California Resources Corporation Completes Combination with Aera Energy
July 01 2024 - 9:12AM
Business Wire
Creates the Leading Energy Producer and Carbon
Management Solutions Provider in California
California Resources Corporation (NYSE: CRC) announced today the
completion of the all-stock combination with Aera Energy, LLC
(Aera). The issuance of shares was approved by CRC shareholders at
a special meeting held on June 26, 2024, where CRC shareholders
voted in favor of the stock issuance necessary for the closing of
the combination of CRC and Aera.
“We are very pleased to welcome Aera’s team with decades of
experience and a track record of successful, safe and
environmentally sound operations into CRC,” said Francisco Leon,
CRC’s President and Chief Executive Officer. “I want to thank the
CRC and Aera employees for their work to complete a combination of
this size. We believe this transformational deal creates
significant scale and asset durability to meet California’s growing
energy needs and expands our leading carbon management platform to
help the Golden State meet its ambitious climate goals. We remain
confident in our ability to deliver $150 million in annual
synergies from the combined businesses within 15 months post close
and create meaningful long-term value for our shareholders. We look
forward to updating the market on our continued progress in the
months ahead.”
Second Quarter 2024 Production and
Second Half 2024 Preliminary Outlook Update
The pro forma combined net daily production of CRC and Aera
averaged 146 thousand barrels of oil equivalent per day (Mboe/d)
(79% oil) during the two months of April and May 2024.
The following table provides average daily net production and
capital guidance for the combined business during the second half
2024. The guidance below remains subject to integration of
accounting and reporting processes, including but not limited to
conforming Aera's accounting policies to CRC. CRC expects to
provide updated full-year 2024 guidance with its second quarter
2024 earnings release.
2H24E
Net Production (MBoe/d)
140 – 146
Percentage Oil
~78%
Capital ($ millions)
$170 - $210
Leadership and
Headquarters
Effective July 1, 2024, Bobby Saadati, CEO of IKAV Energy Inc.,
and James Jackson, Managing Director, Sustainable Energies at
Canada Pension Plan Investment Board, were appointed to serve on
CRC's Board of Directors. The combined company will be run by the
current CRC executive team and will continue to be headquartered in
Long Beach, California.
Credit Agreement and Capital Structure
Update
In connection with closing the transaction, CRC increased its
borrowing base from $1.2 billion to $1.5 billion and increased the
aggregate commitment amount from $630 million to $1.1 billion under
its Revolving Credit Facility.
Pursuant to the terms of the definitive transaction agreement,
Aera's former equity owners (IKAV, Canada Pension Plan Investment
Board and Oaktree Capital Management, LP.) received 21.3 million
shares of common stock of CRC, with an aggregate value of $1,134
million based on the price per share as of market close on June 28,
2024.
About 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 its
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 military conflicts in Israel, Ukraine and Yemen and
the Red Sea;
- the ability to successfully integrate Aera's business;
- 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 its
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 its 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, and its 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 its 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;
- 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 the company 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
does not warrant the accuracy or completeness of such third-party
information.
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version on businesswire.com: https://www.businesswire.com/news/home/20240701728016/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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