CRC - Earnings call transcript Q2 2022 | California Resources Corporation

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Operator

Good afternoon. Good day, everyone and welcome to the California Resources Corporation Second Quarter Earnings Conference Call. [Operator Instructions] Please note today’s event is also being recorded. At this time, I would like to turn the conference call over to Joanna Park, Vice President of Investor Relations and Treasurer. Ma’am, please go ahead.

Joanna Park

California second to call. XXXX welcome and Resources quarter Corporation conference Thanks Financial as on McFarland, Executive Francisco Chief Mac call Vice as and and Participating are Officer; President today’s executive entire the CRC Chief Executive President Officer team. well Leon, highlight to provided have section we Investor slides www.crc.com. our website, that our Relations like I’d on of These quarter results. additional into operations our information provide slides and second our website to as information the also as And provided reconciling measures non-GAAP on measures financial we earnings our directly most our discussed well comparable in release. GAAP have financial Today, current we based will make some forward-looking expectations. statements on Actual in results periodic and could SEC differ earnings our due to the factors in our described filings. release [Operator Instructions] call the turn will With that, now over to Mac. I

Mac McFarland

Joanna. Great. Thank you,

our operations deliver continue reliable commitment strong safe, prioritizing demonstrating We and shareholder returns. cash flow free to to generation, also while

quarter a XXX% the quarter returned more second free flow program. the repurchase share we in generated than cash row, through in our of For our

share XXXX reflects results has In program already XXXX our execution amidst the solid our year-to-date and today’s volatile exceeded fact, environment. our repurchase revised Operationally, program. outlook

portfolio both County their pause programs, later describe litigation assets, Where EIR We our full delay. greater free costs and allows and been Francisco leverage which changes our EBITDAX continue And forced pressures to full reaffirming flow our drilling drilling. programs inflationary CRC large these detail the production year others to our Current total to in guidance. for issues our is cash raising this of and will outlook us to on to have related the to after call. year adjusting are continues

full by carbon develop in by be carbon then initial owned XX% projects partnership California, impacts And CCS XX% flow. the with that which drilling share with XX% X the the California. Brookfield storage free are just commitment $XXX running we and guidance subsidiary of described, per projects. assets completion on Brookfield midpoint out and into the quarter Brookfield our CCS developed. their I by is rigs and a on capital of transport additional million from management and Post support The entering inflation state. majority raising to the our by for the management year earlier-than-anticipated to in these capture Even with are storage of in starting rigs JV, X% the industry-leading approved active business projects we fact, through contribute are to cash changes, will by TerraVault, EBITDAX owned pursue XX% of our end, wholly is the In as Carbon partnership CRC for advanced jointly Brookfield they will ton $XX of and

reservoir metric first million these million targets per would of XX being require tons developed an the the Brookfield. The permanent will and metric project at targeting X is $X.X of total tons injection capital. our billion JV of XXX or year storage The be estimated achieving

which the to potential the and Assuming $XXX the of more Brookfield, would follow-on to billion $X suggests incremental million by than tons investment JV original be through Brookfield per annum full participation a from metric clear, be X million.

the over I about provide transition our call. on excited energy will detail the in this Brookfield the Francisco? California. are decarbonization advance discuss later We and turn now partnership results before and partnership quarterly partnership with Brookfield can our it I Francisco how greater to on to

Francisco Leon

Thank you, Mac.

the $XX common quarter program repurchases form and the we repurchase and share, per with generated income during dividends second delivered shareholders adjusted million the prior is cash of under diluted of which quarter. to quarter, second flow. We For our our free $XXX of of in the returned stock line $X.XX million net fully in share

barrels X,XXX total production with day, the up Our BOE day first well quarter. per continue to XX,XXX assets XX,XXX per from perform the averaging in BOE

we in Hills As our in the CGPX maintenance first and XX% remaining planned Lost sold quarter, field. the completed a the interest reminder,

our Our to plant which production day second NGL production, natural both increased quarter was our volumes. and positively of from X,XXX gas BOEs by CGPX impacted per returning

approximately mix quarterly FX, per production volumes negatively was our also litigation our day reduced day per NGL Changes impact our X,XXX report county oil. volumes. to natural development divestitures and oil production all Additionally, was increased response their plan and our and impacted asset from XXX and by BOE gas barrels PSC environmental current from which modestly in well in

of anticipated drilling half to program original in first the XXXX. Our a resolution litigation the EIR

of end of third litigation expected that current occur hearing hopeful county The California. in year. a Another quarter challenge the represents for resolution is operational many could an the this we’re and year, operators the in by EIR

continue perspective, receive of permits inventory we and However, fibric have healthy X of year. remainder benefited a drilling price CRC strong for our the From all program realized prices permits to across hydrocarbons. a the for from

on in after our received Natural MCF. to The $XX.XX have what derivative for operating derivative price teams after our gas more settlements strengthen than for continue with barrel. after prices oil continued increases. nonenergy-related of realized of settlement costs. of spot quarters barrel, or registered with per per hedges. higher realized our bright on payments contracts a $XX.XX to XXX% we NYMEX pricing $X operations $X.XX CRC of sequential XX% remained rent focus NGL X second quarter average oil the or realizations Our per than

cost surface our pressures workovers, are contracts, set. as on as categories adjust specifically certain experiencing we we well in activity and renew maintenance also our operations we However,

We electricity prices our generate fee As also continue to and in increase. it operations for natural for business our inflects. our use gas generate to relates costs, to energy-related gas natural to

gas also our increased natural purchase Additionally, costs. electricity prices higher

quarters, natural sell means is in a prior operations. natural are our long in we and mentioned As use gas This than gas. purchase in the natural we for the gas greater produce net that

increases, mainly taxes $XX energy cost, XXXX the full is the XX% cost second due muted our during natural our by the relatively to for and the an volume and the the $X.XX expense in was was our by $X.XX March This G&A growth milling to Annual payout a and inflation including not from While dedicated guidance removed higher-than-expected Caljan. non-recurring in G&A rate G&A tax the production first carbon absolute midpoint, or expectations year higher BOE. approximately and and on stock-settled more an expenses. operating per change. are increase basis, increasing Production in of XXXX took the items, compensation-related well to was the for at inflation mix. rest management rate XX, approximately performance-based versus change Lower our $X million base a oil Adjusted portion assessed which and to our – effect quarter and pace primarily expected increased gas $X D&A quarter, adjustment BOE of the gas compensation prior adjusted the increased bonus due due million for by million certain team. On quarter plan. per

guidance approximately by million We million our we $XXX midpoint as the for to adjusted G&A total have at increased ‘XX experienced $XX year wage inflation.

full of This for Corporate year, by BOE of run guidance higher expect flow account by year in rate G&A a we in Also be $X.XX respectively. Other price commodity in EBITDAX the guidance, revert production of inflation expected approximately the realizations. X% BOE. and account of percent than lower X% to cash CRC’s XXXX levels are to into and full mix, to flow and set we However, our midpoint less total raising XX%, for free with to while increase takes for impact per and full E&P, loan average cash production adjusted total prior the change oil line CRC’s guidance are remain a changes. will year

capital $XXX drilling This additional approximately and to range $XX completion and million to to for workover a $X We $XXX program. also increased million our XXXX to million addition includes program our million. of an

and that $XXX cash the CRC We liquidity rewarded business results our seasonal quarter share in also at over continues continues Year-to-date, shareholders guidance Even $X to deliver subject price million the of be invest management Since cash returns our XXXX, return million, as returned as with healthy impacts. CRC we June shareholder free started fixed shareholder XX% what of quarterly XX, our approximately our to a flow commodity our mind program generated million. at of increase strategy focus a and dividends. has remained strategy. of stands environment. in on to flow carbon in on share balance free returns its shareholders largest returned $XXX by XXX% and dividends, capital repurchases flow continue cash strong early free our after total Please keep have to we healthy repurchase of to our our through combination in are cash and returns-driven XXXX. continued

realizations. as increased half the flow second the our confident in NGL and free we yields gas expect our Please flow back now In cash strong to to Lost partnership. expectations, of discuss we will and our from fact, free the from guidance earnings remain call provided to detailed have second in in the over cash quarterly higher and exceeded to internal Hills revenues Power, and quarter results our higher Brookfield I we annual note Mac XXXX our revised year in that operational JV our natural analysis financial turn attachments stronger guidance release. the

Mac McFarland

Francisco. you, Thank Great.

is business two infrastructure or energy competitive it in that global our the first-mover InfraCo, strategy. secure facilities. install our operate asset more JV Combining will over position. is managers. assets commitment through initial $XX transition investment a with management carbon to has Fund, will asset under our strengthens one are experience globally, the With Brookfield the on leveraged our Brookfield’s funds Brookfield’s our or be CCS of Brookfield and Transition So, storage the strategic entities, $XXX partnering BGTF the a projects transition Storage world Infrastructure TerraVault the Co Global leading global date, to or two largest billion CCS through are in carbon largest Company, towards and one and infrastructure transitions partnership BGTF, few recently, carbon Brookfield from $XXX directed Co details allocated that fund CRC and go and with in we Brookfield. base position advance of this the management entities. Renewable TerraVault projects billion with raised energy alternative Carbon JV raised JV. management billion storage transition and More towards JV build, in of and Storage

mentioned, our previously acquired the in value implied permitted Elk Brookfield at which first is per facility $XX As an XX of for of Hills reservoir, Storage XX% ton a Co has metric interest capacity. at

we to done in payable million will total three the on it assets contribute same terms investment be ton. JV, per is of the installments. milestones and the $XXX so Brookfield’s continue $XX towards XXR the As same for

received CTV storage. installment initial the JV third the once $XX by The the first at effectively a committed followed decision million the installment of closing at second the a project FID, we made installment final was when permit from for investment with or due have EPA,

The JV, COX build, operate and equipment maintain capture will and InfraCo transportation install, assets. other

We more InfraCo to financing chain. for of attract structuring this through the in have structured because optimizes most revenue project itself we entities believe these the two cash the project incremental JV the capital aspect streams, to ability by CCS to financing value fixed separately have stable flows lends capital-intensive

We also partners will be InfraCo. other and opportunities believe in equity invest for to there investors future

its capital for Assuming and Brookfield goal, to XX% enable needs contribution their fund storage corporate the carbon tons per of need million to fund the business. annum in all X of the share, the full to limiting would participates JV $XX thus related CRC develops our our Brookfield per near-term ton capital from the portion metric fully management

October. disclosed our the we a curve explain type storage bit further. me last carbon update on Let Recall economic

require would billion or unlevered end would through $X.X requires metric midpoint of JV’s metric value $XXX the capital portion be the half injection $X.X X year X made capital tons million is investment of roughly about JV. of million of of be by investment the we of the XXXX. per which injection target would showed. million billion. Assuming the CRC’s about That across range the of entire of chain, The tons that

which anticipate $XXX over about of an we to would total XX% CRC’s bring approximate least at utilizing next X capital However, debt, needs years. the million

pore that approximately $XX annum is this tons a of shown of per of is development share of would XXX tons the on mentioned $X injection Slide million All in required illustratively XX. Brookfield’s require per the at million XXX XX% contribution X is The pore targeted CRC. which space. well of space million of $XXX tons billion, ton excess million previously the capital, I from metric

reinvestment Brookfield, forming would build to venture that with a annual that target with joint our million development increases core local capital the company Transition significantly we as CRC, expected In we provide provide aims cash strategic of of to the investing could to $X.X showed the flows an renounce CRC also and College CRC objectives, pledge our District JV. operating be EBITDA, flexibility available annual in which with limited or training, has partnership there in operate. from workforce under in Pledge. to scholarships. $XXX is in in nearly to returns generation to flow be County within no XXXX flow net would Achieving This Kern the to $XXX to and transition University fact, incremental more our than corporate within for from XXX% type scenario, County for strengthening Not CRC, Energy transition carbon energy and well CTV this research Kern Community. we additional million curve strategic the only our related California generated come. innovation are economic means including for as be curriculum years carbon to excess allocation shareholder of is free contributions and specifically free investments. midpoint more for the for activities. have potentially California CCS of transition State This E&P of the that pledged within capital flow to our expected tons knowledge we management X would The energy County to Kern means million the distributions of and million from for management are resources optionality partnerships strategic Bakersfield development, support energy and cash business cash live communities we The is cash our in and and

at Management the addition series. also Institute Carbon we forming Bakersfield, this to CCD Kern are pledge, University In the lecture and CalState CRC TerraVault Carbon

our conclude, to to excited our continue about on we future. are deliver So goals and

zero CRC Our Brookfield management hard employees us with our today’s Once California for goal interest an Paris and partnership in call. CRC’s and like economically an the towards CRC energy and on transition progress of goal. thank again, for and that their viable work, to future. your and Carbon I’d step important is our thank near-term you demonstrates align joining dedication

line the Operator? will for We now questions. open

Operator

Please from today go Hanold Our Instructions] question. your [Operator question Scott first comes from ahead with RBC Capital Markets.

Scott Hanold

you us with Brookfield. Certainly Thanks to just strong good see. all. partner JV sense Can make a underpinning Congrats give I’m very about on right. reputable see the – and all the this a sure just upside you optionality thinking

obviously business. commitment kind point. implied carbon and implies, $XX that’s of back of floor, I ton Because sets what the CRC, is will of call a sort the just do when potential thinking their envelope that value math carry kind worth of I the I this at in $XX to thing $XX X wrong think, to per and we billion starting ton, floor that it, relative, their of management With Am on a

I what that good thinking about are if terms they rate that underpinning So as more, minimum, not in a return? a to of going am are given they a require lot of right

Mac McFarland

pore will – top into which build top going a I – floor have and me, capital, So. require for Good was, ton returns would you incremental on to negotiated or describe would is of JV that’s And projects hear But to each on that, good the is it is the will say, the whether of it excuse put which what you. Brookfield initial commitment. morning, then about know incremental contributing Scott, to $XX that. it. JV of don’t as from I I space, Look, say we’re however what that say

is So is if I think just pure $XX I that the the that it to the per way ton pore space that say would pore you buy-in, for will, effectively space.

Francisco Leon

Francisco. Scott, Yes.

value So space. So been recognition value, done it’s in right? transactions an metric a asset important has an it’s few class have on where the space pore very the that

the been it returns. is positioned that projects and establishes the to value. top to recognizing CCS CRC talking Carbon And build step right? So of can that, you management business. incremental are has enable On the well in value, that TerraVault pore We’ve first you and state really this how space about the

So this pretty out we’re there. putting market excited about

Scott Hanold

at think And that’s are to kind Yes. they a And well. office is $XX, obviously, as they was to If saying I are a right? point worth trying return invest, they of I basically space the pore I get to build to. want willing guess, minimum

get time implied X and your, back a tons per you about kind it that trying Is when to space. of And of step whether potential about substantial – CRC, sort XXX that pore are to or ton for thinking the they at it’s thinking billion it. how million sort sort ownership, like pretty and an to of apply So of like what I’m of net that’s that’s $XX that’s you value are like buying they XX% to. right, when is look tons

minimum, a worth. what at So that’s it’s

Mac McFarland

a What I I read through is that’s space. say it. perfected it’s would for fair pore think a

geologists, we’ve our space and over So avails Class year to time on our as and knowledge the will and itself current of reservoir, file last receive inside described, that permits. working engineers these we how as of well have to lot get leaning that we as CRC the XXQ LCFS people is so to work permit development that a understand V lot subsurface assets, we’ve credits, our a of pore perfect permit. it That X.X a spent

that in Brookfield California, coming resource that this market. So which sweat lend as the at with we equity, the ton basically a in along it assets, for to $XX previously, stated itself scarce has is is JV our

Scott Hanold

Got it.

needs again, question helpful. do the to JV, I reservoirs ones like capital getting that about XXR put the So other which of to the how they JV. stay but – the for into an that’s the the my us JV of is, JV? there on to is into process happen? What And think was that the it follow-up reservoir to put No, you like And that’s Because the in what been front projects, you you is the the for advantage process right? initial can calls, what is into the obviously, by tell funding the get compensated other JV? and process will guess, the – of seems getting get into Okay.

Mac McFarland

Yes.

one filed wanted we Scott, things JV for why contributed So this It’s and year is the with received a actionable. that of the JV, to been into make doing so we the XXR we’ve over it – funding, and processing form in permit that’s that’s installments. it XXR why we And started the JV, do three that’s filed. that’s It’s a into through to we XXR. been why when highly initial we’re

we so go the forward, of basically As XX objective storage. million that’s – is tons

this from to space X both XXX Brookfield to million commit of rate of tons. through as to pore is as tons JV us get capital well objective from develop to million annual Our an injection

I Page But this on my out remarks. $X.X basically, of capital, as that XX means deck. laid mentioned So billion is our in in

tons with goals. is our XXX which aligns capital, X achieve intent million deploy tons space and million previously of stated our by of XXXX, So injection pore to perfect the

XX-XX really it we doing JV. that XX-XX or a We’re with now a Brookfield in basically value partner on

Scott Hanold

mechanically, then and at move to it the into point? Is gets be right. the JV it perfecting the ready million what to additional the some tons to of of it permitting XXX Right, And process JV? reservoirs

Mac McFarland

is through with under XXR gone comments responded has the we’ve year and comments, right. and EPA. exactly That’s a file to

with announced to can eventually we get other started the permits, have JV, CTVX we to that once those the CTVX. and an right? we we we’ve that talking other then they assigning tons and do been once into we projects an emitters the We in. investment JV quarter, shown and filed, them XX drop get is to which come FID, they to And as perfected, get those Last million filed get we dropped

at the part. in within permitting when either through them the permitting process or we which we is an when go along InfraCo, a drop capture – will stage, we FID infrastructure So to have investment

Francisco Leon

in Yes. When trapped gets new pore the for premium what space. into it that’s traders

Scott Hanold

Yes.

Thanks so Now I much. it. got

Operator

question. Our next America. from of question comes Bank from Please Akamine ahead Kalei go your with

Kalei Akamine

couple. Hi. a my Thanks for morning, got guys. taking I’ve questions. Good

First conventional reconcile the that help one Hoping to business. is can just that the XX on oil XX. you guidance

production year-end. in With the by the the above comment oil first press will said release had quarter be

Just easy oil from given we’ve the be hurdle. should it like bar your looks to midpoint that the production performance an seen year-to-date,

is wondering So the at. it’s where why low end

Francisco Leon

we Ultimately, well of in I mean, the Yes. we it’s the there talked well about, mix – in combination concern contract is that a we – – mix. production in the as have changes

with to So the and we’re drilling. EIR the the having wells change that plan litigation with

the we variability rigs there, And And mix. the so there is is inventory where four just into the the five can it keep program. that in change rigs adds a

I mix. the expected So return wait of gas results the end think NGLs there have delivering and high a They the we projects, be day, confidence is the in hat have that have result some variability And the good tend is in EIR. the as projects. to they for are gas guidance, of more in at but there Kalei, – very just recognition, on we we

spread the where to going is range I think the half a what’s the the recognition year. the happen of of So in variability of that’s in second

We also...

Mac McFarland

sure. Yes,

the production sharing arcane the build they is thing, with went sharing were variability during of associated an settled we a prices were drove which So to contract the almost quarter, But barrels. second if That to doing now second we prices also a which screen. where they try are if quarter. lot the of contract, were bit back if production right during the PSC $XXX at not you – to but

as production words, a other barrels in gross sharing from under net the contract. So gave for barrels to – reduction we back

we than towards prices in oil come net in our high, So would our that if low up forecasting some come we end end of lower higher. the year, If try variability. probably prices what in to the of range would build balance we’re for of come the were to production

So there that variability itself that into is range as the builds well.

Kalei Akamine

guess follow-up of appears price the back it stabilized, at through year. is, the on the the has I script least oil end that

not we’re about worried effects. So too the PSC

that understand help moving is me the piece, What the which resolution can the you hoping other EIR. pathway is to I’m So there?

Francisco Leon

well, wellness. first me address let the So just

So it’s what this resolution a earlier year we’ve the second litigated to do being it’s process I’m in had end Counsel in But Mike it the was just Right don’t year. to it’s and of over EIR, earlier. – anticipate would we of turn still that settled county we to to until in General there. look anticipating because litigation current now, that Preston, it going to talk the doesn’t about the be going were like

go oil. the can we’re we that is we that therefore, had we a into thing do and that have, why adjust the and good adjust. which to of in with by so, a what that the permits more that’s lower up had what and we because drill program our second to gas But in use to was our mix rigs So going active. outcome have permits ended quarter of current And we doing we keeping was drilling X day lot

it. to of impact So you want do the resolution? talk that’s about Mike, the But

Mac McFarland

Sure.

of number I in we’re deficiencies think process. a what expect would EIR identified the the – court deemed I May, small in basically

a will are on are the so need by weeks. being so essentially make fixes court fixes, to they and to to fixes the those They next being will And to parties by And those. on working be Kern then the essentially County, to briefed over addressed have are few deficiencies taken back court. Those speak. the judgment those

we take before to that and in get several some weeks fourth process clarity. So we into quarter expect early probably the

Kalei Akamine

My question CCS great. That’s on JV. second is the that. appreciate I

understand Brookfield buys all and XXR, pore spending for So the JV. capital up that was space staying is that the but million, a with reservoir $XXX

be? will terms and then the the spend buy in what and of to what I’m of million understand transportation trying will So cadence stores, $XXX that capture

Mac McFarland

any the million capture Well – pore JV. within or actually so equipment great needs will and invest $XXX question. will buy or The capital space either other

capital again, $XXX to commitments their excess we injection contribution I XX%, going on million, be of and the Brookfield. million of go back is which we that make but If projects do project-by-project it So of to be require XXXX. that, a is it’s develop going for will cost the was by our to those we calls. because I well establish our ton specific tons initial in for getting capital are to investments, difference for the because us $X.X to that that that basis billion, we will X commitment per trying that as for $XX was can future will The the earlier of that as the that and alleviate capital recycle capital intent

Francisco Leon

And about as we’re the this business. so we new talked developing in add, Kalei, one to thing past

could option partnership brings think And about piece Brookfield reality just offtakers But the the cash this second by think talked have funding because chain. fast business to defining JV we’ve how then resource also storage give to to by We a business. through or this tanks. the the very the have in value all be full-service partnering what the the having an we I having much way capital, storage intent that since Brookfield should and InfraCo, the deploy or that mechanism be the the is capital this I is takeaway

focusing that’s California the the a providing way to storage, is be JV to emitter going where midstream service that’s So storage from and and the all meters tanks. in capture, to the

as place so have then put to and depot the addition in the the Mac capital in of to buy capital space said, be to deployment able of XXX% the that we So value stream. do, you pore can is that infrastructure

Kalei Akamine

guys. that, is The for question economics. on Thanks the last just

leave on to extremely metric CRC? give clarity how there. it free understand how trying would cash can Any you funding, I’ll getting revenue the guidance us ton to congrats on net off, on I’m a there helpful. but to some first So be flow the And basis, that translates

Francisco Leon

carbon Yes. it it’s Kalei, about XX% a JV way to is Brookfield. XX% about think there

revenue interest levels. ton gets year line the $XX run then model, if the model rest you’re along building of per of the you Then the to split our working working Brookfield add and the side from side levels. to a So interest you then

is basis on cash split Brookfield the $XX contribution a and from working equally, gets So as the the revenue expectation a the fund again, ton income interest putting and to per the CTV. then

capital going mechanism big that’s what’s you’re you practically that what the to a side if able ultimately funding be and on does, So our share CTV right, cost. to contribution, recycle the that and of have capital use

to of expect we still Now what have and going on you our partners then project recycling projects you to and need and to assume But if we’re be day, loan out. – how at these financing, fully the the XX% we Brookfield. another split XX% the finance capital ultimately, year an the between of going to we still this funds of equally cost getting capital, from say roughly is equally project be early end is define much where the and play still very to the are values to to this have the equity

exposure to CRC JV what full that’s the share saying, having to mechanism the without calls So cash that that’s of we’re get us to and capital the our it’s you funding flows capital where from put period. gives

Kalei Akamine

us a flow. free per revenue can basis, equity your to translate piece understand plain I will credits appreciate financing perhaps help on But isn’t yet you cash project that how vanilla maybe of metric just out. figured the ton exposure, on $XXX

Francisco Leon

Yes.

And your Brookfield. it’s associated to XX% capital with So XX% cash get project you and to us, you the take flow. then to expenses

much for the initial JV a space. pretty it’s XX-XX pore other than the So contribution

Mac McFarland

bit a Francisco up back just to is we further, type investment just I’d that project out last a storage-only to as had if our to there they economic the laid curve, describe describing point if out to somewhere we’ve then you of Carbon and hold Day thing you’re more there the one you October, on okay? that at laid be was go $XX where cash we not flows range That’s is So per which true holds said of assumptions joint page, regardless system, be injected level million true $XX of but split $XXX a EBITDA of typically the million with EBITDA. get trying ton associated you’d And bunch still the on but our a still of the to you that venture. capture whole said would COX, capital that ton would that’s it the recover how towards type means because of project, is between

would have needed to recouping cash you closer at $XX because investment. EBITDA, in ton capital be the the out on. that’s flows, recovery, capital a obviously, you’re EBITDA early If initial less of the cash The $XXX you but you’d basically

you would at it would but it a line, more fall same, straight how consideration would look taking so closely Does significant And level. The do the help? the taxes. to have project million $XXX outflow bottom That’s without the into upfront. that cash

Kalei Akamine

if associated or very distributions tax tax and That’s with a anomalies But question this. The you normally would there at any any me like it’s credit? other helpful. can sorry tell just trying last just I’m is if taxed being keep to

Francisco Leon

Yes. ultimately, a right XXQ the credit. I is tax now, mean

line and LCFS, offset a the generated So, by revenue a able yes, be would would XXQ partnership. modeling then credit tax is the item, income to the of it’s that some be

be revenue to similar but what there would – has we that where tax other to I the it’s with and are and offset that specific profitability you solar have credits of projects So, modeling – renewable are type the say, a, to collecting you having very do, happens enterprise. the

Kalei Akamine

it leave there. I will Great guys.

Mac McFarland

we to and as taxpayer going a years forward. add we just the this stated and Francisco would have year I on are before

And appetite actually tax credit. the an for so have we

tax development, a there saying, as a So, to to Francisco use you a renewable our would was tax to in basis use the bring And through us synergy at credits. and those tax energy is flow have for projects, typical, flow actually we and to can through there credits. consolidated equity

Kalei Akamine

guys. Thanks Great.

Operator

next comes Please your Eric from from GoldenTree. Our ahead question. Seeve with question go

Eric Seeve

million about XXX potential beyond projects for more the update of was the with scope and on how And guys. still you emitters, sort an are now a color deal, partner for in And reassess? just little if million you And with well? that tons, are also business? on with a are CMB have tons Hey a first give this call you have is the you exciting could far give on progressing how of pause could there is a specifically, about very Thanks going you hoping permitting. but that or on And you also, exciting. as on congratulations given XXX of what give you deal, to I submitting thinking this sense along deals the for very of do it outside us enterprise? bit the more terms the and looks of

Mac McFarland

Good Yes. eight about Eric. questions were in ones. morning good All there. There

the a tons were filed set announced of of So, that we At we XXX. at this first year. permits We year, by at XX. we file beginning call, earnings the had XXX so we goal already of XX, filed quarter those the to end the million before

be XXX at end year. Our goal the is by of the to

We still are track on that. to do

year of end goal. an that’s So,

that. first respect do is even which tons, backs build can storage. continue on to XXX X hope this we of and is So, successful But that on is tons which we get the injected of JV With the we where it our further. million will JV, million to to by goal is the XXXX,

stopping So, we okay. are not there,

million of end are We going permits the tons XXX to of not year. stop the with by

of the we for helps business that to next economic, the because think case transition more JV. We that a We commercial arrangements, the so. forms because are are of We to With there We this barrel are going they that the going respect would produce they keep stopping good we not say that actually to by of JV. it’s energy because objective. and is and permits additional year zero think think have the file now that’s capital. doing accelerating think it net I XXXX. can we

additional of that also brings the in who would only development, investment not want. the deal capital, origination, an partner things the you have all but structuring, We

It’s good a this that think scalable. is partnership. really I

are to that think going I we continue to do that.

the Now, hope, develop tons the and aligned and we been to as background said to we be of on plan continue so. XXXX. we do emitter that And have with to the is we year-end allows by working our us we emitter this year, the million have always end contracts, by been have to inject target in X we

Eric Seeve

to it’s possible. the range it bring and million the follow-on. question to a million tons are be color, that days you that that potential how okay, are you kind there Thank I Mac. that Scott’s XXX get of now. dirty the just JV, that ton, on is rough could do out, sort great early I a and at XXX you. am mean there frame just remind $XXX per the of that’s but what And That’s a could of million the am to rough in trying of bring you incremental value what beyond you projects I appreciate guess I you tons the is some million I is now trying get can on say, $XXX potential what you the still here, just to after is follow just CRC. And about is $XX tons I be to of what $X could think portfolio? am are looking And the math could sense sense but trying looking marker it’s quick you – net – a us getting there at at at then to billion,

Mac McFarland

Yes.

estimated and So, storage, the and a the for is capital our of the IRR very see, XXX etcetera, split billion, storage, $X.X with million be the align the and us say those excluding returned would by tons Brookfield. would of with per target objective targets think we we a annum ton which million very we of has contribution aligned pore to ton acquire if aligned the are Brookfield a to very level. at and space what is allows which develop targets, we on of financing, with project I investors, have developing got X X XX% we are million tons What well Brookfield fund injection. Their the $XX investing across we capture equipment targets can

flow. cash incremental that’s So,

were generate close Carbon during of Day shown $XXX described Francisco I of to owner the has that we the roughly when at it our midpoint target, of XXX% we then. by XXXX type economic million think curve would EBITDA this

the pore tons, of of going roughly but million we we XXX are also up a for space. in are sell-down Now, picking the that the $XX half to because to position ton

Francisco Leon

Yes. That’s right.

billion would assumption capital billion $XXX billion was – initial result annualized ultimately of EBITDA. million the So, in of $X.X about $X $X.X to

by us. lowered results the too net half, that billion gets for more mechanism. EBITDA funded in So, to is so The you now is, X.X space pore to call of capital X.X the that CTV as Brookfield now is million is difference math share billion through acquires the $XXX that

this a it’s we think have trying capital to with and optimize ultimately So, and we done – that very are deal. improve returns, we

Eric Seeve

base trying there out be guys, your tons? million am tons this beyond more is might do the might beyond much X this I JV you X think contemplates, to at, What projects asset Sorry. million that more how support, get how much

Mac McFarland

the where up said to identified our original billion we portfolio. to of X back target potential goes we that So, tons have across storage

means net which tons you goal And to a XXXX, conversion if We X do our interim that trying but million be have XX time, would storage. injecting you roughly are long-term we year. zero that billion is gets math, to about by set the just tons of that to goals, by per

path we still doing So, on are it. to

are the goals that stating within are next years. just right We interim now X the

first is million So Eric, say this focused on tons – the I XXX of storage. would there is

of the long-term focused goal X are on tons billion We storage. of also

Eric Seeve

call the Very guys. Awesome. for exciting. Thanks

Mac McFarland

Eric. Thanks

Operator

Hanold Please Scott RBC is from follow-up. question next Markets. a go Our follow-up ahead your with Capital from

Scott Hanold

project, that are whether skills of terms a to handled? in kind we or have to some a pretty of again already venture – bring more joint talk transportation, or camp partnered they of obviously the you up JV a when bring one, much on do one first question, you the is they to also set any should it’s financial the side this skill kind you can Brookfield, then but the So, and of with think all of kind about lot going of

Francisco Leon

Scott. Hey

what So to yes, we table. brings the really like Brookfield

their financing, around sequestration. the discussion, views has beyond they which carbon advanced the capture focus of and very So, are in been the

[ph], that’s invested called into investment in large they to a company Canadian need systems capture capture have company post-combustion We Entra a and a system.

but to they not you scale And and at that’s ways technology cost they ultimately, the as how those to at going in so question to the only business. only of towards of be emissions, really and good they looked capturing a if work, That in Canada, also have on the means can systems can side emitters not looked that U.S. built the also the have sense what but

and talking And to And opportunity a given And differentiated the pretty the older as time this California, partnership money. a invested had CCS. the that it’s given components know we them, see make was U.S., then started the obvious match CRC they place-to-place LCFS into effort when they that as to all across so work. really look you they

one there of is They investors largest largest structuring. a it, are in So – and right. talked – the renewable Mac world, about the the

bring technology of that us, of the So, among partnership here they the we the head there about. playing number very the is in There structuring, were and combination to understanding the excited are that aspect shoulders others origination. of number But product. they a is versus level CCS terms of to and is their – at insurance it. CTV of is markets can of things a there There

Mac McFarland

this ton of building buy to to the is JV to is out. is clear, just exactly contributing their be in because XX%. this the it they pore it $XX the subsurface of area Francisco to we But knowledge is that’s this everything and add the And assets are on, focus formed from are skill there venture space a why said that joint or we Scott, our partnership. sets, our very why

Scott Hanold

you don’t Absolutely. think going talked Yes. lot about, to Got my have That laid flow going to partnership, your lot, it. up, of XX% like your is of potentially allocate pool cash are you the management. how that to free the the of the you I to last think us of taking your upstream you being at When fund returns funding flow with think allocated about like kind a obviously, carbon a I that care of is, about said, need And makes like to that of then can with you expect business. carbon as generated the on now What you sense. And follow-up other residual what business kind – being capture initially. this XX% shareholder that? back free year you cash half when thoughts by needs freed are now we

Mac McFarland

Yes. Thanks Scott.

keep flow we then said would and initiatives we thereafter, cash to thereafter, reinvest tax XX-XX exactly, effectively So, business split in previously after free flat, production shareholder the flow the after we free carbon management. between cash

venture joint flows. on this with with those capital cost a the obviously, needs Now and $XX on cash our same the we ton, capital don’t have

And flexibility. so greater us it gives

that the you mechanism that ton for – given strong self-funding not the management there? on with cumulative point cash. where next show the it we free your is are $X.X that there actually to over $XX do that because the making greater on We for use X years, billion uses the the forecasting so a carbon of assuming most is of can want we about cash over flexibility other it a flow. sort XX aspects, talk us of in deck, think gives And I now, question, after-tax Page Francis, call were you

Francisco Leon

Difficulty] [Technical Absolutely. Yes.

Operator

The the connected. is conference this speaker Yes, line is operator. still

Francisco Leon

Yes, we Scott. are. Hey basically

at further Slide in you business billion over to the to the saying, generate after instance. to on the BOE after-tax free XX And invest – in core we maintain the production in scenario was what presented then case first to us business, $X.X So, has we just our cash our investing $X.X Mac billion, flow. core

And dividend. So, successful We at in perhaps since started of XX% we avenues. the can program. the years investment bought look had Certainly, on recovery. also the ways growing oil as we the then us very next look flow we around over We operations, share program about think of cash the can company into that shares fixed what enhanced cumulative back that’s to we We more over think core see our a about business. the where generated different allows the have at acquisitions. to repurchase X deploy core that

doing and either into this with we to investment by move flow So, transaction able cash more a being significant the oil workflow. mechanism and having initiatives our on assets, of cash into separately the retain and or as of funding potential result generation shareholder gas the the

Scott Hanold

that. Thanks for

Operator

Please from question. comes go Sachs. ahead Goldman your question And from our next with Karl Blunden

Karl Blunden

Thanks very much time. Hi. for the

be around to would payment cash the you the on comment regard indenture? deployment, restricted to under options with one able bond your current capacity Just flow

Francisco Leon

Sure.

at as unlimited and a – know, subject we described last to we we we capacity the have you negotiated got as so RBL, leverage first – So, RP looked earnings call. we the in to

thinking high-yield – of given and a there cumulative for the current we we to lower income the day, it’s launched we has cash with as been that, will to we the pricing of would a another bring about. similar the end lot take of lot holders the a day, bonds ask the to on of way. that our high-yield test last net engage with start some have We with replaced turns to months. process off a XXXX. in that perspective, indenture the to bond back have market deploy do request we decided the indenture, of At January And of we improved agreement, At something and within bet quarters in In doing terms, along wanted though, approach. continue – roll last Fed market wanted twists the to a baskets and our we over we of the into pull terms end to XX specific similar making the that terms a from year our volatility the

the as column deal, go. more It to share the into takes reduces And So, do adding those to Certainly, we continue sufficient do one it’s CRC. management. it than investments capacity carbon buybacks Brookfield dividends to and investments. to we were of doing really now with capital

certainly, after are we in this going to yield thinking be how high we So, want the management about announcement, differently the indenture carbon business. But reassess to will Brookfield invest forward. where with we

that. on come to more some So,

Operator

attending. And you will ladies well for and thank gentlemen, today’s question-and-answer We with end session today’s we do that, as as call. conference

You lines. may now your disconnect

California Resources (CRC) 7 Aug 222022 Q2 Earnings call transcript