California Resources Corporation Reports Strong Q2 2023 Financial Results

Source: 7/31/2023, Location: North America

California Resources Corporation (CRC), an independent energy and carbon management company committed to energy transition, today reported second quarter 2023 operational and financial results.

"CRC’s focus on execution drove solid operational and financial performance in the second quarter," said Francisco Leon, CRC President and Chief Executive Officer. "We returned nearly $84 million to our shareholders in the second quarter, bringing the total shareholder return program to nearly $700 million since its inception in 2021. We have accomplished this while growing our cash flow per share along with developing our carbon management business. Cash flow, carbon and California remain our core strengths as we continue to deliver meaningful value to our shareholders and provide low carbon intensity oil and gas that California needs."

Primary Highlights
- Declared a quarterly dividend of $0.2825 per share of common stock, totaling ~$20 million payable on September 15, 2023 to shareholders of record on September 1, 2023
- Repurchased 1,618,746 common shares for $64 million at an average share price of $39.12 per share during the second quarter of 2023
- Repurchased a cumulative 14,498,770 shares for $584 million at an average price of $40.18 per share since the inception of the Share Repurchase Program in May 2021 through June 30, 2023
- Submitted a Class VI permit to the EPA for 17 million metric tons (MMT) for CTV V CO2 reservoir in the Sacramento Basin, bringing CRC's total storage capacity with Class VI permits submitted the EPA to 191 MMT Signed a new storage-only carbon dioxide management agreement (CDMA) with Verde Clean Fuels Inc. for 100 thousand metric tons per annum (KMTPA) of CO2 injection
- Expanded the previously announced Lone Cypress Energy Service, LLC, blue hydrogen project to an estimated 205 KMTPA of CO2 injection

Financial Highlights
- Reported net income of $97 million, or $1.35 per diluted share. When adjusted for items analysts typically exclude from estimates including mark-to-market adjustments and one-time costs, the Company’s adjusted net income1 was $38 million, or $0.53 per diluted share
- Generated net cash provided by operating activities of $108 million, adjusted EBITDAX1 of $138 million and free cash flow1 of $69 million
- Ended the quarter with $448 million of cash and cash equivalents and an undrawn Revolving Credit Facility, (excluding $148 million of letters of credit) with $479 million of availability representing $927 million of total liquidity2

Operational Highlights
- Reservoirs performed in line with expectations; total daily gross production of 103,000 gross barrels of oil equivalent per day (Boe/d) for the second quarter of 2023, which was flat compared to the first quarter of 2023
- Produced an average of 86 net MBoe/d, including 53,000 net barrels of oil per day (Bo/d), with E&P capital expenditures of $35 million during the quarter
- Total daily net production for the three months ended June 30, 2023, includes 2 net MBoe/d of combined negative effects; including 1 net MBoe/d related to CRC's production-sharing contracts (PSCs) and approximately 1 net MBoe/d due to changes in NGL storage volumes
- Operated 1 drilling rig in LA Basin; drilled 6 wells and brought 7 wells online in 2Q23 - Operated 35 maintenance rigs in the first quarter

Total Year 2023 Guidance and Capital Program
CRC estimates average net total production between 85 and 91 MBoe/d3 (~61% oil) for the total year 2023. CRC is reaffirming its total year 2023 total capital which is expected to range between $200 and $245 million with heavier weighting in the second half of the year due to timing of projects and higher expected workover activity and facilities projects. The program includes an expected $185 to $220 million of adjusted E&P, corporate and other adjusted capital1 and $15 to $25 million of adjusted CMB capital1 for carbon management projects4. CRC is also narrowing its total year 2023 free cash flow1 guidance range to $380 to $460 million from $360 to $470 million.

The Company plans to execute a 1 to 1.5 rig development program on average for 2023. Activity will focus on drilling new locations where CRC has permits and high return workovers. The capital plan also includes procuring long-lead time items for planned maintenance of our facilities in 2024.

CRC is lowering the top end of the range for its operating cost guidance from $815 to $865 million to $815 to $850 million as a result of lower natural gas prices expected in the second half of 2023. Natural gas marketing margin was increased from a range of $80 to $110 million to $135 to $150 million to reflect the Company's performance in the first half of the year. Similarly, CRC's 2023 estimated commodity realizations were adjusted to reflect the Company's results.

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