barclays ceo energy-power conference · barclays ceo energy-power conference –new york | 2...
TRANSCRIPT
BARCLAYS CEO ENERGY-POWER CONFERENCETodd Stevens | President & CEO | September 4-6, 2018
Barclays CEO Energy-Power Conference – New York | 2
Forward Looking / Cautionary StatementsThis 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 regarding our expectations as to our future:
Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. While we believe
assumptions or bases underlying our expectations are reasonable and make them in good faith, they almost always vary from actual results, sometimes materially. We also believe
third-party statements we cite are accurate but have not independently verified them and do not warrant their accuracy or completeness. Factors (but not necessarily all the
factors) that could cause results to differ include:
Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "goal," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "target, "will" or
"would" and similar words that reflect the prospective nature of events or outcomes typically identify forward-looking statements. Any forward-looking statement speaks only as of
the date on which such statement is made and we undertake no obligation to correct or update any forward-looking statement, whether as a result of new information, future events
or otherwise, except as required by applicable law.
See the Investor Relations page at www.crc.com for important information about 3P reserves and other hydrocarbon resource quantities, finding and development costs, recycle
ratio calculations, and drilling locations.
• financial position, liquidity, cash flows and results of operations
• business prospects
• transactions and projects
• operating costs
• Value Creation Index (VCI) metrics, which are based on certain estimates including
future production rates, costs and commodity prices
• operations and operational results including production, hedging and capital investment
• Capital budgets and maintenance capital requirements
• reserves
• type curves
• commodity price changes
• debt limitations on our financial flexibility
• insufficient cash flow to fund planned investment or changes to our capital plan
• inability to enter desirable transactions including asset sales and joint ventures
• legislative or regulatory changes, including those related to drilling, completion, well
stimulation, operation, maintenance or abandonment of wells or facilities, managing
energy, water, land, greenhouse gases or other emissions, protection of health, safety
and the environment, or transportation, marketing and sale of our products
• risks of drilling
• unexpected geologic conditions
• tax law changes
• changes in business strategy
• inability to replace reserves
• effects of PSC-type contracts on production and unit production costs
• insufficient capital, including as a result of lender restrictions, unavailability of capital
markets or inability to attract potential investors
• effects of hedging transactions and limitations on our ability to enter such transactions
• equipment, service or labor price inflation or unavailability
• incorrect estimates of reserves and related future cash flows
• availability or timing of, or conditions imposed on, permits and approvals
• lower-than-expected production, reserves or resources from development projects or
acquisitions or higher-than-expected decline rates
• joint ventures and acquisition activities and our ability to achieve expected synergies
• disruptions due to accidents, mechanical failures, transportation or storage constraints,
natural disasters, labor difficulties, cyber attacks or other catastrophic events
• factors discussed in “Risk Factors” in our Annual Report on Form 10-K available on our
website at crc.com.
Barclays CEO Energy-Power Conference – New York | 3
Well-Positioned to Drive Value-Oriented Growth
Disciplined Portfolio Management
Adjusted EBITDAX
Growth*
Regaining Momentum
Through Increased
Investment
• Increasing CRC
Investments and Deploying
Rigs
• Joint Ventures
• Opportunistic Deleveraging
• Significant Operating
Leverage to Crude Oil
*See Slide 24 for additional information regarding Adjusted EBITDAX Growth planning scenarios.
400+
0
500
1,000
1,500
2,000
2,500
2017 2018E 2019E 2020E 2021E
$M
M
2017 2018E 2019E 2020E 2021E
Barclays CEO Energy-Power Conference – New York | 4
Large Resource Base with Production Diversity
Sacramento Basin
14 MMBOE Proved Reserves
5 MBOE/d production (100% dry gas)
San Joaquin Basin
483 MMBOE Proved Reserves
98 MBOE/d production (58% oil)
Ventura Basin
40 MMBOE Proved Reserves
6 MBOE/d production (67% oil)
World-Class Resource Base
• Operate 4 of the largest fields in the continental U.S.
• Diversified, conventional portfolio with low base decline rate
• 682 MMBOE proved reserves
• 134 MBOE/d production, 62% oil
• 2.3 million net mineral acres
Positioned to Grow
• Internally funded capital program designed to live within cash flow and drive growth
• Development investment augmented by JV capital and increases flexibility
• Operating flexibility across basins and drive mechanisms to optimize growth through commodity price cycles
• Increasing crude oil mix improves margins
• Deep inventory of high-return projects
Reserves as of 12/31/17, including estimate of reserves related to the Elk Hills acquisition
Production figures reflect Q2 2018 rates
Los Angeles Basin
145 MMBOE Proved Reserves
25 MBOE/d production (100% oil)
Barclays CEO Energy-Power Conference – New York | 5
Leading Market Position with Deep Regional Insight
163
142
122
3018
-
50
100
150
200
CRC Chevron USA Aera Energy Sentinel Peak Berry
Gro
ss O
pe
rate
d M
Bo
e/d
*Source: DOGGR data (average production data for 2017)
**Information for CRC, Chevron, and Aera is from FY 2017, information for Berry is from Q1 2018, and information for Sentinel Peak is from most recent available information which is 2016. Source: Wood Mackenzie, Company Estimates.
Largest 3-D Seismic
Position in California
$19$21
$24
$29
$20
$0
$5
$10
$15
$20
$25
$30
$35
0%
25%
50%
75%
100%
CRC Chevron USA Aera Energy Sentinel Peak Berry
OP
EX
$/B
oe
**
Pro
du
cti
on
Mix
Shallow Deeper (>5,000') FY OPEX $/BOE**
MONTEREY
SANDS AND
SHALES
TEMBLOR
SANDS
EOCENE
SANDS AND
SHALES
UPPER
CRETACEOUS
SANDS AND
SHALES
1,0
00
’P
AY
TULARE
SANDS
SH
ALL
OW
DE
EP
ETCHEGOIN
SANDS
<5
,00
0’
15
,00
0’
Top California Producers in 2017*
Majority of CA Production is Shallow*
Barclays CEO Energy-Power Conference – New York | 6
San Joaquin Basin – An American Super Basin
Overview
• Oil and gas discovered in the late 1800s
• San Joaquin Basin contributed 73% of CRC’s total Q2 2018 production
• Cretaceous to Pleistocene sedimentary section (>25,000 feet)
• Thermal recovery applied since early 1960s
• Currently running 7 drilling rigs
Key Assets
• 2Q 2018 average net production of 98 MBOE/d (55% oil)
• Elk Hills is the flagship asset (~61% of Q2 2018 CRC San Joaquin production)
• Two core steamfloods - Kern Front and Lost Hills
• Early stage waterfloods at Buena Vista and Mount Poso
• Substantial, integrated infrastructure that supports Elk Hills
Basin Map
0
2
4
6
8
0
100
200
300
2015 2016 2017 1H 2018
Avg
. Rig
Co
un
t
Gro
ss W
ells
Dri
lled
Steamflood Waterflood Primary Unconventional Avg. Rig Count
Legend
CRC Land
Oil Field
Gas Field
CRC Operated
Barclays CEO Energy-Power Conference – New York | 7
-
5
10
15
20
0
20
40
60
80
100
120
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 1H
2018
Rig
Co
un
t
Ne
t M
BO
E/d
Net MBOEPD Rig Count
Elk Hills Area – CRC’s Flagship Asset
Integrated Infrastructure
• 610 MMcf/d processing capacity through four gas plants
• Including California’s largest
• Three CO2 removal plants
• Over 4,500 miles of gathering lines
• 45 MW cogeneration plant
• 550 MW power plant
*DOGGR data and U.S. Energy Information Administration.
Overview
• CRC’s flagship, a 100 year-old field with exploration opportunities
• Light oil from conventional and unconventional production
• Largest gas and NGL producing field in California, one of the largest fields in the continental U.S.*, >3,000 producing wells
• 11 billion OOIP (BOE) and cumulative production of over 2.7 billion BOE
• Q2 2018 average net production of 60 MBOE/d (~45% of total CRC production)
Field Map
Production History
CRC Land owned in fee with
integrated infrastructure
Barclays CEO Energy-Power Conference – New York | 8
Strategic Consolidation of Elk Hills Assets
• CRC acquired Chevron’s non-operated
working interest ranging between 20% to 22%
in different producing horizons within the Elk
Hills field for total consideration of $460MM
in cash and 2.85MM CRC shares, effective
April 1, 2018
• CRC now owns Elk Hills Unit in fee simple,
holding 100% WI, NRI, and surface lands
• Acquired ~10,000 surface fee acres
Total Consideration
$462MM Cash +
2.85MM Shares
2017 Net Production
13 Mboepd46% Oil | 9% NGL
2017E Operating Cash Flow
~$100MM@ $65 Brent
2017 Proved Reserves
64 MmboeCRC estimate @ SEC 2017 Pricing
CRC now owns 100% WI & NRI in
its largest field
Existing CRC Surface Acreage
Acquired Surface Acreage
Elk Hills Unit
Elk Hills Unit47,000 acres
Barclays CEO Energy-Power Conference – New York | 9
$15MM Implemented
$0 $5 $10 $15 $20
Annualized Synergies ($MM)
Elk Hills Acquisition Synergies
• Streamlined Operations
• Equipment Optimization
• Redundancy Elimination
• Processing Efficiencies
Implemented Savings & Other Synergies
Estimated Annualized Elk Hills Synergies
Initial synergy estimate
within 6 months
Target total synergies
over 18 months
Barclays CEO Energy-Power Conference – New York | 10
0
1
2
3
0
15
30
45
2015 2016 2017 1H 2018
Avg
. Rig
Co
un
t
Gro
ss W
ells
Dri
lled
Waterflood Average Rig Count
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 (>30,000 ft)
• Very few penetrations >10,000 ft, leaving deep horizons underexplored
• Focus on mature waterfloods with generally low technical risk and proven repeatable technology across huge OOIP fields
• Q2 2018 average net production of 25 MBOE/d (100% liquids) with a 4% YOY decline and a 2017 organic reserves replacement ratio of 330%*
• Over 30,000 net mineral acres
• Major properties are premier coastal development assets of Wilmington and Huntington Beach
• The Wilmington field is subject to contractual agreements similar to production-sharing contracts (PSCs). The contracts represented slightly more than 25% of our total 2017 oil production.
Wilmington
Huntington Beach
Basin Map
*Organic reserves replacement excludes the effect of price change on reserves volumes
Performed 26 capital workover projects in 2017
Legend
CRC Land
Oil Field
Gas Field
CRC Operated
Barclays CEO Energy-Power Conference – New York | 11
Ventura Basin – High Growth Area with Large OOIP
Overview• Prolific basin with a long history, including the first commercial oil well
in California
• ~8 billion barrels OOIP in CRC fields
• Operate more than 20 fields (over half the fields in the basin)
• ~250,000 net mineral acres (75% undeveloped)
• Q2 2018 average net production of 6 MBOE/d (67% oil)
• Portfolio of drive mechanisms: Primary, New & Redevelopment Waterfloods and Steamfloods
• Building off exploration success: recent exploration wells have flowed in excess and 1,000 BOE/d (80% oil) along Oak Ridge trend
• Incorporating 10 square miles of 3D seismic into drillable locations
• Significant upside: movable oil, low recovery factor, controlling acreage position and existing infrastructure
• California wildfires in Ventura County impacted December 2017 production by approximately 2,000 BOE/d and production remained affected by approximately 1,000 BOE/d in January 2018
High Growth Area: large OOIP, low recovery
factor and potential for high-IP wells
Field Map
OOIP (MMBO) CUM PROD (MMBO) RF
7,843 813 10%
Legend
Active CRC Field
Idle CRC Field
Barclays CEO Energy-Power Conference – New York | 12
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 sands
• Most current production less than 6,000 feet deep, deeper targets remain at less than 10,000 feet
• 3D seismic surveys in mid-1990s helped define trapping mechanisms and reservoir geometries
• Q2 2018 average net production of 29 MMcf/d (100% dry gas)
• CRC produces 85% of basin gas with synergies from scale
• Includes the Rio Vista field, which has produced over 3.7 TCF of natural gas over its lifetime
• CRC has an active exploration program in the basin
California imports >90% of its
natural gas requirements
Basin Map
0 20
Miles
Legend
CRC Land
Oil Field
Gas Field
CRC Operated
Barclays CEO Energy-Power Conference – New York | 13
Value Additive Inventory Growth
• Comprehensive technical review of 40% of CRC’s fields.
• 2017 proved reserves of 618 million BOE (682 million BOE pro forma including the Elk Hills acquisition) and 450 million BOE of probable reserves.
• 119% organic reserve replacement, excluding the effect of price adjustments.
• We added 34 million BOE of proved reserves from extensions and discoveries and 22 million BOE from performance. We were also able to rebook 49 million BOE due to the increase in prices compared to prior years.
• Organic F&D costs excluding price related revisions were $6.82 per BOE and produced a recycle ratio of 2.1x.
• Over 95% of our total proved reserves have been audited by Ryder Scott in the last three years.
3P Reserves Growth Since Spin
58 109 156
768 644 568618
64222 251
202321
340
826
1,129
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
Spin-off 2015 2016 2017
MM
Bo
e
2017 Unproven
Revisions due to Price since 2014
Est. 2017 Reserves associated with Elk Hills Transaction
2017 Proven
Cumulative Production
>350%
Growth
See the Investor Relations page at www.crc.com for important information about 3P reserves and other hydrocarbon quantities.
Barclays CEO Energy-Power Conference – New York | 14
Enduring Strategy
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 investmentsVCI =
Enhancing Production
Margin Expansion
Through managing cost and increasing
oil weighting of commodity mix
Invest for Value
Long-TermShort-Term
*Please see end notes for further information on how we calculate VCI.
Value Creation Index*
Barclays CEO Energy-Power Conference – New York | 15
History of Proactive Strategic Decisions
Swift, decisive actions through the commodity downturn have positioned CRC for growth. Proactive discussions with
lenders and solid asset base provide a path to recovery and an actionable inventory.
0
5
10
15
20
25
30
$0
$20
$40
$60
$80
$100
$120
07/20/14 11/20/14 03/20/15 07/20/15 11/20/15 03/20/16 07/20/16 11/20/16 03/20/17 07/20/17 11/20/17 03/20/18 07/20/18
CR
C D
rilli
ng
Rig
Co
un
t
Bre
nt
Cru
de
Oil
Pri
ce (
$/B
bl)
Oil Price
CRC Rig Count
1. Cut Rig Count/Began Hedging 4. Deleveraging Transactions
2. Cut Capital Budget 5. Increasing Activity
3. Bank Amendments 6. JV Transactions
3
2
1
5
3Under
OXY
6
SPIN-OFF
3
3
33
3
44
4
4
6
63
4
52
Barclays CEO Energy-Power Conference – New York | 16
3,000
4,000
5,000
6,000
7,000
2Q15 Debt Exchange for 2L Open MarketPurchases
Equity for DebtExchange
Cash Tender forUnsecureds
Cash & Working Capital 2Q18
Tota
l Deb
t ($
MM
)Significant Reduction in Total Debt from Post-Spin Peak
Total
Total Debt Reduction$535
million
$298
million
$102
million
$625
million
$130
million$1,690 million
1 Represents mid-second quarter 2015 peak debt.
-
Chose options to maximize deleveraging and minimize recurring cost to the income statement on a per share basis.
Continue to seek opportunistic transactions that reduce overall debt.
5,075
2018 Debt
Repurchases
$145MM
6,7651
Barclays CEO Energy-Power Conference – New York | 17
0%
10%
20%
30%
40%
50%
60%
$0
$100
$200
$300
$400
$500
$600
FY2015 FY2015 FY2016 FY2016 FY2017 FY2017 1H2018 1H2018
Discretionary Cash Flow Cash Payments Face Value % of Discretionary Cash Flow
Chipping Away at Debt: Routinely Repurchased Bonds Opportunistically
• Effectively reduced debt while living within cash flow
• Extended maturities
• Managed liquidity
• Smart asset sales
• Cash flow
• Capital markets
CRC has made value-driven
debt decisions
Continued debt reduction will
use the tools available to us
Cash Bond Repurchases
Period Ending
RCF Balance
($MM)
$739 $847 $363 $277
1
1 See end notes for further information
regarding Discretionary Cash Flow and a
reconciliation to the closest GAAP measure2 Excludes debt repaid using proceeds from
the 2016 and 2017 Term Loans
2 2
Barclays CEO Energy-Power Conference – New York | 18
Recent Transactions - Improving Debt Metrics
6/30/2018
1st Lien 2014 Revolving Credit Facility (RCF) 277$
1st Lien 2017 Term Loan 1,300
1st Lien 2016 Term Loan 1,000
2nd Lien Notes 2,153
Senior Unsecured Notes 345
Total Debt 5,075
Less cash1
(19)
Total Net Debt 5,056
Mezzanine Equity 735
Equity (645)
Total Net Capitalization 5,146$
Total Debt / Total Net Capitalization 99%
Total Debt / LTM Adjusted EBITDAX3
5.1x
LTM Adjusted EBITDAX3
/ LTM Interest Expense 2.8x
PV-104 / Total Debt 1.0x
Total Debt / Proved Reserves5 ($/Boe) $7.44
Total Debt / Proved Developed Reserves5 ($/Boe) $10.42
Total Debt / 2Q18 Production ($/Boepd) $37,873
Capitalization ($MM)
1 Excludes $23MM of restricted cash.2 Includes $144 million of noncontrolling interest equity for BSP and Ares.3 LTM Adjusted EBITDAX includes a +$85 million adjustment as a result of the Elk Hills transaction.4 PV-10 includes an estimate of the Elk Hills reserves acquired at SEC 2017 pricing. See the Investor Relations
page at www.crc.com for details on this calculation.5 Reserves include an estimate of the Elk Hills reserves acquired at SEC 2017 pricing.
2
$0
$1,000
$2,000
$3,000
$4,000
2018 2019 2020 2021 2022 2023 2024
2nd Lien Notes
2014 RCF
Unsecured Notes
2016 Term Loan
2017 Term Loan
Debt Maturities ($MM)
Notable Quarterly Highlights
• Repurchased face value of $95 million of 2nd Lien Notes
and $48 million of 2024 Senior Notes in the second quarter
for $118 million in cash
• Purchased LIBOR interest caps which cap a notional $1.3B
of floating rate debt at one-month LIBOR of 2.75% through
May, 2021
Barclays CEO Energy-Power Conference – New York | 19
Development and Midstream Joint Ventures: A Force Multiplier
JVs are generally focused in the San Joaquin Basin
Kern Front
-Legend-
Oxy Land
Oil Fields
Gas Fields
Buena Vista
Pleito Ranch
Elk Hills
Kettleman North Dome
Lost Hills
Mt Poso
CRC Land
$200 MillionApprox. $300 MM
Committed
~3.5-4.0 MBoe/dGross Peak Production per
$100 MM of development capital
>12 MMBoePotential Targeted Reserves per
$100 MM of development capital
$550 MillionTotal Potential JV
Development Capital
Portfolio Flexibility
and Optionality
Enables High Margin
Production Growth
Accelerate Value
Derisk Inventory
JVs add production and cash flow,
and help de-risk inventory to
increase CRC’s reserve base
$750 MillionMidstream JV
Reduce Debt
Barclays CEO Energy-Power Conference – New York | 20
Mid-Cycle Capital Investment Plan Delivers Production Growth
0
30
60
90
120
150
180
210
240
0
20
40
60
80
100
120
140
160
3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18E**
Ca
pit
al ($
MM
)
MB
oe
/d
Oil NGL Gas Total Capital* CRC Capital (Internally Funded)
Net Production By Stream (Mboe/d)
*Total Capital reflected in the graph includes the capital investment of internal CRC capital as well as all JV partners which include BSP and MIRA. Please
note our consolidated financial statements include BSP’s investment and exclude MIRA’s investment based on the accounting treatment of each venture.
** Q3 2018 Capital guidance includes CRC, BSP and MIRA capital.
Barclays CEO Energy-Power Conference – New York | 21
Dynamic Investment Allocation through the Commodity CycleO
il P
rice
$/
BB
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 is best investment
• Utilize excess equipment to reduce capital costs
• Engineering efforts focused on field surveillance to protect existing production
• Invest to accelerate production growth and explore/pilot new resources
• Add facilities (steam and water handling) to support pace of growth
• Cash generation is high
• VCI 1.3 floor to reinvest for value
Bull Market
Mid-Cycle Market
Bear Market
• Invest to grow cash flow
• Drill in high-graded portfolio (>1.5 VCI)
– Oil to gas ratio for steamfloods (>5:1). Selectively add steam generation
– EOR and IOR for long-term cash flow. Primary and shale for high IP impact
• Delineate future growth areas to unlock upside
Barclays CEO Energy-Power Conference – New York | 22
Drilling
JV - Capital
Workover
Development Facilities
Exploration Other
San Joaquin
Ventura
Los Angeles
Production Enhancement Plans for 2018• CRC 2018 capital plan will be directed to oil-weighted projects in our core fields: Elk Hills,
Wilmington, Kern Front, Huntington Beach, and continued delineation of Buena Vista, Ventura
and Southern San Joaquin Areas
• Additional Capital will be deployed to Drilling, Workovers and Facilities focused in the Ventura
and San Joaquin Basins
• JV capital will be focused in the San Joaquin Basin and Huntington Beach
• We have a dynamic plan that can be scaled up or down depending on the price environment and
efficient deployment of joint venture proceeds
2018 Capital Investment Program – Transitioning to Mid-Cycle Commodity Prices
Approx. $650 to $700 million
1Facility and other support capital are apportioned to producing wells in the year they are drilled.2IRR estimate for the 2017 development program. VCI is calculated by dividing the net present value of the project’s expected pre-tax cash flow over its life by the net present value of the investments, each using a 10% discount rate.3Other includes maintenance and occupational health, safety and environmental projects, seismic, and other investments.
2018E Total Capital Plan
Including JVs
2018E Internally Funded Development
Capital By Drive
47%
15%
13%
21%
3%
Conventional
Waterfloods
Steamfloods
Unconventional
46%
31%
13%
At $65 flat Brent and $3 NYMEX, the
fully-burdened1 2017 CRC Development
Program delivered a 2.0 VCI or 45% IRR2
Approx. $405 million Approx. $405 million
10%
2018E Internally Funded Development
Capital By Basin
67%
5%
28%
1%3
Barclays CEO Energy-Power Conference – New York | 23
Deep Inventory of Actionable Projects at $65
Portfolio Spectrum
• Growth portfolio focus, fully
burdened
• All projects meet a Value
Creation Index (VCI)1
threshold of 1.3 at $65 Brent
and $3.00 NYMEX, and
deliver robust cash flow
• Portfolio has large
contributions from all
recovery mechanisms and
reserves types
• Many projects take
advantage of existing
infrastructure, while other
newer projects may require
infrastructure investment in
facilities and sales points
1 VCI is calculated by dividing the net present value of the project’s expected pre-tax cash flow over its life by the net present value of the investments, each using a 10% discount rate. 2 Full cycle costs = operating costs + development costs + facility costs + field-level G&A + taxes other than on income.3 See the Investor Relations page at www.crc.com for details regarding net resources.
0
2
4
6
8
10
0 100 200 300 400 500 600 700 800Deve
lop
me
nt
Ca
pit
al ($
B)
Net Resources3 (MMBoe)
0
5
10
15
20
25
30
35
40
45
50
0 100 200 300 400 500 600 700 800
Fu
ll C
ycle
Co
st2
($/B
oe
)
Net Resources3 (MMBoe)
Steamflood
Waterflood
Primary
Shale
Gas
Barclays CEO Energy-Power Conference – New York | 24
80
90
100
110
120
130
2017 2018E 2019E 2020E 2021E
Oil
Pro
du
ctio
n (
MB
/d)
400
800
1,200
1,600
2,000
2,400
Ad
just
ed E
BIT
DA
X
($M
M)
Portfolio Flexibility Provides Range of Crude Oil Scenarios
Note: Scenarios assume flat pricing from $55 to $75 Brent and $3.00 to $3.10 NYMEX gas, respectively. Assumes varying lease operating costs within historical ranges depending on the commodity prices of the planning scenario outcomes. Ranges of portfolio planning
scenario outcomes assume development of a variety of combinations of steamflood, waterflood, conventional and unconventional projects in our inventory and reflect estimates of geologic, development and permitting risk. All discretionary cash flow is reinvested in
business in 2019 and beyond for each scenario. 1 See the Investor Relations page at www.crc.com for a description of the calculation of the debt-adjusted per share basis and other important information.2 See the Investor Relations page at www.crc.com for a reconciliation to the closest GAAP measure and other important information.
Combined with mid-cycle commodity
prices, we are positioned for growth in:
• Cash flow
• Production
• Reserves
in total and on a debt-adjusted per share
basis1
Portfolio
Planning
Scenarios
Portfolio
Planning
Scenarios
Capital focused on oil projects that provide
Increasing
Margins
Low
Decline Rates
Compounding
Cash Flow+ =
-
Estimated Crude Oil Production Outcomes
0
300
600
900
1,200
1,500
1,800
2017 2018E 2019E 2020E 2021E
Cap
ital
($
MM
) Estimated Ranges of Capital Investments
Estimated Range of Adjusted EBITDAX Outcomes
-≈
≈
Barclays CEO Energy-Power Conference – New York | 25
Project Inventory and Operational Execution Drives Organic Deleveraging
Note: All cases are self-funding. Capital program in all cases assumes discretionary cash flow is reinvested. Assumes varying lease operating costs within historical ranges depending on the commodity prices of the
planning scenario outcomes. See the Investor Relations page at www.crc.com for a reconciliation to the closest GAAP measure and other important information.
Estimated Leverage Ratios
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
2016 2017 2018E 2019E 2020E 2021E
Tota
l D
eb
t/LT
M A
dju
ste
d E
BIT
DA
X
$55 $65 $75
Barclays CEO Energy-Power Conference – New York | 26
PDP Value
Proved Value
Unproved4
$0
$4
$8
$12
$16
$20
$24
$28
$65 Brent $75 Brent $85 Brent
($B
illio
n)
Elk Hills Acquisition Enhances NAV Above EV
Current EV of
$7.8 Bn5
Infrastructure2
Surface & Minerals3
1-5 See endnotes in the Appendix.
See the Investor Relations page at www.crc.com for important information about 3P reserves and other hydrocarbon quantities.
1
1
Barclays CEO Energy-Power Conference – New York | 27
0
500
1,000
1,500
2,000
2,500
2017 2018E 2019E 2020E 2021E
$M
M
The Case for CRC: Investment Thesis Overview
Industry
leading base
decline rate
Integrated and
complementary
infrastructure
Maintain
Production
Production and
Cash Flow Growth
Production Innovation Deep Inventory
Investment Case for CRC
World-class assets
with significant
inventory
Resilient model that
preserves optionality
and protects downside
Focused on value
and poised for
growth
Moved from defense to offense
Why Own CRC Now
Competitive Advantages
Disciplined portfolio management Potential for Adj. EBITDAX growth*
Clear runway and
available cash
-2017 2018E 2019E 2020E 2021E
*See Slide 24 for additional information regarding Adjusted EBITDAX Growth planning scenarios.
APPENDIX
Barclays CEO Energy-Power Conference – New York | 29
Continued Forward Progress with Strong 1H18 Results
134 Mboe/d62% Oil
$245 Million$337 million Core Adjusted
EBITDAX3
$194 Million2
$170 million internally funded
83 Gross Wells Drilled1
includes 48 CRC wells
Capital
Adj. EBITDAX4
ACTIVITY
PRODUCTION129 Mboe/d62% Oil
$495 Million$622 million Core
Adjusted EBITDAX3
$355 Million2
$309 million internally funded
157 Gross Wells Drilled1
includes 92 CRC wells
2nd Quarter 2018 First Half 2018
1 Includes JV and non operated wells.2 Includes JV capital.3 Excludes settled hedges of $31MM in Q1 and $68MM in Q2 and cash settled equity compensation of $4MM in Q1 and $24MM in Q2.4 See the Investor Relations page at www.crc.com for a reconciliation to the closest GAAP measure and other important information.
Barclays CEO Energy-Power Conference – New York | 30
Wilmington Field – Production Sharing Contracts
• Over 90% of CRC’s Long Beach production is covered under Production Sharing Contracts (PSCs) with the State and the City of Long Beach
• CRC’s net production decreases when prices rise and increases when prices decline
• “Base” rate/profit are defined in contracts
• State/City receive most of base profit
• CRC receives remainder
• “Incremental” rate/profit is everything greater than the Base
• Per the provisions of the contract, the Base of the LBU PSC ended in 4Q 2016
-
10,000
20,000
30,000
40,000
50,000
1992 1996 2000 2004 2008 2012 2016
Bo
e/d
Base Incremental
LBU PSC
-
2,000
4,000
6,000
8,000
10,000
12,000
2006 2008 2010 2012 2014 2016B
oe/
d
Base Incremental
Tidelands PSC
Base Profit Split:
4% CRC / 96% State*
Incremental Profit Split:
49% CRC / 51% State*
Base Profit Split:
4% CRC / 96% State*
Incremental Profit Split
49% CRC / 51% State & City*
*Average profit split %.
End of
LBU Base
First of 3 new
PSC’s executed
Barclays CEO Energy-Power Conference – New York | 31
40 45 50 55 60 65 70 75 80 85 90 95 100
Realized Price ($/Boe)
Wilmington Production Sharing Contracts
• Over 25% of CRC’s oil production is subject to Production Sharing Contracts
• PSC Mechanics
• CRC pays our partners’ share of the Operating and Capital Cost
• CRC recovers our partners’ portion of the cost in barrels
• CRC receives 45-49% of the gross production as “Profit Barrels”
• As prices rise, fewer barrels are required to recover our partners’ portion of the cost
Effect of Oil Price on Net Production
Higher oil prices result in higher
cash flow, but lower net production
Cost Recovery Bbls
Net Profit Bbls 45-49% of Gross Production
Gross Production
Barclays CEO Energy-Power Conference – New York | 32
$3.26 $3.14 $2.95 $3.00 $2.87
$2.75
$2.90 $2.47 $2.56 $2.77 $2.81
$2.25
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018
$/M
cf
NYMEX Realizations
CRC – Price Realizations
66% 62%72% 79%
69%
62%
63% 59%66%
72%64%
56%
0%
20%
40%
60%
80%
100%
1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018
% o
f W
TI
& B
ren
t
WTI Brent
$51.91 $48.29
$48.21
$55.40
$62.87
$67.88
$50.24 $47.98
$50.02
$56.92 $62.77
$64.11 $54.66 $50.92 $52.18
$61.54
$67.18 $74.90
30
40
50
60
70
80
1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018
$/B
bl
WTI Realizations Brent
Realization
% of WTI97% 99% 104% 103% 100% 94%
Realization %
of NYMEX 89 % 79% 87% 92% 98%* 82%*
Oil Price Realization (with Hedges) Gas Price Realization
NGL Price Realization - % of WTI & Brent
CRC believes near-term crude oil
differentials will remain strong
• California refinery demand for native crude continues to be strong and
reduction in heavy waterborne crude has positively influenced
differentials.
• Natural gas prices impacted by continued limits on 3rd party storage
• NGL prices have been supported by lower inventories and export
markets.
-≈
*See attachment 6 of the Earnings Release for information regarding
the effects of an accounting change on realized natural gas prices.
*
Seasonality in NGL prices
experienced in Q2 every year
*
Barclays CEO Energy-Power Conference – New York | 33
3Q
2018
4Q
2018
1Q
2019
2Q
2019
3Q
2019
4Q
2019
FY
2020
FY
2021
Sold Calls Barrels per Day 6,100 16,100 16,100 6,000 1,000 1,000 500 -
Weighted Average
Ceiling Price per Barrel$60.24 $58.91 $65.75 $67.01 $60.00 $60.00 $60.00 -
Purchased Calls Barrels per Day - - 2,000 - - - - -
Weighted Average
Ceiling Price per Barrel- - $71.00 - - - - -
Purchased Puts Barrels per Day 6,900 1,900 34,800 36,700 31,700 21,600 1,500 600
Weighted Average
Floor Price per Barrel$61.31 $51.70 $62.77 $67.40 $70.50 $73.09 $47.97 $45.00
Sold Puts Barrels per Day 24,000 19,000 35,000 30,000 30,000 20,000 - -
Weighted Average
Floor Price per Barrel$46.04 $45.00 $50.71 $55.00 $56.67 $60.00 - -
Swaps Barrels per Day 48,000 29,000 7,000 - - - - -
Weighted Average
Price per Barrel$60.35 $60.50 $67.71 - - - - -
Percentage of 2Q 2018
Oil Production Hedged66% 37% 50% 44% 38% 26% 2% 1%
Opportunistically Built Oil Hedge Portfolio
As of 7/10/2018, assumes counterparty options are not exercised. Certain of our counterparties have options to increase swap volumes at weighted average
prices between $60 and $70 Brent. For potential volume changes and further details please see Attachment 8 of our Earnings Release.
We target hedges
on 50% of crude
oil production
Strategy Protect cash flow, operating margins
and capital investment program
Barclays CEO Energy-Power Conference – New York | 34
Buena Vista Area – Highly Prospective Area
FIELDMAP
Overview
• Includes Buena Vista (BV) Hills and BV Nose
• JV capital applied to infill development program that led to improved operational efficiencies
• Organic capital deployed to expand the extent of the play
• BV Nose was discovered in 2012 as a step-out to BV Hills
• 10,000’ average True Vertical Depth
• 32 API, 600 GOR
• Reduced capital costs with a new well design (two strings)
Growth potential near
existing infrastructure
34
21
0
10
20
30
40
2012-14 2017
Dri
llin
g T
ime
Da
ys/
we
ll
5.0
2.5
0
100
200
300
400
500
-
1.0
2.0
3.0
4.0
5.0
6.0
2012-14 2017
Dri
llin
g C
ost
$/
Ft
Dri
llin
g C
ost
$M
M/
we
ll
Drilling Cost/Well Drilling Cost $/Ft
2017 Conventional BV Nose Development
Drilling Cost Average Drilling Days/Well2017 BV Area development
program delivers a 1.8 VCI
at a $55 Brent price deck
Barclays CEO Energy-Power Conference – New York | 35
Accelerating Value and Derisking Inventory through JVs
Highlights:
• Up to $300MM
o Current commitment of $140MM
• DrillCo type structure where Investor funds
100% of project capital for 90% WI, with
CRC carried on its 10% WI
o CRC interest reverts to 75% after
target IRR is achieved
o CRC retains early termination options
• Focus on four fields within the San Joaquin
Basin
o Kern Front, Mt. Poso, Pleito Ranch,
Wheeler Ridge
• CRC operates all wells
Highlights:
• Up to $250MM over ~2 years
o Three tranches of $50MM
o Total of $150MM funded
• Investor funds 100% of project capital in
exchange for a net profits interest (NPI)
o Investor NPI interest reverts to CRC
after low teens target IRR
o CRC retains early termination
options
• Current focus is in the San Joaquin and
Los Angeles Basin
• CRC operates all wells
Barclays CEO Energy-Power Conference – New York | 36
Strategic Partner Alignment
Summary of Deal
Partner ▪ Affiliate of Ares Management (Ares)
Contributed
Assets▪ Elk Hills power plant, gas processing assets and related non-borrowing base
infrastructure currently owned by CRC
Midstream
JV
Capitalizatio
n
▪ Class A common interests (voting) owned 50% by Ares and 50% by California
Resources Elk Hills (CREH)
▪ Class B preferred interests (“Preferred”) owned 100% by Ares
▪ Class C common interests (distributing) owned 95.25% by CREH and 4.75% by Ares
Distribution
to Partners
▪ Preferred interests to receive distributions of 13.5% per annum on the $750 MM
contributed amount
▪ 9.5% cash pay and 4.0% PIK to be deferred for the first three years
▪ Deferred distributions are interest bearing and repaid over two years following the
deferral period
▪ Remaining cash after Preferred distributions to be distributed pro rata to Class C
interests
Exit
Provisions
▪ Prior to end of 5 or 7.5 years, CRC may redeem Preferred at variable amounts that
include make whole premiums
▪ At end of 5 years, CRC may elect to either redeem or extend to 7.5 years
▪ At 7.5 years, if not redeemed by CRC, Preferred can monetize the JV
Board▪ Board of Managers consists of three CRC representatives and three
representatives from Ares
Barclays CEO Energy-Power Conference – New York | 37
CRC Midstream JV Structure with Ares
California Resources Elk
Hills, LLC
Elk Hills Power, LLC
Contributed
Assets
$750 MM gross proceeds
Class A (50%) and
Class C (95.25%)
Common Interests
Power and
Gas Processing
Services
Commercial Agreement
Capacity Charges
Ares Management, L.P. $750 MM gross
proceeds
Class B Preferred Interests, Class A and Class C
Common Interests
Benefits• Strategic alignment with Ares
• Provides CRC paths for opportunistic
deleveraging through cash flow
growth or debt reduction
• Greatly enhances liquidity
• Retain ownership and operational
control
• Defined exit criteria
Barclays CEO Energy-Power Conference – New York | 38
Dynamic Portfolio Provides Flexibility
0
200
400
600
800
BO
EP
D
YEAR 5
0
200
400
600
800
BO
EP
D
YEAR 5
Gas
0
200
400
600
800
BO
EP
D
YEAR 5
0%
25%
50%
75%
100%
Po
rtfo
lio
Mix
Higher Oil to Gas Price Ratio Lower Oil to Gas Price Ratio
Gas
Unconventional
Primary
Waterflood
Steamflood
Workover
EUR (MBOE per $10MM) 1,385 1,265 1,060
% Oil 81% 70% 53%
Development Cost/BOE $7.20 $7.90 $9.40
Recycle Ratio 3.4x 2.9x 2.2x
For illustration of portfolio optionality based on normalized results per $10MM of investment and not guidance. See endnote for details on type curves.
Prices for recycle ratio are $65 Brent and $3.50 NYMEX.
Oil
Gas
Oil OilGas
Barclays CEO Energy-Power Conference – New York | 39
A Net Water Supplier
• For every gallon of fresh water CRC purchased in 2017, we delivered nearly 3 gallons of treated water to agriculture
• Recycled or reclaimed over 89% of our produced water in 2017, almost a 10% increase since 2015
• Reduced our produced water disposal by over 40% since 2015
• Reduced our potable water use by nearly 30% since 2015
In 2017, CRC supplied 4.9 billion
gallons – over 15,000 acre-feet – of
treated, reclaimed water for
irrigation or recharge.
94%
4% 2% WATER MANAGED IN
CRC’s OPERATIONS
Produced Water
Fresh Water
Non-Fresh Water
CRC set a new company record for
water deliveries to agriculture in
2017, an 85% increase since 2015,
preserving farmland and jobs.
CRC’s operations in Long Beach use
recycled or non-fresh water for
99.5% of their total water use.
Barclays CEO Energy-Power Conference – New York | 40
End Notes
From Slide 26
1 Current CRC estimate of reserves value as of December 31, 2017, including reserves acquired in the Elk Hills transaction.
Includes field-level operating expenses and G&A. Assumes $3.00/MMBTU NYMEX.
2 Reflects the value of facilities and midstream assets at 50% of estimated replacement value. This discount is estimated to
exceed the burden on reserves that would be incurred if assets were monetized. Excludes the value of the assets monetized in
the Ares transaction.
3 Surface & Minerals reflect the estimated value of undeveloped surface and minerals held in fee.
4 Unproved inventory comprises risked probable and possible reserves and contingent and prospective resources. Contingent
and prospective resources consist of volumes identified through life-of-field planning efforts to date.
5 Calculated using June 30, 2018 debt at par and a market cap as of 8/30/2018. Includes mezzanine equity and non-
controlling interest equity.
Value Creation Index (VCI) Note: VCI is calculated by dividing the net present value of the project’s expected pre-tax cash flow over its life by the net present value of project investments, each using a 10% discount rate.
Discretionary Cash Flow Note: See the table to the right for a reconciliation to the closest GAAP measure. See the Investor Relations page at www.crc.com for other important information.
The following table represents a reconciliation of the GAAP financial measure of net cash provided
(used) by operating activities to the non-GAAP financial measure of Discretionary Cash Flow.
(in millions) 2Q18 YTD FY17 FY16 FY15
Net cash provided (used) by operating activities $ 234 $ 248 $ 130 $ 403
Cash interest 215 396 384 359
Exploration expenditures 10 20 20 27
Changes in operating assets and liabilities 37 94 95 106
Other, net (1) 21 (13) 11
Adjusted EBITDAX $ 495 $ 779 $ 616 $ 906
Cash Interest 215 396 384 359
Distributions paid to noncontrolling interest holders 41 8 - -
Discretionary Cash Flow $ 239 $ 375 $ 232 $ 547