CRC - Earnings call transcript Q3 2017 | California Resources Corporation

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Operator

Good afternoon and welcome to the California Resources Corporation Third Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please also note that today's event is being recorded. At this time, I'd like to turn the conference call over to Mr. Espenshade. Scott ahead. go please Sir,

Scott Espenshade

operations and you. I’m Welcome conference of Relations. Executive Stevens, and measures and Vice information Participating and release. of cause Mark Smith, Scott our and California contains Resources and to Espenshade, differ directly Senior President are Todd to is is results statements information. our other statements XXXX today’s call their President Executive Corporation��s Laws. Federal Relations may to Officer within on CRC; Investor Vice the results subject www.crc.com. third comparable call from of financial Thank Chief statements. expressed website slides well on third call. President conference additional implied would portions that certain highlight non-GAAP that like the as members slides in our actual Securities in Investor the section as financial uncertainties These provided our Relations our forward-looking in Chief website, meanings insight and measures Today’s these Officer CRC or additional of our These quarter to available we several Financial in into those reconciling earnings to executive most GAAP I Also, provide discussed risks have team. and Investor projections quarter of

it days for replay today’s XX XX-Q, review following Additional information and you being is made on following available release. least which filed statements company’s call call. cautionary be available in is available be our earnings on and ask by the the a will that A transcript factors our will website at that We in could differ cause and results available Thursday. would the to when

time a to that the allotted limit the their a to As a will Q&A ask prepared and our questions now follow-up. Todd. for reminder, call at a primary participants over remarks, and I would turn have earnings we of question end similar

Todd Stevens

call. today's and you, Scott to Thank earnings welcome

third way. quarter CRC the ongoing for value-driven to performance invest reflects resources our commitment of Our disciplined, XXXX world-class a in in

on while also deleveraging to We within financial to to promise flexibility. our deliver live continue our our sheet our enhance balance cash flow

and proactively our optionality joint in and opportunity. business base, balance principle, has value the our execute venture and utilizing by priority. balance path been business against the the highest operational Straightening a our Creation provided are goals we we and as financial response continue focus With price environment need sheet asset to the and CRC's sheet Index to agreement our by Value We managing guiding flexibility or create VCI navigate on CRC's enhancement ahead. remain to

During debt our used million bank flow the we maturities. taking $XX and our by proactively to steps quarter, are debt reduce to cash free extend

fleet detail we amendment Our relax last We about slowed to other the bottom of financial a financial financial XXX,XXX quarter, flexibility. more was strong basis which guidance. XXX% within crude oil approved to as produced one to will our for equipment our talk witness We provide and ramp the we current modest oil summer day, production a subject proposed approximately this barrels issues bank of our by in group and our bank rigs, basis nine quarter our year will years bank reaffirmed $X.X both ramp operated Mark additional term these in continues support the gross group on and items. up and approval production the billion credit and That a third by increases XXXX quarter. provide On for of The a certain to agreement. late of extend about equivalent the covenants third on base of said, has out up in some onboarding per borrowing to conditions and net our from oil spoke received capital amendment activity. ago program which in vendor we two rigs growing production. facility experienced our talk and no updated

crude quarter. barrels expected, line are with $XX PSC our million our in Wilmington production investment oil Field, in effect with see has environments capital production that $XXX we this million we price Recall increased cost. and in barrels of our contracts receive flattened As in paid knock-on our we per fewer higher and

accomplished. at I'm of Looking we year-to-date, our what performance proud have

several done maintaining navigated an successfully job has team production. outstanding operational Our and our base challenges

San heat the cost Our than to facility during us XX Elk consolidate the compression. safely avoiding a realize eliminate more facing with third savings. This gas Joaquin and operated for temperatures degree to centralize and operations quarter. [indiscernible] greater team the despite Hill Valley also need days We synergies enables issues plus infrastructure in for XXX our

we and so online As wells to completion. of team, have nine This are rigs a process free result, up demonstrates that XX the cash our had to of base Thanks the We this the successes our flow. is of diligence character our many that hours organization. over able to have year. our efficient the we're the to XX we resilient flexibility ramped predictability generating operations, after

clearly downturn. The ability and our through the deliver cycle. can CRC is sustained the demonstrated a manage that that important our business takeaway throughout resources to has We've the team

decline forward nature results going and drive production and low to capital focused resource remain of activity production we base momentum. our validate flow Our cash within intensity continue to on the low sustained

From distinguishes our we itself through a In day are stated CRC have of addition, value. clear one business. that we spinoff, our on focus further value-driven

VCI invested CRC separates to Through capital above VCI leaves a is essentially threshold. X.X. X.X approach resources. our our that that average date, This X.X an executed program the of on disciplined an our XXX across based pursue growth is allocate that is growth completed index workovers with a them Our far cash from and with negative. discounted profitability measures expected that buck. bank investment applies for flow key sake investment team for decisions drilling VCI metrics, companies This VCI. a tool are To highly a It's BCI our us has our

way third are plan. for responding which walk in the through operational the assets highlight Let's key quarter, our to our factors performance which now

asset efforts drilling benefiting as is rigorous increased surveillance responding to activity. Our base production from

During average quarter, efficiencies. rigs. the third improved the been from XXXX drilled nearly rigs the capital. an an planning of third well-design three In eight additional create to $XXX able of count million tripled and along, second also rig we the wells invested of to Through XX and we've nearly approximately we doubled our quarter to average and quarter

by our Vista as taken apply of to continue broader Vista We're approach pleased Buena and a steeper are We're a in deliver deeper on efficiencies a these We optimize drove area drilling we basis. as eliminated the reduced a to our XX% grow. XX we to as Recent are see while per total wells relationships spring on These believe Nose We've well XX% through since building also efficiencies on we as and MIRA. program. similar well the with example, in in dollar For shale, foot safely JVs cost referenced BSP Slide drilling signed in Hills this Buena such a to basis, per XX%. last incremental area economics. approximately of recently coming XX. casing effectively lower momentum

and opportunistic recent the oil XXXX. in in of JV Today with efficiency services We our maintain and the activity we mass behind third our value Our of of de-risking and layered and second build in Brent combination full in growth, and prices. for oil to our the for these the funded XX,XXX to inventory JV outside portfolio hedges quarter flexibility per our half of they contracts have of activity benefit suite believe prices inventory critical facilitate added XX,XXX inside or in half is We our inventory. day partnerships with first oil in of added JV's our oil Part strike agreements enhance ability approximately XXXX barrels quarter the with of served enhance at the day enhance into of drilling CRC high-margin accelerating XX achieving addition barrels the We've a XXXX will and above. areas. production per XXXX. of for in provided and and that CRC XXXX program protecting fourth increase specific resumption production protection the been

XX. with management value-driven It's to projected also high barrels cash operating For with large continue but third We capital to please hedging target We of flow. consider global The layer dynamics accrued adjust strengthened. for provides -- us the underpins level also California's assets We'll barrels fewer adequate additional given our strategically and crude demand believe see that strategically our available. Slide Brent about quarterly waterborne flexibility has of oil Brent diverse and portfolio realizations In not the increased, portfolio imports WTI in pursue portfolio a medium investment line improved that sophisticated We our price our a price supported waterborne align a the only from a production market and with prices our environment, our the crude projects expected variety quarter dynamic by enables with commodity in differential details crude typically as our of alignment apply to heavy and approach. to were additional is realizations. of increased hedges projects. these benefit XX% control. of oil

cash of believe on back, CRC target wells pay a potential We to growth. advantage. competitive resulting and able a with combination reserve in by the BCI we're Specifically, portfolio production fact provides based complemented

us contribute and base to to look field CRC's we extend provides production. outcomes ways portfolio our multiple As target our thoughtfully achieve increase throughout to limits strong and top of activity assets, with

of how adhered out. quarter, and discipline the operate day aren’t capital within for philosophy to commitment cash aspirational our us. principles again day flow. living in That's Over These to we we and

highest levels addition, capital created utilizing opportunities. CRC activity to remains increased at flex to cash inventory, and JV resources our within and In direct de-risk capital value optionality the by we flow

we oil. population XX% the Looking continues, entire global the accounting see Golden California's chronic oil imports survey the country's we ahead net that current and United sector, imports into State crude dependence and demand of the down are due energy gas on in drawn being XX% solid for undersupply the inventories to as of with States. of energy

sector. implies better than remained crystal Conversely decline X the anyone see our no that the maintenance attests. a increasing decline Slide we CRC's capital in rate ball that as are While standout do low which regard else's, rates for lower XX, increased in is

formula on simple. value. to focused continue For be We'll for CRC, laser is our success

matters. portfolio details Mark to base de-levering results the living third to optimizing asset the principles XXXX. The are over for to well flexible of for These investors. sheet create as excellent into continue other value the cash CRC our well rich us financial future. flow and quarter to We optionality discuss call guide our within our our positions our balance long-term turn now I'll of as the

Mark Smith

Todd. Thanks

Before stage overall. into we I'd the in rallied production oil the which numbers current the on dive of expectations positive sector a industry Brent and as the share Crude September we perspective moderating particular to set first see like for environment. our

business we've contango those flexible and progress from been backwardation, in we've continue dynamics adjust a in our to to fewer manage made report and price With curve in to environment. and on that to levels seen barrels to model, I play, has diligent match the in supporting forward commodity should Due storage am activity the slight price. incentivize pleased force fronts. to we've Additionally, able many fluctuations further transition CRC's which work the

with our our order quarter, ultimately last sheet our runway. was extend preference noted maturity deal to of to we balance and As in

facility on This approval facility. credit financial amendment modifying XX to institutions lenders amendment CRC in will extend years relaxed of the covenants. XXXX, from key maturity bank subject our two through and extend all have to to spring a the our XXXX We that and

Once the will will raise. new amendment after that confirmatory effective conditions are certain money become by diligence. flood signed insurance met including after completion the signed expect be We lenders a federal of the amendment

approximately run XX% than $XX value was as $X.X also about XX, strip lower Our This flat. with September at reaffirmed price today's that billion PVXX our strip Brent to that it's was and which borrowing of Note fairly recently of a compares base price. is $X.X billion.

covenant lenders value the Our lenders our ability our improved we flexibility, constructively receive deep from have considerable borrowing and to our resilient our understanding maturity to underscores work endorsement with our validation base, and maintain asset of model. extend our of base business our and

We other the work to avenues sheet. strengthen to balance continue

be when spin. an since and monitoring As we've said first the in will markets will the this opportunistic time We're past, capital property capital process. prudent. sheet, increased investment pursue balance enhancing iterative We've year this and transactions

six had quarter waterfloods, about primary steam this During excited re-development drilled the targeting four quarter floods, year's attic and full third the of have unconventional Willington. results and with doubled in in in activity successes our oil year the additional alone. We're XX This initial nearly drilling we has of wells particularly XX wells. area horizontal point last

We in reducing delineate make learnings as our our we continue high to progress drill and gain fields times. potential overall

joint to of capital introduction roughly able we initial reduce million internally the venture With our were funded $XXX plan from million. to $XXX capital,

line beginning that of expected remains overall in the activity view our with Our the we year. at

Our costs with of of wells directional conventional sections states. in typically unconventional as completion don't fields wells require vertical are reservoir large and typical a drilled large other

differentiator equipment compared water experience result, same as in the a we're cost this basins. a when and see market As peers or other sand, other We completion to escalation constraints not regions. infrastructure subject to as

an This effects produced our of X,XXX of per negative flat the realized higher approximately result a to year-over-year guidance. due prior average barrels included approximately This those BOE of we at to the quarter of per third the X%. decline quarter represented figure equivalent XXX,XXX was prices compared and PSC day. time oil day For with

nature the and continues showcase rate. assets low production decline Our resilient of to base our

if near-term. our As the presentation effect more materials activity CRC decline portion should production quarterly will toward the on far Slide across CRC be while the With directed other you drilling overall in increase rates large outline our of X, to right graph. see ventures, joint a muted of standalone companies.

activity in in on quarter our and period and California and continue California keep our the executing to up asset period prices XX% base. favorable sixth in a and year steep drilling largest Our ramp economy and see to workover in is teams from have we It's higher important responses mind produce. well performed in that world's This the Refiners in at of the strong local demand uses realized and third for quarter realization reported XX% before and third The of preference gasoline. increase enhanced which XXX% $XX.XX The compared Brent to result oil state which quarter-over-quarter compares the $XX.XX higher year hedges, every The contracted $X.XX $XX.XX resulted quarter. third barrel. in oil further we the WTI native the to price of of barrel global favorably were per by WTI. only NGL domestic the our Settled $XX.XX remained NGL of in XX% WTI. in prior reflected reflected tighter the basis California or exports crude. year-over-year prior reflects Realized supplies, prices of realized strength XX% the the on hedges prices natural the realizations in

winter heating NGL in into continue the strength well fast the approaching, anticipate XXXX. will season the we With market

basis. in production PSC well or X% This with elective third in of XXXX. Increased year quarterly in lower from including a commodity driven third-party electricity to gas of the of conjunction largely higher X% The Prices from strength in was elective in XXXX prior quarter increase year continue the to levels in $X.XX level, to lower prices. production regional in in and MCF higher quarter demand Much be cost state. ongoing natural the per costs economics affected the period, well curtailment increase increase resulted the affected production work. $XX period. than downtime, gas activity of work on quarter realized $X.XX produce by lower million the increased the storage prices was repair negatively unit by price third resulting effects the improved prior per the maintenance infrastructure X% realized of The from related well the second

just per guidance cost outside BOE Third quarter production $XX.XX of our fell range. of

guidance time negative the set we in barrel day X,XXX effects. in resulted PSC per As from prices the improvement mentioned, I

general our guidance. basis per below line and end have per was $X.XX effect, $XX was expense cost the $XX.XX barrel this Interest costs would third in in BOE. Excluding been production our Adjusted year-over-year a administrative the on which our guidance. million of with and were of lower low quarter,

and commodity XXXX EBITDAX up million prior and quarter share. For by loss price discipline free flow free nine or in year million first charges. concept of of capital net loss also adjusted million net cash to period third we ended from the working for $XX reported business. and within the capital balance The we're share for per continued the of per million our ago, up the a excluding funded EBITDAX of million net $XX down $XXX is net reported noncash the have and BSP. and our expansion from $XXX in $X of quarter of despite strengthening since We demonstrate cash was of after of Living third for environment million commitment prior and operating the inception. with $X.X net the $XX capital third million to was challenging or hedge generated third reflected margin $XXX a results our continue million million in apply $X.X not for losses year quarter of flow XX% a the These It's something the diluted $X.XX months done from loss the reported XXXX, other flow $XX cash proud quarter of million XX%. sheet. CRC $XXX $X.XX diluted excluded our million we the we've that adjusted balance quarter cash a flow quarter. a in us. new reflecting $X $XXX billion to Adjusted billion

cash partners within value increased and commodity a believe to to of activity hand. to our in levels activity creation. level capital we maximizing increased and continue us support that the grow the environment responding joint for set at flow, allows venture flow We cash live is from sustainable we're organization base while that asset Our align our

our to and to our balance strengthen we've runway discussed sheet. evaluate to other lengthen maturity I continue taken As opportunities steps

of the affected the far in seen So third-party that in a fourth period. we've quarter outages isolated handful production power

third-party and day amounting have outages plant outages guidance per to expected in another into and other utility in account PSC addition to our barrels these X,XXX Wilmington Now reduction, per been for over built X,XXX barrels day. effects estimated

happy we deploy that detailed live production For ranked Please as capital items adjusted expect key provided and to of within XXXX earnings momentum guidance build during quarter other be value that our now to flow it ongoing the have information to high And growth. note results analysis XXXX of our Todd. aspects information we've I'll any you cash and turn portion I'll for attachments the on the in Q&A fourth release VCI questions to to as and well take back of over projects, call.

Todd Stevens

Mark. Thanks

that drive investment flow. CRCs are ramped we a place cash high to been cash criteria sustainable have from and activities With to cash cash criteria. as JV expected our the our review to our -- our activity of up operating As available from level criteria the view given flow in what key investment our and we -- flex that control, same it's flow available since level partners, factors These important meet flow inception. capital will

resource space low hydrocarbon a a has province. large throughout Our is cycle. world-class benefits the production California decline commodity that us

We have and increase for EBITDAX the growth production drive CRC. ability to

deliver welcome and have to We to influence that share XXXX values for our as a are market in cash CRC's deliver we directed and our debt now investors from deleveraging, to strong producers to are adjusted living XXXX like focus flow commitment Our your operate part exit and value inception. oil within Things character, is responsibility questions. look of gas valuation. and been since with metrics time some fashionable beyond. core on that and for to time We'll note recognizing continue per

Operator

Stanley. Our from at question-and-answer question question. Morgan instructions] gentlemen, go your this the Calio with ahead begin we'll today and first comes Evan [Operator session. time Please Ladies from

Evan Calio

or is the Yeah. the think last fund role]. and you on flow generating Good about XXXX organic change evening, terms debt My and growth free XXXX your congrats CapEx [earning maybe question Slide deck CapEx, of guys mentioned since you how first cash on sheet? on de-lever looks spending X, to the balance for to in like do just generally it lower

Mark Smith

capital, joint this with right is think that you not anticipating we assume now. Yeah XXXX there another meant just it that numbers venture We're joint year but flex I either built along all flexing year and late augment how venture we it's will early partners. into talked as next activity also those our set, we've

Evan Calio

driving generally Right, strip flow you incremental about or for do your with terms today? cash flow generating free de-lever think planning basing a of in between the how either on but again balance XXXX, cash growth of

Mark Smith

at at from look we a value we it same think always way the it perspective. look I

at I look the strip today, think when still we it's backdated. where is fairly

strip modestly probably lower has today. what than planning out the we're there So,

think projects look from flow first we had at to came incredibly perspective, incremental free deleveraging an a our I So, deleveraging. in you'll from prior I VCI that see that hard dollars and high that something us take cash think invest potential

is So, value I can job think balance understanding the it's we said know sheet really it look from and we we one that order. and demonstrating the we're like proposition, in at we bringing standpoint but

dollars going So towards be deleveraging. to incremental bias is the

So, competitive that have would the on be something it side. to would value very

think at our year. If I slightly program to up for for you would today, prices want the bias based on be next capital overall

Evan Calio

on to process, JV capabilities your issues update the that billion you from of you ramp the strengthened second come then can also I you could, of mentioned that some modified and within first discuss question invest a or you rigs, I and $X the zero there mentioned more think organizational in nine any answer? I has billion to ability were maybe which you if to details $X.X Then guess in

Mark Smith

numerous folks by Yeah, materializing I opportunities think new in discussion be actively upstream that on I JV. on think could or year-end there still midstream nothing early is and with in the we're XXXX.

probably the that's that of where have say The middle the cycles we year, did their but happened. look job. all the activity past As third were closer an really compared in ramps ramp, outstanding I activity and to to to at to we hoped be quarter we timing we had

to being anyone. we're not safety cautious. we're hurt is and being think Top more priority I

So, it I took little back we more saw anticipated. were months. a think ramp us We the probably a you of and than longer little by cautious be a few bit pushed

Evan Calio

Great. being billion from this supported $X perspective? again your a organizational And that $X.X view CapEx billion capabilities of to

Mark Smith

we No, about capital or or -- ramp joint our when still on our for own I there ventures what still JV and to utilizing talk think I or development ability think exploration for we're execute our our purpose. that

Evan Calio

Great. Thanks guys.

Mark Smith

Evan. Thanks

Operator

Our Wolfe ahead next question comes Sankey from question. Research. Please go your Paul with from

Paul Sankey

Hi. everyone. Good evening,

Todd Stevens

Paul. Hi

Paul Sankey

Todd that hi. fast The XX of move this to in a you the how technicality oil free price if that? so whatever your so what clear a are? flows dramatic follow-up that you've changes very it backwardation wondering we've seen to thing or such extra much it doing of made would do makes or just on, recently, then but what if the be whether was cash things? I through and and because of obviously what price outlining quickly been Is to money? how that be firstly was just is of and the going this flow are some wondering difference benefit Brent the change And get price clear obviously about actually and had We've change is really what sort it does priorities you're you've priorities your I you

Todd Stevens

the differentials how thirds in we has and to obviously really two to look get Brent. we I paid, but going we regards cash pricing. flow, of to free set, that, oil we're in to waterborne the think look closely Clearly Brent activity and this import the as with California imported is track at manage

XXX% showed the think on and are of well pricing have see percent regime. do to has it medium the and differential where actually heavy the the quarter We barrels we impurities out with WTI, that We even favorable and what on there and a Brent barrels. last today the the over a above waterborne lot we quality above a of

quality have California. better impurities and Sulphur here We in other

So, strong native preference pipeline for there is crude. and a

Paul Sankey

it. Got

to Sorry earlier. interrupt

great quality of move basically the and getting differentials the issue. because you're anyway immediate is So,

Todd Stevens

Yes.

Paul Sankey

Got price it. is that it is we've you've extra anything the plan? handling the because anything, got how there made exactly And oil pretty then look but $XX on clear this, you're there dollars changes constantly

Todd Stevens

of are at was everything clearly representative -- that projects the there strip. more I price than XXXX but strip. actually a some reaffirmed, about significantly borrowing the inventory the base lower our But side. We think getting it was talked was deck on current that more

So, inventory. we an awful our have from perspective I lot think of

So, is I even more market us break. venture joint for think stronger to the

Paul Sankey

Yeah, whether I were the or less likely was more at I slightly driving, wondered prices. JVs different

Todd Stevens

Yeah, more at talked look up picked and its those think that I and lot obviously payout I likely. The think you more price even about related. when interest we've they're on has and performance

prices had be performance to than and better what we've So, we improved. anticipated have

fairly on I things you we're bullish Board as across at ventures think So, the look one. particularly new joint and existing our

Paul Sankey

actually or appetite same be by prices higher? be the reduced would for or higher your joint and so ventures Yeah,

Todd Stevens

our the be intriguing. same above as sales particularly as XX, more the would or get up, I become a pipes inventory because it lot more No, go of higher think expands you

Paul Sankey

Understood. Thanks a lot.

Todd Stevens

Thanks Paul.

Operator

Hamid ahead Tarek from with Our next question comes Please from your question. JPMorgan. go

Tarek Hamid

Good afternoon, guys.

about just transaction, revolver is pay that balance million the hundred little is down revolver dollars down, understanding through fair a walk like announced sheet, a that looks hundred bit my way characterize it as it, and cash talk term a we the a raise, to I dollars On couple it? loan can some couple pay A capital million to

Todd Stevens

it. critical for mechanics and us years and you walk my of perspective two through maturities liquidity two we're details you From I'll factors characterization the Mark let the greeting details. actually I'll walk extending we're Mark the give the let you I'll of how

Mark Smith

the to decreased extended term maturity. commitments We've loan, assuming downsized will of be commitments reduced -- to reduced maturity right. new The bringing $XXX be money the the is to the revolver XXXX will amortization from decreased. million. as be revolver term be substitute Todd bank billion will will XXXX The raise, $X and

So, spoke help as liquidity improve liquidity coverage it to enhancing leverage and then works our well. minimum from financial and further relief ratio about liquidity covenant the we the interest I received

to term loan the loan new that loans RBL get think term conditioned amendment new the you liquidity upon effectiveness to $XXX and earlier. decreased As from replay will size to money the and the would forma a then it is to, down junior bank be proceeds it's term the issuance be that raised to of that the important I to and it of about pro the of minimum the I for the on the bank new million basis. levels And at money the note of borrowings used talked revolver referred

Tarek Hamid

Got it.

to firstly senior potential going new lien junior. out to or clarify, term second So, that carrier the to be is existing

Mark Smith

The in to senior current out. ahead construct existing the just and waterfall of second is the facility the lean first bank subordinate

Tarek Hamid

Got just then my final well? is points you junior obligation, And repurchase that $XXX understanding have as to it. and million room

Mark Smith

That would correct. be

Tarek Hamid

you it. Got very much. Thank

Operator

question Brian from Goldman next Singer comes Our question. ahead go with Sachs. your Please from

Brian Singer

you. collateralization on so as and also should be Thank here. if any to wondered in the it afternoon the back I topic indicated more Wanted talked a sales after or you you've of close flex indicated far the straight you're a JVs about to considering so relations, Good you've here to sales call? apologies the for go noise smart JVs, background lot JVs.

Todd Stevens

stream look above basket are and at Yeah Brain in at as we we things, midstream. look the

I been bias upstream joint ventures. side the think towards we've

along divestures in our portfolio. for don't compete interest potential some through that dunk have capital the we think think at they do divested small deeper I portfolio. We and years and our way the will that look I

of said have sense value I things, conducting again So not from at from and all make the to we're of is have some we sales. standpoint I but got our perspective. the alone, that there out fire looked

our the on part income think trading side, but understand midstream leverage at we're monetizing any look midstream balance continue of also leverage. to for statement monetization, I we

sense it be actually So, amount amount, reduce think we makes think anything higher provide and that we to do to that debt clearly in for something to know have will would there but we ourselves. cases, slightly cost that some a absolute is our reduce debt impetus our there

Brian Singer

little Great. guidance Thanks, and bit on trajectory you the then quarter, that day basis. the thought more can in you production about BOE a a fourth oil a talk

of that one defense you as go slides moving offense and thinking your had the about like? offensive the you looks year? some does XXXX a oil So then through there trajectory to just what in is how for oil impact and we how comment And

Todd Stevens

trajectory the flattening of from of at climbing our we've here. it the we we're I point reached oil bottom here think inflection the out here bottom think out and

be So, perspective, think going to own capital. we venture from our from investing we're we'll and our joint here growing and from be

invest our but From we defense. sitting the and of offense immediate we now getting at we've gone we about benefit is finally point of moving as some perspective getting shelled this ton mode capital, unless our get in out trajectory a more production not talk in but from So, foxhole in oil and benefit time. foxhole, we're immediate forward we and on joint the think a do growth venture

Brian Singer

you. Thank Great.

Operator

from Herrlin comes Our Please next your Generale. question from with John Societe go question. ahead

John Herrlin

Yeah close enough.

downhole the For Todd? workovers maintenance you're that just doing

Todd Stevens

it's in been Yeah production workovers offline. back cases, in that's most bringing

John Herrlin

like you heard gas or to alluded Okay. activity Also it to given storage increasing going in was potential stay gas the you gas of you just shortage with in oil? are California, storage in

Todd Stevens

increased We of little gas have activity. bit actually our a

we or not have partners I some had in us prospect. and -- expiration activity to workovers active We it's up something but bring there. you us. then that it, to we've an We've Talenio As venture about, talked try the set partners and with that do joint completely talk think some active, might done we know see about

is be at basis change at a We this got in California really weather something that that'll minimal I have time. think is a better I scale, patterns in be the but but in to facility as used because weaker think canyon future, shortage the point being do on the a get the particularly to and large-scale there's small more got gas

John Herrlin

hedging, All up one you compared of amount me last you added is done right. on more? 'XX. obviously for would half Are Last you some quarter, a fair at least or second the for floor to

Todd Stevens

pay for think I you when you and for pay time hedges, volatility.

and of I don't extending we years. down XX% remains XX% we could off out take ball and got creative target right the go So, high we that's came more calls, spot about add level you prices monitor our is our see to the same in goal us given be why operating think our control or hedged. that swaps could our or forward, be more the as or we and

You time too for that just pay the much often. typically element of

into in can the look on half we in layer more makes we'll back do I probably eventually, think the see look what us the So, of but you year think sense. and most

John Herrlin

Okay. Thank you.

Todd Stevens

John. Thanks

Operator

Our next your question. comes Spicer ahead from James question from with Fargo. Wells Please go

James Spicer

environment rate to reversion and your reaching timeline interest? that Yeah couple the due ventures the joint this I'm what hurdle oil benefiting on working of is hi for wondering the from things. A guys. price higher

Mark Smith

said I think it what Jamie goes price. and performance to it really before I back

this than from curve. is what higher anticipated the obviously had we think I

point So, as reversion price ventures overall flows, the cash And joint been than on where that both the occurs. the you we expected. performance better to accelerate what have accelerate you're and again, going

on an price So, you not months answer, I years think be exact can't will how give I clearly up. you it maybe the holds but depending if

James Spicer

when as a might have you you point those at Do begin benefits? current to realize estimate you to this start

Todd Stevens

No.

to I do think prepared that. we're not

back we talked and four talked on I anywhere price we to be performance. last this, at about think look year could years it if we depending two from and about

I off price the on think and probably a anticipated. than little better we we're performance

but and that probably we're two we're different are closer partners we changed because the version that So, mix four, well range the the to point. in have has

prepared of right again, So a detail about get into you we're talk not to lot that now. really

James Spicer

amendment, sheet you capacity forma here, And new understand. deck pro the credit liability how have balance management? incremental the on term then and incremental do much loan just do secured Okay. facility secondly, I still to for

Todd Stevens

walk through Mark I'll that. you let

Mark Smith

baskets operative James. We've got two

that's the basked is and result of the $X a got base. of -- unsecured a imposed the second by borrowing we've the or or which it top imposed ounce, greater first is of basket billion link second the the as then on billion The $X.X

$X.X So currently that billion. would be

the term those we'll we be to And that that within with have last working loan basket. them. operative work baskets proposed the with are two So

James Spicer

Okay.

this put of So, by on limitations or virtue constraint there incremental those incremental are no new capital raise?

Mark Smith

we're Not still process? in the at the present raising capital time, but

James Spicer

right. very much. All you Understand. Thank

Mark Smith

James. Thanks

Operator

comes from ahead Sean next Please Our go your Oppenheimer. question. with from question Sneeden

Sean Sneeden

Hi. is that that had that what impact of program that I your and would second you're program a be of the any the part what XXXX Todd, drilling on sense I doing or the period or guess Thank is a question a you would your you're on of of program 'XX think that more indicated 'XX under prepared has BCI, be therefore remarks or helpful? the the drilling payback guess general if today current XXXX I taking in wells you have current for you X.X questions.

Todd Stevens

Yeah.

BCI time program general So, of the it that was in was is XXXX that the $XX lower probably two $XX, that and at calculation payback that less point a and the than on with years. price deck, pricing

Sean Sneeden

then wanted Okay. CRC? is million net maintenance Mark helpful. are spending a to clarify, And just that CapEx is that that you That's $XXX I referenced think to or inclusive of I amount Spend. a just JV

Mark Smith

It's just net amount.

Sean Sneeden

for the biggest issues Okay. day will And between the what housekeeping being of question and similar what just referenced that lastly guidance, so Todd, delta just earlier those outlined a guys one then to to reduced is QX some interruptions you X,XXX you initially timing that the QX? QX you on if looks from just

Todd Stevens

Yeah.

through quarter been having first just continue what have large our put also, came versus PSE we have from with think X,XXX month and here about to when the in we've as I effects actually rise, we a out the prices the it's in would we higher BOE of first perspective. the as quarter been guidance third PSE day

you here, basis also. going also prices from curve Beach the are cost free to have can in on effect have as net why anticipates on Long more per a So, it's our that and then climbed of see for unit

Sean Sneeden

makes sense. That it. Got Thank you much. very

Operator

ahead James. from go question. Molchanov Pavel from comes question Raymond your Please with next Our

Pavel Molchanov

for question guys. Thanks the taking

nine are you or going at you're you more that hurdle long-standing amount of point a meaningful of still become activity, rigs fair distant? will begin to permitting bottlenecks some a that is where fairly Now and a for the

Todd Stevens

I we it. handle on to days we pretty like our know basis on but on good of look plan we a business Are think XX-month at have that? always I built I a XXX really try a we think in. and have activity permitting and basically No,

with we deal We all have relationship regulators with excellent an and also. the on level state working regulators and the local everyone a federal

So, on particularly a like operate process that a no have don't matter I in plan permits manner, issues There's but always we place County. where feel our think U.S. getting a pretty being huge timely issue. in in execute we with you in the good to Kern foresee I

Pavel Molchanov

more point I you XXXX to or of meaningful acreage because unconventionals of mix it's Okay. Monterey might think And your other whether spend? it's only a where comprise still a approaching portion are XX% shale begin activity what

Todd Stevens

on but you Monterey that a that think was even the bit really little into venture wasn't start about shale joint I or to a the It But I big. today. thinking environment effort or it program, not might you compete but when the a it’s as like creeping it's capital of far expiration time typical you development on science to the Yeah. think spend think particularly talk start the from than that XXs unconventional anything going prices because about like you some expiration joint big today probably venture think the project want price and where lower more so elsewhere the because are side might or opportunity different size I something as in country, price of to in when an

Pavel Molchanov

All Appreciate it. right.

Todd Stevens

Pavel. Thanks

Operator

go from America question next Brody question. your Gregg Please Lynch. Our comes from of ahead Bank with Merrill

Gregg Brody

Hey guys.

Todd Stevens

Hey Gregg.

Gregg Brody

then was quarter then natural maybe and looks explain and third little lower on the you you isn't better us per fourth into in quarter bit, why and maybe guidance operational the or Just quarter can and gas? I happening know a of oil case us the realization insights maybe through some case a gas what it's side se least natural same improved NGLs the gave NGLs and -- with fourth at and at than Brent walk just little what you

Todd Stevens

XX don't above feel said, that high we the historical want realization we higher, than and see like actually average today As we're through end that's even but we average higher in to today. Brent historical guide anything is we XX-XX,

want that's can at typically out to just than you we And pricing. we improving but what as range the literature is see Bellevue we to within better looked if you have I historically the go now our get that of the some there we seen. see from perspective, know NGL right think, think I higher side been think that of potential not much stay So, on you've

Gregg Brody

How outage. just then from And come we power outage see on What's the think the back? you hits gave power PSCs as for production guidance the the that? timing should the to as production well -- the about

Todd Stevens

think be longest usually one three experienced. to we could back four I hours, It from It hours to the anything bouncing XX is fairly quickly.

this consequence impact that on. is use VSPs sometime unintended but goes the power back you devices or again, the in all areas has where might failure downhole had an it So have other when

consequence the of double unintended you occurs that bit the little that's sometimes a whammy. So that gets

You got that on. back with then the timing the you bring back go production the on rig workover to

Gregg Brody

Got And turning covenants. to it. then just

long any you insurance, of covenant will How is a relief this based timing think So, there's there. that the flood -- on do approvals take?

Mark Smith

weeks. say from this is to the Gregg, banks we days it's It's is that Mark. exact timing, to have the feedback difficult few

with work work accelerate banks to closely to to that. continue our We

it's side sure think that, we it's to mandatory. make of the we adequately So, want but on shorter

Gregg Brody

Does that where And there back then XXs that, than power were to million more less questions about for prices XXs and can junior previously also the limitations buy just of that also $XXX some on other second bonds there. part for you liens that indebtedness know the least couple include than… of flexibility bonds, at than -- and

Todd Stevens

talking the unsecureds. the spring address the $XXX the the million to you're with amendment allows of that Gregg, disclosed associated not We've ability but all maturity the situation company details the about,

Gregg Brody

more last there before. if then there color And exchanges, to more were some do any know to created that flexibility I you can ability don't know just as question, on give there? I it. Have Got you limitations my

Todd Stevens

still will forth our my amendment the umbrella it's working ability style. the will put been nature not We've addressed the this ability and deleveraging work commented amendment and do, we've that's us things the they the banks I gives in executed. in comments, once gave think and to but exact earlier I to additional and of basket of that place final all transactions with -- us that the nor terms an it in come to contemplate that I XXXX XXXX with we have banks in

Gregg Brody

guys, Got me for Thanks That's for time. it it. the

Operator

Our go next ahead of comes Bank question from from your Please question. with America. Akamai] [Clay

Unidentified Analyst

Hi thanks for getting me on.

for XQ time, So and little XQ more but wide, modestly pretty at in production is Q-on-Q. lot a here still spending guide declined the same you're

see a clear wondering just great? I'm inflection So be visibility expect we when provide can production? to can in you Any would

Todd Stevens

inflection we've climb I bottom I like starting think earlier to in of out oil said flattening seen we've out and I the Yeah, think seen the that.

of got look when at you to that capital. You the some remember is capital venture joint

right So, point think at time. it's production point we're at inflection oil not benefit. like the the of we're getting we of as in this But now, XXX% of

climb is in of cover is go also to effect by You it fewer and lot a of the our going to Wilmington. down remember oil barrels masked cost we to need the our joint to net agreement as continue prices got production PSE

Unidentified Analyst

color any of the the volatility coming that this the we've XXXX, If I'm you which this Right and just looking guided you've above has wondering here on what capital for XQ? but just declined given CRC funded commodity capital seen recovery if that. XQ year, spending capital have in is understandable for in at here on

Todd Stevens

can OpEx rigs in see with the some get like to wanted at have operations that still us curve really to the the strength we with up quick is on you you're strength, see CapEx is going particularly it if I point unless as the your the think same. Yeah, that you you and side think at and you payback team rigs drilling the commodity both to items I more investment we in workover term our the ramp when We've activity efficiencies the it, short at time. get Yeah, typically, than the net enabled net just our below. on that activities CRC come pursue look by investment, our

Unidentified Analyst

of know some Brent strength wide And but the PI about what's XX% NGLs due and it. specific strong you that's Got is to? anything perspective pretty there this diff, WTI driving your I last to and that one for were point probably so quarter, me, the can from of that

Todd Stevens

Well, have we goes of transportation Mexico a is lot that from in NGLs California particularly got advantage. Canada being other Bakken, it Mexico to advantage remember I marketed and mostly the so clear you to the a think a have that propane, in to propane we from

think than look at what a going price So, I Bellevue. you see have we're we we higher the usually to typically much when NGLs

Bellevue as gallon now a $X.XX but probably of normal. we're fairly basis, right think I today, on it's over

Unidentified Analyst

Appreciate the guys. answers it. Got

Operator

go comes Our and from Tiwana ahead question. Please question Cowen your with next Amer from Company.

Amer Tiwana

Hi guys.

CapEx. quick limitation a number Is a the question agreement? Just your there new on CapEx on under

Mark Smith

than other nothing the targeting CapEx. financial covenants, no is there specifically there's normal No

Amer Tiwana

Understood. Thank you.

Operator

comes question. Our Gomolinski-Ekel question with from ahead Please from next Morgan your Jacob Stanley. go

Jacob Gomolinski-Ekel

guys. for me Thanks Hey sneaking in.

on the Just wanted to was question think it follow up, JV. James' on I

was of have reversion I and that interest You said of result prices what working maybe as a given could guess you and wise had it context now close. year sense originally a be terms in two of you just production? to Do could year four in ago bump working performance move interest a a and the that in pretty

Mark Smith

working going when so you that be going interest occurs get give It's sizable. just an the the example MIRA to XX%, obviously of significant, to point in reversion on We at it's XX% fairly XXX% XX% upfront they the It's to there, invested capital. time. and

XX% we're XX% anticipation getting So, anticipation. from to a

complicated little a joint of type their venture they It's going just that a but to completely actually it's reversion, The threshold measure. one rate hit typical other one not once different of a more because is revert return.

to from effectively. it So, goes X% XXX%

Jacob Gomolinski-Ekel

Got it.

towards of to XX in sense what to might maybe like be the next of number the XX guiding be months? production given So, terms when that looks like number start able may you

Mark Smith

XQ as the firmed this XQ next or because and and sometime this might of you better guiding this maybe I can what prices year year. started us on Yeah, they up, performance the firm investment a late area, see occur see middle we think up JV visibility basically when we're year in next price and

gas oil aren’t and immediate. investments most So,

or California. So, even a pay they're usually two in back year

Jacob Gomolinski-Ekel

you at speak maybe And adjusted EBITDA when modeling you and the there million back is number, income look net about then quick that non-cash includes? then Can $XX items it. just EBITDA. question, what Got to in just a million add other $X in of

Mark Smith

the the Usually that and ourselves by biggest on going other that and related mark-to-market usually one but there sold I is look filed plant we that all and the anything and probably the what markets to that other typically can plant power consumed the Q gets see to is power items or non-items. you power then talk not what else. gold is our the that's some to be has those are, to to with about But we're other hedging think is

Todd Stevens

some equity is non-cash compensation it. into that there crops Yeah

Jacob Gomolinski-Ekel

Got it.

include slides surface acreage what want the sorry doesn't PDXX something given you given what just your to QX, in like acreage? Okay. bump housekeeping Beach own last value yearend number on And that just bump the confirm then that also and that question, from property the from just that the Huntington indicated

Todd Stevens

No. It doesn’t.

Jacob Gomolinski-Ekel

Appreciate Okay. Great. very Thanks much. it.

Operator

today question Joseph question. von Management. Meister Bennett Please final from our And comes with from your ahead go

Joseph von Meister

my Hey answered. you much. questions were very guys Thank

Todd Stevens

you. Thank

Operator

any I'd back Stevens call will turn that And the our like to and gentlemen, question-and-answer to conference conclude remarks. ladies over session. for Todd closing

Todd Stevens

strength XXXX Thank in See feel Look our the and focused there. Any please to always will you our everyone. from beyond. sheet out guide in We're partners balance deliver us These our forward value resource base. out within long-term value. IR on is reach and myself, you. staff. to dedicated and investors. you, optimizing to principles free cash living flow you questions, our continue hearing to to Bye. We're Remember for CRC

Operator

Ladies you for We and conclude gentleman, call. conference do thank attending. that does today's

now may disconnect You your lines.

California Resources (CRC) 6 Nov 172017 Q3 Earnings call transcript