q4 Production costs $/boe 18.43 18.46 17.74 16.07 • Workforce redeployed to focus on reducing costs and building a robust project pipeline • Targeting 6-month payout on workovers at current prices • Downhole maintenance – reduced cycle times, ESP optimization, reduced fa
Slide 33: Value Creation Index
VALUE CREATION INDEX • Measures value created per dollar investment (“Bang for the buck”) • Corporate Target 1.3 PV10 pre-tax cash flows VCI = PV10 of investments Project A Project B Project C Max IRR% Max VCI Max NPV Period Capital Cash Flow Capital Cash Flow Capital Cash Flow 0 1,000 (1,000) 1,000
Slide 34: Shale Geological Overview
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 N Depth Thickness Porosity Permeability Carbon Play (ft) (gross ft) (%) (mD) (%) Upper Monterey1 3,500' – 12,000' 250' – 3
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