California Resources Corporation

Good morning and welcome to the California Resources Corporation first quarter earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. Please note, this event is being recorded. I would now like to turn the conference over to Joanna Park. Please go ahead.

Thank you. I'm Joanna Park, Vice President of Investor Relations and Treasurer. Welcome to California Resources Corporation's first quarter conference call. Participating on today's call is Matt McFarland, President and Chief Executive Officer, Francisco Leon, Executive Vice President and Chief Financial Officer, Sean Kern, Executive Vice President of Operations and Engineering, Mike Preston, Senior Executive Vice President, CAO and General Counsel, and Jay Vee, Chief Commercial Officer, as well as several other members of the CRC Executive Team. I'd like to highlight that today we have provided supplemental slides which we may refer to during our prepared remarks, which can be found on the Investor Relations section of our website, www.crc.com. We have also provided reconciliations of non-GAAP financial measures discussed to the most directly comparable GAAP financial measure on our website and in our earnings press release. Today's conference call contains certain projections and other forward-looking statements within the meaning of federal security law. These statements are subject to risks and uncertainties and may cause actual results to differ from those expressed or implied in these statements. Additional information on factors that could cause results to differ are available in the company's 10Q, which will be filed later today. we ask that you review it and the cautionary statement in our earnings specialies. A replay will be made available on our website following today's call, and we have allotted an additional time for Q&A at the end of our prepared remarks. Thanks, and I'll now turn the call over to Mac.

Thank you, Joanna, and thanks to everyone on the phone for attending today's earnings call. Jumping to the punchline, the first quarter results delivered $120 million of free cash flow which set the backdrop for the $150 million share repurchase program we are announcing today. Our strong start to the year displayed CRC's ability to execute on our strategy and deliver meaningful cash flow. The company is trending towards the high end of our free cash flow guidance that we provided during our March 18th Strategy Day. That is $350 million in free cash flow for 2021 and would reflect and 18% free cash flow yield at yesterday's market valuation. Based on the progress we have made to date, and because our stock price has not fully participated in the most recent energy sector rebound, we believe that our stock offers a very attractive return. The $150 million share repurchase program provides us the flexibility to make good on our commitment to return capital to our shareholders while also maintaining a healthy balance sheet with low leverage ratios and significant liquidity. Francisco will detail this later during his remarks. From an activity standpoint, first quarter results were achieved with just one drilling rig where we drilled 17 wells, 15 of which were brought online during the quarter, and the other two came online during the second quarter. During the quarter, we also completed 40 capital workovers and performed 570 downhole maintenance jobs, bringing back online nearly 3,300 barrels of oil equivalent per day of gross production. In May, we added a second drilling rig and increased our maintenance rig count from 30 to 38. We expect to maintain this level over the next six months to focus on quick payback, high return, backlog of wells. I'm extremely proud of our employees for maintaining safe and efficient operations and for adapting to and executing our strategy to deliver these strong results. We have one of the lowest safety incident rates in recent history and outstanding environmental performance. Shifting gears now, there has been a fair amount of discussion regarding the California regulatory environment, highlighted by the recent announcement to ban fracking. Regardless of whether or not such a ban is upheld, CRC will see no material impact because less than 1% of our approved reserves require well stimulation, and our current long-term development plans do not include well stimulation. In fact, CRC's operations do not require high-pressure cyclic steam. We continue to operate according to the strictest environmental regulations in the world, and the carbon intensity of CRC's barrels are much lower than the average imported barrel as California continues to import 70% of its oil needs. Said differently, there will be no impact to CRC if the fracking ban is upheld. That being said, we look forward to working with the state on its energy transition plans. In the second half of this year, we are planning to provide additional clarity on several concrete items directly related to energy transition that will have the potential to benefit California's future success in this area. Our core operations will continue to deliver solid cash flow while we work on these future steps. Additionally, CRC is evaluating ways to strengthen our ESG commitment even further. We have multiple sustainability opportunities and are looking to strengthen our approach through a total review of our ESG efforts. The company is successfully delivering on our current 2030 sustainability goals, and given the significant progress in the areas of water recycling and methane reduction, our future efforts will focus on renewables integration and decarbonization projects. In other words, we are looking to revamp the E or the environmental approach of our ESG strategy to make a bigger impact on the state's decarbonization and energy transition plans through our focus on renewables and CCUS without compromising our social and governance commitments. This may include opportunities outside of the uphill CCF and EOR project, as well as both self-supply and grid supply of renewable energy. We expect to provide further details on this revamped ESG strategy in the second half of the year. I'll now turn the call over to Francisco, who will provide additional details on the first quarter financial performance and on our borrowing base redetermination. Francisco?