CRC - Earnings call transcript Q3 2019 | California Resources Corporation

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Operator

Good afternoon, and welcome to the California Resources Corporation Third Quarter 2019 Conference Call. [Operator Instructions]. Please note today's event is being recorded.

I would now like to turn the conference over to Scott Espenshade. Please go ahead, sir.

Scott Espenshade

you. Thank Senior Relations. Espenshade, President, Vice Scott Investor I'm Welcome Call. Resources Corporation's XXXX Conference Third Quarter to California today's is Senior on as of and Participating call Financial several CRC; Executive and Chief CRC and Officer members Chief of Mark executive as Smith, Officer; Executive the President Todd Vice well Stevens, team. President

third reconciling measures on financial information into highlight These the slides www.crc.com. to that to slides measure our like comparable website, available directly Also, and have in portion Investor provided most plus information. additional and in additional non-GAAP is our insight quarter our discussed I'd financial we Investor operation earnings website our Relations results, section of GAAP release. our our in Relations the provide

other federal risks meaning these expressed Today's from statements forward-looking cause or conference that call security differ in These to subject within actual of contains and are uncertainties the those implied statements may and projections to laws. the results statements. certain

that to it earnings when filed the Additional ask review later you could being information statement in that cautionary cause today. is available on differ in available company's which results release. factors We XX-Q, the our is and

on and days will will transcript replay made website least be and A today's following following call be available at a for call. available our XX the

please and question We ask primary that would reminder, allotted similar their end remarks. prepared to time follow-up. we a a have As have the participants -- our for Q&A of at a question limit

now Todd. will I the call turn to over

Todd Stevens

attending Scott and today's everyone thank earnings you, you call. for Thank to

their fires for all I'd firefighters foremost, first California's across continued responders to and to efforts thank battle of First like our state. and

workover like us and uniquely reiterate of of that believe portfolio large capital with the superior at prices. creation inventory that we our significant even position value intensity I'd capital commodity projects continue lower CRC, low-decline maintenance to conventional down capital. production to recent we annually hold low to assets and to for efficiencies Turning internal With to levels. and our flat maintenance current be million continued $XXX organizational will of trend $XXX capital drilling, from million to and completion operational continue oil redesign, required between expect

the our CRC for safety Our of distinguish local operator record, sustained, geologic of as to tanker, California's combined Hormuz. in thirst insight for partners supply and reliable provides X a the traveling for basins, Arabia production XX% oil. of governments. that large distinct Saudi deep and to state majority over crude native import by Strait CRC's base continues a choice strong, that large with our from across refineries operate volatile of our We market their a and the has neighbors its environmental with crude

a averaging result, the have for much premium the we above realizations of achieved year. benchmark Brent As

supports To we a strong remain the value. reasonable on there, future strengthening sheet balance model growth focused business cash get base asset and predicated Our flow. enhance free on to will equity our

third market's petroleum sector, the of influence on XXXX, many a the we plus saw quarter market wide of events the In production and opinions perceptions range XXXX of balance. exploration external the

our quality success of means that CRC control, strong CRC, expertise to this At controllables. received our assets' in partners capital continuing is focused what environment. discipline show laser While controlling validation and remain from market and remains, uncertainty realizations continually on external the and within has operating we in

Through delivered results. consistent these CRC efforts, again

range, report pleased of progress guidance credit improving and anticipated. flow cash to as led to better at largely our we in came This results expected, sheet million production in or and margin costs quarter strengthening than our additional balance and in are with the and Third within our $XXX position. quarter, free

sheet. balance our to Turning

We're deck we've the committed $X.X of the to our This lowest-for-longest predictable, value and the the was billion, again once face reaffirmed of our group in our spin. balance bank reserves. sheet. of Our strengthening price diverse confirming borrowing base seen simplifying underlying since

As we and approach disciplined manner. to continue in take an all-of-the-above we steps reduce a debt, thoughtful follow our to next

paths are matures We achieve balance XXXX. multiple the first discussing of in set actively our recognizing to sheet significant debt objectives,

We're to minerals of a prospective partners and in diverse properties, producing assets, participate infrastructure. including variety among and developing finding interest exploration, our

we seek maximize the of sales and As our value asset proceeds the and from we sheet. our pursue monetizations key these opportunities, objective optimize meet of use strengthening to to balance

and added by The valuation Hills barrel May, We've year. XX% we field our completed will continued oil. demonstrate through the through investment this the Lost at new In interest share value flowing retained opened operator, we in transaction in interest. of our to a divested the $XX,XXX revenues steamflood door several in to that a of transactions more capital operation fundamentals per working our

August, $XX strike with price. most announced with terms development our Colony major joint In venture, known a venture including formerly as joint favorable date, Alpine, our we third warrants to our at

water carbon of and reduction align proud integration, are sustainability sequestration recycling, We for record our emission our progress environmental capture goals. XXXX methane safety goals and towards with that state renewables our and and

home U.S. I'd with operations awards like Most by to the quarter to XXXX. long-term are sure Electric milestones National and Safety The the CRC by continued from importantly, in each to plans. Hills surpassed methane Department displaying quarter the third our front-end Elk XX% Research Energy plant We our make central power received emissions a goal study capture our methane our the technology. CRC Council, design that awarded XXXX between retrofit engineering few a our workers highlight safely for diligence development XXX-megawatt our grant to in XX XXXX of carbon day. Power and cutting from return Institute safety

and one to be our This asset the plant barrels add well gas acquire capturing at lower formations across into equivalent just potential of and, to COX portfolio. of reduce will enhanced the opportunities sequestration for significantly oil million the Hills. need plant, produced by resources, is deep which team to available We allowances recovery greenhouse of injected oil oil COX expects has turn, believe to Elk large our EOR over XXX capture and for many gas Our in cost. us the

our projects voluntary Last be the the the U.S. we score our in scoring XXXX second-highest We among anticipate formerly in targets to the months. independents, provided year, Project. to more CDP's as recent details Disclosure we and received known Carbon released the about and report sustainability coming CDP,

production the September. mainly to California's focus bills handful of and XXXX ended gas effect the lands. our signed under bills our these on tighten legislative project and governing state don't and to on expect state particularly given infrastructure the or year state's inventory, sector. leading agreements duties bills comprehensive Only oil leasing CRC's We that regulators, standards state our bonds, in oil of passed the cost integrated indemnity operations reevaluate a have gas require significant a were These abandonment our lands. and and and regulators expand of on

supply California's serve renewable but affordability, believe who'll reliability Several media production, electrical outages both bills advance. international grow of the attention grid. in balanced few of native similar in XXXX would oil supply as gas local and to Events year. order energy, pursue past events from as resilience. natural in the highlighted failed We state's the and to next it further opposition and need months garnered much widespread face to including oil community of California's living it they well and to susceptibility sources These energy a vocal and again reinforce groups over and gas and labor the turmoil cost have for

well As toward remain our we permit look inventory. we drilling XXXX, situated with

on from dependent fields single any continue to or of and mechanism are mix not production We benefit diverse balanced play type. from a drive

XX X% ownership of Additionally, federal of To XX% our comes a put state operation and to our from with production alone XX% Long our from in years City state held Beach L.A. lands. $X nearly over this variety context, from from Long County lands, Beach the economic types, and private in from Long lands CRC-owned on operations by Beach. provided production minerals of has owners, lands state, XX% the the billion on past approximately

our our constructive partners year's continue coalition California legislative we as prepare with for to dialogue session. next better We communities

we remains efficiencies. CRC on efforts In engineering cost focused reductions intensely of yielded and to sustained what our operations will significant improved terms control operational our teams believe has controllables. our of our Innovation and performance, be

As we count. a our steps annual that organizational refine cost by cash to million, context, review in have about believe head to spin. and debt continue reduce will employees recently design We sustain taken reduce have our reduction to we're $XX prior now and and for with to result, little our our this helping we assets us actions will To the margins the value of number put our over half operating creation.

see cost in expect of the We quarter. fourth the beginning to recent our reductions impact

to continue and margins value within is while as cash on the XXXX Our strengthen sheet we investment cash investment program of focused our flow. capital at living our maximizing balance enhancing

and allocation expect which the our end, drilling in we the than capital $XX we capital to market investments to expected disciplined capital. most and continue We metrics conditions cash invest reduced quickly adjust we internal VCI CRC process total completion to to flow. rigs of of expected X to be to currently internally-funded with ensure apply To our workover that quarter, less and have is million to value, align that an our about on fourth our relying X/X create

to expect joint ventures. behalf of rigs our also on operate We X

year date with volumes have our and in our production investments exit noted the BOE As expectations line close to XX,XXX venture to should slides, day. per joint delivered in gross

billion balance debt is under from principal base our which shareholders. our while level continue trading flow, to $X.X to interest I'm in our for us year. debt very reduce our that value compelling we over we expense. a since opportunity lowest of spin, at resource post-spin remaining and operating Our positive near the for with cash peak is a for associated to free levels billion, reduced level investing pleased With will repurchases debt its flow provide $X cash drive our

a in X debt. our We in current within pricing our of opportunity excess of fundamental and market fundamentals risk-free dislocation based commodity investment see the -- the solid debt publicly-traded with on VCI a

with assets. deeply of discounted within flow mindset, We in market will the debt, approach open living same balancing cash our XXXX investment purchases with and our

continue will portfolio utilize joint our venture to spending, our de-risk production our flex to We bring forward. capital and

We our earnings in call. plan will next capital summarize our XXXX

our stated deleveraging. to advance enhance As to plan sheet of we calls, and balance in prior XX% discretionary flow cash we to XX% the utilize have

million XXXX, three we $XXX flow in year Through totaling posted quarters $XXX of of repurchased cash prior period. cash. of $XXX of for the lien first second an over X the face value increase during EBITDAX notes the first X% solid quarters with million We in XXXX, million,

record I our of XX% should current of We market also a delivered for free $XXX after is also year-to-date cash over internally-funded cap. this flow million CRC. capital, note

we Year-to-date, higher have crude over which realizations have of oil XXX% benefited from averaged Brent.

Brent-based pricing the price attractive receive market. California we the as waterborne know, crude you As sets for

of of is for realizations Looking and CRC's interest global XXXX, to strong of compared expect to worldwide similar the California ahead IMO relative crude. crude is steady, imported impact Of to CRC's grade competitive portfolio CRC's production we content to price California. Demand to sulfur well alternatives. is California, average positioned against crude in that of remain

As and production demand our in-state same thoughtfully opportunistically California remains refinery runs oil for time, crude high the decline, cycle. remains flow sources in this other underpin our putting the crude place our to cash we At hedges are through stable.

to quarter performance, I on the turn will call details more over our third now For Mark.

Marshall Smith

work through XXXX. cost debt granting guidance. overall potential low-decline strengthening Thanks more amendment, reduced Todd. through has We production base our repurchases, all line flexibility sheet while within high-quality, expectations our us our continued to with for keeping to the of credit organizational significant hard our Xth royalty Thanks, transactions. perform balance in X first we while secured teams and the efficiencies, CRC's quarters of asset

Todd affirmation X. received on our redetermination in group As of by semiannual $X.X noted, borrowing our billion we Xth our a base bank straight also November

to continues a be strengthening priority. top sheet Balance

The consecutive marks repurchased largest in quarter Xth a second the that and the our third quarter single repurchases lien marks notes we quarter-to-date.

our the lowest $XX lien a value spin. XX%. debt billion, During notes. discount to below second brings the billion, for opportunistically $XXX for in notes agreement face repurchase below level additional credit in our $X now of of since million This cash, our well million meaningful have repurchased face we within value and nearly The $X we stands flexibility quarter, our

commitment assets, We JV to our living utilize of and focusing levels the to strengthening. our debt investments continue flow capital trading and in our within to take of maintain while cash sheet our all advantage balance on

quarter projects. growing XX%. focus was day, the adjusted operational XXX,XXX margin EBITDAX values capital Total CRC's $XXX in on the be of remain EBITDAX disciplined for and equivalent adjusted third process production million continues and to highest oil of controllables. VCI we an to work to our per in We barrels invest control capital allocation quarterly leading our of

Our of prices, by adjusted realizations offset share. and free income gas strong weakness to $XXX partially diluted discipline, oil NGL led or million an million and of $XX and continued in capital net $X.XX cash flow per

million joint for of our XX $XX quarter, partner funded maintained and averaging third capital joint $XXX venture $XXX capital bringing utilized and or with while our and of Alpine, as rigs, operating to our capital. our flagship our internally-funded rigs us with million, the we known allow still partners Field joint venture new internally total activity an additional level projects, joint X investment Colony our Elk the while venture forward increasing We venture, We constant. In development held cash Hills flow discipline of invest million funded within of our to reserves. investment formerly a

we CRC rest flexibility X and additional rigs plan of of to into quarter our the the count while our rig capital investments intensity quarter joint through deploy to projects to plans of Todd provide to capital fourth XXXX start capital the the As continuing to reduced below to venture and mentioned, majority limit fourth we at internal XXXX.

capital should in reduction to further reduce CRC flow This give and flexibility cash our improve debt. free us

plus our in provide availability, revolver cash expect flow, XXXX. $XXX for senior We million notes adequate operating of capacity that the January maturing will

Los Basin, Angeles the Our we we wells, the continued drilled XX of the XXXX third San in where drilling and program Joaquin wells. focus Basin, to primarily drilled quarter X on where

while majority drilling gas capital also well the modest wells results, X continued natural in low-risk to no Sacramento and show of exploration with on We with promising CRC drilling Ventura decline a waterfloods. We drilled primary production our focus activity.

Production we quarter, XX,XXX day down approximately decreased Lost of to average X% during of the produced barrels due capital was terms natural X,XXX averaged with XXX,XXX per the barrels to XXXX, our an excluding day. of to the third due decrease oil BOE In investment. production production, while of compared day and per divestiture, per Hills low quarter decline remainder

sequential full PSC factors, the a the quarter divestiture, reduction quarter over As per offset as oil by XXXX first reflects from Hills production a day barrels affected per from so results Lost Lost of of in as Hills XXX-barrel approximately third the effects reminder, other effects positive were of by well X,XXX day.

before oil realizations strong, As registering XXX% effect Todd to the noted, Brent of hedges. our be of continue

to into remainder continue throughout realizations will believe We that strong remain XXXX. the of the and year

this by barrel oil Our the continues which, of during program market can cash our strengthen sheet. from hedge to $X.XX turn, Hedges help mitigate per our used price balance to environment Area local primarily the supporting at downtimes. downside barrel. refinery enhanced for realized NGL be in help national and flow fall the price the in Bay demand quarter, $XX.XX due supply realized and an per and to in Brent, average came of markets realizations XX% midpoint guidance, of L.A. to of weaker excess by due

and realizations of increase after NGL is fourth scheduled begin demand quarter in increased beginning demand local Nymex to guidance, maintenance XXX% to utilization strengthens primarily their as to registered increase in due levels refineries the markets. see above Natural completed. We're gas our realizations

by basis due partially compared costs. the These heightened able to Production reduced to we on as operations, efforts production both of lower or $XX.XX Due both in as costs an focus to controlling $XXX sequentially. per and overall surface our costs and XXXX cost were per barrel quarter for the team's on downhole and were energy period were year to our costs, prior million well BOE. primarily our offset third

$XX.XX per BOE. production PSC quarter effects, costs our would have Excluding been third

quarter. costs the compensation, administrative of $X.XX our and below stock lower reduction BOE previous end resulted the and from general the $X.XX an million the was guidance range. were quarter about Most per a due equity-based of below quarter at previous or decrease well the Adjusted which $X lower price cash-settled to from

As price stock-based in are awards settled we statement a because significant portion every income previously of quarter. introduced discussed, our changes market stock to volatility marked our are cash our in and

efficiencies resulted $XX total implemented of a We operational organizational recent related mentioned, a workforce. range by $XX our the million Todd million the in report of reduction charge our to and XXXX. quarter fourth teams in As of in

we of of result, slightly XX% with a the than more the cost $XX approximately XXXX. the million at ongoing anticipate production in As of with savings fourth expenses, G&A in remaining quarter of annually, reduction the costs beginning

based to expected. in excluded the gains by attributable per share. came for of per valorem reported $X.XX net we or GHG diluted have income, are quarter the paid investment such well as we that our unusual comprised earnings $XX of noncash income XXXX, income on than as been as other and taxes value Cash share. third analysts, our minerals from or largely of as million In ad $X.XX of common cost, items items to early and our $XX diluted which extinguishment on are ground million counties would on other of Adjusting the stock on debt the net infrequent generally core are and

in EBITDAX adjusted activity Adjusted trading the natural the to largely improved trading EBITDAX while driven decrease second quarter $XXX in quarter, for quarter from for XXXX lower The XX% divestiture margins natural XXXX production adjusted X% gas and due million to to prior improved gas EBITDAX including higher million income, for sequentially XX%. third and compared of year-over-year increase by Hills was Lost $XXX of the year primarily a was cost. the

interest cash of to payments valorem comparing third million of cash operating taxes. second flow in favorably timing million $XXX third to first of of approximately capital due the quarter the internally-funded $XXX discretionary than $XXX generated X investments the cash and months to of first through higher the million X significantly year. In flow year, in quarter our XXXX, and of activities the the cash the reported CRC the from primarily months we quarter, million $XXX ad

high volatile portfolio we recalibrate As pivot during flows. has allows of rapidly out, to our CRC level our operational a activity expected which diverse us control and pointed periods cash over with

quarter, record We believe is succeed accordingly of continue environments. value, of have amount the flow success third to through believe months free adapt with the the the a has in quarter wide generated a CRC we we'll respond focusing million to XXXX. flow proven We internally-funded investment capital. We capital evident after first price in of million our range $XXX that on of fourth generate provided $XXX and flow for free and In will we and cash prudent plan. X cash with additional free our track cash

In inventory. part projects loaded our to capital joint our to for We our to the rate capital use continue VCI CRC and of capital added flexibility quarter, utilize fourth for the only cash will our in to deploy venture highest bringing year and national forward the offset plan decline -- primarily front-end flow.

we've that our positions guidance attachments current XXXX as note detailed fourth quarter the well in to hedge analysis as earnings please information provided release. key of items Also adjusted and

be happy portion any results take Q&A of to during call. our that I aspects on will have information of questions other the you and may on the

I'll over turn Thanks, to the back and now call Todd.

Todd Stevens

in remains CRC our portfolio. of Mark. full capture value the focused strategy asset laser our to Thanks,

on inception. our Our X capital disciplined continue quarters results deliver focused to XXXX a is value the solid that of team program since with in first

a resource enabled focus to Our generate controlling of margins to cash free our cost continued have diverse reliable combined discipline, These with healthy our continue realizations on to and with base base flow. capital asset our results. attributes, low-decline and allow and Brent-based CRC and us controllables optionality achieve the to consistent exposure

on to CRC's to the strengthening of asset simplifying We absolute and lowering utilizing our ventures full base. and debt, large flexibility level remain of sheet, focused value unlock de-risk and provide joint capital our balance while keenly potential

We'd happy now be to your take questions.

Operator

question comes of Raymond Molchanov James. Today's Instructions]. first [Operator from Pavel

Muhammed Ghulam

behalf Muhammed This is Molchanov. Pavel on Ghulam of

of directly. about the asset been headlines don't you've have think talk your a the of the are any of kind in you curious, frequency But your I across grunts about So have lot. this Can this fire even affected events. fire by first, your wildfires protection, measures bit varying a protection taken I'm assets base?

Todd Stevens

Thanks, preparedness different with our mudslide first wildfire Yes. for we with dealt we that and earthquake work responders the very is something and take well time of Muhammed. this, is local The we this not kind seriously. prepared regularly issues. agencies this and season of first the And government. season, We're California

the like events impacts give Edison you shutoffs also minor where operations something we related some anticipation impacts they PG&E. but which of by of could our is fires safety the an of To be directly Maria do do and have idea, high-wind fire SoCal and the to around power in of some

the that we being take of But, material appreciate we guidance year a and is in work thing take events react and have California much. that. into done from by something, all not very they do seriously. the first some So the to that pretty noted We these I really yes, outset, all we and as a occur responders But CRC as here, it the it's our firefighters every at unfortunately, perspective.

Muhammed Ghulam

bit state. to me And revived session? something drilling coming you in year's XXX legislative more Okay. and also during and oil Governor AB the pressure anticipate into Do getting policy guys be seems ask about more to landscape. The restrict like the let a gas next

Todd Stevens

that cities local it already things of behind be I if than something political to be Again, XXX state it language, there get will That, the with bill, other the it's was in X-year will we I that something. can And which in happen, with would but vague here California of setbacks A probably are support at serve things hyper-politicized people deal deal into push brought think and happens the country. like In money the a we be other that even make like there's will governments can local we tax California, landscape than a look some real and a they and irresponsible always these of resilient up. their issues. and decades own AB in. that put brought the This we parts severance California of a in that's for think with year the coffers. responsible have that so in year, the got and But that form. think and it is supply every the there that reliable it more out just back. of I that's up legislation tax was world industry might everyone that for deal challenges are severance been We're it you ensure today purposes. but think county even every come that here. lot they live impacts nature have the of legislation coffers something of the a take energy in could diverse and wildfires that sure have things -- but is is important is to

Operator

And our Goldman of Karl next Blunden comes Sachs. question today from

Karl Blunden

you've a back at uses at the some bonds bought obviously a cash, of look discount. of Taking

where couple swings We've just liquidity a but example. that right bit. take the is reaffirmed now. to would your guys just intra-quarter look commodities the positive, other under facility? in pressure issuers just for though, a of I do need you a that flexibility working manage of bit themselves give minimum are it what at given take that seen on a more a you'd is your increasing capital, front, On Interested to commitments metrics liquidity to it borrowing then, little for base choosing And noticed does which in second, the take

Todd Stevens

we're to mind. down the looking the We're we're to and and, you few our now that break fixed quantum I sheet We the charges for ultimately, absolute think debt. maturities. liquidity to two And to always balance simple sheet. the resimplify for things sheet. We're the complicated balance preserve our in out and break balance we questions with simplify to us sheet asked -- a a there. with balance to different of with as knowingly value trying trying Remember, look balance trying shareholders. to we trying balance protect, We're down create started

my to a to Brent us, market's for ourselves at environment. a a acting So, debt. $XX a the noted be with absolute But here $XX that's perspective the view what unique bring opportunity the in not debt's we way in our able like of I from we're sitting quantum down Brent Like It's trading. regards environment. to value comments,

I working swing of few think month. out dollars always unique debt, a and that come million talked as bills opportunity our against balance each due we about fixed it's to it's bring quantum on looking capital month liquidity, think we're and When us charges, swings, the for at. our something I each depending I and look, hundred investment we the that a down

Karl Blunden

That's helpful. now. stands update try can restricted you that in And and your payment then capacity, on where right

Todd Stevens

Mark will let I through that. you walk

Marshall Smith

you are want to. what "our us sure understand to for There referring I clarify mean you I aspects. to want whenever what you You say, restricted capacity?" payment different make are several

Karl Blunden

buy In back to ability one, bonds. this

Marshall Smith

of as we have what million base We asset the under to roughly $XXX non-borrowing basket. refer sale availability

Operator

the question today America. Bank Gregg from comes of Brody next And of

Gregg Brody

maybe I those clarify missed through numbers. cost-cutting and been You've some things. you it some could just of

million $XX to to rest. you missed and I then million place heard the savings. allocate take going through So how $XX the is the just we'd quarter, you this run of XX% that's cost, charges think much then it if that but clarify, I I and cash you reduction it where said of see

Todd Stevens

Yes.

reduction $XX and about that it's XX% is year XX% about related about of to OpEx. of million in that a So is G&A related to and cost, overall

Gregg Brody

forward? much how then And going

Todd Stevens

as in And quarter. start the tell seeing far it Going I'll was. as let should we fourth the Mark you charges, forward, exactly that what

Marshall Smith

onetime out will of, that be roughly, to million expect a charge take year. to on paid basis, and $XX Gregg, Yes. the we million then, cash remainder $XX over next

Gregg Brody

year. next of Remainder

Marshall Smith

Yes.

Gregg Brody

But million? is so it. that all the Got cash, $XX

Marshall Smith

just to we'll to million sure be accrual we taking that in want we're clear then $XX and -- the year. $XX so take cash here, next So over million flow will Gregg. make be That the will of I out really terms

Gregg Brody

the in quarter? nothing fourth So

Marshall Smith

charges quarter. fourth in the The be will all

Gregg Brody

I'm thinking about I get it. cash.

the see most in saying it XXXX? impact but $XX throughout you're charged you'll cash million the to So of quarter of million $XX fourth

Marshall Smith

Yes.

Gregg Brody

But $XX the... over million savings that's in really

Marshall Smith

correct. XX the That's Over right. next Yes. months, roughly

Gregg Brody

you full XX rate to expect in And be run months?

Marshall Smith

I I've I've -- our the it, normalized want you will clear to got the levels. We'll an Gregg. in take ongoing accrual run make basis, on to sure on bring rate, got it and quarter so down that fourth

Gregg Brody

in saying there fourth You're the quarter?

Marshall Smith

Right.

Gregg Brody

Got it.

complicating question for and don't it leave one. -- And just maybe, second then maybe Sorry there. I'll I a then that there

asset us you're an kind things of can color? what where sale us some thinking give of the Sort on today, Just process, about? just are give you you update? Can

Todd Stevens

mentioned all in my a bunch people to would some about it is. comments have strategy, opening And like of specifics. know but I know I it's I truly

of you leases just and think you we major. Some don't typically vibrant see super a it, again, is We But have of would business pumping inside it that some confidential. actually a units. about when have

looking things from So so to there, stable of where when at we of downturn, assets. our went wouldn't above, point really all midstream now, prices the our assets, had we $XX asset infrastructure in value conduct preserved like a we to existing through at part producing around -- standpoint Brent, say assets, we're We looking any of the get fire-sales. the our we're monetizations monetization

land. have We surface

here there's on how and a business acquiring talk Beach ways elsewhere. something event, But could And have opportunity It you elsewhere, whether in deleveraging be up. depending Huntington a looking else of I monetize. dream with think everybody we're capitalize M&A, you could Do development things. we large creative it be you knows kinds California. about engineering to at us ways at can which position all financial

but about it I one expound all shot. So we're looking things just all day not could the at, long is

We a lot of we're have ammunition, here. and paths lots of pursuing

Operator

at Sankey comes question from Mizuho. Our Paul next

Paul Sankey

I a bit XXXX. back sort was that it a was enormous was February operationally different over and how company I'm I as essentially that the an to and believe regards this you argument in and the thinking surprises was you but level period well been high in prices. what Brent, just would the would The was I at about of be negative say, performs [indiscernible]. at $XX stock like tell wondering, back wrong, oil now, lower, at operational nevertheless there 'XX me the if if oil between think haven't then

you I would guess, think appetite occurring more, the is oil your Maybe insofar sell equities in seem perception the I on all fair what debt. just of market oil for down risk equity, that's wanted across It say, less say. it's to stuff. be perception in I trade to board. as, as that

Todd Stevens

it's Paul, I think still same thing. the

out cash We to since the have people think try We're are positive assets. on asset not don't be I we now, even is but definitely free spin, And going We've perception since much what -- to too energy underlying say -- that now. we February back screened right XXXX. bleak We've look to poorly times a which the February business. more able peel from been been able what think we're is onion the whatever for than of at flow do capital-intensive in favor often is do to I 'XX, my to debt, reason.

a in that But is years. the not wouldn't times investors where values. seen this in type this fire-sale methodical, conditions methodically We've maturity it to the Again, trying when, things be we start have think haven't of I We've of been the reality, but XXXX. have there's burned in not well of many have aware of been contemplating out reorganization strategic. self-fulfilling work that to been right through debt very year. too perception prophecy last very too CRC, to spin, it. there kind I with through since X been early we're do monetizations, the It's we're want a many think a also like that people there

You plenty to time keep and And we value vest to of execute our on that do maximize going know for our have to background. the cards shareholders. are going about to I that things left to close prior pricing my We're what's not to these debt something $XX us going for delever. view assumptions all plus as opportunity $XX a an today. barrel. It's Brent happen, and is Again, distressed the to

Paul Sankey

go an thoughts it but give that given Yes. point on that, I mean your you in it to was obvious wanted comments. I your you mentioned kind of just

for to sure because must referenced pricing you're deals. royalty I'm what's reluctant the And it's it. or update you do, happening? Is far on could or so you potential have other fell it

Todd Stevens

There's the executed We're parties, parties we've of and have with if doing are some been me. it way pull. plan I'd it involved. a work would more waiting giving and most have them say. to been go on in Again, was create but working X it, levers We've would've one actually cases, B, E there expect to D, doesn't F party of I If the It's stood And it's anticipate so involved by in have that one I not we and, we the progress, out. trying done now, been go. to a parties some business time. C, value some be lot we to in

a full-some different of a assets, like types full major. have business, We of super again,

our going trying we in of best our it. taking to and just to interest and regret the after what's shareholders that do time rush do we're really do we're not So something

Operator

today from of Sneeden Guggenheim. question comes Our next Sean

Sean Sneeden

addition ultimately guys is the how with in capital has guys level? and you out that you the you down, capital kind the are prepared about maintenance you that how perspective, what that alluded of think do our kind to lower trend that at levers may what From maintenance -- Or about JV, think to. You think, called your of Colony of all? how remarks get I transformed

Todd Stevens

things a flow tool a It weren't think internal swings. us working for in competing I Again, bring opportunities, value for added that helps capital. with cash our because us manage the helps tool in the powerful really remember an our the are toolbox for business us And volatile it us. partners. JVs it there are de-risk helps where is commodity it

an toolbox it's important tool us. So in for our

We're ultimately people and As and do JVs, is have manage business real forward, cash they they have we in this, forget flow too, look reversions about to revert the all better we better. get different we're pleased JV. about different But and to you to -- Colony so always referenced, striving with talking looking we're the at what do very what get which the They going slightly differently. all always criteria.

time, to operating capital even over so the of anyhow. G&A at a standpoint million We're our wasn't bigger this efficient. not end." We better, a from we we to new to low away benefits, and and So change production maintenance pushing already sat We're looking of more and and capital, going for of can challenged "Oh see time over out becoming kind right also actually starting we to it So this restructuring, our It's and and on where capital thought, This and something we with about working That's structure part to of started to capital the feel yield boy, we out work intensity a further help oil system completion come faster, that keep margin. thought take drilling even ourselves I make see feel something and always a very starting months do looking think, our $XXX kind be $XXX and our and flat kind leaner team that stronger. down we we've really let's that X at and X the X big years. more and standpoint, from getting us like, cost the ago then an and down us standpoint, about, efficient to million structure of faster "Hey, of meaner spent numbers. long what it that the is we're we're in will organization with that we from said, validating that this."

Sean Sneeden

into Got come cost of think to it. of was business. Is number $XX a -- the way million part fair savings that to of in you capital that maintenance I And trying that referenced guess kind it? a going strategy the about the lower to some

Todd Stevens

No.

We the X,XXX member OPEC when into the remember X,XXX contractors, well after think about prices. I A going cast with if X, off bit little I was twofold. on said think over right. Monday and December with to I spun employees XXXX We was, we downturn. a support it they the went Friday weren't

a trying we free could we so business to within necessary out activity So enable reduced remain so. we take things. then during to different when downturn, flow to and steps the much that as were positive us flow do to to things came so. our we way and We're to to the to manage do able capacity had to continue do the preserve do as the And be downturn, of quickly cash some free we cash those we of organizational

wasn't something as in that I started we preserved $XX It say, organizational redesign capital It the and really What deploy is savings, whole up the highest it to we in a we're and realized like is larger I way. G&A. with a an let's when up. can studying year, we where I savings our at at why went really started the we how It probably right an we much you now organization and human make financial capital company, need you're with doing of and projects our cash million reality better exercise too up company capacity start how can so think did work. we much absolute exercise. the how think was in from and OpEx money. what how many then bottom organization the or look how we value But really the and work, it heads ended we things as at we wasn't better be the do And that's from

Sean Sneeden

I Those applies referenced That think makes basket the then then sense. repurchases the lien the around loan, just if Mark, thinking to you. X.X just of And guess the second significant that be are to all million the your trade, I for discount lien on around calculus how borrowing specifically and get that the term guess, to you're $XXX that for clear, or earlier, changed Xx. about you has I unsecured curious thoughts any

Marshall Smith

basket That used components discount, base repurchase I question. will be a that to the go with non-borrowing $XXX Well, both Sean. answer can at associated this to debt think to million any

biggest capital to might various the look we'll tend benefit get we evaluate where of we components So structure the at and the accordingly. call it and

Todd Stevens

from the after I go the August, Sean, other the the value that both a debt was with set our them. is charges. now from proceeds a early focus we best saying, opportunity our you opportunity remember But has using the fixed shareholders, principal proposition in the coupon amendment, -- balance fixed which that high a transaction traded reduction of down, think value we got associated "What on, liens when we was charge and that and contemplating were Yes, I'd best as X.X for reducing because Xth

the from the marketplace. where I day try to debt evaluate So think we're be we as -- opportunistic at trades the just in we'll standpoint, look each our landscape and

liquid. extremely is it of Some

Some is not. of it

You in reality, hypothetical trade price, can but that that's see where on that and your screen, you just think it's there are or some they're some here doesn't some but there are particular who of stuff based won't listening, one buy less stuff of trading when they becomes that and -- a are they it name buyers, everything some who know available. I of up dollar when Bloomberg

Sean Sneeden

Got That's last could it. And if just one squeeze I one helpful. in.

like that? the here talked the to of On immediately it how is It's think kind should think program the of million TOE we of and will should about of what grant capital how about, you term Or needs in actionable $XXX that about guys be? -- near how the reserves. that adding -- going we kind

Todd Stevens

So that they -- a book This capital commercially you something project. large when become is is viable. reserves this

are a commitment So contingent work facilities grow the they think technical are this. and the have to in I to in there time, a have at that you to but invest category because, actually money point reserves this

are So it doing, is the we that now. right something FEED study

isn't people start you This committed reserves. facility, have We you but start booking be those to overnight, can working going on building this. to the once

on slide have the think deck, I Slide a in on we X. that

be at we of based this on is It in but It X, at where we the would on take it on point accelerated, can that. of on now. time, see you think that look you looks of could think it process in Slide if can are But like you you right time today. stream frame XXXX. kind comes something look a I So a working gives around it

Operator

of today Ginsburg question comes our next R.W. Andrew from And comes Pressprich.

Andrew Ginsburg

placed the recent just ask question terms administration a Trump COSCO sanctions the of in the I Chinese that wanted on So to firm. shipping

of lot rates did any since tailwind to been So a Middle is you of that from Brent? provide Saudi from you East, to and imported tanker I Arabia and exploding -- crude lately, have realization the the guys kind are know guys

Todd Stevens

pricing almost just this upward realizations causes cost, it kind XX%, it's from into on the is it's XX% our bid barrels. just Alaska in or from to whether California up the up East. of confirms pressure giving X/X that I because the our remember our Yes, barrels and added entirely XX% ability Middle of upward the crude because California, pressure and that supertankers, think imported mostly is to our

Andrew Ginsburg

right. right. All All

then circling of an just terms to be idea how sense. you makes able of have that capture Now an on study, much think percentage like it you you'd decrease back Did costs mentioned accretive to could And in that structure. carbon from you the cost that? estimate the cost be to overall

Todd Stevens

is because there. over market, a actually we've in bid players come probably what And too that to exactly time. gets that it's It marketplace, seen financial up know bid in happens so GHD early some

I estimates and too much premature be. So but that some see, up. we time, bid over that it's we be how But have think we to wait will say but think might

Andrew Ginsburg

All right.

saying. you're you kind So of then the really any positive momentum emissions credits need from the be terms would that cost to from from pay any that perspective, really for in of

Todd Stevens

credit Yes. for We would our powerplant. no longer need to buy

Operator

And Tarek JPMorgan. our today next comes Hamid of question from

Tarek Hamid

of but talk on terms natural just supply about you gas in and up and you power a of impact got of pricing. bit what of sort of bases the more a little sort bunch seeing the you're you've over -- back down as a demand well had both impact Can the sort you wildfires Obviously also of with over a again. brought impact of bit on

Todd Stevens

haven't the we seen pricing think Citygate I any in on state. impact real

just pretty to the commentary. my gas as out being unreliable. some natural I rushing think But lot time, see they generators, that's probably with over create it'll a grid of demand people buy

Tarek Hamid

the you of thoughts liability lot expect question to on it's sort if other of when something bit asset to important the announce? then a And of, little have sales the to ask, an but this your you a and but air, of comments, management, it. kind have sort of with Got hate of you any of in I sort balls sort put touched sort just about you between meaningful to around, would you on spot, think

Todd Stevens

we a are there earlier, the things of trying isn't No. solution Like best we're for wait the involved, I trying said our I whites to hope line. we're their for to term, Paul be A these be lot military we'd finish to shareholders of of eyes. patient, would think use but and the we contemplating, lawyering lot so work across

to free work involved, we're you that what's a parties you're the at and trigger generate to with try We We'd to continue cash to We're while, done and here are a Again, to are but you're do little them. maximum when not we other value, and to business not have flow. to their if going trying in the we to best wait few weeks, while wait a the going means and soon. be whims too in going anything. to run a sometimes get rush do little continue have pull love when to

time in happen your it frame. always doesn't So

Tarek Hamid

Fair enough. me. one And then last just for

ninth to that's covenants want I With no sure the make correct. the I'm amendment. borrowing the base affirmation, assuming changes from just to

Marshall Smith

Tar, correct. that's

Tarek Hamid

want just to I Good. that. clarify

Marshall Smith

provisions. no other was Borrowing with base reaffirmed

Operator

the question-and-answer remarks. our Stevens over conference concludes to this session. I any gentlemen, back and to turn closing Ladies like would Todd for

Todd Stevens

today's value model a quality, our our CRC Aided keenly unrelenting be built record We'll focused VCI meaningful delevering allocation our deliver throughout the flows on of to and is high focus excellence, decline transactions to to our and value operational shareholders. the full business by perform in our low additional base. consistent with and by cash advance further Thank on everyone, continue disciplined can capture risk resource completing to expected to inventory. cycle we're capital you, has transactions, high track of and call. participating for our guided aligned low

see you in the will room. We Thank out there you.

Operator

coming The And presentation. today's We concluded. for thank to has conference now you thank, sir. all

day. wonderful lines have a now may and your disconnect You

California Resources (CRC) 4 Nov 192019 Q3 Earnings call transcript