California Resources Reports Fourth Quarter and Full-Year 2023 Financial and Operating Results

CRC Delivers Record Cash Flow and Free Cash Flow per Share Annual Results

LONG BEACH, Calif.–(BUSINESS WIRE)–#Californiaresourcescorporation–California Resources Corporation (NYSE: CRC) today reported financial and operating results for the fourth quarter and full-year 2023. The Company plans to host a conference call and webcast on Wednesday, February 28^th at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time). Participation details can be found within this release. In addition, supplemental slides are posted to CRC’s website at www.crc.com.

2023 Highlights:

• Generated $653 million of net cash from operating activities and $468 million of free cash flow¹
• Demonstrated strong capital efficiency with lower-than-expected total capital of $185 million delivering 6% entry to exit gross production decline
• Reported net income of $564 million, or $7.78 per diluted share. When adjusted for items analysts typically exclude from estimates (including gains on asset divestitures, business transformation costs and mark-to-market adjustments on commodity derivative contracts) adjusted net income¹ was $372 million, or $5.13 per share
• Average annual net production of 86 thousand barrels of oil equivalent per day (MBoe/d). Oil production averaged 52 thousand barrels of oil per day (MBo/d)
• Returned $280 million to stakeholders, more than half of 2023 free cash flow¹, through share repurchases, debt repurchases and dividends
• Exited 2023 with a leverage ratio¹ of 0.1 times, down from 0.3 times at year-end 2022
• Through the business transformation initiative, strengthened future outlook by achieving $65 million in annual, sustainable cost savings
• Announced receipt of California’s first U.S. Environmental Protection Agency (EPA) draft Class VI well permits for underground carbon dioxide (CO₂) injection and storage at Elk Hills. See Carbon TerraVault’s 2023 Update for additional information

“Our 2023 results were exceptional, and our teams executed on our plan to build a stronger CRC while creating long-term value for all stakeholders,” said Francisco Leon, CRC’s President and Chief Executive Officer. “We profitably grew our business and generated significant free cash flow that maintained our premier balance sheet and allowed us to prioritize cash returns to our shareholders. Our focus now is on securing the requisite approvals to close the recently announced merger with Aera Energy, while preparing for integration of their experienced team members and high value assets into CRC after closing. The Aera merger will provide CRC greater operating scale for the entire business, thereby improving our operating cash flows and liquidity profile. The Aera assets will also enhance CRC’s carbon management business from which CRC will accelerate the decarbonization of California.”

Fourth Quarter 2023 Financial and Operating Summary

The Company reported fourth quarter net cash from operating activities of $131 million and free cash flow¹ of $65 million. Net income for the period was $188 million, or $2.60 per diluted share of common stock, and adjusted net income¹ was $67 million, or $0.93 per diluted share. Adjusted EBITDAX¹ was $179 million.

CRC’s daily gross production in the fourth quarter averaged 98 MBoe/d. Net production averaged 83 MBoe/d, including 50 MBo/d. Average realized oil prices during the period were 99% of Brent.

Operating costs in the fourth quarter of 2023 averaged $24.49 per Boe, compared to $24.96 per Boe in the third quarter of 2023 and reflect a positive impact of recent organizational changes. In August 2023, CRC took actions to better align its resources to strategic priorities and improve operational efficiency. The Company realized approximately $15 million of savings in the fourth quarter and expects these actions to result in approximately $65 million of savings in operating costs and general and administrative expenses on an annualized basis.

Capital investments in the fourth quarter were in line with expectations and totaled $66 million. Capital allocation during the period was focused on a one-rig program in the Los Angeles basin.

Fourth Quarter and Full Year Financial Results

Selected Production, Price Information and Results of Operations	4th Quarter				3rd Quarter					Total Year					Total year
($ in millions)	2023				2023					2023					2022
Average net oil production per day (MBbl/d)		50				51					52					55
Realized oil price with derivative settlements ($ per Bbl)	$	71.34			$	66.12				$	65.97				$	61.8
Average net NGL production per day (MBbl/d)		11				11					11					11
Realized NGL price ($ per Bbl)	$	49.08			$	44.95				$	48.94				$	64.33
Average net natural gas production per day (Mmcf/d)		130				138					135					147
Realized natural gas price with derivative settlements ($ per Mcf)	$	4.66			$	4.83				$	8.59				$	7.54
Average net total production per day (MBoe/d)		83				85					86					91
Margin from marketing purchased natural gas ($ millions)	$	28			$	47				$	180				$	41
Margin from electricity sales ($ millions)	$	24			$	44				$	108				$	94
Net gain (loss) from commodity derivatives ($ millions)	$	119			$	(204	)			$	(12	)			$	(551	)

Selected Financial Statement Data and non-GAAP measures:	4th Quarter					3rd Quarter					Total Year					Total year
($ and shares in millions, except per share amounts)	2023					2023					2023					2022
Statements of Operations:
Revenues
Total operating revenues	$	726				$	460				$	2,801				$	2,707
Selected Expenses
Operating costs	$	186				$	196				$	822				$	785
General and administrative expenses	$	66				$	65				$	267				$	222
Adjusted general and administrative expenses1	$	55				$	51				$	218				$	201
Taxes other than on income	$	33				$	48				$	165				$	162
Transportation costs	$	18				$	16				$	67				$	50
Exploration expense	$	1				$	—				$	3				$	4
Operating Income (loss)	$	283				$	(15	)			$	808				$	812
Interest and debt expense	$	(13	)			$	(15	)			$	(56	)			$	(53	)
Income tax provision (benefit)	$	(79	)			$	8				$	(184	)			$	(237	)
Net (loss) Income	$	188				$	(22	)			$	564				$	524
Adjusted net income1	$	67				$	74				$	372				$	384
Weighted-average common shares outstanding – diluted		72.3					68.7					72.5					77.6
Net (loss) income per share – diluted	$	2.60				$	(0.32	)			$	7.78				$	6.75
Adjusted net income1 per share – diluted	$	0.93				$	1.02				$	5.13				$	4.95
Adjusted EBITDAX1	$	179				$	187				$	862				$	852
Net cash provided by operating activities before changes in operating assets and liabilities, net1	$	104				$	129				$	647				$	747
Net cash provided by operating activities	$	131				$	104				$	653				$	690
Capital investments	$	66				$	33				$	185				$	379
Free cash flow1	$	65				$	71				$	468				$	311
Cash and cash equivalents	$	496				$	479				$	496				$	307

2023 Reserves

As of December 31, 2023, CRC’s proved reserves totaled an estimated 377 million Boe (MMBoe), of which 68% was oil and 331 MMBoe was proved developed. Estimated future net cash flows had a PV-10^* value of $5.5 billion based on SEC pricing of Brent $82.84 per barrel for oil and Henry Hub $2.64 per thousand cubic feet (Mcf) for natural gas, as of December 31, 2023.

PV-10 AND STANDARDIZED MEASURE
The following table presents a reconciliation of the GAAP financial measure of Standardized Measure of discounted future net cash flows (Standardized Measure) to the non-GAAP financial measure of PV-10:
($ millions)			December 31, 2023
Standardized Measure of discounted future net cash flows			$	4,069
Present value of future income taxes discounted at 10%				1,464
PV-10 of cash flows (*)			$	5,533
(*) PV-10 is a non-GAAP financial measure and represents the year-end present value of estimated future cash inflows from proved oil and natural gas reserves, less future development and operating costs, discounted at 10% per annum to reflect the timing of future cash flows and using SEC prescribed pricing assumptions for the period. PV-10 differs from Standardized Measure because Standardized Measure includes the effects of future income taxes on future net cash flows. Neither PV-10 nor Standardized Measure should be construed as the fair value of our oil and natural gas reserves. Standardized Measure is prescribed by the SEC as an industry standard asset value measure to compare reserves with consistent pricing costs and discount assumptions. PV-10 facilitates the comparisons to other companies as it is not dependent on the tax-paying status of the entity.

Pending Aera Merger

On February 7, 2024, CRC entered into a definitive merger agreement (Merger Agreement) to combine with Aera Energy, LLC (Aera) in an all-stock transaction with an effective date of January 1, 2024. Aera is a leading operator of mature fields in California, primarily in the San Joaquin and Ventura basins, with high oil-weighted production. At closing, Aera’s owners will receive 21.2 million shares of CRC’s common stock plus an additional number of shares determined by reference to the dividends declared by CRC having a record date between the effective date and closing. CRC also agreed to assume Aera’s outstanding long-term indebtedness of $950 million. CRC expects to repay a significant portion of this indebtedness with cash on hand and borrowings under its revolving credit facility. CRC expects to refinance the balance through one or more debt capital markets transactions and, only to the extent necessary, borrowings under a bridge loan facility.

The Merger Agreement has been unanimously approved by CRC’s Board of Directors and the shareholders of Aera. The transaction is subject to certain closing conditions, including among others, regulatory approvals and approval of the stock issuance by CRC’s shareholders. The transaction is expected to close in the second half of 2024.

For more information about this transaction please visit: https://www.crc.com/news/news-details/2024/California-Resources-Corporation-to-Combine-with-Aera-Energy/default.aspx

2024 Preliminary Outlook and First Quarter 2024 Guidance and Capital Program²

CRC’s 2024 guidance estimates exclude the pending merger with Aera. The Company intends to update guidance after the transaction closes.

CRC expects its total 2024 capital program to range between $300 million and $340 million assuming normal operating conditions. Of this amount, $250 million to $260 million is related to oil and natural gas development, $30 million to $40 million is related to maintenance of one of its gas processing facilities and a power plant, both of which are located in CRC’s Elk Hills field, $15 million to $25 million is for carbon management projects and $5 million to $15 million is for corporate and other activities.

Through 2024, CRC expects to run a one rig program executing projects using existing permits. Subject to the availability of well permits, the Company expects to increase to a four rig program in the second half of 2024. The actual amount of spending related to oil and gas development under CRC’s 2024 capital program will depend on a variety of factors. In particular, the rate and amount of this spending depends on its ability to obtain new well permits in the second half of the year. If CRC is not able to obtain these permits, CRC could reduce its capital program by up to $100 million.

2024 PRELIMINARY OUTLOOK2	TOTAL 2024E
Net Total Production (MBoe/d)	78 – 82
Oil Production (%)	~60%
Capital ($ millions)	$300 – $340
Drilling & completions, workovers ($ millions)	$250 -$260
Facilities ($ millions)	$30 – $40
Carbon management business ($ millions)	$15 – $25
Corporate & other ($ millions)	$5 – $15
Note: If CRC is not able to receive drilling permits or permits are delayed, the Company plans to run a one rig program with a $200 million to $240 million 2024E total capital program and would expect a 5% to 7% entry to exit decline rate.

CRC expects its first quarter capital program to range between $65 million to $75 million. The program includes capital of $36 million to $42 million for oil and natural gas, and facilities development³, $4 million to $6 million for carbon management projects and $25 million to $27 million for corporate and other activities, including maintenance at CRC’s Elk Hills power plant.

CRC expects to produce 76 to 80 MBoe/d (~60% oil) in the first quarter of 2024. The table below provides highlights of the Company’s first quarter 2024 guidance. See Attachment 2 for complete information on CRC’s first quarter 2024 guidance.

CRC GUIDANCE2	Total 1Q24E		CMB 1Q24E		E&P, Corp. & Other 1Q24E
Net Total Production (MBoe/d)	76 – 80				76 – 80
CMB Expenses and Operating Costs ($ millions)	$175 – $185		$6 – $10		$169 – $175
General and Administrative Expenses ($ millions)	$61 – $72		$2 – $3		$59 – $69
Adjusted General and Administrative Expenses1 ($ millions)	$48 – $58		$2 – $3		$46 – $55
Capital ($ millions)	$65 – $75		$4 – $6		$61 – $69
Natural Gas Marketing Margin ($ millions)	$8 – $13				$8 – $13
Electricity Margin ($ millions)	$5 – $10				$5 – $10

Shareholder Return & Deleveraging Strategy

CRC is committed to returning significant cash to shareholders through dividends and repurchases of its common stock. On February 6th, 2024, CRC’s Board of Directors approved a $250 million increase of the Share Repurchase Program, bringing the aggregate program to $1.35 billion, and extended the program through December 31, 2025. Adjusting for this increase, CRC has approximately $747 million of capacity remaining under the repurchase program as of February 6, 2024.

In 2023, CRC repurchased 3.4 million shares for approximately $143 million at an average price of $41.69 per share. Since the inception of the Share Repurchase Program in May 2021 through December 31, 2023, 14.9 million shares have been repurchased for $604 million at an average price of $40.53 per share, including commissions and excise taxes. These total repurchases represent ~18% of CRC’s shares outstanding since December 31, 2020.

In 2023, CRC repurchased $55 million in principal of its Senior Notes at par. After these repurchases, the remaining principal amount of CRC’s Senior Notes is $545 million due February 1, 2026.

On February 27, 2024, CRC’s Board of Directors declared a quarterly cash dividend of $0.31 per share of common stock. The dividend is payable to shareholders of record on March 6, 2024 and will be paid on March 18, 2024.

Through December 31, 2023, CRC has returned $813 million of cash to its stakeholders, including $604 million in share repurchases, $154 million of dividends and $55 million in principal of its Senior Notes repurchases.

Balance Sheet and Liquidity Update

On October 30, 2023, the borrowing base for the Revolving Credit Facility was reaffirmed at $1.2 billion as part of CRC’s semi-annual redetermination. CRC’s aggregate commitment from lenders under the Revolving Credit Facility was $630 million as of December 31, 2023.

As of December 31, 2023, CRC had liquidity of $973 million, which consisted of $496 million in cash and cash equivalents plus $477 million of available borrowing capacity under its Revolving Credit Facility (which is net of $153 million of issued letters of credit).

In connection with the Merger Agreement, on February 9, 2024, CRC entered into a second amendment to its Revolving Credit Facility to permit CRC to incur indebtedness under a bridge loan facility that may be used in connection with closing the Aera Merger.

Acquisitions and Divestitures

On December 29, 2023, CRC sold its non-operating working interest in the Round Mountain Unit in the San Joaquin basin for $35 million, before transaction costs and purchase price adjustments, recognizing a gain of $25 million. CRC retained an option to capture, transport and store carbon dioxide (CO₂) emissions from the production at Round Mountain Unit for future carbon management projects.

On February 22, 2024, CRC entered into an agreement to sell its 0.9 acre Fort Apache real estate property in Huntington Beach to a local real estate developer for approximately $10 million.

Sustainability

“2023 was another important year in CRC’s sustainability journey,” said Francisco Leon, CRC’s President and Chief Executive Officer. “We are dedicated to becoming an even more sustainable energy company while continuously prioritizing health, safety, and the environment in all we do. We achieved our second-best safety rate in the Company’s history, our best since the period during COVID. Throughout the year, our skilled teams plugged and abandoned more than 600 wells, exceeding stringent local and state requirements. Furthermore, we received the 2023 S&P Global Energy Transition – Upstream Award recognizing CRC’s perseverance in developing solutions to help reduce carbon emissions and tackle climate change, one of many industry awards we received during the year.”

Additional 2023 sustainability highlights and achievements include:

• Eliminated 269 gas venting pneumatics, keeping CRC on track with its 2030 methane reduction ESG goal
• Delivered more than 113 million barrels of water for agricultural use, or more than 3 times the amount for CRC’s internal use
• Qualified for 22 National Safety Awards for 2023 safety performance
• Provided more than $2.5 million in charitable giving to local groups, organizations, and nonprofits

Upcoming Investor Conference Participation

CRC’s executives will be participating in the following events in March and April of 2024:

• MS Global Energy and Power Conference on March 6 and 7 in New York, NY
• CERAWeek 2024 on March 18 to 20 in Houston, TX
• Capital One Carbon Capture Conference on March 27 in New York, NY
• North America CCUS & Hydrogen Decarbonization Summit on April 16 to 18 in Chicago, IL

CRC’s presentation materials will be available the day of the events on the Events and Presentations page in the Investor Relations section on www.crc.com.

Conference Call Details

A conference call is scheduled for Wednesday, February 28^th at 1:00 p.m. Eastern Time (10:00 a.m. Pacific Time). To participate in the call, please dial (877) 328-5505 (International calls please dial +1 (412) 317-5421) or access via webcast at www.crc.com 15 minutes prior to the scheduled start time to register. Participants may also pre-register for the conference call at https://dpregister.com/sreg/10184870/fb2ecfed18. A digital replay of the conference call will be archived for approximately 90 days and supplemental slides for the conference call will be available online in the Investor Relations section of www.crc.com.

¹ See Attachment 3 for the non-GAAP financial measures of operating costs per BOE (excluding effects of PSCs), adjusted net income (loss), adjusted net income (loss) per share – basic and diluted, net cash provided by operating activities before changes in operating assets and liabilities, net, adjusted EBITDAX, free cash flow, adjusted G&A and adjusted capital, including reconciliations to their most directly comparable GAAP measure, where applicable. For the 1Q24 estimates of the non-GAAP measure of adjusted general and administrative expenses, including reconciliations to its most directly comparable GAAP measure, see Attachment 2.

² Current preliminary 2024 outlook assumes a four rigs program starting from 2H24 subject to the availability of well permits. If CRC is not able to receive drilling permits or permits are delayed, the Company plans to run a one rig program with a $200 million to $240 million 2024E total capital program and would expect a 5% to 7% entry to exit decline rate. 1Q24 guidance assumes Brent price of $78.73 per barrel of oil, NGL realizations as a percentage of Brent consistent with prior years and a NYMEX gas price of $2.87 per mcf. CRC’s share of production under PSC contracts decreases when commodity prices rise and increases when prices fall.

About California Resources Corporation

California Resources Corporation (CRC) is an independent energy and carbon management company committed to energy transition. CRC produces some of the lowest carbon intensity oil in the US and is focused on maximizing the value of its land, mineral and technical resources for decarbonization efforts. For more information about CRC, please visit www.crc.com.

About Carbon TerraVault

Carbon TerraVault Holdings, LLC (CTV), a subsidiary of CRC, provides services that include the capture, transport and storage of carbon dioxide for its customers. CTV is engaged in a series of CCS projects that inject CO₂ captured from industrial sources into depleted underground reservoirs and permanently store CO₂ deep underground. For more information about CTV, please visit www.carbonterravault.com.

Additional Information and Where to Find It

This communication may be deemed to be solicitation material in respect of the transactions contemplated by the merger agreement pursuant to which California Resources Corporation (“CRC”) has agreed to combine with Aera Energy, LLC (“Aera”) (the “Merger Agreement”), including the proposed issuance of CRC’S common stock pursuant to the Merger Agreement. In connection with the transaction, CRC will file a proxy statement on Schedule 14A with the U.S. Securities and Exchange Commission (“SEC”), as well as other relevant materials. Following the filing of the definitive proxy statement, CRC will mail the definitive proxy statement and a proxy card to its stockholders. INVESTORS AND SECURITY HOLDERS OF CRC ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CRC, AERA, THE TRANSACTION AND RELATED MATTERS. Investors and security holders will be able to obtain copies of the proxy statement (when available) as well as other filings containing information about CRC, Aera and the transaction, without charge, at the SEC’s website, www.sec.gov. Copies of documents filed with the SEC by CRC will be available, without charge, at CRC’s website, www.crc.com.

Participants in Solicitation

CRC and its directors and executive officers may be deemed to be participants in the solicitation of proxies in connection with the transaction. Information about the directors and executive officers of CRC is set forth in the proxy statement for CRC’s 2023 Annual Meeting of Stockholders, which was filed with the SEC on March 16, 2023. Investors may obtain additional information regarding the interest of such participants by reading the proxy statement regarding the transaction when it becomes available.

Forward-Looking Statements

This document contains statements that CRC believes to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than historical facts are forward-looking statements, and include statements regarding CRC’s future financial position, business strategy, projected revenues, earnings, costs, capital expenditures and plans and objectives of management for the future. Words such as “expect,” “could,” “may,” “anticipate,” “intend,” “plan,” “ability,” “believe,” “seek,” “see,” “will,” “would,” “estimate,” “forecast,” “target,” “guidance,” “outlook,” “opportunity” or “strategy” or similar expressions are generally intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Additionally, the information in this report contains forward-looking statements related to the recently announced Aera merger.

Although CRC believes the expectations and forecasts reflected in its forward-looking statements are reasonable, they are inherently subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond its control.

Contacts

Joanna Park (Investor Relations)

818-661-3731

Joanna.Park@crc.com

Richard Venn (Media)

818-661-6014

Richard.Venn@crc.com

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