California Resources Corporation (NYSE: CRC), an independent
energy and carbon management company committed to energy
transition, today reported first quarter 2023 operational and
financial results.
“We’re off to a great start this year with strong quarterly free
cash flow driven by operational execution and natural gas markets
in California, which underscores the quality of our asset portfolio
and commodity diversification strategy,” said Francisco Leon,
President and Chief Executive Officer. “We made good progress in
advancing the plan to reposition our business, reduce our costs by
$25 to $50 million on an annual run-rate basis and expand our
carbon management business. Our focus remains on driving cash flow
generation, increasing our financial flexibility and delivering
meaningful value to our shareholders while providing the energy
that California needs.”
Primary Highlights
- Named Manuela (Nelly) Molina as the new Executive Vice
President and Chief Financial Officer, effective May 8, 2023 (see
press release on May 1, 2023 for additional details around Nelly’s
appointment)
- Achieved record quarterly financial results driven by natural
gas realizations of 630% of NYMEX during the first quarter of
2023
- Increased 2023 free cash flow1 guidance to reflect strong first
quarter performance by 8% and lowered 2023 operating costs guidance
by 3% to reflect lower natural gas outlook, at midpoint of ranges
respectively
- Engaged Alvarez & Marsal (A&M) to assist with the
execution of cost savings initiatives targeting $25 million to $50
million of sustainable annual run rate savings by the end of
2023
- Successfully amended the RBL credit facility - extended its
term to July 31, 2027, improved financial flexibility and
reaffirmed the $1.2 billion borrowing base
- Declared a quarterly dividend of $0.2825 per share of common
stock, totaling ~$20 million payable on June 16, 2023 to
shareholders of record on June 1, 2023, with subsequent quarterly
dividends subject to final determination and Board approval
- Repurchased 1,423,764 common shares for $59 million during the
first quarter of 2023; repurchased an aggregate 12,880,024 shares
for $519 million at an average price of $40.31 per share since the
inception of the Share Repurchase Program in May 2021 through March
31, 2023
- Submitted a Class VI permit to the EPA for 34 million metric
tons (MMT) for CTV IV CO2 reservoir
- Signed two new storage-only Carbon Dioxide Management
Agreements (CDMAs) with Yosemite Clean Energy, LLC and InEnTec Inc.
for 40,000 and 100,000 metric tons per annum (MTPA) of CO2
injection, respectively
Financial Highlights
- Reported net income of $301 million, or $4.09 per diluted
share. When adjusted for items analysts typically exclude from
estimates including mark-to-market adjustments and gains on asset
divestitures, the Company’s adjusted net income1 was $193 million,
or $2.63 per diluted share
- Generated net cash provided by operating activities of $310
million, adjusted EBITDAX1 of $358 million and free cash flow1 of
$263 million
- Ended the quarter with $477 million of cash and cash
equivalents and an undrawn $454 million Revolving Credit Facility,
(net of $148 million of letters of credit), representing $931
million of total liquidity2
Operational Highlights
- Produced an average of 89,000 net barrels of oil equivalent per
day (Boe/d), including 55,000 barrels of oil per day (Bo/d), with
E&P capital expenditures of $40 million during the quarter
- Operated ~1.5 drilling rigs across CRC’s asset base; drilled 9
wells and brought 10 wells online in 1Q23
- Operated 35 maintenance rigs in the first quarter
Total Year 2023 Guidance and Capital
Program3
CRC is reaffirming its total year 2023 capital program to a
range between $200 and $245 million. The program includes $15 to
$25 million of adjusted capital for carbon management projects4 and
$185 to $220 million of E&P, Corporate and other adjusted
capital, including procuring long-lead time items for planned
maintenance at CRC's Elk Hills power plant in 2024. CRC's 2023
capital program related to oil and natural gas development to be
focused primarily on executing projects using permits outside of
Kern County.
CRC estimates average production between 85,000 and 91,000
Boe/d3 (~60% oil) for 2023. CRC expects to run a development
program averaging 1.5 rigs for drilling locations where CRC has
permits and plans to focus on workover and maintenance
activity.
As a result of higher-than-expected natural gas market prices in
the first quarter of 2023, CRC is raising its free cash flow1 and
lowering its operating costs guidance by 8% (to a range of $360 to
$470 million) and 3% (to a range of $815 to $865 million) at the
midpoint, respectively.
CRC GUIDANCE3
Total
2023E
CMB
2023E
E&P, Corp. & Other
2023E
Net Total Production (MBoe/d)
85 - 91
85 - 91
Net Oil Production (MBbl/d)
51 - 55
51 - 55
Operating Costs ($ millions)
$815 - $865
$815 - $865
CMB Expenses5 ($ millions)
$25 - $35
$25 - $35
Adjusted General and Administrative
Expenses1 ($ millions)
$195 - $225
$10 - $15
$185 - $210
Adjusted Total Capital1,4 ($ millions)
$200 - $245
$15 - $25
$185 - $220
Drilling & Completions
$67 - $77
$66 - $76
Workovers
$44 - $54
$44 - $54
Adjusted Facilities
$44 - $54
$44 - $54
Corporate & Other
$30 - $35
$30 - $35
Adjusted CMB
$15 - $25
$15 - $25
Free Cash Flow1 ($ millions)
$360 - $470
Adjusted Free Cash Flow1 ($ millions)
($60) - ($80)
$440 - $530
Marketing & Trading, Net ($
millions)
$80 - $110
$80 - $110
Net Electricity ($ millions)
$70 - $110
$70 - $110
Transportation Expense ($ millions)
$50 - $70
$50 - $70
ARO Settlement Payments* ($ millions)
$55 - $60
$55 - $60
Taxes Other Than on Income* ($
millions)
$175 - $185
$175 - $185
Interest and Debt Expense* ($
millions)
$55 - $60
$55 - $60
Cash Income Taxes* ($ millions)
$100 - $120
$100 - $120
Commodity Realizations:
Oil - % of Brent:
97% - 99%
97% - 99%
NGL - % of Brent:
58% - 64%
58% - 64%
Natural Gas - % of NYMEX:
150% - 250%
150% - 250%
*Notes:
- 2023E ARO Settlement Payments: ~25% of estimated annual amount
is paid every quarter
- 2023E Taxes Other Than on Income: ~30% of estimated annual
amount is paid in 1Q, 2Q and 4Q, respectively
- 2023E Interest Expense: ~46% of estimated annual amount is paid
in cash in 1Q and 3Q, respectively
- Cash Income Taxes aren’t paid evenly throughout 2023
Second Quarter 2023 Guidance and
Capital Program3
CRC expects its second quarter 2023 total capital program to
range between $46 and $62 million under current operating
conditions. This includes $1 to $2 million of adjusted capital1 for
carbon management projects.
At this level of spending, CRC expects to produce on average
between 86,000 and 88,000 Boe/d3 (~61% oil) in the second quarter
of 2023 and plans to run 1 drilling rig in the Los Angeles basin,
where CRC plans to develop drilling locations for which it already
has permits.
CRC GUIDANCE3
Total
2Q23E
CMB
2Q23E
E&P, Corp. & Other
2Q23E
Net Total Production (MBoe/d)
86 - 88
86 - 88
Net Oil Production (MBbl/d)
54 - 52
54 - 52
Operating Costs ($ millions)
$175 - $195
$175 - $195
CMB Expenses5 ($ millions)
$5 - $10
$5 - $10
Adjusted General and Administrative
Expenses1 ($ millions)
$52 - $60
$2 - $5
$50 - $55
Adjusted Total Capital1,4 ($ millions)
$46 - $62
$1 - $2
$45 - $60
Free Cash Flow1 ($ millions)
$45 - $ 65
Adjusted Free Cash Flow1 ($ millions)
($10) - ($15)
$60 - $75
Marketing & Trading, Net ($
millions)
$17 - $22
$17 - $22
Net Electricity ($ millions)
$12 - $17
$12 - $17
Transportation Expense ($ millions)
$10 - $15
$10 - $15
Cash Income Taxes ($ millions)
$50 - $60
$50 - $60
Commodity Realizations:
Oil - % of Brent:
94% - 98%
94% - 98%
NGL - % of Brent:
55% - 60%
55% - 60%
Natural Gas - % of NYMEX:
150% - 160%
150% - 160%
First Quarter 2023 E&P Operational
Results
Total daily net production for the three months ended March 31,
2023, compared to the three months ended December 31, 2022
decreased by approximately 2 MBoe/d, or 2% largely due to higher
amounts of rain and colder seasonal temperatures than normal in
California, resulting in increased downtime in CRC's operations.
Production-sharing contracts (PSCs) did not have an impact on
production for the three months ended March 31, 2023 compared to
the three months ended December 31, 2022.
During the first quarter of 2023, CRC operated an average of
~1.5 drilling rigs in the Los Angeles basin, drilled 9 wells and
brought online 10 wells. See Attachment 3 for further information
on CRC's production results by basin and Attachment 5 for further
information on CRC's drilling activity.
First Quarter Financial
Results
1st Quarter
4th Quarter
($ and shares in millions, except per
share amounts)
2023
2022
Statements of
Operations:
Revenues
Total operating revenues
$
1,024
$
682
Operating Expenses
Total operating expenses
638
549
Gain on asset divestitures
7
(1
)
Operating Income
$
393
$
132
Net Income Attributable to Common
Stock
$
301
$
83
Net income attributable to common stock
per share - basic
$
4.22
$
1.14
Net income attributable to common stock
per share - diluted
$
4.09
$
1.11
Adjusted net income1
$
193
$
93
Adjusted net income1 per share -
diluted
$
2.63
$
1.24
Weighted-average common shares outstanding
- basic
71.3
72.7
Weighted-average common shares outstanding
- diluted
73.5
75.0
Adjusted EBITDAX1
$
358
$
208
Review of First Quarter 2023 Financial
Results
Realized oil prices, excluding the effects of cash settlements
on CRC's commodity derivative contracts, decreased by $8.47 per
barrel from $87.15 per barrel in the fourth quarter of 2022 to
$78.68 per barrel in the first quarter of 2023. The decrease was
primarily due to recession concerns across Western economies and
disappointment at the pace and scale of the post-COVID-19 reopening
in China.
Realized oil prices, including the effects of cash settlements
on CRC's commodity derivative contracts, increased by $1.71 from
$61.33 in the fourth quarter of 2022 to $63.04 in the first quarter
of 2023.
Adjusted EBITDAX1 for the first quarter of 2023 was $358
million. See table below for the Company's net cash provided by
operating activities, capital investments and free cash flow1
during the same periods.
FREE CASH FLOW
Management uses free cash flow, which is
defined by CRC as net cash provided by operating activities less
capital investments, as a measure of liquidity. The following table
presents a reconciliation of CRC's net cash provided by operating
activities to free cash flow. CRC supplemented its non-GAAP measure
of free cash flow with free cash flow of CRC's exploration and
production and corporate items (Free Cash Flow for E&P,
Corporate & Other) which it believes is a useful measure for
investors to understand the results of its core oil and gas
business. CRC defines Free Cash Flow for E&P, Corporate &
Other as consolidated free cash flow less results attributable to
its carbon management business (CMB).
1st Quarter
4th Quarter
($ millions)
2023
2022
Net cash provided by operating
activities
$
310
$
114
Capital investments
(47
)
(75
)
Free cash flow1
263
39
E&P, corporate & other free cash
flow1
$
270
$
61
CMB free cash flow1
$
(7
)
$
(22
)
The following table presents key operating data for CRC's oil
and gas operations, on a per BOE basis, for the periods presented
below. Energy operating costs consist of purchased natural gas used
to generate electricity for CRC's operations and steam for its
steamfloods, purchased electricity and internal costs to generate
electricity used in CRC's operations. Gas processing costs include
costs associated with compression, maintenance and other activities
needed to run CRC's gas processing facilities at Elk Hills.
Non-energy operating costs equal total operating costs less energy
operating costs and gas processing costs.
OPERATING COSTS PER BOE
The reporting of PSCs creates a difference
between reported operating costs, which are for the full field, and
reported volumes, which are only CRC's net share, inflating the per
barrel operating costs. The following table presents operating
costs after adjusting for the excess costs attributable to
PSCs.
1st Quarter
4th Quarter
($ per Boe)
2023
2022
Energy operating costs
$
15.56
$
9.56
Gas processing costs
0.62
0.48
Non-energy operating costs
15.43
13.82
Operating costs
$
31.61
$
23.86
Excess costs attributable to PSCs
$
(2.23
)
$
(1.90
)
Operating costs, excluding effects of PSCs
(1)
$
29.38
$
21.96
Energy operating costs for the first quarter of 2023 were $125
million, or $15.56 per Boe, an increase of $45 million or 56% from
$80 million, or $9.56 per Boe, for the fourth quarter of 2022. This
increase includes $38 million for purchased electricity and
purchased natural gas, which CRC uses to generate electricity for
its operations, and $7 million for purchased natural gas used to
generate steam for its steamfloods. Natural gas used in CRC's
operations is purchased at first-of-the-month prices, which were
higher than average daily prices during the period due to
significant volatility in the natural gas market during the first
quarter of 2023.
Non-energy operating costs for the first quarter of 2023 were
$124 million, or $15.43 per Boe, which was an increase of $8
million or 7% from $116 million, or $13.82 per Boe, for the fourth
quarter of 2022. This increase was primarily a result of increased
downhole maintenance activity from the prior quarter.
Carbon Management Business
Update
In April 2023, CRC applied for a Class VI permit for 34 MMT of
permanent CO2 storage for a new CTV VI in the Sacramento basin,
which, subject to approval, brings CTV's total potential permitted
storage to 174 MMT.
Additionally, in April 2023, Carbon TerraVault Holdings, LLC
(CTV), a subsidiary of CRC, reached new storage-only CDMAs for
40,000 and 100,000 MTPA of CO2 injection, at CTV carbon storage
vaults from two new facilities to be constructed in Northern and
Central California. See CTV's 1Q23 press release for further
information on these CDMA's.
The CDMA frames the contractual terms between parties by
outlining the material economics and terms of the project and
includes conditions precedent to close. The CDMA provides a path
for the parties to reach final definitive documents and FID.
Balance Sheet and Liquidity
Update
On April 26, 2023, CRC amended its existing Revolving Credit
Facility. The amended Revolving Credit Facility provides for an
initial aggregate commitment of $592 million and a borrowing base
of $1.2 billion. CRC's borrowing base for the Revolving Credit
Facility was also reaffirmed at $1.2 billion on April 26, 2023. The
amendments included, among other things:
- Extending the maturity date to July 31, 2027 (subject to a
springing maturity to August 4, 2025 if any of our Senior Notes are
outstanding on that date);
- Increasing CRC's ability to make certain restricted payments
(such as dividends and share repurchases) and certain investments
(including in its carbon management business);
- Releasing liens on certain assets securing the loans made under
the Revolving Credit Facility, including CRC's Elk Hills power
plant;
- Extending the period for which we can enter into hedges on our
production from 48 months to 60 months; and
- Increasing CRC's capacity to issue letters of credit from $200
million to $250 million.
CRC also amended the interest rates and fees it pays under its
Revolving Credit Facility. At CRC's election, borrowings under the
amended Revolving Credit Facility may be alternate base rate (ABR)
loans or term SOFR loans, plus an applicable margin. ABR loans bear
interest at a rate equal to the highest of (i) the federal funds
effective rate plus 0.50%, (ii) the administrative agent prime rate
and (iii) the one-month SOFR rate plus 1%. Term SOFR loans bear
interest at term SOFR, plus an additional 10 basis points per annum
credit spread adjustment. The applicable margin is adjusted based
on the commitment utilization percentage and will vary from (i) in
the case of ABR loans, 1.50% to 2.50% and (ii) in the case of term
SOFR loans, 2.50% to 3.50%. CRC also pays customary fees and
expenses. Interest is payable quarterly for ABR loans and at the
end of the applicable interest period for term SOFR loans, but not
less than quarterly. We also pay a commitment fee on unused
capacity ranging from 37.5 to 50 basis points per annum, depending
on the percentage of the commitment utilized.
As of March 31, 2023, CRC had liquidity of $931 million, which
consisted of $477 million in unrestricted cash and $454 million of
available borrowing capacity under its Revolving Credit Facility
which is net of $148 million of letters of credit.
Leadership Changes
On February 24, 2023, CRC announced that Francisco J. Leon, its
current Executive Vice President and Chief Financial Officer, will
succeed Mark A. (Mac) McFarland as its President and Chief
Executive Officer, and joined CRC's Board of Directors. Mr.
McFarland will continue to serve as a non-executive member of CRC's
Board of Directors and Chair of the Board of its Carbon TerraVault
subsidiary. Manuela (Nelly) Molina has been appointed Executive
Vice President and Chief Financial Officer, effective May 8,
2023.
Shareholder Return
Strategy
CRC continues to prioritize shareholder returns and therefore
dedicates a significant portion of its free cash flow to
shareholders in the form of dividends and share repurchases.
During the first quarter of 2023, CRC repurchased 1.4 million
shares for $59 million or an average price of $41.25 per share.
Since the inception of the Share Repurchase Program in May 2021
through March 31, 2023, 12,880,024 shares have been repurchased for
$519 million at an average price of $40.31 per share. These total
repurchases represent 15% of CRC’s shares outstanding at its
bankruptcy emergence in October 2020.
On April 28, 2023, CRC's Board of Directors declared a quarterly
cash dividend of $0.2825 per share of common stock. The dividend is
payable to shareholders of record on June 1, 2023 and will be paid
on June 16, 2023.
Through March 31, 2023, CRC has returned $612 million of cash to
its shareholders, including $519 million in share repurchases and
$93 million of dividends. These figures exclude share repurchases
made after March 31, 2023 as well as the $20 million second quarter
dividend declared and payable in June 2023.
Upcoming Investor Conference
Participation
CRC's executives will be participating in the following events
in May through July of 2023:
- 2023 Citi Energy & Climate Technology Conference on May 9
to 10 in Boston, MA
- Goldman Sachs Eighth Annual Leveraged Finance and Credit
Conference on May 22 to 24 in Rancho Palos Verdes, CA
- MS Sustainable Finance Summit on May 24 in New York City,
NY
- Stifel 2023 Cross Sector Insight Conference on June 6 in
Boston, MA
- 2023 RBC Capital Markets Global Energy, Power &
Infrastructure Conference on June 7 in New York City, NY
- 2023 BofA Securities Energy Credit Conference on June 8 in New
York City, NY
- 2023 JP Morgan Energy, Power & Renewables Conference on
June 21 to 22 in New York City, NY
- 2023 TD Calgary Energy Conference on July 11 to 12 in Calgary,
AB, Canada
CRC’s presentation materials will be available the day of the
events on the Events and Presentations page in the Investor
Relations section on www.crc.com.
Conference Call Details
To participate in the conference call scheduled for May 2, 2023,
at 1:00 p.m. Eastern Time, please dial (877) 328-5505
(International calls please dial +1 (412) 317-5421) or access via
webcast at www.crc.com 15 minutes prior to the scheduled start time
to register. Participants may also pre-register for the conference
call at https://dpregister.com/sreg/10177066/f8cf780338. A digital
replay of the conference call will be archived for approximately 90
days and supplemental slides for the conference call will be
available online in the Investor Relations section of
www.crc.com.
(1) See Attachment 2 for the non-GAAP
financial measures of adjusted EBITDAX, operating costs per BOE
(excluding effects of PSCs), adjusted net income (loss), adjusted
net income (loss) per share - basic and diluted, free cash flow,
adjusted G&A and adjusted capital, including reconciliations to
their most directly comparable GAAP measure, where applicable. For
the full year 2023 and 2Q23 estimates of the non-GAAP measure of
free cash flow, adjusted G&A and adjusted capital, including
reconciliations to their most directly comparable GAAP measure, see
Attachment 7.
(2) Calculated as $477 million of
available cash plus $602 million of capacity on CRC's Revolving
Credit Facility less $148 million in outstanding letters of
credit.
(3) Current guidance assumes a 2023 Brent
price of $79.54 per barrel of oil, NGL realizations as a percentage
of Brent consistent with prior years and a NYMEX gas price of $2.92
per mcf and a 2Q23 Brent price of $79.69 per barrel of oil, NGL
realizations as a percentage of Brent consistent with prior years
and a NYMEX gas price of $2.22 per mcf. CRC's share of production
under PSC contracts decreases when commodity prices rise and
increases when prices fall.
(4) Adjusted E&P Capital and Adjusted
CMB Capital are Non-GAAP measures. These measures reflect the
reclassification of certain E&P, Corporate & Other Capital
to CMB Capital related to the investment in facilities to advance
carbon sequestration activities. For the full year 2023 and 2Q23
estimates of the non-GAAP measure of free cash flow, including
reconciliations to their most directly comparable GAAP measure, see
Attachment 7.
(5) CMB Expenses includes lease cost for
sequestration easements, advocacy, and other startup related
costs.
About Carbon TerraVault
Carbon TerraVault Holdings, LLC (CTV), a subsidiary of CRC,
provides services that include the capture, transport and storage
of carbon dioxide for its customers. CTV is engaged in a series of
CCS projects that inject CO2 captured from industrial sources into
depleted underground reservoirs and permanently store CO2 deep
underground. For more information about CTV, please visit
www.carbonterravault.com.
About California Resources
Corporation
California Resources Corporation (CRC) is an independent energy
and carbon management company committed to energy transition. CRC
produces some of the lowest carbon intensity oil in the US and is
focused on maximizing the value of its land, mineral and technical
resources for decarbonization efforts. For more information about
CRC, please visit www.crc.com.
Forward-Looking
Statements
This document contains statements that CRC believes to be
“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 other than historical facts
are forward-looking statements, and include statements regarding
CRC's future financial position, business strategy, projected
revenues, earnings, costs, capital expenditures and plans and
objectives of management for the future. Words such as "expect,"
“could,” “may,” "anticipate," "intend," "plan," “ability,”
"believe," "seek," "see," "will," "would," “estimate,” “forecast,”
"target," “guidance,” “outlook,” “opportunity” or “strategy” or
similar expressions are generally intended to identify
forward-looking statements. Such forward-looking statements are
subject to risks and uncertainties that could cause actual results
to differ materially from those expressed in, or implied by, such
statements.
Although CRC believes the expectations and forecasts reflected
in its forward-looking statements are reasonable, they are
inherently subject to numerous risks and uncertainties, most of
which are difficult to predict and many of which are beyond CRC's
control. No assurance can be given that such forward-looking
statements will be correct or achieved or that the assumptions are
accurate or will not change over time. Particular uncertainties
that could cause CRC's actual results to be materially different
than those expressed in its forward-looking statements include:
- fluctuations in commodity prices, including supply and demand
considerations for CRC's products and services;
- decisions as to production levels and/or pricing by OPEC or
U.S. producers in future periods;
- government policy, war and political conditions and events,
including the war in Ukraine and oil sanctions on Russia, Iran and
others;
- regulatory actions and changes that affect the oil and gas
industry generally and CRC in particular, including (1) the
availability or timing of, or conditions imposed on, permits and
approvals necessary for drilling or development activities or CRC's
carbon management business; (2) the management of energy, water,
land, greenhouse gases (GHGs) or other emissions, (3) the
protection of health, safety and the environment, or (4) the
transportation, marketing and sale of CRC's products;
- the impact of inflation on future expenses and changes
generally in the prices of goods and services;
- changes in business strategy and CRC's capital plan;
- lower-than-expected production or higher-than-expected
production decline rates;
- changes to CRC's estimates of reserves and related future cash
flows, including changes arising from CRC's inability to develop
such reserves in a timely manner, and any inability to replace such
reserves;
- the recoverability of resources and unexpected geologic
conditions;
- general economic conditions and trends, including conditions in
the worldwide financial, trade and credit markets;
- production-sharing contracts' effects on production and
operating costs;
- the lack of available equipment, service or labor price
inflation;
- limitations on transportation or storage capacity and the need
to shut-in wells;
- any failure of risk management;
- results from operations and competition in the industries in
which CRC operates;
- CRC's ability to realize the anticipated benefits from prior or
future efforts to reduce costs;
- environmental risks and liability under federal, regional,
state, provincial, tribal, local and international environmental
laws and regulations (including remedial actions);
- the creditworthiness and performance of CRC's counterparties,
including financial institutions, operating partners, CCS project
participants and other parties;
- reorganization or restructuring of CRC's operations;
- CRC's ability to claim and utilize tax credits or other
incentives in connection with its CCS projects;
- CRC's ability to realize the benefits contemplated by its
energy transition strategies and initiatives, including CCS
projects and other renewable energy efforts;
- CRC's ability to successfully identify, develop and finance
carbon capture and storage projects and other renewable energy
efforts, including those in connection with the Carbon TerraVault
JV;
- CRC's ability to convert its CDMAs to definitive agreements and
enter into other offtake agreements;
- CRC's ability to maximize the value of its carbon management
business and operate it on a stand-alone basis;
- CRC's ability to successfully develop infrastructure projects
and enter into third party contracts on contemplated terms;
- uncertainty around the accounting of emissions and CRC's
ability to successfully gather and verify emissions data and other
environmental impacts;
- changes to CRC's dividend policy and Share Repurchase Program,
and its ability to declare future dividends or repurchase shares
under its debt agreements;
- limitations on CRC's financial flexibility due to existing and
future debt;
- insufficient cash flow to fund CRC's capital plan and other
planned investments and return capital to shareholders;
- changes in interest rates, and CRC's access to and the terms of
credit in commercial banking and capital markets, including its
ability to refinance its debt or obtain separate financing for its
carbon management business;
- changes in state, federal or international tax rates, including
CRC's ability to utilize its net operating loss carryforwards to
reduce its income tax obligations;
- effects of hedging transactions;
- the effect of CRC's stock price on costs associated with
incentive compensation;
- inability to enter into desirable transactions, including joint
ventures, divestitures of oil and natural gas properties and real
estate, and acquisitions, and CRC's ability to achieve any expected
synergies;
- disruptions due to earthquakes, forest fires, floods, extreme
weather events or other natural occurrences, accidents, mechanical
failures, power outages, transportation or storage constraints,
labor difficulties, cybersecurity breaches or attacks or other
catastrophic events;
- pandemics, epidemics, outbreaks, or other public health events,
such as the COVID-19 pandemic; and
- other factors discussed in Part I, Item 1A – Risk Factors in
CRC's Annual Report on Form 10-K and its other SEC filings
available at www.crc.com.
CRC cautions you not to place undue reliance on forward-looking
statements contained in this document, which speak only as of the
filing date, and CRC undertakes no obligation to update this
information. This document may also contain information from third
party sources. This data may involve a number of assumptions and
limitations, and CRC has not independently verified them and do not
warrant the accuracy or completeness of such third-party
information.
Attachment 1
SUMMARY OF RESULTS
1st Quarter
4th Quarter
1st Quarter
($ and shares in millions, except per
share amounts)
2023
2022
2022
Statements of Operations:
Revenues
Oil, natural gas and NGL sales
$
715
$
617
$
628
Net gain (loss) from commodity
derivatives
42
(132
)
(562
)
Sales of purchased natural gas
184
94
32
Electricity sales
68
90
34
Other revenue
15
13
21
Total operating revenues
1,024
682
153
Operating Expenses
Operating costs
254
199
182
General and administrative expenses
65
59
48
Depreciation, depletion and
amortization
58
49
49
Asset impairment
3
—
—
Taxes other than on income
42
42
34
Exploration expense
1
1
1
Purchased natural gas expense
124
87
21
Electricity generation expenses
49
68
24
Transportation costs
17
13
12
Accretion expense
12
11
11
Other operating expenses, net
13
20
14
Total operating expenses
638
549
396
Net gain on asset divestitures
7
(1
)
54
Operating Income (Loss)
393
132
(189
)
Non-Operating (Expenses) Income
Interest and debt expense
(14
)
(14
)
(13
)
Loss from investment in unconsolidated
subsidiary
(2
)
(1
)
—
Other non-operating (expenses) income,
net
(1
)
—
1
Net Income (Loss) Before Income
Taxes
376
117
(201
)
Income tax (provision) benefit
(75
)
(34
)
26
Net income (Loss)
$
301
$
83
$
(175
)
Net income (loss) attributable to common
stock per share - basic
$
4.22
$
1.14
$
(2.23
)
Net income (loss) attributable to common
stock per share - diluted
$
4.09
$
1.11
$
(2.23
)
Adjusted net income
$
193
$
93
$
91
Adjusted net income per share - basic
$
2.71
$
1.28
$
1.16
Adjusted net income per share -
diluted
$
2.63
$
1.24
$
1.13
Weighted-average common shares outstanding
- basic
71.3
72.7
78.5
Weighted-average common shares outstanding
- diluted
73.5
75.0
78.5
Adjusted EBITDAX
$
358
$
208
$
206
Effective tax rate
20
%
29
%
13
%
1st Quarter
4th Quarter
1st Quarter
($ in millions)
2023
2022
2022
Cash Flow Data:
Net cash provided by operating
activities
$
310
$
114
$
160
Net cash used in investing activities
$
(61
)
$
(79
)
$
(53
)
Net cash used in financing activities
$
(79
)
$
(86
)
$
(84
)
March 31,
December 31,
($ in millions)
2023
2022
Selected Balance Sheet Data:
Total current assets
$
972
$
864
Property, plant and equipment, net
$
2,764
$
2,786
Deferred tax asset
$
117
$
164
Total current liabilities
$
717
$
894
Long-term debt, net
$
592
$
592
Noncurrent asset retirement
obligations
$
424
$
432
Stockholders' Equity
$
2,092
$
1,864
GAINS AND LOSSES FROM COMMODITY
DERIVATIVES
1st Quarter
4th Quarter
1st Quarter
($ millions)
2023
2022
2022
Non-cash derivative gain (loss)
$
107
$
2
$
(381
)
Net payments on settled commodity
contracts
(65
)
(134
)
(181
)
Net gain (loss) from commodity
derivatives
$
42
$
(132
)
$
(562
)
CAPITAL INVESTMENTS
1st Quarter
4th Quarter
1st Quarter
($ millions)
2023
2022
2022
Facilities (1)
$
9
$
19
$
32
Drilling
25
48
59
Workovers
6
14
6
Total E&P capital
40
81
97
CMB (1)(2)
1
(13
)
1
Corporate and other
6
7
1
Total capital program
$
47
$
75
$
99
(1) Facilities capital includes $1
million, $3 million and $2 million in the first quarter of 2023,
fourth quarter of 2022 and first quarter of 2022, respectively, to
build replacement water injection facilities which will allow CRC
to divert produced water away from a depleted oil and natural gas
reservoir held by the Carbon TerraVault JV. Construction of these
facilities supports the advancement of CRC’s carbon management
business and CRC reported these amounts as part of adjusted CMB
capital in this press release. Where adjusted CMB capital is
presented, CRC removed the amounts from facilities capital and
presented adjusted E&P, Corporate and Other capital.
(2) In the fourth quarter of 2022, $14
million of capital investments was reclassified from PP&E to
other noncurrent assets.
Attachment 2
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATIONS
To supplement the presentation of its
financial results prepared in accordance with U.S generally
accepted accounting principles (GAAP), management uses certain
non-GAAP measures to assess its financial condition, results of
operations and cash flows. The non-GAAP measures include adjusted
net income (loss), adjusted EBITDAX, E&P, Corporate & Other
adjusted EBITDAX, CMB adjusted EBITDAX, free cash flow, E&P,
Corporate & Other free cash flow, CMB free cash flow, adjusted
general and administrative expenses, operating costs per BOE, and
adjusted total capital among others. These measures are also widely
used by the industry, the investment community and our lenders.
Although these are non-GAAP measures, the amounts included in the
calculations were computed in accordance with GAAP. Certain items
excluded from these non-GAAP measures are significant components in
understanding and assessing our financial performance, such as our
cost of capital and tax structure, as well as the effect of
acquisition and development costs of our assets. Management
believes that the non-GAAP measures presented, when viewed in
combination with its financial and operating results prepared in
accordance with GAAP, provide a more complete understanding of the
factors and trends affecting the Company's performance. The
non-GAAP measures presented herein may not be comparable to other
similarly titled measures of other companies. Below are additional
disclosures regarding each of the non-GAAP measures reported in
this press release, including reconciliations to their most
directly comparable GAAP measure where applicable.
ADJUSTED NET INCOME (LOSS)
Adjusted net income (loss) and adjusted
net income (loss) per share are non-GAAP measures. CRC defines
adjusted net income as net income excluding the effects of
significant transactions and events that affect earnings but vary
widely and unpredictably in nature, timing and amount. These events
may recur, even across successive reporting periods. Management
believes these non-GAAP measures provide useful information to the
industry and the investment community interested in comparing our
financial performance between periods. Reported earnings are
considered representative of management's performance over the long
term. Adjusted net income (loss) is not considered to be an
alternative to net income (loss) reported in accordance with GAAP.
The following table presents a reconciliation of the GAAP financial
measure of net income and net income attributable to common stock
per share to the non-GAAP financial measure of adjusted net income
and adjusted net income per share.
1st Quarter
4th Quarter
1st Quarter
($ millions, except per share amounts)
2023
2022
2022
Net income (loss)
$
301
$
83
$
(175
)
Unusual, infrequent and other items:
Non-cash derivative (gain) loss
(107
)
(2
)
381
Asset impairment
3
—
—
Severance and termination costs
1
—
—
Net (gain) loss on asset divestitures
(7
)
1
(54
)
Rig termination expenses
1
2
—
Other, net
2
13
1
Total unusual, infrequent and other
items
(107
)
14
328
Income tax provision (benefit) of
adjustments at effective tax rate
30
(4
)
(93
)
Income tax (benefit) provision - out of
period
(31
)
—
31
Adjusted net income attributable to common
stock
$
193
$
93
$
91
Net income (loss) attributable to common
stock per share - basic
$
4.22
$
1.14
$
(2.23
)
Net income (loss) attributable to common
stock per share - diluted
$
4.09
$
1.11
$
(2.23
)
Adjusted net income per share - basic
$
2.71
$
1.28
$
1.16
Adjusted net income per share -
diluted
$
2.63
$
1.24
$
1.13
ADJUSTED EBITDAX
CRC defines Adjusted EBITDAX as earnings
before interest expense; income taxes; depreciation, depletion and
amortization; exploration expense; other unusual, infrequent and
out-of-period items; and other non-cash items. CRC believes this
measure provides useful information in assessing its financial
condition, results of operations and cash flows and is widely used
by the industry, the investment community and its lenders. Although
this is a non-GAAP measure, the amounts included in the calculation
were computed in accordance with GAAP. Certain items excluded from
this non-GAAP measure are significant components in understanding
and assessing CRC’s financial performance, such as its cost of
capital and tax structure, as well as depreciation, depletion and
amortization of CRC's assets. This measure should be read in
conjunction with the information contained in CRC’s financial
statements prepared in accordance with GAAP. A version of Adjusted
EBITDAX is a material component of certain of its financial
covenants under CRC's Revolving Credit Facility and is provided in
addition to, and not as an alternative for, income and liquidity
measures calculated in accordance with GAAP.
The following table represents a
reconciliation of the GAAP financial measures of net income and net
cash provided by operating activities to the non-GAAP financial
measure of adjusted EBITDAX. CRC has supplemented its non-GAAP
measures of consolidated adjusted EBITDAX with adjusted EBITDAX for
its exploration and production and corporate items (Adjusted
EBITDAX for E&P, Corporate & Other) which management
believes is a useful measure for investors to understand the
results of the core oil and gas business. CRC defines adjusted
EBITDAX for E&P, Corporate & Other as consolidated adjusted
EBITDAX less results attributable to its carbon management business
(CMB).
1st Quarter
4th Quarter
1st Quarter
($ millions, except per BOE amounts)
2023
2022
2022
Net income (loss)
$
301
$
83
$
(175
)
Interest and debt expense
14
14
13
Depreciation, depletion and
amortization
58
49
49
Income tax provision (benefit)
75
34
(26
)
Exploration expense
1
1
1
Interest income
(4
)
(3
)
—
Unusual, infrequent and other items
(1)
(107
)
14
328
Non-cash items
Accretion expense
12
11
11
Stock-based compensation
7
4
4
Post-retirement medical and pension
1
1
1
Adjusted EBITDAX
$
358
$
208
$
206
Net cash provided by operating
activities
$
310
$
114
$
160
Cash interest payments
23
2
23
Cash interest received
(4
)
(3
)
—
Exploration expenditures
1
1
1
Working capital changes
28
94
22
Adjusted EBITDAX
$
358
$
208
$
206
E&P, Corporate & Other Adjusted
EBITDAX
$
367
$
223
$
208
CMB Adjusted EBITDAX
$
(9
)
$
(15
)
$
(2
)
Adjusted EBITDAX per Boe
$
44.55
$
24.94
$
25.89
(1) See Adjusted Net Income (Loss)
reconciliation.
FREE CASH FLOW
Management uses free cash flow, which is
defined by CRC as net cash provided by operating activities less
capital investments, as a measure of liquidity. The following table
presents a reconciliation of CRC's net cash provided by operating
activities to free cash flow. CRC supplemented its non-GAAP measure
of free cash flow with free cash flow of its exploration and
production and corporate items (Free Cash Flow for E&P,
Corporate & Other), which it believes is a useful measure for
investors to understand the results of CRC's core oil and gas
business. CRC defines Free Cash Flow for E&P, Corporate &
Other as consolidated free cash flow less results attributable to
its carbon management business (CMB).
1st Quarter
4th Quarter
1st Quarter
($ millions)
2023
2022
2022
Net cash provided by operating
activities
$
310
$
114
$
160
Capital investments
(47
)
(75
)
(99
)
Free cash flow
$
263
$
39
$
61
E&P, Corporate and Other
$
270
$
61
$
64
CMB
$
(7
)
$
(22
)
$
(3
)
Adjustments to capital investments:
Replacement water facilities(2)
$
1
$
3
$
2
Adjusted capital investments:
E&P, Corporate and Other
$
45
$
85
$
96
CMB
$
2
$
(10
)
$
3
Adjusted free cash flow(1):
E&P, Corporate and Other
$
271
$
64
$
66
CMB
$
(8
)
$
(25
)
$
(5
)
(1)Adjusted free cash flow is defined as
net cash provided by operating activities less adjusted capital
investments.
(2) Facilities capital includes $1
million, $3 million and $2 million in the first quarter of 2023,
fourth quarter of 2022 and first quarter of 2022, respectively, to
build replacement water injection facilities which will allow CRC
to divert produced water away from a depleted oil and natural gas
reservoir held by the Carbon TerraVault JV. Construction of these
facilities supports the advancement of CRC’s carbon management
business and CRC reported these amounts as part of adjusted CMB
capital in this press release. Where adjusted CMB capital is
presented, CRC removed the amounts from facilities capital and
presented adjusted E&P, Corporate and Other capital.
ADJUSTED GENERAL & ADMINISTRATIVE
EXPENSES
Management uses a measure called adjusted
general and administrative (G&A) expenses to provide useful
information to investors interested in comparing our costs between
periods and performance to our peers. CRC supplemented its non-GAAP
measure of adjusted general and administrative expenses with
adjusted general and administrative expenses of its exploration and
production and corporate items (adjusted general &
administrative expenses for E&P, Corporate & Other) which
it believes is a useful measure for investors to understand the
results or CRC's core oil and gas business. CRC defines adjusted
general & administrative Expenses for E&P, Corporate &
Other as consolidated adjusted general and administrative expenses
less results attributable to its carbon management business
(CMB).
1st Quarter
4th Quarter
1st Quarter
($ millions)
2023
2022
2022
General and administrative expenses
$
65
$
59
$
48
Stock-based compensation
(7
)
(4
)
(4
)
Other
(3
)
(2
)
—
Adjusted G&A expenses
$
55
$
53
$
44
E&P, Corporate and Other adjusted
G&A expenses
$
52
$
51
$
43
CMB adjusted G&A expenses
$
3
$
2
$
1
OPERATING COSTS PER BOE
The reporting of PSC-type contracts
creates a difference between reported operating costs, which are
for the full field, and reported volumes, which are only CRC's net
share, inflating the per barrel operating costs. The following
table presents operating costs after adjusting for the excess costs
attributable to PSCs.
1st Quarter
4th Quarter
1st Quarter
($ per BOE)
2023
2022
2022
Energy operating costs (1)
$
15.56
$
9.56
$
9.16
Gas processing costs (2)
0.62
0.48
0.56
Non-energy operating costs (3)
15.43
13.82
13.15
Operating costs
$
31.61
$
23.86
$
22.87
Costs attributable to PSCs
Excess energy operating costs attributable
to PSCs
$
(1.19
)
$
(0.76
)
$
(0.90
)
Excess non-energy operating costs
attributable to PSCs
(1.04
)
(1.14
)
(1.40
)
Excess costs attributable to
PSCs
$
(2.23
)
$
(1.90
)
$
(2.30
)
Energy operating costs, excluding effect
of PSCs (1)
$
14.37
$
8.80
$
8.26
Gas processing costs, excluding effect of
PSCs (2)
0.62
0.48
0.56
Non-energy operating costs, excluding
effect of PSCs (3)
14.39
12.68
11.75
Operating costs, excluding effects of
PSCs
$
29.38
$
21.96
$
20.57
(1) Energy operating costs consist of
purchased natural gas used to generate electricity for operations
and steamfloods, purchased electricity and internal costs to
generate electricity used in CRC's operations.
(2) Gas processing costs include costs
associated with compression, maintenance and other activities
needed to run CRC's gas processing facilities at Elk Hills.
(3) Non-energy operating costs equal total
operating costs less energy operating costs and gas processing
costs. Purchased natural gas used to generate steam in CRC's
steamfloods was reclassified from non-energy operating costs to
energy operating costs beginning in the third quarter of 2022. All
prior periods have been updated to conform to this
presentation.
Attachment 3
PRODUCTION STATISTICS
1st Quarter
4th Quarter
1st Quarter
Net Production Per Day
2023
2022
2022
Oil (MBbl/d)
San Joaquin Basin
35
36
38
Los Angeles Basin
20
19
18
Total
55
55
56
NGLs (MBbl/d)
San Joaquin Basin
11
11
9
Total
11
11
9
Natural Gas (MMcf/d)
San Joaquin Basin
119
129
121
Los Angeles Basin
1
1
1
Sacramento Basin
16
17
19
Total
136
147
141
Total Production (MBoe/d)
89
91
88
Gross Operated and Net
Non-Operated
1st Quarter
4th Quarter
1st Quarter
Production Per Day
2023
2022
2022
Oil (MBbl/d)
San Joaquin Basin
39
40
43
Los Angeles Basin
26
25
26
Total
65
65
69
NGLs (MBbl/d)
San Joaquin Basin
12
12
9
Total
12
12
9
Natural Gas (MMcf/d)
San Joaquin Basin
135
136
129
Los Angeles Basin
7
8
8
Sacramento Basin
20
21
23
Total
162
165
160
Total Production (MBoe/d)
103
105
105
Note: MBbl/d refers to thousands of
barrels per day; MMcf/d refers to millions of cubic feet per day;
MBoe/d refers to thousands of barrels of oil equivalent (Boe) per
day. Natural gas volumes have been converted to Boe based on the
equivalence of energy content of six thousand cubic feet of natural
gas to one barrel of oil. Barrels of oil equivalence does not
necessarily result in price equivalence.
Attachment 4
PRICE STATISTICS
1st Quarter
4th Quarter
1st Quarter
2023
2022
2022
Oil ($ per Bbl)
Realized price with derivative
settlements
$
63.04
$
61.33
$
60.30
Realized price without derivative
settlements
$
78.68
$
87.15
$
96.13
NGLs ($/Bbl)
$
58.88
$
56.55
$
78.63
Natural gas ($/Mcf)
Realized price with derivative
settlements
$
21.56
$
8.51
$
6.28
Realized price without derivative
settlements
$
21.56
$
8.73
$
6.28
Index Prices
Brent oil ($/Bbl)
$
82.22
$
88.60
$
97.38
WTI oil ($/Bbl)
$
76.13
$
82.64
$
94.29
NYMEX average monthly settled price
($/MMBtu)
$
3.42
$
6.26
$
4.95
Realized Prices as Percentage of Index
Prices
Oil with derivative settlements as a
percentage of Brent
77
%
69
%
62
%
Oil without derivative settlements as a
percentage of Brent
96
%
98
%
99
%
Oil with derivative settlements as a
percentage of WTI
83
%
74
%
64
%
Oil without derivative settlements as a
percentage of WTI
103
%
105
%
102
%
NGLs as a percentage of Brent
72
%
64
%
81
%
NGLs as a percentage of WTI
77
%
68
%
83
%
Natural gas with derivative settlements as
a percentage of NYMEX contract month average
630
%
136
%
127
%
Natural gas without derivative settlements
as a percentage of NYMEX contract month average
630
%
139
%
127
%
Attachment 5
FIRST QUARTER 2023 DRILLING
ACTIVITY
San Joaquin
Los Angeles
Ventura
Sacramento
Wells Drilled
Basin
Basin
Basin
Basin
Total
Development Wells
Primary
2
—
—
—
2
Waterflood
1
6
—
—
7
Steamflood
—
—
—
—
—
Total (1)
3
6
—
—
9
(1) Includes steam injectors and drilled
but uncompleted wells, which are not included in the SEC definition
of wells drilled.
Attachment 6
OIL HEDGES AS OF MARCH 31,
2023
Q2 2023
Q3 2023
Q4 2023
1H 2024
2H 2024
Sold Calls
Barrels per day
17,837
17,363
5,747
2,000
4,000
Weighted-average Brent price per
barrel
$60.00
$57.06
$57.06
$90.53
$90.53
Swaps
Barrels per day
16,475
17,697
27,094
3,500
1,000
Weighted-average Brent price per
barrel
$70.48
$69.27
$70.73
$78.79
$77.20
Net Purchased Puts (1)
Barrels per day
17,837
17,363
5,747
5,467
4,000
Weighted-average Brent price per
barrel
$76.25
$76.25
$76.25
$71.80
$66.25
(1) Purchased puts and sold puts with the
same strike price have been presented on a net basis.
Attachment 7
2023 Estimated
TOTAL CRC GUIDANCE1
Consolidated
CMB
E&P, Corporate &
Other
Net Total Production (MBoe/d)
85 - 91
85 - 91
Net Oil Production (MBbl/d)
51 - 55
51 - 55
Operating Costs ($ millions)
$815 - $865
$815 - $865
CMB Expenses2 ($ millions)
$25 - $35
$25 - $35
Adjusted General and Administrative
Expenses ($ millions)
$195 - $225
$10 - $15
$185 - $210
Adjusted Total Capital3 ($ millions)
$200 - $245
$15 - $25
$185 - $220
Free Cash Flow ($ millions)
$360 - $470
Adjusted Free Cash Flow ($ millions)
($60) - ($80)
$440 - $530
Marketing & Trading, Net ($
millions)
$80 - $110
$80 - $110
Net Electricity ($ millions)
$70 - $110
$70 - $110
Transportation Expense ($ millions)
$50 - $70
$50 - $70
ARO Settlement Payments* ($ millions)
$55 - $60
$55 - $60
Taxes Other Than on Income* ($
millions)
$175 - $185
$175 - $185
Interest and Debt Expense* ($
millions)
$55 - $60
$55 - $60
Cash Income Taxes* ($ millions)
$100 - $120
$100 - $120
Commodity Realizations:
Oil - % of Brent:
97% - 99%
97% - 99%
NGL - % of Brent:
58% - 64%
58% - 64%
Natural Gas - % of NYMEX*:
150% - 250%
150% - 250%
*Notes:
- 2023E ARO Settlement Payments: ~25% of estimated annual amount
is paid every quarter
- 2023E Taxes Other Than on Income: ~30% of estimated annual
amount is paid in 1Q, 2Q and 4Q, respectively
- 2023E Interest Expense: ~46% of estimated annual amount is paid
in cash in 1Q and 3Q, respectively
- Cash Income Taxes aren’t paid evenly throughout 2023
CRC GUIDANCE3
Total
2Q23E
CMB
2Q23E
E&P, Corp. & Other
2Q23E
Net Total Production (MBoe/d)
86 - 88
86 - 88
Net Oil Production (MBbl/d)
54 - 52
54 - 52
Operating Costs ($ millions)
$175 - $195
$175 - $195
CMB Expenses2 ($ millions)
$5 - $10
$5 - $10
Adjusted General and Administrative
Expenses1 ($ millions)
$52 - $60
$2 - $5
$50 - $55
Adjusted Total Capital3 ($ millions)
$46 - $62
$1 - $2
$45 - $60
Free Cash Flow1 ($ millions)
$45 - $ 65
Adjusted Free Cash Flow ($ millions)
($10) - ($15)
$60 - $75
Marketing & Trading, Net ($
millions)
$17 - $22
$17 - $22
Net Electricity ($ millions)
$12 - $17
$12 - $17
Transportation Expense ($ millions)
$10 - $15
$10 - $15
Cash Income Taxes ($ millions)
$50 - $60
$50 - $60
Commodity Realizations:
Oil - % of Brent:
94% - 98%
94% - 98%
NGL - % of Brent:
55% - 60%
55% - 60%
Natural Gas - % of NYMEX:
150% - 160%
150% - 160%
See Attachment 2 for management's
disclosure of its use of these non-GAAP measures and how these
measures provide useful information to investors about CRC's
results of operations and financial condition. CRC has supplemented
its non-GAAP measures of consolidated free cash flow with free cash
flow from our exploration and production and corporate items (free
cash flow from E&P, Corporate & Other) which CRC believes
is a useful measure for investors to understand the results of its
core oil and gas business. CRC defines free cash flow from E&P,
Corporate & Other as consolidated free cash flow less free cash
flow attributable to CMB.
ESTIMATED FREE CASH FLOW
RECONCILIATION
2023 Estimated
Consolidated
CMB
E&P, Corporate &
Other
($ millions)
Low
High
Low
High
Low
High
Net cash provided (used) by operating
activities
$
605
$
670
$
(55
)
$
(45
)
$
660
$
715
Capital investments
(245
)
(200
)
(15
)
(5
)
(230
)
(195
)
Estimated free cash flow
$
360
$
470
$
(70
)
$
(50
)
$
430
$
520
Adjustments to capital investments:
Replacement water facilities
(10
)
(10
)
10
10
Adjusted capital investments(3)
$
(25
)
$
(15
)
$
(230
)
$
(195
)
Net cash provided (used) by operating
activities
$
(55
)
$
(45
)
$
660
$
715
Adjusted capital investments
(25
)
(15
)
(220
)
(185
)
Estimated adjusted free cash
flow
$
(80
)
$
(60
)
$
440
$
530
2Q23 Estimated
Consolidated
CMB
E&P, Corporate &
Other
($ millions)
Low
High
Low
High
Low
High
Net cash provided (used) by operating
activities
$
107
$
111
$
(13
)
$
(9
)
$
120
$
120
Capital investments
(62
)
(46
)
(1
)
—
(61
)
(46
)
Estimated free cash flow
$
45
$
65
$
(14
)
$
(9
)
$
59
$
74
Adjustments to capital investments:
Replacement water facilities
(1
)
(1
)
1
1
Adjusted capital investments(3)
$
(2
)
$
(1
)
$
(60
)
$
(45
)
Net cash provided (used) by operating
activities
$
(13
)
$
(9
)
$
120
$
120
Adjusted capital investments
(2
)
(1
)
(60
)
(45
)
Estimated adjusted free cash
flow
$
(15
)
$
(10
)
$
60
$
75
ESTIMATED ADJUSTED GENERAL AND
ADMINISTRATIVE EXPENSES RECONCILIATION
2023 Estimated
Consolidated
CMB
E&P, Corporate &
Other
($ millions)
Low
High
Low
High
Low
High
General and administrative expenses
$
235
$
250
$
10
$
15
$
225
$
235
Equity-settled stock-based
compensation
(25
)
(15
)
(25
)
(15
)
Other
(15
)
(10
)
(15
)
(10
)
Estimated adjusted general and
administrative expenses
$
195
$
225
$
10
$
15
$
185
$
210
2Q23 Estimated
Consolidated
CMB
E&P, Corporate &
Other
($ millions)
Low
High
Low
High
Low
High
General and administrative expenses
$
67
$
72
$
2
$
5
$
65
$
67
Equity-settled stock-based
compensation
(8
)
(6
)
(8
)
(6
)
Other
(7
)
(6
)
(7
)
(6
)
Estimated adjusted general and
administrative expenses
$
52
$
60
$
2
$
5
$
50
$
55
(1) Current guidance assumes a 2023 Brent
price of $79.54 per barrel of oil, NGL realizations as a percentage
of Brent consistent with prior years and a NYMEX gas price of $2.92
per mcf and a 2Q23 Brent price of $79.69 per barrel of oil, NGL
realizations as a percentage of Brent consistent with prior years
and a NYMEX gas price of $2.22 per mcf. CRC's share of production
under PSC contracts decreases when commodity prices rise and
increases when prices fall.
(2) CMB Expenses includes lease cost for
sequestration easements, advocacy, and other startup related
costs.
(3) Adjusted E&P capital investments
and Adjusted CMB capital investments are non-GAAP measures. These
measures reflect E&P facilities capital for replacement water
injection facilities (which will allow our oil and gas operations
to divert produced water away from a depleted oil and natural gas
reservoir held by the Carbon TerraVault JV) as Adjusted CMB capital
investment. Construction of these facilities supports the
advancement of CRC’s carbon management business (CMB). CRC has
supplemented its non-GAAP financial measure of free cash flow with
adjusted free cash flow calculated using adjusted capital
investments for its E&P, Corporate & Other. Management
believes this is a useful measure for investors to understand the
results of the core oil and gas business. CRC defines adjusted free
cash flow for E&P, Corporate & Other as consolidated free
cash flow less results attributable to its carbon management
business.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230501005705/en/
Joanna Park (Investor Relations) 818-661-3731
Joanna.Park@crc.com
Richard Venn (Media) 818-661-6014 Richard.Venn@crc.com
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