CRC - Earnings call transcript Q4 2019 | California Resources Corporation

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Operator

Good afternoon and welcome to the California Resources Corporation, Fourth Quarter and Year End Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, today's event is being recorded.

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

Scott Espenshade

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

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

will comments provided our offer related market, is currently opened and XX Press to X-K. information the in transactions the our be we in dated February the Because limiting Release our exchange regarding

bird we As early after the on March the X. market mentioned, will update previously deadline

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

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

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

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

turn call will I Todd. over to the now

Todd Stevens

strategy flows, and Thank to and a XXXX to closed end oriented cash This of to million XXXX and in XX our our in sheet. XXXX XXXX, earnings and based then we cash of Since committed flow. entered a delivered for quarter free attending primary capitalization. yield fourth formation stronger tenants market one our December year our balance resulted Scott. today on call. value lived have within Thanks $XXX everyone you XXXX cash We achieving flow XX% in consistently free

in in CRC Operational realizations our also adjusted excellence stellar by improved delivered highlighted a price our strong by driven reductions, EBITDAX marketing cost efforts. strong record was and margins. safety XXXX,

space. activity several that deployed debt our validate again resource major capital and transactions our advance reduction, our support JV We drilling executed to

of of by exchange we As launched an our de-lever. would have our transaction you know, as reducing to the offer If almost $X recently debt effect subscribed, part continuing fully efforts the billion.

and credit reduce transaction of principal enable our stack free which be to debt continue significantly would to would us successful for balances, company. would cash the balance The this conclusion flow other sheet transaction strengthening. The accretive address our of our layers

and broad our We continuing sales next and are our on involving potential to monetization and steps discussions Real portfolio. also on focus Assets

bird early March provide an the exchange X, on We current the on after to deadline on the close expect to update March transaction and XX.

last oil January, Let back to The of recent and recent lower XXXX. XXXX. coronavirus seen implications has briefly of macroeconomic from apparent December for with early volatility, the early in current me in highs environment turn its part Brent caused reversing the to prices levels course

flow value of organization cash our built fluctuations to cycle free through and We've price sort. deliver this commodity

portfolio differentiated and nimble pressure our Our tested. is is asset flexible, team

variety environment adapt to quickly value we that and opportunities strategically demonstrated, best we our have we of to capital are ahead. allocating As price the lie

targeted our our same absolute synergies XXXX balance in reducing At control to on significant long more and to continue work further we we enhance time, look have today as margins, cost remain goals controllables. ratio sheet to opportunities operational us our in XXXX. leverage the progress to enabling we below made the to are strategies term towards and Our track Xx. achieve We’ve

consolidating Fields and Beach Long teams to and reduce we've improve been efficiency, our able streamlining staffing our in and margins. increase offices, By core our Bakers operations

provide We expect efficiencies these for efforts CRC to additional XXXX. in

cash our important unit and maintain we control as work strong the Growing to is costs. premiums and are across our absolute and we receive margins per enhance commodities production

modest Our base. with our low assets intensity production underpin decline valuable capital

to base are increase decline. planning our to production work help In capital activity, XXXX our to relative allocation we over offset

continue de-risk value and metric capital accelerating opportunities of portfolio of flow. will strategy and served our have joint bringing VCI to our us our production well. This disciplined space to use allocate deep We of the to cash forward our utilize resource investable ventures while to

Our program VCI tested approximately deliver believe a the we expected capital. this internally X.X time of invest fully our on XXXX capital a to benchmark, projects. ensures in is invested We burdened which best is

sheets, balance our ensure our In and spend. multi-step to maximize billion, lowest solid we drove credit since able in are XXXX $X our consistent we're below debt of strengthening debt level our reducing XXXX value made to total processes Many through the transactions transactions agreements. multiple our progress with

take strengthen our balance prices steps to sheet commodity in to by market and to conditions. changes continue dynamically We responding

we relocate decision and XXXX For in more our actively conscious prudently to back repurchase capital approximately VCI debt in made slow our example, advantage the investment and to half two. our for of of took the conditions our a base asset of market

XX% use proceeds interest our Additionally from debt Hills sale flow Lost to this our a directly property. and in lower free The cash contributed our of sold we level.

our reduce the strengthen continues balance targeted work and Our to to sheet debt level. further

stemmed environmental, neighbors, The responsibility, ESG to commitment investment CRC's our and governance matters. and from communities core our values on increasingly policy environment. the coworkers, focused character, of social has and committee

since performance most significantly have and peers. for excellence focused from believe our XXXX our Like CRC our climate strategy briefly performance highlight disclosure. enduring our spin. on to value, recent We two examples safety we of this like and differentiates of ESG I’d champion,

our zero office E&P recordable with even better than XXXX, Our workforce and operations better employee history achieved a in jobs. far in and injuries that contractors our rating the most industry including the best safety safety than of record is the

have been like safety year. formally CRC last organizations last every Safety CDP's scoring A- highlighting for as Project, since year leadership XXXX XX climate known ESG Council received our Further recognized an our awards leading from excellent, the CDP, month Operations the formation, on Disclosure at the by including Carbon the level. disclosure National

U.S. regulatory world as change this requirements, to integrating XXXX planning our goal That policies oil of sustainability delighted are highest our among and recognition term receive goals. gas into our employees advance We as ambitious a and state the rating thoughtful ESG climate all reflects implementing goals. well CDP's This companies. in of distinction leading strategic beyond long California's leadership to

ranking that our in state California's energy apply standards. do illustrate meet demand CDP share safety CRCs energy intense our performance from production high not standards, and foreign import both, to that can values need countries reducing and the or

As to energy belier Californians serve ESG and and our with policies role environmental track producers. we will coupled strategic and continue record our industry sustainably safety as operational differentiator among an our model goals,

partnerships will projects, has that our we To metrics am board XXXX to for incorporate community workforce specific sustainability and adopted diversity, announce compensation summarize and pleased that sustainability proxy. further in XXXX which our development I incentive demonstrate additional milestones commitment, for CRCs

California is also in spotlight. the political

deadline work to Governor's battle our nonprofit affect homelessness regulations business, may tackle proposed We're industry, actively the introduction coalitions primary, our and with the stated from the bills agricultural the address With force the Friday's state X labor, in that recent reviewing at bill and last our legislature. communities. in engaged presidential sectors and and March

and chart process more the vote committee physical both We've workforce a be believe of the they prior the included heard and balanced, law. bill our compromise in our these continue the of to process have we responsibly to lasts This impacts detailing and in opportunities multiple final legislature's the involves for to make has state’s for year solutions formal often past. analysis process will This historically new flow slide collections in hearings, a appendix as houses. leadership in decisions four resulted become own and a with most

throughout world across and lifespan a environment, levels. across access affordable, EMPs I particularly economic social increased America and cleaner standard economic through living energy, note, would growth, to the and the ingenuity driven all has of reliable, longer

the for efficient sensitive provided renewables. technological with innovations environmentally in of progress, building has and the complementary this gas and Petroleum basic natural blocks production oil,

next into the for move energy to we grow. decade, the produced continue demand As will sustainably

can As actually energy state afford. leaders on promote Californians continue goals necessities we must ambitious climate long reliable, to term working and that daily a deliver demand,

we demonstrates environmental and energy renewable Experience ensure that even of goals. portfolio state affordability, resilience, long and need globally closer traditional reliability and in energy pursue our diversified will our to term as society

local producing Hills City, energy supply securing and pioneering an in to CRC carbon Californians serves and Beach an at affordable, and field. from essential by operating for safely responsibly Elk energy our reliable, sequestration Yuba Huntington critical infrastructure capture role resources

investment program capital and in funded reflects California. to capital investment workovers. approximately internally XXXX was drilling XXXX approximately capital $XXX which million, $XXX Our million of totaled active our CRC's directed in

approximately drilling. all million XXXX, was partners $XXX invested in which Our JV to of directed

XXXX XXX,XXX we the excluding oil drilling rigs day totaling XXX total to equivalent. We barrels with a Meanwhile reserves BOE operating XXXX JV with ended of per XXXX, production seven million eight asset year, net from X% for decrease averaged a CRCs with projects. exited rigs devoted sales. of

F&D cost a of replacement reserve with organic $XXX per Our ratio was organic BOE. XXX%, corresponding

management's at and some time the reserves higher PUD back rule. We reserve SECs the a spend, to also certain additional environment. date significantly were by discretion, year impacted our PUD removed These PUD reserves five price of

with future asset for life we recategorized this manage and will as Although plans. PUDs capital be were they these long to remain quality, our that our investment high economic they year, evaluated continue

funded inventory the talented thanks unproved growing actionable capital, well reserves the use efforts venture projects. and as of team once of joint again, Notably, our to internally increased we as our our and

least which each ended robust XXXX As of very our a inventory average with permit XX target we an exceed. previous we maintaining CRC consistently optimize drilling for at years, days ready in To drilling of program rig, inventory. permits rig drilling

market gives focus avoid on rig in time costly our flexibility waiting us the inventory non-productive to and permit we permits. VCI on drilling projects This highest changing conditions

As of drive CRC from any a diverse type. mechanism production play reminder, we dependent mix on a or single balanced from benefits and are not fields

have consistently established again volatility this capital XXXX, once year, done past. in given as early program we have We oil the price the disciplined of for a

noted capital earlier, As to increase XXXX. in planning allocation we I activity relative to our workover are

to year, driven capital to cash align discretionary We the dynamically will us. program the adjust utilize our best before ensure with captures flow to the opportunity during value decision making investment

million. $XXX XXXX to joint of million million funded venture to of million internally an program capital $XXX entered looking a an which with to to million, with capital we of approximately supplement total $XXX $XXX we to million additional Accordingly budget are $XXX $XXX support

balance deleveraging continue and in and ventures pursue additional capital help with investment will We'll investing our value while to flow. us CRCs assets high our joint projects opportunities, align cash

$XXX We XX% combined first expect which midpoint the $XXX JV to capital is and our than in fourth XXXX in million level. CRC capital approximately at quarter million invest approximately the quarter to investment XXXX, lower

the be funded of we our internally invested the XXXX. the of expect half XXXX also capital quarter We level approximately in first fourth to quarter in

our the XXXX to prices cash plan conditions and current will as provided in started to one positive flow levels with investment our dynamically broad free We capital as past. remain the year a change we've the We target just will continue CRC demonstrated and at market end guidance of adjust range. rig range lower we capital

stabilize are first joint internal cash levels targeting conditions stronger macroeconomic investment in we our we be positive. conducted of If slight the of quarter expect venture as at investment, our be range, production net on CRCs bulk through our we with expect our still remaining gross year, growing the will level year, guidance the activity could upper to while end Based flow although capital. a this of production decline

reversion if CRC BSP We joint maturity. early our to revert to CRC although to XXXX. BSP occur production expect ventures could revert revert prices, venture At we late improve prices this XXXX, mirror’s certain in expect while in current to oil XXXX year, can joint before that flow cash

EBITDAX reduction realization BOE for X,XXX our day, strong approximately of decline one asset We base, to is our our continuing by expect to due generation, nature production low first at include XXXX anticipate of supported demand healthy robust a which products. plants. quarter power and of California levels We scheduled the per maintenance still

to more turn fourth Mark. will a the on quarter performance, I call detail over now For the

Mark Smith

Thanks Todd. sheet assets joint our and enhancing ventures. value demonstrate on CRCs discipline, team continuously maximizing market continued strategic focus margins, and our balance to through strengthening our the while of transactions capital underlying our

the of through XXXX. down One annual additional $XXX billion, $X.X of proud adjusted a while of number level. by spend our This total generated million a peaked key our year. billion are $X.XX of accomplishment, reduction a accomplishments to We debt driving since team total record EBITDAX our contributed debt the in from

Another $X.X billion. flow of key accomplishment, record free during of borrowing generated the $XXX base and reaffirmed we year cash million our

key other of on of an to Another team's diligence serve with adjusted finished testament accomplishment among year value. net XXXX, our diluted or and $XX $X.XX the we accomplishments million share. a focus These per as income

we As resource integrated significant decade, space our apply world decline new in class, expertise California's infrastructure. their to enter value and a our will continue from asset teams diversified derive low to base a thoughtfully technical

our the marked This repurchased million in consecutive our a repurchases and $XXX strengthen given lean top to remains us. cumulative with priority that work constantly We quarter in face sheet, XXXX the above value. the we’ve second all XXXX quarter approach. for Accordingly notes, balance eighth fourth totaling the

highlight to lowest adjusted like January spin reflects at of our ratio. stood that a EBITDAX month billion, total end and since XX level $X.X I'd below the the debt to X.Xx debt last our

three substantial our stated we Todd exchange below expect we're will deliver of the make recently towards offer mentioned, As continuing deleveraging goal launched to leverage we progress and an which ratio times.

XXXX low assets. driven infrastructure market long unique decline displayed reserves believe once life, our We strength value that integrated are generate and our transactions. Our the differentiators and sustained year development clear assets end enhanced driven of again

of reserves environment joint prospective year-end of recategorize We five based attractive, we particularly partners. believe XXXX discretion capital year rule to and on at can some due undeveloped Based or remain the on venture proved SEC’s level our management's and reserves the development commodity our priorities. investment, the very current these

reserve In XXX resources gross prove and drove organic XXXX of XXX%. to replacement with by wells an continue ratio including partners our we wells, funded JV

ended year year BOE XXX we produce reserves. with the BOE and During XX million improved the million

in per Our the XXXX ratio organic finding and X.Xx. resulted and BOE recycle development in were $X.XX of costs organic

averaged of Organic F&D average underlying $X.XX years, with last our record low while per In experience ratio, finding have strong five development costs my fundamentals X.Xx. the high ratios asset and demonstrates combined recycle costs recycle over BOE the this track of organic base.

substantial infrastructure, into insight costs geology. F&B our highlight development resources, undeveloped reservoirs were operate, well our our with as and Our previous continued low consistent in of stack the integrated year’s nature costs as which unique we deep our California's

Our reserve in additions allocation choice was XXXX and discoveries, to well extensions our disciplined demonstrated capital approach as from in the as projects. of our

we optimize our and as discussed, development we’ve such factors strive pay-back metric to on secondary VCI period. As based

relative graded Our our in ratio to support VCI upper XX extensive of quartile projects and which our production high is reserve portfolio of to group. the years, peer high

crude to is alone consider enterprise value point key develop to exceed reserves continues our that believe current we our value. Another the of

day, full year-over-year a sale. average BOE XX,XXX barrels total year oil per including decrease our Returning the day. produced Lost reflects adjusting to XXX,XXX the quarter and we X% the is fourth quarter This in and an per statement in income production fourth for XXXX. Hills financial of the performance In production

CRCs low quarterly down X% capital with to range, investment, third the lower power in the our of outages production and in XXXX quarter at factors. fires end was Southern guidance other together California due

XXXX production year day, registered barrels oil per XX,XXX per including full average Our day. of BOE production XXX,XXX

due effects second occurred XXXX the that of with to down Lost combined Hills quarter the divestiture in BOE total production the was Our X% previously XXXX. mentioned in

Aligned and discussed in total million the capital with internally our of additional our funded allocation investment we an projects in funded $XX last JV million fourth earnings capital $XXX the we of with million quarter $XX call, quarter. our partners in that

rigs. venture with eight This drilling joint averaged we capital. operating quarter rigs six included the During

rig light As to venture reduced end free price Todd aid continuing assets mentioned, we the commodity in our our the fourth of environment, the to of CRC generation. count deploy flow while to develop our investments by one and cash joint quarter,

continued we XXXX XX Joaquin the quarter where where Los the fourth drilled wells. in Our drilled the drilling nine we Angeles wells and focus program primarily on of basin to San basin

to Ventura and both a have which no modest active continue at basin, Sacramento decline. natural program drilling CRC We show

CRCs Our continue market marketing combined based infrastructure crude realizations. and Brent the industry in leading efforts mix with preferred drive California to

During Brent of $XX.XX oil the per for were our the full barrel XXX% or per fourth quarter unhedged Brent or $XX.XX of realizations barrel XXXX. XXX% and year

positive Our of our strong $XX.XX of or the during hedged quarterly per is year oil quarter that Again, strong contributed market $XX.XX the were to barrel was full our above of for Brent of per realization barrel XX% realizations per per and the barrel range of XX% quarter, another peers. approximately and differentiator our for guidance The twice fourth NGL $XX.XX barrel in or California $XX.XX XXXX. realizations XXXX. Brent

Quarterly cold of at at due guidance range national realizations anticipation milder also gas to realizations top gas with California year at natural U.S. rest of the temperatures of and the our XXX% XXX% end of in the NYMEX. NYMEX the in full came the of winter

fourth BOE the our or range, Production on were per reflecting efficiency. our $XXX focus and XXXX ongoing of costs operational guidance quarter $XX.XX for million stated within

Although XXXX. our production trended per in year-over-year, consistently remained down unit costs they flat relatively

per improving Including on also we costs focus sequentially throughout of been would our BOE BOE, In down have operations. PSC trending XXXX fourth effects, quarter $XX.XX look third per and quarter to costs production controllable our in XXXX. from efficiency the $XX.XX

we our mentioned of XX% G&A production savings teams a these and in reduction $XX implemented operational of in quarter. organizational a as the reminder costs. and last annually result of than recorded million of recent of more result with workforce, operational the ongoing as cost anticipate expenses slightly and charge fourth million We the improvements, approximately in a quarter, our resulted we total efficiencies and in organizational by As a reduction $XX

$X.XX our per workforce that’s our below from the quarter were and recent prior previous and in BOA, general is our reduction. range. guidance $X.XX Mostly decreased the of administrative Adjusted primarily quarter below result the result costs

are other GHG than ground, taxes net work loss came attributable to income, analysts, ad a common of debt for the reported or and valorem have taxes, loss taxes value our minerals charges fourth per in non-cash on Adjusting as would as $XX local quarter production XXXX $XXX expected. our Taxes which share. of on based per largely we of as the extinguishment by of gains from are our in stock the comprised reduction, we infrequent In well excluded force diluted which income other items core share. early earnings and investment $X.XX net unusual such diluted been as or on and $X.XX of generally million million

we a of As per for share. XXXX net a reported full or $XX $X.XX million loss year loss diluted

frequent similarly We items. for unusual are adjusting and

XXXX would million have Our adjusted net share. $X.XX $XX or per diluted been income

for registered fourth the EBITDAX $XXX million. Adjusted quarter

our Our full of XX%, $X.XX expansion reached year EBITDAX a adjusted operational XXXX adjusted of spin billion. margin as This both our continued focus EBITDAX highlights to as well on records excellence.

flow CRC reduction to in with quarter, than quarter from activities XXXX, and lower associated fourth costs mentioned workforce primarily of the that earlier reported the operating realizations. I of $XXX in cash by million third strong bolstered

flow In year. provide $XX quarter compared with capital capital during for internally to XXXX. flow discipline generate and for of previously we the funded demonstrate million free million fourth and that like $XXX on the would the discretionary for This full focus results XXXX. $XXX quarter ability us with million cash well to in million fourth of cash investments these and our our million I'd $XXX the approximately highlight generated $XXX mentioned

exploration organization companies. our and CRC only results, as most domestic of value free group, we believe free between We XX, capitalization delivers that to of yield both or further also but as not differentiator improve production peer strong In efficiencies financial is other breadth and on an XX% diverse flow XXXX. key our based flow operational market and another XXXX this approximately noted the asset December XXXX Todd highlighting cash base. CRC well cash underlying and optimized our CRC’s implies as for

this in strategic enter we efficiencies other and key I'll during any as pursuing to attachments the we provide Q&A and ventures, XXXX decade, analysis industry while earnings sheet. well to information aspects questions on Please happy thoughtfully release. first new items, adjusted take be joint As quarter as that operational call. our the and maintain balance our value that detailed strive note have you a may a portion driven of results to realizations, we guidance of our information strength of a leading

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

Todd Stevens

to Before sustainably for cash observations longer spin. searching make a oil seeing we move gas the energy These have low general We're resource generate sentiment a been about in the intensity, a to our change with capital Q&A, since and flow. domestic to hallmark investor investors free sector. like few our duration, and ability I’d CRC’s

within and flow. base We increased have consistently lived our resource cash

low us the value. Our further class California's from support with based pricing. oil value continued further factors decline, allows premium along happy enhanced We're strengthening These questions. now to world brand benefit assets balance weighted and to production sheet take your shareholder of CRC’s

Operator

with Bank question Instructions] [Operator Our Kalei from Akamine America. comes Please ahead. go of first

Kalei Akamine

Hey guys, afternoon. good

Todd Stevens

Hey Kalei.

Kalei Akamine

are first this I particular, share way hoping itself. the sale. a the the keep to that outright just on I you're comments rather just But than question, trying wondering could offer to benefits I'm was exchange royalty monetizing Hey, on comments what minimum. In an it the you through some that to understand

Todd Stevens

talk I'll but think I level. very Yeah, careful, a about it again, high at be – I'll

what by doing flow you the part cash say other earned rather here down does pay at I thing debt think structure if up the it a I and royalty differentiating so. really think and accretive, but both this is would things. Perella, royalty come capture of us It of advisors to the back I discount partners that unique is notes, allows free with the our is we it's and

never it sale you it, get back. you If did for a would simple

because out buy annual by Elk us million of it, this with we've Chevron to out to Chevron But it of all $XX Elk a think and about take got realize, because excess Ares to operational year. Hills achieved step, Hills a our got of to synergies in buying I with you Capital, allowed started if Ares back want also JV you

a we've effectively to effect monetized achieved unique see to more this Hills, Elk down. part able to opportunity in part as I the nature given and there, our a this be but And as loyalty earn synergies of royalty. over So taken we’ll them think continue this those just back rather gives we've of pays us synergies of time

Kalei Akamine

it. exchange Got XK second substantial was Hill. you the on offer, XK can the Elk question why released confirm Brent. My also is the with suggested help The that that be. if it Elk premium wondering a suggested, us that to Hill case that’s I’m that has and received would understand

Todd Stevens

has this Well, do know it a Brent are and our a is heavier, crudes of inception crude. It at to River, the one like XXG premium all it has but so received and in still Midway they the crude anXXG is The for heavy XXG slightly carbon stock – higher it or the California. quality other blending effectively and lower Sunset much is all of blending you heavy has than Current with more California stocks since intensity. to crudes super

Kalei Akamine

a Got Todd. it, thanks

Todd Stevens

Thanks Kalei.

Operator

The from Wangler Imperial please Capital; with ahead. is go next question Jason

Jason Wangler

which guess as where that the think how years. reduction kind about about capital couple I have as that the obviously you kind you some Hey, plan generating wondering out as conjunction I pretty kind have with with you on of year debt further of think of the tough, program oil right you but obviously exchange, likely afternoon. of can operating done that in now laid far in was have free prices here cash is going know flow, going through and that’s the been just last you good and the you basis an EMR, forward

Todd Stevens

Yeah, into that XXXX. price I reins, pulled year flow cash however as through JV cash work and partner go that. year. go into within in cautious perspective to because we're you've operated going worse flow company to the from year, of the commodity We're our as live an going being as a we a our to flat discretionary was some and how environment us We you free up to continues mean and the we know very we generate seen is our the coming growth in with stay back

is they something analyze. there's that when put realize puzzle they again, moving them to people here think a lot the So for don't this I parts of together

it's pricing the prices But a business but to Maybe get kind cash to of today, the the type to flow. great where to free assets go some able we're in again, as do and just Brent get little be to have to manage generate we're we're are going going the fortunate take and and the year through so control to we the operating premium we here California. actions

Jason Wangler

monetization you forward. know in some know could you past you infrastructure then go you front candidates some it's asset And Thanks. land that maybe assets, other the property you’ve be whether have as mentioned or of the like beach the

hopefully forward going with deal divestiture move that are weeks, you the would know things into of year? You still next here as obviously be candidates the royalty couple for through this in those

Todd Stevens

our the and spin and think prices since XXXX. collapse this of you I before the we Yeah, know levered day, Halloween knew over at know to are is we started analyst at spin time the you and

modernization So we knew at shrinking will that you about want we be looking way. or the to think doing if it growth

to to any monetization. not to continue perspective, at from level we're available going clever asset any kind so optimal look us, So of at we’re a an alternative debt

underlying of the place structure not really came simply our the market fundamentals of was business. reflecting price because the the about in debt This

that of be we'll continue like at surplus unique to a land, to commodity you but other the this would prices You it know reflect whether look opportunity take was monetization’s, lower prices, advantage anticipate much we of felt current so why assets. that's creative that, ways

You hold have processes to to know sure. of parallel look monetization, any going for here a but lot fire we're on that's not sale, we at

Jason Wangler

for answers. thanks Great, the

Todd Stevens

Thanks Jason.

Operator

next The Blunden Sachs; Karl is Goldman of ahead. question from please go

Karl Blunden

thanks work guys, to busy Hey your extend a sure for the maturities. I’m of lot you're pretty some with time. of

can you you the didn't was talk about loan. information Is that? extending You term any addressing you can share know to use XXXX something about different approaches or there

Todd Stevens

you us. as that’s at know and conference XXXX. and prior that as before priority in calls wall of mentioned handle a that to look conferences the that’s to we maturity We've both Well, public end

on us, we're look of bird to process we have Arguably clear doing we've For to engaged kind here. next that's parallel been week but ways. process time kinds date a and for you of know early on some accretive work the the all at exchange, what that

just we the flexible to with early group were August, to back balance you'll the we out. the you them to that to and push our our us specifically have think you to know the adapting and the with to to what changed at trading bank ultimately and market sheet see group our and market and time enable debt liens probably so the The look entirely, being in X.X premium, us enable that's because on X.XX take work – say holders both us our after we're strengthen X.X time, load further summer go If place, a as the they bank I’d at the we amendment to achieved out. maturities level ninth

and the flow turning over time we really then what loading free opportunity are more complicating shareholders. targeting balance excellent simplifying are bit this here, little know Again we proposition I is level that's I but think think always I overtime, here but I've sheet said value cash an simplify it we around the And and really sheet, as our maturities. a the of balance positive, for so

Karl Blunden

of Okay, levers cash the and in then got door. you discussed other the to some you bring

the more after and that's have for little currently Is we Just term further more think line, exchange royalties here work that should something you're you on and JV one. through the as that there outlined potential that of near or current specifically the down a transactions, pursuing. one you out

Todd Stevens

I Elk think from is isn't it's just, Like the company you’d the our table probably company; the said, big buy Hills. perspective the to that part own Elk on such a the on to only Hills, of thing it's table. because everything have I was

a at. ton looking value Like of for our earlier we'll balance said the for processes good mind. I think parallel, sheet ultimately in take and place achieve have in in value at bring our right all hard else anything I shareholders proposition we our to shareholders a look

afraid from that grow here not of are perspective. We strength to

just for going what’s do right we’re shareholders. So our to

Karl Blunden

Got Thanks for the you. time.

Todd Stevens

Thanks Karl.

Operator

go The next Please Molchanov from Raymond James. with is Pavel question ahead.

Pavel Molchanov

to taking policy start the with I'm question. for question. a going Thanks

the a a anything You a comparable perspective but such becomes headaches? close, initial that think XXX Is from about the legislature. how showed caused there year AB the ago your as you law, bill proposals, on what's maybe to in

Todd Stevens

passed few headache, was I version. it's a Yeah, perceived, a think but out a AB version the weeks modified the Senate, at it of assembly there that kind ago, different don't basis hurried XXX of actually caused it is in but a of was and over

understand at specifics look really to the to have You’d it.

sort I do lab thing of little preempted the about and more governor's the both already more, who office scientists think this in look regulatory rulemaking at whole has Senate to that. and by talking a using

end to as out scientific something I win to think and assume in that’s the of opposed that's balanced the I approach, the would the more best out that legislature. as approach going and outcome

bills last if filing for in it, oil even with new think literature XXXX X% less and over itself. mentioned the Friday, net submitted the But, were gas about than deadline and you

there. of things out there's lot So a

Pavel Molchanov

operations? and Okay, own, and what the you know those and created just first fracking this Can last so remind back forth. if our any some since CRC's restrictions of since on actions November follow-up of have impact when had executive conversations governor us you go his kind is on lateral

Todd Stevens

had I you has got really they would say, actually were. impact. what remember It no to

and they have do? and SBX of permits and He have CalGEM. on Lawrence diversified but or point media he stimulation they Livermore any doesn't a think at said I small that characterized do but the of resource that, We play look pick-or-drive come let's some think there, Labs what did permits amount behalf on outlet, depending pending were we we the out, on have a at but rely again, type. we mechanism some will space differently

some response to did prudent it precluded happened folks spill basically was doing at at was a given the done diatomite the at was it Cymric. I frac gradient, thought that specifically from that spill caused be Cymric, being The what was time over with of honest over injection shallow other thing the in which the steam that

Pavel Molchanov

you Thank very much.

Todd Stevens

Pavel. Thanks

Operator

Sachs. go Goldman The from question Please ahead. Singer Brian is with

Brian Singer

Thank you. Good afternoon.

production outages, would about your quarter Southern and a perspective, you one-offs help You when in talked the and quantify in offset about fourth factors. Can production? comment this power fires quarter mentioned a in California couple that some from first of other you maintenance the you think

BSP year, venture uplift with you this end net And on reverts if year, it see joint production which next when then the of CRC. to is one as incremental production front the question other the and

Todd Stevens

majority was four that the equivalent. outages related Ventura XXXX first our quarter got that to a in up. and quarter little of Basin the The started it bit a Brian, into about barrels continued fire before from day fully was

really that’s So about regard think we are to what that. talking with I

Brian Singer

Got thanks. BSP the if reverts? And then venture it, joint

Todd Stevens

other one, point, from the that’s X,XXX think day To I a that’s just too. that’s production. cash not In Hills reversion, a the remember there barrels there’s about based out BSP Lost a

and So that's somewhere between million quarter. $XX $XX a million

$XX as So CRC. million, sort you of to flow million it that can of $XX cash look revert would at

Brian Singer

Thanks. And Elk response mentioned Hills the on you of to was then off kind question earlier in the table. that lastly

it think Exchange of out less and party royalty for might area From an you and been you Hill a likely. sale or to additional meet are or third Hill an that asset in perspective. would less referring have for of royalty royalty Elk curve perspective, interests does transactions inclusion from focus Elk Co I asset that offer

Todd Stevens

preclude it. doesn't It

royalty know at California look royalties high typical a is I premium, depending you X% assets as really case somewhere XX%. and the it between you set, think in have but the you might where The be when typical XX% you XX%. rarer as

of here keep X.X% XX% worry from to reserves. go we reserves about and could yes, our effectively still So not tail economic, all

this look back that, at look simply to market because at time. And over got it So for the we opportunity can earn we the we yeah, the value again royalties, place proposition. structure but be diverted would it as of to about

proposition that the value was great I think from our perspective.

Brian Singer

Thank you.

Todd Stevens

Thanks Brian.

Operator

of The next Pressprich. R.W. Please question is go ahead. from Andrew Ginsburg

Andrew Ginsburg

questions thanks guys, Most call. my talking of were for Hi my addressed.

fracking have of affected or you then you effect amount things at have any November, feel mentioned clarify wanted and a also guys from much permits. of steady the And production very with Just Newson backlog the the your royalty, really that all. to ban last you that of related side a mention the from rig so also comfortable for didn't your then guys to Has backlog backlog you of permits. you have couple

Todd Stevens

issue place it was by steam had diatomite injecting with caused that fall the will if overall particularly have But the do the frac shall regularly CalGEM look thing in we the off a the do out, something you very track Livermore level small they actually that at we at and amount permits. I one more XXX of we're ban year entirety, record our for last a our It's by Lawrence spill. formations, point specific lines actually and Governor in its we put but perspective require more have or was Labs, gradient every them, they permits wells, for new and are almost rig very know P&A of to before do that over oil that every one but for again – than from drilling wells so some you signed the days in

stimulation. legislation a method passed permits through all ban specific was with stimulation, was that about. under that those it So It was It hydraulic on scientific again the so directly issue Brown wasn't that review an of the was come prudent. in a governor again, I because SB-X thought causing state, type very ban on there's

But remember, hydraulically, fractured it. Mother nature's a geology is – hydraulically rather already on naturally lot California's not of unique. state

our limited we we on basis from country. it’s might use about a small perspective do to So think ones you very in scale our when a and it very relative the elsewhere in

Andrew Ginsburg

was to and keeping increasing level that then really If to level at – comments become the possibly you where that? uneconomical what you go Is max question that really made the royalty interest can XX% the that not, is related that XX% economical. about you it my to on next did threshold point? that Great! it And really states think

Todd Stevens

I referring economic. to No, wasn't

and Brent. is look of of the things, lowest You OpEx some Elk sought costs got crude these highly under to at $XX, $XX as prices in you after remember operating can Hills, in its company, our that’s premium

put royalty out the and basis. at we out XX XX% a cut future on you're going it an years it could make tail XX% So some XX, Yes. that, work? probably to in reserves on absolute But

we best you're know minimize sense to you piece we prudently are for to we like proposition but the as perspective, we're from possible, So of getting value feel best trying as the makes shareholders. do we're trying our use little have because we'll about asset the talking if that that, it our that

are to sheet mind and to deal, was cleverly thing my a to You the in know trying the take our this to done, continue of and friends again, structure balance at steps and thanks strengthen very do and our But Carella means debt lot to something a our if elsewhere, we Elk around Hills with to of doing and it things with we we’ll we look at in banks. have holders work our have royalty that. with the or

Andrew Ginsburg

you. Great! Thank

Operator

I for turn Todd back the over closing question-and-answer the to to concludes Stevens any session. like would This conference remarks.

Todd Stevens

flow call. cash to for transactions enhance free meaningful track everyone a returns. our record today's you in that grow participating with CRC Thank attractive has of completing capacity

on and transactions our focused keenly high inventory. our additional sheet advance are further balance We strengthen VCI to

on is capture you our cash you term road. the resource on the see focus perform be We’ll cycles to continue risk and capital and full operational commodity through disciplined flows to base. we'll value business models built Thank consistent our excellence, guided our our low long various and for allocation, value high With to price the deliver shareholders. decline expected by of aligned with quality, unrelenting low

Operator

presentation. Thank for concluded. now is conference The attending today's you

may disconnect. You now

California Resources (CRC) 26 Feb 202019 Q4 Earnings call transcript