California Resources Corp Q3 FY2024 earnings call

• Strong year for CRC with successful integration of Aera Energy, forming California’s largest producer with a high-quality portfolio. Over 55% of $235 million in annual synergies from Aera implemented ahead of schedule. • Carbon management business making progress with key updates: Kern County approved conditional use permits for CTV I at Elk Hills, expect final EPA Class VI permits for CTV 1 26R reservoir next month, signed brownfield MOU with Hull Street Energy for up to 1.5 million metric tons per annum CO2 sequestration, and exploring opportunities with AI data centers in California. • 2025 priorities include maintaining strong balance sheet, improving bottomline through capital discipline and area-related synergies, near-term hedges underpinning cash flow, E&P plans with workovers and sidetracks, scaling Carbon TerraVault, growing power business with resource adequacy contracts increasing payments, and pursuing additional cash flow-generating opportunities.

Third quarter production averaged 145,000 barrels of oil equivalent per day, with oil averaging 113,000 barrels per day. Adjusted EBITDAX was $402 million, and free cash flow was $141 million. Cash costs came in approximately $0.04 below guidance. The company generated strong results driven by strong production, improved operational efficiencies, and lower costs compared to the previous quarter.

• Roughly 72% of 2025 oil production hedged at an average floor price of $67 per barrel. • 2025 priorities include maintaining strong balance sheet, improving bottomline via capital discipline and synergies, E&P with workovers and sidetracks, scaling Carbon TerraVault, growing power business with resource adequacy contracts, and pursuing additional cash flow opportunities.

• Need for CO2 pipeline regulation in California to scale carbon management business, with potential delays or uncertainties. • Political landscape dynamics could impact agreements, though the company sees multiple ways to make projects viable. • Uncertainties around permit resolutions, though constructive discussions are ongoing.

Q: Scott Hanold with RBC Capital Markets asked about the Hull Energy MOU, CO2 pipeline regulation timeline, and context of the agreement relative to California assets.

A: Francisco Leon responded on CO2 pipeline need for scaling, progress with Kern County permits, and building brownfield emitter portfolio with Hull Street Energy.

Q: Kalei Akamine with Bank of America asked about the MOU in relation to Class VI permit and California power market difference.

A: Francisco Leon discussed Class VI permit milestone, ongoing work on value chain, and California power market dynamics being unique with decarbonization mandates.

Q: Betty Jiang with Barclays asked about carbon management business CapEx and cash return/buyback.

A: Francisco Leon talked about low capital project for 35R, self-funding potential with Brookfield partnership, and ongoing share repurchase with value in stock.

Q: David Deckelbaum with TD Cowen asked about 2025 upstream optimization and solar market progress.

A: Francisco Leon said optimization continues with workovers and sidetracks, and solar is complementary with other clean energy solutions like enhanced geothermal.

Q: Josh Silverstein with UBS asked about oil realizations and Aera synergies.

A: Francisco Leon and Jay Bys discussed California oil demand and refining needs, and Omar Hayat talked about Aera synergy execution on infrastructure consolidation.

Q: Scott Gruber with Citigroup asked about big tech interest in gas plant capture and cadence of interest.

A: Francisco Leon said big tech interest is high, and progress with permits and projects will drive interest.

Q: Leo P. Mariani with ROTH asked about drilling permit updates and CO2 pipeline regulation progress.

A: Francisco Leon discussed permit progress with Conditional Use Permits and constructive discussions, and CO2 pipeline regulation expected to be taken up by legislature early next year.

Q: Michael Scialla with Stephens asked about Midway Sunset co-gen plant and Elk Hills excess power.

A: Francisco Leon talked about power generation usage and excess power optimization for contracts.

Q: Noel Parks with Tuohy Brothers asked about momentum and timing between brownfield projects and data center discussions.

A: Francisco Leon discussed brownfield vs greenfield projects, connectivity needs, and being solutions provider in California with strong market opportunity.