Earnings call transcript Q1 2023

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Operator

Hello! And welcome to the California Resources Corporation First Quarter Earnings Call. All participants will be in listen-only mode. [Operator Instructions]. Please note, today’s event is being recorded.

I’d now like to turn the conference over to your host today Joanna Park, Vice President of Investor Relations and Treasurer. ma’am. ahead go Please

Joanna Park

I'd Resources of call quarter results. and and are well provide our into Executive Officer California have information that Participating slides additional website, provided Chief conference first www.crc.com. on our as on team. entire the today's Francisco Relations as operations to Corporation's to quarter highlight XXXX we section first Investor call. Executive like our Welcome our Leon, slides President These

financial in measures GAAP non-GAAP to release. also the our comparable reconciling We’ve provided directly discussed financial website most information as our on measures well as earnings

Today, we our making forward-looking in our earnings differ could current statements based in are Actual results expectations. described some to release filings. factors SEC due and on periodic

have the allotted Q&A questions We we prepared remarks. to for time follow-up. end one our and our reminder, participants limit at ask additional a a to their of As primary

the to With over Francisco. now I’ll turn that, call

Francisco Leon

joining everyone carbon CEO Thank very business. our of you, as company, from build morning we be Good CRC, today intensity the pleased carbon a and Joanna. you assets as and generating of cash continue highest us. talking you focused energy our kind to low flow to I’m here to different advancing for on thank management

key today execution operational and performance three remarks which My will record by focus position. a strong leading areas: financial was our First, on in gas driven the quarter, natural

California's to goals. management reposition steps plans we business clean enable growing as value. our Second, unlock we of finally, to the strength business advancing the energy take carbon made progress continue to the And to our shareholder

flat start low diverse production and financial showcased quarterly quarter-over-quarter completions XX and benefit decline results, of the portfolio. maintained we're quality million on oil a great for year. the Record our and our results E&P successfully of over Turning drilling assets work the We of capital. hydrocarbon off to to a

Wilmington at quarter ended nine rig one rigs. We with sidetracks drilling and two wells XX and and the maintenance drilled

offer at reservoirs to stack production fraction we of pace, a new and activity can add sidetrack bring means returns. pay recomplete type attractive economic which of cost and the to well. of us at highly Our This allows on existing wells the is

of execute the over one program. increase rig the to our balance work we activity year, intend a For and drilling

secured have XXXX incremental for We build are program permit to year. the necessary inventory next for all drilling our permits working capital and

operates QX be benchmarks. Another realizations island, for state demand quarter was California Both Because national highlight expectations realizations of To California reflect for the normal for crude of in-state approximately and realizations first specific, higher from and as of than commodity and weather NGLs natural realizations energy to natural tend the production. within and markets. realizations case NYMEX. than gas, were natural NGL our and above gas the the benefited more gas the guidance. lack an the be In energy were XXX% colder were

make production up market to January California of gas degree In to itself approximately natural inventories found in storage the natural reminder, consumed of limited the state. of gas case California natural difference. incoming local limited When the and a As and supply, in gas upon supply demand and local exceeds relies XX% imports February, with plus the the production. storage some

of As available the was our the meet of producer, to state's largest production natural Bcf XX roughly gas state. needs the

shareholders. returned The facilitated $XX share million free shareholder $XX of another million, quarter generated record in million factors in This $XXX and returns. flow was company cash to of which million helped dividends of consisted results These $XX and drive approximately pre-tax repurchases. of

in returned XX% have fixed of with back outstanding dividends $X.XX have share, cap May approximately of in we the than to bought program repurchase million market continue per of less board our of shares. $XXX total, we share shareholders remaining our have our authorization. years. of approved company's shareholder current We two million and with under program implementation the to intend approximately $X.X Since active XX% XXXX, Combined back our

the including robust to greater million, $XXX we liquidity ended cash-on-hand. focus $XXX strong on CRC’s continue foundation, committed returns. with of quarter also shareholder million very financial commitment and will our of maintaining We flexibility financial and achieving a to

changes year, range higher to ‘XX pricing As balance for to and look is our This $XXX partially by quarter midpoint of lower flow X% million timing the XXXX our after-tax by increased the performance. assumptions to capital, offset first strong at we the cash guidance commodity capital to of taxes. reflect our working we year, of cash free the have rest of the

on have quarterly attachments results our our the in XXXX earnings our release deck. financial about to We provided guidance in detailed our slide operational and and analysis

energy be the She more CRC. to our Turning strategic realignment excited years Nelly operations financing is more company's and than sectors. of yesterday extensive project welcome of infrastructure in appointment new development gas and to not Molina, an capital could the and energy CFO to of we in I finance, continued power and a projects markets of seasoned corporate natural Nelly background XX the effective executive structure, breaks May X. with CRC's experience announced as the

President where Energy, served Nelly joins recently us most Vice from of she Sempra as

weeks President to we in will know the I of and and navigating introducing greatly ahead Vice her I energy Investor forward evolving and Relations. her today's look in expertise industry. to months benefit you Audit Services from

the are excellence. focused In also addition operational in we changes pursuing to on leadership,

organization. we more quarter, transformation initiative and build last a business reduction to cost activity our mentioned As with a align and launched efficient levels

cost reduction targeting of this are to rate end million the annualized by year. goal be $XX to implemented million We of $XX run

and reductions and the of to QX. to-date are working expand We million scale identified reduction have during scope cost efforts $XX of

key is achieve Another flexibility. element plan of to increased our financial

investments and well additional as in have return pave make separation terms. our business. management duration we our to These RBL enable reaffirmed program, carbon for us improve and our our as the This the and potential billion support $X.X help the way base successfully facility will shareholder a increase business of quarter borrowing carbon amended to the management changes further

to the evaluate increase financial our year ways to will We as flexibility progresses. continue

we we last best of efforts Board the our CEO As ongoing carbon are together been CRC, optimize McFarland Carbon have business, management to serving part as forward. of value our portfolio. Carbon to evaluating Outgoing is our the Chair of TerraVault the Mac discussed of TerraVault, the we working path closely separation as and of determine the quarter,

FID, in that COX an to are reach EPA and still First such of Injection to Sight The separation, as early carbon stages a are cash Project VI Permit among initiating first others. is management important working we potential Class business and the there milestones flow before Line Approval,

made the further Renewable are carbon new in We by continuing at the we project and California. net Only business Sacramento Park. to our leading Storage build basin, zero Greenfield CDMAs, quarter two the Green a signing Elk Industrial first progress storage Hills Hydrogen DME a in out In Project have

annum CTV's Further, projects These COX XXX,XXX for for metric year, our We target tons. pore XXX,XXX stated for new XX% XX% metric XXX development to about a call in million our storage tons per an combined we have target Class million total bringing metric of metric XXX a tons on area, of metric XXXX of potential of combined CDMAs a IV, VI of four submitted representing place per tons, applications tons now injection space. reservations additional CTV permitted injection basis. rate of we or XX million permit which over

permits team state. CTV for California The across to the file position in expand vaults to continues additional our leading

from the draft targeting permit receiving VI of first end the by EPA Class our are year. We I CTV for the

continued progress our of which In to executing we're the In had in strategic our us full-year increase repositioning. financial performance, about summary, XXXX, first we excited quarter guidance. our record allowed

and our shareholder value. to our reposition continue to advanced also business unlock cost-cutting initiatives We additional

finally, And our expanded California's further energy carbon to California leading management clean goals. we strategy support

We'll the now for Operator? you for the open questions. joining us Thank line on today. call

Operator

[Operator the Yes, Capital first question from And comes with Scott Markets. Hanold RBC Instructions]. thank you.

Scott Hanold

Thanks. all. me but of may afternoon bit like multifaceted little it Good first morning or question, a And feel one, my here. try let good

confident. and your you how about mix on Do see I want the the feel permitted, concern. some you front of some the going And to of do XX% on more do but much of obviously you projects intense scarcity do made – of do agreements. you're in end were that really so You've as about only new that the or think forward? I recently kind CDMAs of starting to the a storage increase capital you lower you those, know projects scale you up confident these of of in factor and how the the more right getting progress reservations guess EBITDA now, of larger quantum isn't feel said total

ultimately the but stake it's know higher would a a opportunity bit relative potential to I I'm about trying if a equity question, kind the think EBITDA exercising be of just multifaceted some of and of offset options? So

Francisco Leon

yeah Hey Scott, focused we're on both.

four greenfield, area. tailwinds the co-locate on helped Elk that's we CDMAs that, projects no increase It had good these the greenfield is greenfield projects also helps progress, the question so in from definitely really you the about that in put and incentives, Hills Sacramento So IRA at together. can

to So easier an it's CDMA. to process – get it a just

have but across here do discovery Existing move price point to value how state. the chain still across Where about yield credits you sources, to transportation, they forward we the are before, are also the you it talked to this right. going solve and

to with we're going know transportation a something and part we're deploy the interest term. near partners in more right Sacramento but projects, We're Everyone there's source, also the focused ensuring equation, going ability that is some there's to is point the certainly We to uncertainty that of that is confident uncertainty EBITDA increase lot Brookfield. in that But successful. be CCS I'm both hoping hoping on of clarified the capital, understands our is delivering in we're the now.

do both. a we'll bit of little So

we're I at that the Q, think of are reviewing. we of if in you types the that projects see the projects types looked

kind You see this everybody mix bring greenfield, in new but of projects just points into in for the live happens the first projects business be a this of so term. Greenfield. pretty kind for the we're front them. to fold not near building, is exclusively of – some the hopefully are four not business good We'll It that's as going that between

Scott Hanold

how about on and the Yeah, options and equity the those? exercising

Francisco Leon

the into by of longer. invest and preserved projects the – but of only the the to We're requires hydrogen. with not depth a Cypress the ammonia. that option equity we're in the Ammonia works they is of quite Yeah, of we reviewing cost in that That and best there's four cases a Lone Sacramento. well do co-op but profile place been also lot in started tied understanding lot businesses, so market, contracts all already Grannus And have the the those yet, interest. what in and to is of and not a take market the the for market a very developed best off hydrogen in

have excited. to we're do, we're a we're lot of Lone particular. the to both. potential We support We lot will That's develop supports this So California. a reviewing decision There's a the XXV lot has by we're year hydrogen like that Cypress be There's equity. demand evaluating think in again for in to the these a it, project nicely first but going but product. IRA, of on markets seeing

have Brookfield about the in that very participating and So us gets new that excited retained invest in equity we CRC, to this something at verticals. both it's and energy ability

Scott Hanold

XX can depth with like to cost CRC. kind sounds you kind do of like But was can service. on targeting. and they question in you you're right stuff are of A&M in – about, bit that of My and No, color putting of those sight a you of doing you like little going do this a you that I the and I outside on cost talked that seeing of savings the thought million, on this. I'm think lot follow-up give of can and curious help appreciate us what your is using versus have in I And somebody specific and now. there's said what around on kind line come reason a are What you them own, guess specifically What with? savings really you of come it

Francisco Leon

operated does ways Scott, we It's really looking were regulations strictest of that CRC so company in change things been the lot how has well. pretty work. Yeah for we much the a a under U.S. to

– there's of So there's well. lot a works team that the

operating – are standards, bring We levels. high change very work. We in all line how but need we have need we with to activity cost to

transformation, exercise. business just kind a not So of that a requires cost-cutting a

We everything. to take to look system. the question for decisions question, and of make need costs some need need prioritize we question where we how to out to So to we're ultimately organized, we

to, team we're months, quarter trying And good the this These right removing these are not pretty You to not we a And in initiative. savings of after away permanent million it's described cost. are know, that work last $XX is got out good, a one-time again, run deferral, not this system. this rate is want we came the and to win. a savings, couple take

that say, So we're contracts, for going opportunity for a we're the It's to how ultimately – can ‘okay, evaluating we And drive do contractors, culture chemical do we're we forward?’ a How questioning do It's better refresh. board? we right? different evaluating everything, a example. good across contracts and opportunity make do decisions good use

good get we very we of external the perspective. We and accelerating want a tends help efforts. to want happening some brought We they their that from and in are two, best the what's rest California of cost-saving to team; bring assessing be to these A&M; want practices, U.S. one, isolated ultimately

lot of taken a historically at of CRC. cost the We've system out

help. that really felt we how phase outside a requires was it best work, next is done with the transformation one and of of So we kind some

presenting I'm exercises, do So very great the organic of from on and on getting company new we're we better. lot team, focused this these make how support cost-reduction ideas a

Scott Hanold

appreciate Got it. it. you. I Thank

Francisco Leon

you. Thank

Operator

Thank you. the of question next America. Bank Leggate Doug comes from And with

Kalei Akamine

the on look quarter for a following G&A the myself. power E&P, like? its well, plant; of does potential we of received This is regarding for Francisco, last separation Hey, valuation, good imbalance announcement from morning. your a lot power the CCUS on Kalei actually the – what's market burden, what's what

guys standalone comment you gas maybe better gas a you but there be the even time, with it's a did with [inaudible]. to could years remember that a Therefore, wouldn't core there an it noting that whether few are CCUS power on something ago, that back it was period synergies option fit buy you first after business on did capture. for or business, So of whether a I to with time. your to it's plant add here, if potential oil in here, And deal the and deal,

it. suggests to that about be in me some there So that think may structuring constraints how you

Francisco Leon

at of the a we us asset owning big yeah, it. have great advantage with been at Hey really and Kalei, Elk grid, truly least fields, I I It's Hills. which helps mean think for costs alongside us a so by us stay the a bring it for in state our power plant part helps away from down

two-thirds plant sold the field power [ph] – the oil about Cali so to and delivers one-third goes utilities. So and gets of the to

So asset a historically. it's been profitable for good us

really net able make to be opportunity better, state with a the these to have in system, a be offerings. that's to We able deliver it capture of hungry power zero types for

I prospect able also of I net appealing is a to this we you to to mean capture, which zero of So everybody, as system past, best which a have think it's asset where having basis. of go-forward cost be is higher on but the on we're evaluating right? talked undertake to fits concentration on capture be a the in or stream end going low the COX, spectrum, the about

the RBL asset put things banks We way the looking sort we release ultimately and the in to CRC the have to finance capital Carbon that we're working on best that on make so the it we do collateral how did is and How we it from possible. call through. more what work that TerraVault? type of can the the flexibility, of that is long, These we're asset, the to more investment? do are So does or

now even that Right I power an the see as see way the asset E&P trading plant, unique it's California right. multiple, industry, the E&P though a we great asset companies,

visibility to unlock it's how and asking, So way see things a to by things value get showcase better I zero right, you're having the it plant, ability good great clearly this going is be power – having how to and add financials, think the an the of value. can plant the a making a it some so net to

definitive. gave you of do we through through here separate assets nothing working the case we're groundwork Hopefully, in of forward. do where these types as So it, working least fit some I we're going they at the businesses and best

Kalei Akamine

for was Can on The quick there study you performing? don't And performed years give what follow-up ago. my second is you that whatever currently you're there, and a hope that reason, us the this second feed feed study I study. two an count status that guys but as are you performing update a was feed on question, about

Francisco Leon

it's on if say not, a looks what see the Kalei. I'd depending your like. second question We'll question No, one or great next it's

with with we we're few did study ago, and Fluor NextDecade. a second a a doing So now years study feed feed

You feed have of put continue natural hasn't cost, the facility the a before. a looking going two gas is system have there this at we into power been in to understand, the capture we're studies, to anywhere that reason and U.S. scale plant

we to want the right. we make So have that cost sure

only over it's delivers two I to really it's drive scale not that We project. mean, the profitable new the a the project lot years. cost trying of it's want It's make technology maybe also concerns is the that down. but ability footprint, technology. or but last COX that reduce that to a pressures does, that had inflationary sure We've to something really a not emission not

happen? year, CalCapture from you're can we How do power us we do set We're next targeting this plant, best that we so So to profile. is up? continue right? cost finance How seeing going that make what FID to working really

input. the that looking technology executed supply to that the bringing award to ideas, be we're the And are project companies through a project going can we're and on. can of get soliciting chain and working lot comfortable we There's deliver feel at whoever ultimately we're best differently. new it; price bringing to So new us look a that

So we're working through it.

Kalei Akamine

second gas. I that. on natural is My appreciate real question

how us because really gate I spot? tightness it SoCal Hoping here So California, this in it you this help could appreciated, help reoccurring. would big border? exposure. like it understand to is quarter. any it or Is Is be numbers the can city is obviously, or seems given your be think that mid-week it model

Francisco Leon

give it turn to I'll then a in-depth and start I'll answer. over to Jay So more

So the that gas and California only through to we we not going baseload. renewables is is absolutely near through penetration a go the do the as but forward of in this regulation as feel be needed, term,

So spikes we were well positioned state as see natural the these happening the more. and gas in more and largest producer we

it's definitely, It’s that's So what an the kind that's something decided that to island. state, going of be. energy we're

this in natural these the both right Vista of reposition the to when cover we of flexibility the Elk all have that market assets that to a shocks pricing deliver own and can and lot It and a us assets So gives see owning bit and gas through Basin for maybe the be gas places. state. little try go power gas Sacramento you if we Jay, Buena our to and But Hills able out around that. areas

Jay Bys

month. to of to not the to close We'd prefer lot gas into we're times the not of any here. kind month index. particular touch be than the precept looking me carry let a at, daily going first market Yeah, More during if basic on to, find the of ourselves not,

bid fixed simply that are frankly cycle advance or bid given the week place. just seem, taking the limited of circumstances take Now, some attractive positions may week that cycle, that we price during in

produced most position may a a maintain the you significant and River from as gas be the Kern relative system not the terms got so. fairly BTS, is border on we to or part field long-haul SoCal may on we've transportation in for but of SoCal Gas aware, index,

state. marketing kind asset afraid, call tools trading of got dependable the generating goofy fact production, We've make together. where some liquid of call very the and a right that get of transportation state is got around I most the to really we got maintain is And this I'm and the in well as the of semantics people the those the capacity mentioned. management. decisions. work little that We've This and points We set folks we've some we keep it gas a some bit around in that

plant; we more to when more power, gas needs market the So needs the to to when the we're market move able power market. gas gas, the bring

general I the think you border/PG&E of any So reflective probably in look XX/XX month SoCal a City particular of monthly for index. index, Gate cycle, kind of at should first look the

Kalei Akamine

that response. I appreciate

Francisco Leon

Thanks Kalei.

Operator

MKM. And the Leo comes question ROTH you. with from next Mariani Thank

Leo Mariani

Why to around just of more in little delve the you sort a few you don’t the numbers, bit a of quarter. know

price I a quarter. at You're up below a up in SoCal getting that sort question. border, then was of at sort I what CapEx, quite bit a really of time the it Gate, just the matter. looking and looked it City hard guess XX.XX guys I follow guidance, on didn't had you put gas the to

that that. of So some the indices local nicely get are or outside any visible drove more so that. less how on these XX.XX CapEx whatnot But of Bloomberg any some the maybe markets the of there's agencies by to again, other reported data color semantics on just then that to here, kind sort guide thoughts like and of kind below get pricing around other that or

Francisco Leon

that sounds good. Hey Leo,

the answer Let me CapEx question.

snow four months are through that and of rain, went hard wind, through see impact lot and you California; data a in we affected of in bad really and I to operations. is lot production. believe of a know executing The don't weather So phenomena lot of it's a that

on production we but that fact In activity had it capital the planned. expectations, we delay some did outperform of

step-up now the rig is see capital that you field, and a year what the for in year. normalized. activity But the operations Wilmington we'll down, over the step of run in throughout we as continue we We work do – rest as get one should

an pricing answer. gas question, In turn terms over I'll Jay again, to for the it of

Jay Bys

Sure.

gas ago, couple fixed gets mid-week As opportunistic of bunch execute of the thing cycle. But that price few when we kind I the when trades times price. comes trying kind are that see whole of year lost it natural the doesn't trades months there a it we’re a necessarily an market it to did when trade natural discount get index There and of year a at one is, times a weeds premium. to the in are and at pricing physical [ph] during a gas mentioned when you posted, of the trade will of at physical

get for than SoCal So to you border gas physical at the physical border, number. gas the in index example, may price, plus end more up paying buy know you

number So plus transacted a the we are both strong. fair frankly and months our in of had index of very numbers book for February, January

gas A gas western lot market. points premiums the different posted trading at indexes. financial to significant of the Physical individual was in

limited year. it’s the of we see I what variation pretty and quickly. for that will we think of opportunistic Again, representative the combine trades, get and be number balance ‘XX we’ll the the not had there sure So small I'm QXof

probably I the think large shortage to gas gas inventory now. find excluding of and measures, going fact you're a are right that our prices got we've that

gas more to you're of the find think going national I reflective that price.

Francisco Leon

one And if I add can thing.

electricity. So point year This stream. Last year NGL fantastic where natural very be there’ll and team diversified then trading The after-hedge and trading have at it's the a in highlighted a we we some times year’s barrels have barrels. the revenue oil than higher our NGL's. were we marketing gas,

think run. the that most here diversification to feel our manage then up opportunity we're for an good the built make to team CRC set we that highest about return long in and success for So that decisions, really given I

Leo Mariani

that then the on we're to walking has of that very know pretty this down and more sort Okay, based to this around by the directing so Historically the was here quarter. steady. a of sold less last. gas of Was lot understand move doesn't you downtime, that maybe power or guys you It in kind or gas market of sense. maintenance sticking quarter been quarter to versus quarter. production a helpful million around kind of the volumes, here, gas market some more makes the in It much, there like was it numbers just production. any of going And you with really of of day $XX know and sort is

on looking that. Just any for color

Francisco Leon

was high Yeah, Leo production impacted weather. I facilities down had winds know particular. the – really gas our the you and in you gas that because by That's know of affected

quarter. So but really We have that of I some weather. can year, maintenance to projects what the in QX, happened that's do the think change most throughout you attribute

Leo Mariani

I the Okay, just and then permits no, just here, county update of in only front for kind that's helpful situation gasoline permitting the any the regulatory on general on California. know current of EIS is apart talk still outside Kern just of the County to maybe kind that those a not ways are away you from can coming in decision, or areas? but whether permits

Francisco Leon

so that’s Yeah, update so yeah, EIR, still ongoing. County no on the Kern appeal around

some time, said to so. expect we that take before, we As

getting and so those flowing. the We County throughout are Kern in workover permits are state,

permitting three an to County. in also our to Basin us That gives San We be EIR. be for alternative able field the do in Joaquin largest a Kern level in back [inaudible] of County fields filed Kern to

you looking Kern, and Sacramento get, gas LA basin our at continue to basin looking the inventory the building of well. in as know and south outside wells We're at

As the we said ’XX. before, permits that for all we the have we in campaign need drilling

really many options right So doing possible as for is now creating XXXX. we're all as

permits again in flowing. no County permits working yet, those, through other which Kern but are workover So than

Leo Mariani

you still County it get Kern something here? but EIS. the generally you outside able are That's sounds can to probably permits obtain of guys Okay, like speaking

Francisco Leon

do Yeah, shape. to like County. Kern We have we permits expect we get that Wilmington, were – all that's permits I in I mean the said, good we so of outside need in

Leo Mariani

Okay, you. thank

Operator

Nate from comes question next the And you. Thank with Pendleton Stifel.

Nate Pendleton

congrats on Good quarter. a morning and strong

Carbon other any there can exploring at noteworthy that Regarding trucking are use site throughput that you to costs you're you TerraVault sites details trucking should emissions and provide your implications any alluded around COX at whether about? or low of the earlier, thinking we be

Francisco Leon

that's of the so gathering our use that's Hills on. to at co-locate, we’ll be we focused able lines greenfield the first COX, where first Yeah, developments on so internal to that all Elk and we're option move

yes, into of much looking cells the so that of vehicles, and Ultimately we're to that's extent part emission them these the we're hydrogen trucking, whether other areas in to now low solution across right. options, plan, low order full going to very the or at that the the require and benefit fuel emission projects To so it's credit. provide need work for get board,

so. So definitely the across that COX pipelines wait to as resolved, the as through we move state for be on uncertainty thinking we and

COX first to to co-locate behind the order and the injection plans deals just on be reservoir have systems. the and is But quicker much of fence gathering of able with business get we're how to top going our

Nate Pendleton

Great, thanks. we've growing over in Carbon country. this the permit, your is back going At can months level, how first California you on industry you and few mover TerraVault of how classics out an both to the a speak increasing high And stepping past differentiated and to plan capitalize tracking advantage number bit, across forward? been in

Francisco Leon

No, absolutely.

in XXXX, ’XX. So first we filed in permit August of second November of our permit

EPA permits withdrawn We've an have permissions new uncertainty as We and have process. a at has to filing a we is, high take the – So to well. really that's the EPA, throughout, takes I this commercially the we they we’re it being XX thing permits to lot fronts. But said time to we of permit on in our rigor there Class some the lot of XX them expected era from in anybody know think application. some everything of starting, come the a that VI talked going What learned just Technically, this when that seen year. is it's submits all months.

good we understanding We've have of work. seismic, we Technically of done a at Hills. the a Elk have reservoir lot

the has team the with in diligently way best dialogue support Our to good have EPA. the for position worked possible bring working permit and a the communities from to really with forward local having Kern project EPA. the We're in this County

permits what, of first the the we're know to be So you one by in the running think EPA.

together, that first that permit, to projects, you the there, going made. have more given key a the right sources that being progress think this A catalyst year, I and to we're what the good feel well emission what coming I there and it’s we channels transparency to catalyst. is TerraVault is permits through we best we're big is more very know dialogue, line. given permit Carbon EPA we're the really that get with market that to think to giving putting to the multiple again, try of to positioned the happens and finish some next, working I out heard as the the

Nate Pendleton

Got Thanks for questions. taking it. my

Francisco Leon

Nate. Thanks

Operator

Tuohy [Operator Instructions] from question Investment the Thank Brothers Noel Park And comes you. with Research. next

Noel Park

morning. good Hi,

Francisco Leon

Hi!

Noel Park

I of guess Just things. I'm There's sort about high a questions, couple but overall. thinking just of level

a your, of of you some thoughts today in see course, degree some a deals. of at time? on new integration the current where couple greater storage-only of announced you Looking business, over And might albeit vertical

on the like you guidance clearly us what given accounts those might some that So margins look you've from line and business like.

early the or that be So the burden sort or as where looking – the pretty you see far more bringing is construction way know you as over project in-house reward or time, low risk of do that of you I fruit, are to would time, over activities ideal, like mean you'd presents achieve. a even development any much unfolding hanging

Francisco Leon

Yeah, let to so try question, in Noel it. me that address

type So we that per is $XX deliver deals. scarce to type we being projects, $XX pore today the as as regular you curve going is ton and state four CDMAs see curve. space contract fit signed between greenfield reminder ,and on resource to storage parts that All where know only a we said for the in within these our what

economics are pore So space. that you value have space we pore work validating the and parties not and the only point, third storage ultimately but through that scarcity

green business to there's as not and option invest the good to if lot, value to that trying the something difficult we're We're add blue, projects. we're a to most have to learning to – have equity do. integration, or not a into take you and ammonia we're model a a it's companies, right. the but we these to company, way we'd but not where we're understand It's it's going returns, like make vertical say hydrogen way We're

centers with industrial only together amongst can bringing not sell these have natural But develop ourselves, even land. happening, we integration know gas these centers, you at that we're power, the we’re seeing as natural see partners industrial projects integration big and as like do bring power, Hills. We you provide into you Elk we so

projects these just Right say that way. looking be have and get to then in-house. if to market people to this we're we really partner green which It's bring most attractive projects we’re their before now a hard to smart need on with to seems done develop to looking in the these California,

We'll – we're we it’s answer, the it’s get projects. California question in a door. projects difficult yet but light know through very energy know as see coming where early, don't to in-house these too do I that seeing all I different the a about to sector exposed do So that we

Noel Park

and sort eager about But of or criteria lines development of would industrial continuing of thanks. similar about the blocks that. of be rule to announced And out industrial would get some zero get talk the I’m the along business you to the projects more park, of more you process rule some net in projects maybe maybe discussion, what park to setting. the could from curious are projects. sense just of We as Great, – for building sort maybe of inclined types the opposed maybe of for you

Francisco Leon

think no, brought Yeah, able multiples we to and have in. four think what evaluating a of of terms the we mean We're ongoing, I I only of CDMA. see that lot in I forward conversations you're brought we

we As before, feel we're we talked over-subscribed. about

parties So than more talking capacity to we're that have we means many for.

permits are process and these get that selection we so know the that is have to projects term Where forward. do have a need you and can bring we in So can are able ultimately going credibility with ultimately returns projects a these locally right, off-takes there obviously to in dealing as people well are to serving that strong market and be and lock long that financing. incremental

MOUs is we're that's making right, moved. just a not We're that the we selection announcing there why for process, progress. sake of doing So

projects these contracts are We're on million we want more all – have much tons. be then to targets together, by and that conditions the to and injection precedent. that building can focused finalizing a come so really we sure We’re this XXXX need for to XXXX X need we to all able we our get to to can make XXXX because them, that

are we and that and provide are good for and kind grading selecting we finish our projects funnel the have think we us Brookfield, right, can So partner. this of we high get the line returns to

hard I are list can you But see graded So, strongly we what not say being high projects we of is very we without on. a that would specific. feel considering it’s execute to say, what that

Noel Park

Great. lot. Thanks a

Francisco Leon

Thanks Noel.

Operator

Thank you. from And Seeve the comes GoldenTree. next with Eric question

Eric Seeve

guys, Hey thank call. you for the

COX question follow-on Another business. the regarding

a I chunkier some color size the when appreciated. of those million projects queue, of the you're talking color I'm projects you've curious It's talking the there talk on that I'm ones there. remaining some Are or us you in year. they and of announced size are of bigger Is sequestered would I greenfield to, similar the of COX tons be already [inaudible] each In know about gave it size, still terms and about X size of potential projects. in are that Any out the in the brownfield, was interesting. projects mix that with earlier. line terms

Francisco Leon

of of Hey million a Eric! XXX dealing remember, with So in right. total tons market addressable California, we're emissions

as to you points scale pipelines to naturally definitely you're capture, having in sink you're said, points sources going to if those for put mission chunky to there. a place, you're us projects. connect out naturally And there's on if for to having put and So have investment

and said right. at at toward all look commercial we aspects projects, tanks. We these at the we counterparty that of look injection Now, the that, look we of having look proximity at payment,

a So do, full as in order service, CCS a if we [inaudible].

are that right projects and tax we on there right that size ton the there. It’s year. hard need now multiple are to are state, answer big emitters that's emitters throughout per at out solutions paying that question, they are there some There looking but increasing $XX but carbon every

to They core not are sub-surface finding and going probably permitting through, we're and replicate competency. that trying what a doing also is out probably

of on near out ‘okay, working through But term. the dialogues, point So and source it, size big. educating, and those we're emissions, what's land again to we're trying but terms.’ we're right It's having store right just the to the is too some year partner the legacy deal the matter this of the to price place in agreeing we're figuring best hopefully expect a

Eric Seeve

space projects well Are over Elk a – going seems potential it be to that sounds are you but thank field Hills you. is really there that guys in here, it like subscribed. And Great, one well follow-up. there mean suited like is attractive I of evaluating? get to storage lot more you're

Francisco Leon

plant I new sure. extended permits of Hills power with We're for one a mean property simple add our Elk lot bring into hours. incremental already pore with looking expanded a a ways to technology gas, for with the elements I space. Yeah, XX,XXX we've XX natural mean in acres, field. to of

more valuable but gas draw some creating too than point that could injection the pore maybe right, and it yes, oil space, space today, ultimately the be. more and we're as yes, we’re case That's we pore at and not So extracting.

as be value tanks as comes that market really installing and down we So we will those know, for looking more proximity having pore understand or of the to even and together COX, ways create there. is we the Hills the Elk key at and near well, space, see

in We Sacramento do lot and see nice There's emissions we near of the portfolio assets. are area. a very, lot near a a of room of very building running there

I creating access two that the the gives So options these see. most us to we think market can

Eric Seeve

of any there maintenance should quarterly production there potential from of year, just Terrific, progressing than we as any just, remainder is – adverse – sort the other rate QX the cadence gas would oil we see impact weather, or the sort second are throughout production the thank down QX. annualize understand can And production, and to the you. scheduled model that of with we impacts trying to out question from is we

Francisco Leon

– so maintenance rest the rig going for permits to said is production so exit. for activity plants of that's Hills year. of Yeah, was effectively couple X% the for one in hand, X% declining reflected that's to year, down We in a the only because QX for There providing guidance the entry guidance. drilling QX. our one weeks on between do we’re we're see with What to but we is, Elk ago, of

here, bit we the a number go us we – of a that started So be decline rest of year. the QX. would case more very held looks to QX little up seeing and production so still as that nicely the in in for good Then

not to it's So going paste QX. copy be

guidance the a trend. the You do the should and see for at We decline year. look X%

Operator

as today's question-and-answer the presentation. Thank Thank as this concludes you both And session, taking well itself. you. for the conference

You now phone lines. your disconnect may

California Resources (CRC) 2 May 232023 Q1 Earnings call transcript