California Resources Corporation · NYSE:CRC
California Resources — Investor Day (March 2017)
102 slides from California Resources's investor day presentation, Mar 22, 2017
Slide 1: CRC 2017 Analyst & Investor Day
CRC 2017 Analyst & Investor Day March 22, 2017 | Bakersfield, California
Slide 2: Forward Looking / Cautionary Statements
2 | 2017 CRC Analyst Day 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. Such statements include those reg
Slide 3: 2017 CRC Analyst & Investor Day Overview
3 | 2017 CRC Analyst Day 2017 CRC Analyst & Investor Day Overview Todd Stevens – CRC Strategy and Investment Opportunity Bob Barnes – Operations Overview Shawn Kerns – Growth and Life of Field Plans Darren Williams – Exploration Francisco Leon – Portfolio Modeling Mark Smith – Strengthening the Bala
Slide 4: CRC Strategy & Investment Opportunity
CRC STRATEGY & INVESTMENT OPPORTUNITY CRC 2017 Analyst & Investor Day Todd Stevens | President & CEO | March 22, 2017
Slide 5: Portfolio Built For Any Price Environment
5 | 2017 CRC Analyst Day Portfolio Built For Any Price Environment O il P ric e $ / B B L Gas Price $/MCF Bull Market Mid-cycle Bear Market Investor Topics of Discussion • No Peers; Modeling Multiple Drive Mechanisms • Balance Sheet • E&P Opportunity in California • Regulatory Environment Key Messag
Slide 6: Strategy at a Glance
6 | 2017 CRC Analyst Day Strategy at a Glance Value Directed Investments Targeting Balance Sheet Leverage 2x-3x (mid-cycle) Value Focus Live within Cash Flow Smart Growth (per share) PV10 pre-tax cash flows PV10 of investments VCI = Value Creation Index Protect Base Production Defend Margins Live wi
Slide 7: Value Proposition – Multiple Ways to Increase Valuation
7 | 2017 CRC Analyst Day Value Proposition – Multiple Ways to Increase Valuation Disciplined Portfolio Management Leads to EBITDAX Growth Positioned to move from Defense to Offense • Joint Ventures • Increasing Investments and Rigs Deployed • Opportunistic Deleveraging • Operating Leverage to Crude
Slide 8: Largest California Producer with Deep Regional Insight
8 | 2017 CRC Analyst Day Largest California Producer with Deep Regional Insight Surface & Minerals3 178 155 129 33 29 - 20 40 60 80 100 120 140 160 180 200 CRC Chevron USA Aera Energy Sentinel Peak LINN Energy G ro ss O p e ra ted M B O E /d *Source: DOGGR data (through November 2016), IHS, Wood Mac
Slide 9: Benefits of the Spin: Focus Led to Improvements
9 | 2017 CRC Analyst Day Benefits of the Spin: Focus Led to Improvements Sac Valley Elk Hills THUMS Vintage Thermal OneCRC • Entrepreneurial culture • Disciplined capital allocation through portfolio management • Principal drivers: o Maximize long-term value – VCI > 1.3 o Financial discipline – self
Slide 10: CRC Focus Post-Spin Transformation
10 | 2017 CRC Analyst Day CRC Focus Post-Spin Transformation Culture Regulatory Engagement Employee Engagement Silo / Separate Reactive Low One CRC Proactive High Financial Priorities $ Debt Capital Efficiency Annual Production Costs $7BN Low $1.2BN $4BN High $750MM Portfolio Management Maintenance
Slide 11: California Operator of Choice
11 | 2017 CRC Analyst Day California Operator of Choice • Proven coexistence with sensitive environmental receptors • ~4 billion gallons of water supplied to agriculture in 2016 • Excellence in safety and mechanical integrity • Recognized by national safety and environmental organizations Produced W
Slide 12: Focus on Life of Fields
12 | 2017 CRC Analyst Day Steamflood Waterflood Primary Unconventional Gas Focus on Life of Fields 0 1,000 2,000 3,000 4,000 5,000 6,000 2015 2016 $55 Dril lin g an d W o rk o ve r Ca p ex ($MM ) VCI > 1.0 VCI > 1.3 Inventory Growth • Doubled actionable inventory over 1.3 VCI • VCI improvement deliv
Slide 13: Creeping Back to Mid-Cycle Pricing?
13 | 2017 CRC Analyst Day Creeping Back to Mid-Cycle Pricing? WTI Daily Price Frequency WTI $/Bbl F re qu e n cy ( D a ys ) Conventional/Pre-Shale “New Normal” Tight Spare Capacity; Political Premiums Source: Bloomberg
Slide 14: Capital Allocation Strategies at Various Brent Oil Prices
14 | 2017 CRC Analyst Day Mature Projects 100% 0% Near Term Growth Mature Projects 100% 0% Near Term Growth Capital Allocation Strategies at Various Brent Oil Prices Mid Cycle $60-$70 Above $80 • Priorities: VCI and payback (Liquidity) • Mix between steam floods (highest VCI); quick payout workovers
Slide 15: Capital Investment Program – Living within Cash Flow
15 | 2017 CRC Analyst Day Drilling $150 JV - Drilling $50 Workover $50 Development Facilities $50 Exploration $25 Other $25 1 San Joaquin Ventura Los Angeles Moving from Defense to Offense • CRC 2017 capital plan of $300 million before JV funding will be directed to oil-weighted projects in our core
Slide 16: Portfolio Flexibility Provides Range of Crude Oil Scenarios
16 | 2017 CRC Analyst Day 40 60 80 100 120 140 160 2016 2017E 2018E 2019E 2020E Oi l P ro d uction M B /d 0 300 600 900 1,200 2016 2017 2018 2019 2020 Capi ta l ($ M M ) 500 1,000 1,500 2,000 2016 2017E 2018E 2019E 2020E $ M M Portfolio Flexibility Provides Range of Crude Oil Scenarios Note: Assumes
Slide 17: The Case for CRC: Investment Thesis Overview
17 | 2017 CRC Analyst Day The Case for CRC: Investment Thesis Overview Operational flexibility Grow within cash flow Industry leading decline rate Integrated and complementary infrastructure 0% 25% 50% 75% 100% P or tf ol io M ix Higher Oil to Gas Price Ratio Lower Oil to Gas Price Ratio Gas Unconve
Slide 18: Operations Overview
OPERATIONS OVERVIEW CRC 2017 Analyst & Investor Day Bob Barnes | EVP Operations
Slide 19: CRC's Large Resource Base with Advantaged Infrastructure
19 | 2017 CRC Analyst Day CRC’s Large Resource Base with Advantaged Infrastructure Sacramento Basin 11 MMBOE Proved Reserves 6 MBOE/d production San Joaquin Basin 429 MMBOE Proved Reserves 97 MBOE/d production Ventura Basin 29 MMBOE Proved Reserves 7 MBOE/d production World-Class Resource Base • Ope
Slide 20: San Joaquin Basin – An American Super Basin
20 | 2017 CRC Analyst Day San Joaquin Basin – An American Super Basin Overview • Oil and gas discovered in the late 1800s • 70% of CRC production is from San Joaquin Basin • Cretaceous to Pleistocene sedimentary section (>25,000 feet) • Source rocks are organic rich shales from Moreno, Kreyenhagen,
Slide 21: Elk Hills Area – CRC's Flagship Asset
21 | 2017 CRC Analyst Day Elk Hills Area – CRC’s Flagship Asset Integrated Infrastructure • 590 MMcf/d processing capacity through 4 gas plants • Including California’s largest • 3 CO2 removal plants • Over 4,500 miles of gathering lines • 45 MW cogeneration plant • 550 MW power plant 1 DOGGR data a
Slide 22: Elk Hills Area Reservoir – Stacks on Stacks
22 | 2017 CRC Analyst Day Elk Hills Area Reservoir – Stacks on Stacks TEMBLOR SANDS EOCENE SANDS AND SHALES UPPER CRETACEOUS SANDS AND SHALES MONTEREY SANDS AND SHALES TULARE SANDS SH A LL O W D EE P ETCHEGOIN SANDS LEGEND Stevens Sandstones Stevens Shales Stevens Sandstones & Shales Gunslinger Sand
Slide 23: Elk Hills Area Shale Overview
23 | 2017 CRC Analyst Day Elk Hills Area Shale Overview • Formation: Monterey • 2,500’ to 13,000’ average measured depth (MD) • <0.1 to 20 millidarcy (mD), 4% to 47% porosity • Complex structures, tight matrix, naturally fractured • 18-36° API gravity • FY 2016 average net production of 32 MBOE/d •
Slide 24: Driving Costs Down – Elk Hills Field Operating Costs
24 | 2017 CRC Analyst Day $14.31 $11.11 $10.48 2,000 2,500 3,000 3,500 4,000 4,500 5,000 $- $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 2014 2015 2016 Well Count s O p e ra tin g Co st , $ /B O E Elk Hills Field – OPEX, $/BOE Opex $/BOE Well Counts ≈ Driving Costs Down – Elk Hills Field Oper
Slide 25: Integrated Infrastructure Provides Operational Control and Improved Margins
25 | 2017 CRC Analyst Day Integrated Infrastructure Provides Operational Control and Improved Margins • Consolidated Control Facility (CCF) • Largest gas plant complex in California CGP1 (200 MMSCFD) LTS1 (160 MMSCFD) LTS2 (160 MMSCFD) CGP1 Amine, GTU2 & GTU3 (CO2) • 550 Megawatt Power Plant
Slide 26: Coles Levee – New Portfolio Entrant
26 | 2017 CRC Analyst Day Coles Levee – New Portfolio Entrant: Leveraging Infrastructure Synergies - 4.00 8.00 12.00 16.00 20.00 Pre-CRC 2016 O P E X $ /B O E Overview • Acquired by CRC in December 2015 • Operations consolidated in January 2016 • 60% staffing reduction • Coles Levee gas plant shut d
Slide 27: Buena Vista - Overview
27 | 2017 CRC Analyst Day Buena Vista - Overview Overview • Discovery Date: 1910 • Formation: Etchegoin sand and Monterey shale • 2,000’ to 6,000’ average MD • 25-34° API gravity • FY 2016 production of 8 MBOE/d • 280 active producers, 72 active injectors • Etchegoin production from Waterflood/Prima
Slide 28: Buena Vista Nose – Conventional: Development of Exploration Success
28 | 2017 CRC Analyst Day Buena Vista Nose – Conventional: Development of Exploration Success FIELDMAP Overview • Discovery Date: 2012 • Formation: Stevens Sandstone, Turbidities/Deep Marine • 10,000’ average True Vertical Depth • 32 API, 600 GOR. Initial pressure 4,760 psi • 2016 Gross Rates: 1 MBO
Slide 29: Kettleman North Dome – Delineating this Elk Hills Analog
29 | 2017 CRC Analyst Day Kettleman North Dome – Delineating this Elk Hills Analog for Future Growth Overview • Faulted 4-way anticline with multiple stacked oil and gas reservoirs • Discovery date: 1928 • Area: 14,000 acres (22 sq. miles) • 2 miles wide by 14 miles long • Total wellbores: 582 • Dep
Slide 30: Los Angeles Basin – Kitchen is the Entire Basin
30 | 2017 CRC Analyst Day Los Angeles Basin – Kitchen is the Entire Basin Overview • World-class hydrocarbon-rich sedimentary basin with large quantities of stacked pay • ~10 billion barrels OOIP in CRC fields • Kitchen is the entire basin, hydrocarbons did not migrate laterally; basin depth (>30,00
Slide 31: Wilmington – World-Class Waterflood
31 | 2017 CRC Analyst Day Wilmington –World-Class Waterflood Overview • Large, well-defined pay zones in 7 major stacked turbidite sandstone reservoirs • High quality, prolific sands drive productive wells and bypassed-pay opportunities • Deep understanding of the reservoir – over 8,000 historic wel
Slide 32: Ventura Basin – Birthplace of the California Oil Industry
32 | 2017 CRC Analyst Day Ventura Basin – Birthplace of the California Oil Industry Overview • Prolific basin with a long history, including the first commercial oil well in California • ~8 billion barrels OOIP in CRC fields1 • Operate 26 fields (over half the fields in the basin) • ~250,000 net min
Slide 33: Sacramento Basin – Significant Gas Optionality
33 | 2017 CRC Analyst Day Sacramento Basin – Significant Gas Optionality Overview • 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 s
Slide 34: Defending Margins by Managing Costs
34 | 2017 CRC Analyst Day Defending Margins by Managing Costs - 4.00 8.00 12.00 16.00 20.00 2014 2015 2016 $ /B O E CRC COST TRENDS Surface Operations/Maintenance Downhole Maintenance/Workovers Supports Purchased Injectant Energy Gas Plant/Pipeline/Processing Fees/Others CRC COST TRENDS
Slide 35: Well Maintenance Scorecard
35 | 2017 CRC Analyst Day Well Maintenance Scorecard • Developed and implemented standardized process for well maintenance operations • Automated scheduling • Standardized economic tool • Root cause failure analysis • Streamlined procedures to expedite servicing and return to production • Cycle time
Slide 36: Redesigning Wells and Finding Efficiencies
36 | 2017 CRC Analyst Day Redesigning Wells and Finding Efficiencies 2016 program achieved ~23% lower well costs compared to prior similar wells Efficiency drivers: • Rig costs – Rig optimization and day work rate reduction • Cementing – Slurry redesign, volume optimization • Back to Basics – Cost r
Slide 37: CRC Drives California Rig Count Activity
37 | 2017 CRC Analyst Day 0 10 20 30 40 50 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 R ig C o un t Total CA Rig Count CRC Rig Count CRC Drives California Rig Count Activity Source: Baker Hughes Rotary Rig Count (includes offshore and onshore) Californ
Slide 38: Deep Inventory of Actionable Projects
38 | 2017 CRC Analyst Day Deep Inventory of Actionable Projects Steamflood Waterflood Primary Shale Gas Portfolio Spectrum • Growth portfolio focus, fully burdened • All projects meet VCI 1.3 threshold at $65 Brent and $3.50 NYMEX, and deliver robust cash flow • Portfolio has large contributions fro
Slide 39: Low-Cost Capital Workovers Deliver Big Value and Volumes
39 | 2017 CRC Analyst Day Low-Cost Capital Workovers Deliver Big Value and Volumes Actuals through December 2016, forecasted values forward Economics Run at $55 Brent / $3 NYMEX 0.0 0.5 1.0 1.5 2.0 2.5 N e t MBOE/ d Add Pay Return to production Tie In Convert to InjOther Thoughtful ramp-up with stro
Slide 40: Resilient Resource Base – Highly Capital Efficient
40 | 2017 CRC Analyst Day Resilient Resource Base – Highly Capital Efficient 0 100 200 300 400 500 600 0 20 40 60 80 100 120 140 160 180 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 FY 2014 FY 2015 FY 2016 $ M M M B O E /d Production By Stream (MBOE/d) Oil NGL Gas Capital 159 MBOE/d 160 MBOE/d 99 MB
Slide 41: Growth and Life of Field Plans
GROWTH AND LIFE OF FIELD PLANS CRC 2017 Analyst & Investor Day Shawn Kerns | EVP Corporate Development
Slide 42: Large in Place Volumes with Significant Upside
42 | 2017 CRC Analyst Day Large in Place Volumes with Significant Upside • 135 fields across 4 major basins • In place volumes of ~44 Billion BOE at low recovery factor (22%) to date • Conventional “recovery” approach to life of field development • Unconventional success with attractive upside posit
Slide 43: Substantial Resource Base
43 | 2017 CRC Analyst Day Substantial Resource Base • Numerous large scale fields in CRC portfolio • Presence in all four key basins • High confidence in development • 3D seismic and geological models • Experience with multiple rock types • Various operating environments • Drilling & completions exp
Slide 44: Stacked Reservoirs Lead to Multiple Opportunities
44 | 2017 CRC Analyst Day Stacked Reservoirs Lead to Multiple Opportunities Primary Oil Primary Shale Primary Dry Gas Steamflood Waterflood Type Wells MONTEREY SANDS AND SHALES TEMBLOR SANDS EOCENE SANDS AND SHALES UPPER CRETACEOUS SANDS AND SHALES 1 ,0 0 0 ’ P A Y TULARE SANDS 20 40 200 50 40 50 S
Slide 45: Life of Field Plans – Growing Inventory
45 | 2017 CRC Analyst Day Life of Field Plans – Growing Inventory • Comprehensive technical review of 40% CRC field areas • Updated Geologic models, OOIP • Teams shared analog experience across CRC • Cataloged opportunities consistent with our proven reserves methodology • Rolled into our portfolio
Slide 46: Analog Expertise Leads to Development Success
46 | 2017 CRC Analyst Day Built analog experience from Elk Hillsf 0 20,000 40,000 60,000 80,000 100,000 2002 2004 2006 2008 2010 2012 2014 2016 N et B OE P D ELK HILLS Analog Expertise Leads to Development Success Elk Hills Example – with additional development & new pool discoveries, reserves doubl
Slide 47: Buena Vista Hills – Growth Potential
47 | 2017 CRC Analyst Day Buena Vista Hills – Growth Potential • Growth Focus Area for CRC • Three separate structures of stacked pay • 2nd largest CRC field by OOIP • 20 square miles of potential • Operations • Only 350 active wellbores to date • Depths: 3,000’ to 6,000’ • Waterflood, Shales, EOR o
Slide 48: Buena Vista Nose – Field Extension
48 | 2017 CRC Analyst Day Buena Vista Nose – Field Extension FIELDMAP Buena Vista - Extension BV Nose • New Pool Discovery • Conventional reservoir • 10,000’ depth • Stratigraphic trap “hidden” since 1939 • 9 wells penetrated, never recognized • 3D seismic tie-in with Elk Hills • Upper Stevens simil
Slide 49: Kettleman Field Area
49 | 2017 CRC Analyst Day Kettleman Field Area • Field Discovered 1928 • Analogous reservoir sequence to Elk Hills • 4+ billion barrels in place • 7 major stacked pay zones • Low recovery factors • Technical Life of Field Plan • Completed 200 square mile 3D seismic survey • Geologic / reservoir stud
Slide 50: Kettleman Growth Program
50 | 2017 CRC Analyst Day Kettleman Growth Program • Multiple Growth Targets o Analog to Elk Hills and San Joaquin valley properties o Stacked pay opportunities o Low recoveries from proven zones • Key Growth Opportunities o Pool Extensions and Underdeveloped Fault Blocks Temblor Vaqueros Krey
Slide 51: Track Record of Implementing Growth Plans
51 | 2017 CRC Analyst Day Track Record of Implementing Growth Plans - 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Start Year 3 Pr o du c ti o n - M BO E P D Steamflood Lost Hills - 1.0 2.0 3.0 4.0 5.0 Start Year 3 Pr o du c ti o n - M BO E P D Waterflood Huntington Beach - 1.0 2.0 3.0 4.0 5.0 Start Year 3 Pr o du c
Slide 52: Diverse Assets with Flexible Development Opportunities
52 | 2017 CRC Analyst Day Diverse Assets with Flexible Development Opportunities Basin Net Proved Reserves (MMBOE) Avg. Net Production (MMBOE/d) % Oil Production Avg. OPEX $/BOE Net Acreage (million acres) Identified Gross Drilling Locations4 Drive Mechanisms Competitive Advantage 568 140 65 $15.61
Slide 53: Life of Field Plans Result in Economic Inventory
53 | 2017 CRC Analyst Day Life of Field Plans Result in Economic Inventory Economic Inventory Years of Economic Inventory1 1 LOF locations are high-graded locations from the total inventory that have a positive NPV10 and VCI of >=1.0 and have been incorporated into a LOF analysis with consideration
Slide 54: Joint Venture with Benefit Street Partners
54 | 2017 CRC Analyst Day Joint Venture with Benefit Street Partners Kern Front -Legend- Oxy Land Oil Fields Gas Fields Buena Vista Pleito Ranch Elk Hills Kettleman Lost Hills Mt Poso CRC Land Highlights • Up to $250 MM over ~2 years • Initial $50 MM tranche • Focus will start in San Joaquin Basin •
Slide 55: Exploration
EXPLORATION CRC 2017 Analyst & Investor Day Darren Williams | EVP Exploration
Slide 56: Conventional Exploration Play Concepts
56 | 2017 CRC Analyst Day Conventional Exploration Play Concepts • Underexplored hydrocarbon basins • World-Class source rocks • 400+ stacked reservoirs in proven play trends • Diverse set of play types • 4-way and 3-way closures • Seismically defined stratigraphic traps • Multiple prospects in each
Slide 57: Proven Value Creation Through Exploration
57 | 2017 CRC Analyst Day Proven Value Creation Through Exploration • Conventional exploration program focused on discovery of high value resources that high-grade CRC development portfolio • Demonstrated exploration driven production growth > 25K BOE/d • Additional near-term production growth from
Slide 58: Competitive Advantage Drives Success
58 | 2017 CRC Analyst Day Competitive Advantage Drives Success Largest 3-D Seismic Position in California• Technical capabilities • Proprietary geologic models and knowledge • Operating experience and optimization from offset field developments • Stable leasehold position • 2.3MM net acres with ~60%
Slide 59: Unparalleled Portfolio of Onshore U.S. Conventional Exploration Prospects
59 | 2017 CRC Analyst Day 3,400 4,800 5,650 0 1,000 2,000 3,000 4,000 5,000 6,000 0 500 1,000 1,500 2,000 2,500 2014 2015 2016 N et Loc at ion s N et U nr iske d R esou rce P ot ent ial (M M B O E) San Joaquin Basin Ventura Basin Sacramento Basin Net Locations Exploration Portfolio Doubled > 2 BBOE
Slide 60: Deep Inventory of Projects With Demonstrated Success
60 | 2017 CRC Analyst Day Deep Inventory of Projects With Demonstrated Success SAN JOAQUIN BASIN STRUCTURAL PLAYS SAN JOAQUIN BASIN STRATIGRAPHIC PLAYS SAN JOAQUIN BASIN SEISMIC DRIVEN PLAYS VENTURA BASIN STACKED SAND PLAYS NET UNRISKED RESOURCE POTENTIAL 170 MMBOE 375 MMBOE 300 MMBOE 260 MMBOE PROS
Slide 61: Exploration Activity
61 | 2017 CRC Analyst Day Exploration Activity Sacramento Basin Gas Prospect • 50+ square mile (32,000 acres) 4-way closure with stacked reservoir potential, mappable at surface and on proprietary 2D seismic • Previous CRC drilling encountered 2 high-pressure gas sands • ~ 5 miles to PG&E trunk line
Slide 62: California Resource Play Opportunity
62 | 2017 CRC Analyst Day California Resource Play Opportunity ~ 2 BBOE Net Unrisked Resource Potential 4,000’-5,000’ Stacked Wet Gas and Oil Column 360,000 Contiguous Net Mineral Acres Dominating lease position in core of play(s) 60% mineral fee position provides additional value and minimal le
Slide 63: Deliberate and Staged Kreyenhagen Reservoir Evaluation
63 | 2017 CRC Analyst Day Deliberate and Staged Kreyenhagen Reservoir Evaluation • Utilizing field development activities at CRC-Operated Kettleman North Dome field • Key resource play elements confirmed in Kreyenhagen • Multiple, stacked reservoir intervals with properties fully comparable to other
Slide 64: Material Growth Opportunity
64 | 2017 CRC Analyst Day Material Growth Opportunity Geoscientist collecting magnetic susceptibility data near active seeps in the Monterey formation • Underexplored, world-class hydrocarbon province • Proven value creation and organic growth through exploration success • Unparalleled portfolio of
Slide 65: Portfolio Modeling
PORTFOLIO MODELING CRC 2017 Analyst & Investor Day Francisco Leon | VP Portfolio Management & Strategic Planning
Slide 66: Capital Allocation Decisions
66 | 2017 CRC Analyst Day Capital Allocation Decisions INVESTMENT PROGRAM Steamflood | Waterflood | Primary Shale| Gas 100+ Producing Horizons4 Producing Basins135 Fields LIFE OF FIELD PLANS VCI EBITDAX CASH FLOW
Slide 67: Initial Wellbore Economics
67 | 2017 CRC Analyst Day 1 Initial Wellbore Economics VCI = 1.3 Capital = $1.5 MM Primary Oil Primary Shale Primary Dry Gas Steamflood Waterflood Project Type Zones 2 VCI = 5.2 Capital = $200K 3 VCI = 5.2 Capital = $200K 4 VCI = 7.3 Capital = $150K Overall Wellbore Economics VCI = 2.8 Capital = $2.
Slide 68: Multiple Recovery Methods with High Value Creation
68 | 2017 CRC Analyst Day 0.0 1.0 2.0 3.0 4.0 V C I Kern Front Buena Vista Bardsdale Asphalto Grimes Lost Hills Elk Hills Buena Vista Nose Buena Vista Kettleman McDonald Anticline Huntington Beach Elk Hills Elk Hills Rio Vista McKittrick Kettleman Kettleman Gunslinger Tompkins Hill Midway Sunset Mou
Slide 69: Cash Margins by Mechanism Type
69 | 2017 CRC Analyst Day Realized pricing based on $65 Brent and $3.50 NYMEX * Assuming 2016 costs High Cash Margins by Mechanism Type* 85% 87% 82% 56% 32% 73%Realized $/BOE as a % of BRENT $55 $56 $53 $36 $21 $47 35% 37% 50% 28% 10% 35% 0% 20% 40% 60% 80% 100% $0 $20 $40 $60 % O il R ea lize d P r
Slide 70: California is an Energy Island
70 | 2017 CRC Analyst Day California is an Energy Island • CA produces 532 MBPD • CA imports 1,093 MBPD • No interstate crude pipeline • Rail is one-directional (North to South) CAPTIVE MARKET Saudi Arabia 311 Ecuador 195 Alaska North Slope 194 Colombia 119 Kuwait 96 California 18º CRC ~23º Waterbor
Slide 71: California Natural Gas Market
71 | 2017 CRC Analyst Day California Natural Gas Market • CRC produces ~183,500 Mcf/d – (3% of CA demand) • Ability to service markets throughout CA as well as others – 80% sold to Southern CA markets via SoCal Gas, Kern, Mojave – 20% sold to Northern CA market via PG&E, other direct markets • CRC’s
Slide 72: CRC Price Realizations
72 | 2017 CRC Analyst Day $3.66 $4.34 $2.75 $2.42 $3.73 $4.39 $2.66 $2.28 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 2013 2014 2015 2016 $ / M c f NYMEX Realizations CRC – Price Realizations 51% 51% 40% 52% 0% 10% 20% 30% 40% 50% 60% 2013 2014 2015 2016 % of W T I $97.97 $93.00 $48.80 $4
Slide 73: Near Term Growth Plan Opportunities
73 | 2017 CRC Analyst Day Near Term Growth Plan Opportunities Counts exclude prospective drilling and injector locations. Near term growth plan locations include inventory in the 5-year plan at $65 Brent. 2,300 of 15,000+ Locations Used in Near Term Growth Plan 15,125 Total Net Producer Locations
Slide 74: Steamfloods Overview
74 | 2017 CRC Analyst Day • Steam injection contributes to over 1.2 MMBO/d of production worldwide • Thermal techniques account for over 40% of US EOR production; 95% of these are in California • Up to 75% of the oil-in-place can be recovered • Characterized by low risk and stable/low decline TEMBLO
Slide 75: Steamflood – Single Pattern Mechanics
75 | 2017 CRC Analyst Day Heat reduces viscosity of oil and increases its mobility Steam and Condensed Water Hot Water Oil Bank Oil and Water Zone near original reservoir temperature Steam Generator Injection Well Production Well Steamflood – Single Pattern Mechanics Ramp-Up Peak Mature Facilities E
Slide 76: Greenfield Steamflood Type Pattern
76 | 2017 CRC Analyst Day 0 25 50 75 100 0 1 2 3 4 B O P D YEAR • Information is for a steamflood pattern assuming 3 producers per 1 injector and are fully burdened with new steam generator infrastructure costs of $900K per pattern. At low prices, new steam generation infrastructure is not added to
Slide 77: Waterflood Overview
77 | 2017 CRC Analyst Day • Water-flooding techniques are the most commonly used EOR production methods • 20 – 40% of the oil-in-place can be recovered • The oil rate decline for waterfloods is generally ~10% • Low capital intensity and robust margins make it an attractive investment at low prices •
Slide 78: Waterflood – Single Pattern Mechanics
78 | 2017 CRC Analyst Day Fill Up Recovery Redevelopment Establish Facilities & Reservoir Fill-up / Plateau Period 6 mos. – 2+ yrs. Expected Water Rate Breakthrough & Oil Decline 3 – 5+ yrs. High initial rates targeting bypassed pay using horizontal wells and other technologies Injection Rate Oil Ra
Slide 79: Waterflood – New Pattern Type Well
79 | 2017 CRC Analyst Day 0 15 30 45 60 0 1 2 3 4 B O EP D YEAR * Capital cost is fully burdened with facilities, injectors and tie-ins. Assumes 5-spot pattern with a 1:1 producer to injector ratio. VCI 165 190 EUR 215 $55 1.6 1.9 2.1 $65 2.2 2.6 2.9 $ B R E N T $75 2.8 3.2 3.7 Waterflood – New Patt
Slide 80: Waterflood – Redevelopment Type Well
80 | 2017 CRC Analyst Day 0 40 80 120 160 0 1 2 3 4 B O EP D YEAR * Capital cost is fully burdened with facilities, injectors and tie-ins ** A majority of locations are subject to PSCs, which have a 49% NPI. For NPV calculation, this can be modeled as 49% WI/NRI. For Production Rate, Net/Gross ratio
Slide 81: Deeper Horizons Primary Overview
81 | 2017 CRC Analyst Day • CRC has experienced repeatable success in deeper (>10,000 ft.) producing horizons and projects with high IPs • Generally characterized by sandstones with shallower declines as compared with non-California shale wells • Natural flow followed by conversion to artificial lif
Slide 82: Primary Type Well – Deeper Horizons
82 | 2017 CRC Analyst Day PARAM ET ER S Operating Expense $10/BOE Capital Cost* $5.0MM Total EUR (MBOE) 430 Peak Rate (BOEPD) 360 Drilling Time (days) 30 Royalty 12% * Capital cost includes drilling, completion, and tie-ins. Does not include 450 shallow (<5.000 ft) locations with costs under $1.5 MM
Slide 83: Shale Reservoirs Overview
83 | 2017 CRC Analyst Day TEMBLOR SANDS EOCENE SANDS AND SHALES UPPER CRETACEOUS SANDS AND SHALES MONTEREY SANDS AND SHALES 1 ,0 0 0 ’ P A Y TULARE SANDS 20 40 200 50 40 50 SH A LL O W D EE P ETCHEGOIN SANDS # of S ta ck ed Reser voi rs Targeted Zone • Upper Monterey Shale Reservoirs (Infill): natur
Slide 84: California Shale Type Well
84 | 2017 CRC Analyst Day California Shale Type Well Asphalto Elk Hills Buena Vista Kettleman Rose N. Shafter Gunslinger Railroad Gap CRC SHALE - 100 200 300 400 500 0 1 2 3 4 B O EP D New Pool Type Curve Infill Shale Curve YEAR Gunslinger Actuals Rose/N. Shafter Actuals Elk Hills Actuals Elk Hills
Slide 85: Sacramento Basin – Gas Overview
85 | 2017 CRC Analyst Day • CRC is the largest gas producer in California • Operates 85% of the gas production in the Sacramento Basin • Gas production is a natural hedge to rising steam and electrical energy costs • At current prices, CRC pursues capital workovers in the Sacramento Basin. New wells
Slide 86: Investment Allocation through the Commodity Cycle
86 | 2017 CRC Analyst Day Investment Allocation through the Commodity Cycle O il P ric e $ / B B L Gas Price $/MCF • Invest to protect base production • Take advantage of existing facilities and prior capacity investments – Steamfloods and waterfloods: drill to fill – Workovers on existing wellbores
Slide 87: Dynamic Portfolio Provides Flexibility
87 | 2017 CRC Analyst Day Dynamic Portfolio Provides Flexibility 0 200 400 600 800 B O EP D YEAR 5 0 200 400 600 800 B O EP D YEAR 5 Gas 0 200 400 600 800 B O EP D YEAR 5 0% 25% 50% 75% 100% Po rt fol io Mi x Higher Oil to Gas Price Ratio Lower Oil to Gas Price Ratio Gas Unconventional Primary Water
Slide 88: Strengthening the Balance Sheet
STRENGTHENING THE BALANCE SHEET CRC 2017 Analyst & Investor Day Mark Smith | Sr. EVP & CFO
Slide 89: History of Proactive Strategic Decisions
89 | 2017 CRC Analyst Day History of Proactive Strategic Decisions Swift, decisive actions have positioned the company for growth through the commodity downturn. Proactive discussions with lenders and solid asset base provide line of sight to a recovery and an actionable inventory. 0 5 10 15 20 25 3
Slide 90: Significant Debt Reduction from Post-Spin Peak
90 | 2017 CRC Analyst Day Significant Debt Reduction from Post-Spin Peak 6,765(1) 5,268 4,000 5,000 6,000 7,000 2Q15 Debt Exchange for 2L Open Market Repurchases Equity for Debt Exchange Cash Tender for Unsecureds Operating Cash Flow YE 16 To ta l D e b t ($ MM ) Cumulative Debt Reduction Total Tota
Slide 91: Strengthening the Balance Sheet
91 | 2017 CRC Analyst Day Strengthening the Balance Sheet $25 $375 $193 $135 $1,000 $2,250 193 $0 $500 $1,000 $1,500 $2,000 $2,500 Jan-1 6 Ma y- 1 6 Se p -1 6 Jan-1 7 Ma y- 1 7 Se p -1 7 Jan-1 8 Ma y- 1 8 Se p -1 8 Jan-1 9 Ma y- 1 9 Se p -1 9 Jan-2 0 Ma y- 2 0 Se p -2 0 Jan-2 1 Ma y- 2 1 Se p -2 1 J
Slide 92: Living within Cash Flow Plus Additional Liquidity
92 | 2017 CRC Analyst Day Living within Cash Flow Plus Additional Liquidity JV Receipts JV Receipts Revolver Availability 1 Revolver Availability 1 Annual Cash Interest Annual Cash Interest Term Loan Amortization Term Loan Amortization Capital Investment JV Investments JV Investments $0 $200 $400 $6
Slide 93: Opportunistically Built Oil Hedge Portfolio
93 | 2017 CRC Analyst Day Opportunistically Built Oil Hedge Portfolio 1 • Hedge book started at zero post spin; we target hedges on 50% of production • Strategy focuses on protecting cash flow for capital investments and covenant compliance Q1 2017 Q2 2017 Q3 2017 Q4 2017 1Q 2018 2Q 2018 3Q 2018 4Q
Slide 94: Reserves Value and Enterprise Value
94 | 2017 CRC Analyst Day PDP Value Proved Value Unproved4 $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 $22 $24 $55 Brent $65 Brent $75 Brent ($B ill ion ) Reserves Value1 In Excess EV Current EV of $5.9 Bn5 Infrastructure3 Surface & Minerals2 1-5 See endnotes in the Appendix.
Slide 95: CRC Significantly Undervalued Relative to Peers
95 | 2017 CRC Analyst Day 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 14.0x E V /2 0 1 7 E EBI T D A CRC Significantly Undervalued Relative to Peers Source: Bloomberg, Bloomberg consensus estimates and Capital IQ as of March 16, 2017. DNR 96% OAS 82% WLL 72% PE 67% CRC 65% CXO 61% EGN 61% MUR 59% EPE 53% P
Slide 96: Portfolio Flexibility Provides Range of Crude Oil Scenarios
96 | 2017 CRC Analyst Day 40 60 80 100 120 140 160 2016 2017E 2018E 2019E 2020E Oi l P ro d uction M B /d 0 300 600 900 1,200 2016 2017 2018 2019 2020 Capi ta l ($ M M ) 500 1,000 1,500 2,000 2016 2017E 2018E 2019E 2020E $ M M Portfolio Flexibility Provides Range of Crude Oil Scenarios Note: Assumes
Slide 97: Project Inventory Drives Organic Deleveraging
97 | 2017 CRC Analyst Day 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 2016 2017E 2018E 2019E 2020E Tota l D e bt/ LT M E B IT D A X $55 $65 $75 Project Inventory Drives Organic Deleveraging Note: All cases are self-funding. Capital program in all cases assumes discretionary cash flow is reinvested. Assumes lease
Slide 98: The Case for CRC: Investment Thesis Overview
98 | 2017 CRC Analyst Day The Case for CRC : Investment Thesis Overview Operational flexibility Grow within cash flow Industry leading decline rate Integrated and complementary infrastructure 0% 25% 50% 75% 100% P or tf ol io M ix Higher Oil to Gas Price Ratio Lower Oil to Gas Price Ratio Gas Unconv
Slide 99: Appendix
APPENDIX
Slide 100: CRC Management Presenters
100 | 2017 CRC Analyst Day CRC Management Presenters Todd A Stevens President and CEO Mr. Stevens was selected to lead CRC in July 2014. Previously, he served for 20 years with Occidental Petroleum as VP of Corporate Development, Oxy Oil & Gas VP – California Operations, and Occidental VP – Acquisit
Slide 101: CRC Management
101 | 2017 CRC Analyst Day CRC Management Roy Pineci EVP – Finance Prior to this role, Mr. Pineci was Vice President and Controller of Occidental, overseeing its finance and accounting functions. Previously, he served as Senior Vice President, Occidental Oil and Gas, as well as Vice President, Inter
Slide 102: End Notes
102 | 2017 CRC Analyst Day End Notes 1 Current CRC estimate of reserves value as of December 31, 2016. Includes field-level operating expenses and G&A. Assumes $3.30/Mcf NYMEX. 2 Surface & Minerals reflect the estimated value of undeveloped surface and fee interests. 3Reflects the value of facilitie