California Resources Corporation Reports Strong Second Quarter 2023 Financial Results and Provides Updates on Carbon Management Business

California Resources Corporation (NYSE: CRC), an independent energy and carbon management company committed to energy transition, today reported second quarter 2023 operational and financial results.

"CRC’s focus on execution drove solid operational and financial performance in the second quarter," said Francisco Leon, CRC President and Chief Executive Officer. "We returned nearly $84 million to our shareholders in the second quarter, bringing the total shareholder return program to nearly $700 million since its inception in 2021. We have accomplished this while growing our cash flow per share along with developing our carbon management business. Cash flow, carbon and California remain our core strengths as we continue to deliver meaningful value to our shareholders and provide low carbon intensity oil and gas that California needs."

Primary Highlights

• Declared a quarterly dividend of $0.2825 per share of common stock, totaling ~$20 million payable on September 15, 2023 to shareholders of record on September 1, 2023
• Repurchased 1,618,746 common shares for $64 million at an average share price of $39.12 per share during the second quarter of 2023
• Repurchased a cumulative 14,498,770 shares for $584 million at an average price of $40.18 per share since the inception of the Share Repurchase Program in May 2021 through June 30, 2023
• Submitted a Class VI permit to the EPA for 17 million metric tons (MMT) for CTV V CO₂ reservoir in the Sacramento Basin, bringing CRC's total storage capacity with Class VI permits submitted the EPA to 191 MMT
• Signed a new storage-only carbon dioxide management agreement (CDMA) with Verde Clean Fuels Inc. for 100 thousand metric tons per annum (KMTPA) of CO₂ injection
• Expanded the previously announced Lone Cypress Energy Service, LLC, blue hydrogen project to an estimated 205 KMTPA of CO₂ injection

Financial Highlights

• Reported net income of $97 million, or $1.35 per diluted share. When adjusted for items analysts typically exclude from estimates including mark-to-market adjustments and one-time costs, the Company’s adjusted net income¹ was $38 million, or $0.53 per diluted share
• Generated net cash provided by operating activities of $108 million, adjusted EBITDAX¹ of $138 million and free cash flow¹ of $69 million
• Ended the quarter with $448 million of cash and cash equivalents and an undrawn Revolving Credit Facility, (excluding $148 million of letters of credit) with $479 million of availability representing $927 million of total liquidity²

Operational Highlights

• Reservoirs performed in line with expectations; total daily gross production of 103,000 gross barrels of oil equivalent per day (Boe/d) for the second quarter of 2023, which was flat compared to the first quarter of 2023
• Produced an average of 86 net MBoe/d, including 53,000 net barrels of oil per day (Bo/d), with E&P capital expenditures of $35 million during the quarter
• Total daily net production for the three months ended June 30, 2023, includes 2 net MBoe/d of combined negative effects; including 1 net MBoe/d related to CRC's production-sharing contracts (PSCs) and approximately 1 net MBoe/d due to changes in NGL storage volumes
• Operated 1 drilling rig in LA Basin; drilled 6 wells and brought 7 wells online in 2Q23
• Operated 35 maintenance rigs in the first quarter

Total Year 2023 Guidance and Capital Program³

CRC estimates average net total production between 85 and 91 MBoe/d3 (~61% oil) for the total year 2023. CRC is reaffirming its total year 2023 total capital which is expected to range between $200 and $245 million with heavier weighting in the second half of the year due to timing of projects and higher expected workover activity and facilities projects. The program includes an expected $185 to $220 million of adjusted E&P, corporate and other adjusted capital¹ and $15 to $25 million of adjusted CMB capital¹ for carbon management projects⁴. CRC is also narrowing its total year 2023 free cash flow¹ guidance range to $380 to $460 million from $360 to $470 million.

The Company plans to execute a 1 to 1.5 rig development program on average for 2023. Activity will focus on drilling new locations where CRC has permits and high return workovers. The capital plan also includes procuring long-lead time items for planned maintenance of our facilities in 2024.

CRC is lowering the top end of the range for its operating cost guidance from $815 to $865 million to $815 to $850 million as a result of lower natural gas prices expected in the second half of 2023. Natural gas marketing margin was increased from a range of $80 to $110 million to $135 to $150 million to reflect the Company's performance in the first half of the year. Similarly, CRC's 2023 estimated commodity realizations were adjusted to reflect the Company's results.

Third Quarter 2023 Guidance and Capital Program³

CRC expects its third quarter 2023 total capital to range between $52 million and $67 million under current operating conditions. This includes $1 to $2 million of adjusted CMB capital¹.

At this level of spending, CRC expects average net total production between 86 and 88 net MBoe/d³ (~61% oil) in the third quarter of 2023, running a 1 drilling rig program in the Los Angeles basin where it has permits.

Second Quarter 2023 E&P Operational Results

Total daily net production for the three months ended June 30, 2023, compared to the three months ended March 31, 2023 decreased by approximately 3 MBoe/d largely due to natural decline and changes in NGL storage volumes. This decrease was partially offset by increased production from drilling and workover activity. CRC's PSCs negatively impacted net oil production by 1 MBoe/d in the three months ended June 30, 2023 compared to the three months ended March 31, 2023.

During the second quarter of 2023, CRC operated an average of 1 drilling rig in the Los Angeles basin, drilled 6 wells and brought online 7 wells. See Attachment 3 for further information on CRC's production results by basin and Attachment 5 for additional information on CRC's drilling activity.

Second Quarter Financial Results

Review of Second Quarter 2023 Financial Results

Realized oil prices, excluding the effects of cash settlements on CRC's commodity derivative contracts, decreased by $2.91 per barrel from $78.68 per barrel in the first quarter of 2023 to $75.77 per barrel in the second quarter of 2023. Prices decreased slightly as global demand for crude remained generally flat.

Realized oil prices, including the effects of cash settlements on CRC's commodity derivative contracts, increased by $0.62 from $63.04 in the first quarter of 2023 to $63.66 in the second quarter of 2023.

Adjusted EBITDAX¹ for the second quarter of 2023 was $138 million. See table below for the Company's net cash provided by operating activities, capital investments and free cash flow¹ during the same periods.

The following table presents key operating data for CRC's oil and gas operations, on a per BOE basis, for the periods presented below. Energy operating costs consist of purchased natural gas used to generate electricity for CRC's operations and steam for its steamfloods, purchased electricity and internal costs to generate electricity used in CRC's operations. Gas processing costs include costs associated with compression, maintenance and other activities needed to run CRC's gas processing facilities at Elk Hills. Non-energy operating costs equal total operating costs less energy operating costs and gas processing costs.