2015 Analyst Day 2 Presentation

88 Pages·2015·6 MB·English

Bakersfield
ANALYST DAY & SITE TOUR
October 14, 2015
FORWARD-LOOKING / CAUTIONARY STATEMENTS
Thispresentationcontainsforward-lookingstatementsthatinvolverisksanduncertaintiesthatcouldmateriallyaffectourexpectedresults
ofoperations,liquidity,cashflowsandbusinessprospects,andreportedresultsshouldnotbeconsideredanindicationoffuture
performance.Suchstatementsspecificallyincludeourexpectationsastoourfuturefinancialposition,drillingprogram,production,
projectedcosts,futureoperations,hedgingactivities,capitalinvestmentsandotherguidanceincludedinthispresentation. Factors(butnot
necessarilyallthefactors)thatcouldcauseresultstodifferinclude:commoditypricefluctuations;theeffectofourdebtontheimpactof
economicdownturnsandadversebusinessdevelopments;sufficiencyofouroperatingcashflowtofundplannedcapitalinvestments;the
abilitytoobtaingovernmentpermitsandapprovals;effectivenessofourcapitalinvestments;restrictionsandchangesinrestrictions
imposedbyregulationsincludingthoserelatedtoourabilitytoobtain,use,manageordisposeofwater;risksofdrilling;taxlawchanges;the
subjectivenatureofestimatesofprovedreservesandrelatedfuturenetcashflows;restrictionofoperationsto,andconcentrationof
exposuretoeventssuchasindustrialaccidents,refineryshutdowns,naturaldisastersandlabordifficultiesin,California;concernsabout
climatechangeandairqualityissues;lower-than-expectedproductionfromdevelopmentprojectsoracquisitions;catastrophiceventsfor
whichwemaybeuninsuredorunderinsured;cyberattacks;operationalissuesthatrestrictmarketaccess;anduncertaintiesrelatedtothe
spin-off,theagreementsrelatedtheretoandtheanticipatedeffectsofrestructuringorreorganizingourbusiness.Materialrisksarefurther
discussedin“RiskFactors”inourAnnualReportonForm10-Kavailableonourwebsiteatcrc.com. Wordssuchas"aim,""anticipate,"
"believe,""budget,""continue,""could,""effort,""estimate,""expect,""forecast,""goal,""guidance,""intend,""likely,""may,""might,"
"objective,""outlook,""plan,""potential,""predict,""project,""seek,""should,""target,"will"or"would"“orsimilarexpressionsthatconveythe
prospectivenatureofeventsoroutcomesgenerallyindicateforward-lookingstatements. Anyforward-lookingstatementspeaksonlyasof
thedateonwhichsuchstatementismadeandtheCompanyundertakesnoobligationtocorrectorupdateanyforward-lookingstatement,
whetherasaresultofnewinformation,futureeventsorotherwise,exceptasrequiredbyapplicablelaw.
This presentation includes financial measures that are not in accordance with United States generally accepted accounting principles
(“GAAP”), includingPV-10and Adjusted EBITDAX. While managementbelieves thatsuch measures are usefulforinvestors,theyshould not
be used as a replacementforfinancialmeasures that are in accordance with GAAP. For a reconciliation of Adjusted EBITDAX to the nearest
comparablemeasureinaccordancewithGAAP,pleaseseetheAppendix.
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AnalystPresentation–Day2
CAUTIONARY STATEMENTS REGARDING
HYDROCARBON QUANTITIES
Wehaveprovidedinternallygeneratedestimatesforprovedreservesandaggregatedproved,probableandpossiblereserves(“3PReserves”)asof
December 31, 2014 in this presentation, with each category of reserves estimated in accordance with SEC guidelines and definitions, though we
havenotreportedallsuchestimatestotheSEC. Asusedinthispresentation:
• Probablereserves. Weuse deterministicmethodstoestimateprobable reservequantities,andwhendeterministicmethodsareused,it
isaslikelyasnotthatactualremainingquantitiesrecoveredwillexceedthesumofestimatedprovedplusprobablereserves.
• Possible reserves. We use deterministicmethods to estimate possible reserve quantities,and when deterministic methods are usedto
estimate possible reserve quantities, the total quantities ultimately recovered from a project have a low probability of exceeding proved
plusprobablepluspossiblereserves.
TheSECprohibitscompaniesfromaggregatingproved,probableandpossiblereservesestimatedusingdeterministicestimationmethodsinfilings
withtheSECduetothedifferentlevelsofcertaintyassociatedwitheachreservecategory.
Actual quantities that may be ultimately recovered from our interests may differ substantially from the estimates in this presentation. Factors
affectingultimaterecoveryincludethescope ofourongoingdrillingprogram,whichwillbe directlyaffectedby commodity prices,theavailabilityof
capital, regulatory approvals, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations,
transportation constraints and other factors; actual drilling results, which may be affected by geological, mechanical and other factors that
determinerecoveryrates;andbudgetsbaseduponourfutureevaluationofrisk,returnsandtheavailabilityofcapital.
We use the term “oil-in-place”, “net unrisked 3P resources”, “net unrisked prospective resources” and “estimated ultimate recovery” in this
presentation to describe estimates of potentially recoverable hydrocarbons remaining in the applicable reservoir. SEC guidelines restrict us from
including these measures in filings with the SEC. These have been estimatedinternally without review by independent engineers andmay include
shale resources which are not considered in most older, publicly available estimates. Actual recovery of these potential resource volumes is
inherentlymorespeculative than recovery ofestimatedreservesandanysuchrecovery willbe dependentupon future designandimplementation
of a successful development plan. Management’s estimate of original hydrocarbons in place includes historical production plus estimates of
proved,probableandpossiblereservesandagrossresourceestimatethathasnotbeenreducedbyappropriatefactorsforpotentialrecoveryand
as a result differs significantly from estimates of hydrocarbons that can potentially be recovered. Ultimate recoveries will be dependent upon
numerous factors including those noted above. In addition, we discuss “PUD-like” reserves by which we mean reserves for which our technical
evaluation indicates that we would book the reserves as proved undeveloped reserves except that we do not expect to develop them within five
years. ThesearenotprovedreservesinaccordancewithSECregulations.
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AnalystPresentation–Day2
CRC AGENDA
• Day One
 Strategic Overview of CRC – Todd Stevens, President & CEO
 Marketing Overview – Carlos Contreras, VP Marketing
 Regulatory Overview – Charlie Weiss, EVP – Public Affairs
 Waterflood Primer – Jerry Foster, Manager IOR/EOR
 Los Angeles and Ventura Basins – Frank Komin, EVP – Southern Operations
 THUMS Island Tour
• Day Two
 Exploration Overview – Darren Williams, EVP – Exploration
 Northern Operations Overview– Bob Barnes, EVP – Northern Operations
 Steamflood Primer
 Dr. Vic Ziegler, Director- Corporate Development
 Jeff Hatlen – Chief Reservoir Engineer Thermal Operations
 Elk Hills Site Tour
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AnalystPresentation–Day2
World Class Resource Base
•Interestsin4ofthe12largestfieldsinthe
lower48states
•768MMBoeprovedreserves(12/31/2014)
•LargestproducerinCaliforniaonagross
operatedbasiswithsignificantexploration
anddevelopmentpotential
Shareholder Value Focus Portfolio of Lower-Risk, High-
Growth Opportunities
•Internallyfundedcapitalexpenditure
program •Oilweightedreserves
•Optimizedcapitalallocation •Broadexplorationanddevelopment
•Unlockingunder-exploitedresource program
potentialutilizingmoderntechnology •30%-100%+ratesofreturnonindividual
projects
California Heritage Management Expertise
•Strongtrackrecordofoperationssince •Successfuloperationsexclusivelyin
1950s California
•Longstandingcommunityandstate •Assembledlargestprivately-heldland
relationships positioninCalifornia
•ActivelyinvolvedincommunitieswithCRC •Operatorofchoiceinsensitive
operations environments
AnalystPresentation–Day2
FLEXIBLE HIGH RETURN INVENTORY
• Capital associated with currently identified projects delivering VCI >1.3*
• Current average well cost ~$1.1 MM
• Multi-year inventory to maintain flat production at different points in the price curve
ActionableInventoryatVariousPriceLevels
$8.0
$7.0
$6.0
)
B
$
($5.0
al Workovers
t
api$4.0 Steamflood
C
g Primary
n$3.0
rilli Waterflood
D
$2.0
Unconventional
$1.0
$0.0
55 65 75 85
Brent$/Bbl
Pace– Rigs/Year YearsofInventory
3 11.1 24.0 37.1 45.9
5 6.7 14.4 22.2 27.5
7 4.8 10.3 15.9 19.7
10 3.3 7.2 11.1 13.8
*Doesnotincludeinjectors
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SELF-FUNDED CAPITAL INVESTMENT PROGRAM
CCoommmmeennttaarryy 22001155 TToottaall CCaappiittaall BBuuddggeett
• 2015 capital budgetof $440 million expected to Other1 Total: $440 million
be directed almost entirely towards oil-weighted $95
22% Drilling
investment
$150
• Expect to grow oil productionin 2015 without 34%
Exploration
exceeding cashflows
$15
3%
• Expect multi-year crude oil maintenance capital
range of $600-$700million per year to maintain
flat crude oil production*
Workovers
• Primary tenet for 2016 capital program will be to Dev.Facility $50
$130 11%
invest within cash flow
30% 1Otherincludesland,seismic,
maintenanceandother
investments.
22001155 DDrriilllliinngg CCaappiittaall BBuuddggeett –– BByy BBaassiinn 22001155 CCaappiittaall BBuuddggeett ((MMMM))–– BByy DDrriivvee
Primary
Total:$150million $40,9%
Unconventional
$35,8%
LosAngeles Waterfloods
$50 $175,40% Exploration
33% $15,3%
Other
$20,5%
SanJoaquin
$100
Steamfloods,
67%
$155,35%
*Calculatedover3yearsbasedoncurrentoperatingcostsandexpensesinthecurrentcommodityenvironment.
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AnalystPresentation–Day2
EXPLORATION OVERVIEW
Darren Williams | EVP – Exploration | October 14, 2015
EXPLORATION KEY TAKEAWAYS
• Material growth portfolio in an
Sacramento Basin
underexplored, world-class
Dry gas & shale
hydrocarbon province
• Proven value creation through
exploration success San Joaquin Basin
Heavy oil, light oil, dry
gas & shale
• Unparalleled portfolio of conventional
exploration assets
• Significant prospective shale
resources with reservoir properties
comparable to US resource plays
Ventura Basin
• Rigorous portfolio management Heavy oil, light oil, dry
process focused on value creation gas & shale
drives exploration program
LA Basin
Heavy oil, light oil & shale
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CALIFORNIA EXPLORATION HISTORY
CCAALLIIFFOORRNNIIAAEEXXPPLLOORRAATTIIOONNHHIISSTTOORRYY
• Multiple 1 Bn Boe+
DrillOilandGas DrillSurface Small
discoveries from 1880s to Seeps Features 2DSeismic Discoveries
4.0 40
1940s based upon surface
e
o 35C
B u
information m
n
B 3.0 30.D
 EwprsootravldibnlccisleahsesdhCyadlriofocranribaoans a Discoveries 2.0 122505iscoveries
B
al 1.0 10n
• Limited exploration activity Annu 5 Boe
1970 thru 2000s 0.0 0
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1
8 8 8 8 9 9 9 9 9 9 9 9 9 9 0 0
1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2
 Industry focused on DiscoveryYear
development and EOR CCRRCCRREENNEEWWEEDDEEXXPPLLOORRAATTIIOONNSSUUCCCCEESSSS
250 37
• Late 2000s CRC
e
o C
reestablished focused B 200 37 u
M m
M .
exploration program D
es 150 36 is
eri co
• Portfolio of high-graded scov 100 DiscCoRvCeries 36 verie
exploration opportunities Di s
B
al 50 35 n
delivering renewed success u B
n
n o
A 0 35 e
0 5 0 5 0 5 0 5 0 5 0
6 6 7 7 8 8 9 9 0 0 1
9 9 9 9 9 9 9 9 0 0 0
1 1 1 1 1 1 1 1 2 2 2
Source:CaliforniaDivisionofOil,Gas&GeothermalResources. DiscoveryYear
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