California Resources Corporation

Good day and welcome to the California Resources Corporation third quarter 2021 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 touch-tone phone. To withdraw your question, please press star then two. Please note, today's event is being recorded. I'd now like to turn the conference over to Joanna Park, Vice President, Investment Relations. Please go ahead.

Welcome to California Resources Corporation's third quarter 2021 conference call. Participating on today's call is Matt McFarland, President and Chief Executive Officer, and Francisco Leon, Executive Vice President and Chief Financial Officer, as well as several members of the CRC Executive Team. I'd like to highlight that we have provided slides on our investor relations section of our website, www.crc.com. These slides provide additional information into our operations and their quarter results. And they've also provided information reconciling non-GAAP financial measures with us to the most directly comparable GAAP financial measures on our website as well as in our earnings release. This call contains certain projections and other forward-looking statements, and these statements are subject to risks and uncertainties. and may cause actual results to differ. Additional information on factors that could cause our results to differ are available in the company's 10Q and 10K. A replay will be made available for these 30 days following the call on our website. And as a reminder, we've allotted additional question time for question and answer at the end of our prepared remarks. We would ask the firm to limit their question to a primary and one follow-up. And with that, I will now turn the call over to Matt.

Thank you, Joanna, and good morning, good afternoon, everyone, and thanks for joining the call. In honor of Veterans Day, we would like to thank all of those women and men who served and continue to serve our great nation. Thank you for your service. In the third quarter, we continued our strong performance, maintaining production of low-carbon intensity oil, demonstrating our disciplined investment, and generating significant free cash flow. I'd like to thank the employees of CRC for their dedication to make all of this possible during the pandemic. Their strong and consistent performance has enabled us to generate $328 million of free cash flow year to date and announce the following. First, we are updating our annual free cash flow guidance for the year, which we are increasing to a range of $460 to $510 million. Second, I am pleased to announce that that the Board has approved a dividend of 17 cents per share payable in the fourth quarter of 2021 and has extended the $250 million share repurchase program until the end of the second quarter of 2022, thus highlighting CRC's dedication to shareholder returns. I'd also like to point out that even with these strong cash returns to shareholders, we still expect to have over $325 million dollars of cash on our balance sheet at year end. And lastly, we continue to advance our commitment to the energy transition in the sector. Building upon our carbon management strategy, CRC has adopted a 2045 full scope net zero goal for scope one, two, and three emissions. This puts us among a handful of industry peers to include scope three emissions in our net zero goals. and puts us on a timeframe five years sooner than most, which aligns us with the state of California's 2045 net zero ambitions. CRC's low carbon intensity production combined with our unique asset position in carbon management opportunities are the key differentiators, which allow us to have a clear line of sight to achieving the full scope net zero goal. Said simply, CRC provides low carbon intensity fuel for today and net zero fuel for the future. When we couple our unique position with the economic incentives available in California, CRC's opportunities stand apart even further because we have the opportunity to reach our net zero goal economically. As previously disclosed, Carbon TerraVolts near-term focus targets up to 200 million metric tons of storage potential annually. or injection of up to 5 million metric tons per annum by 2027. This represents nearly double our scope 1 and 2 emissions and provides a clear direction to meaningful progress towards our goals. As I said before, we do not expect it to be easy to achieve, but these are our goals. They are ambitious, and we are committed. As we committed before, we have submitted our second permit for the to the EPA for 26R reservoirs plan. Combined with our initial permit for the A1, A2 reservoir at Elk Hills, these make up an approximately 40 million metric ton project for carbon tera-volt one and supports our goal for first mover advantage in California and the US when it comes to carbon management. We continue to have discussions with various emitters, as we stated before, and we are targeting an announcement on these advancements in 2022. On the solar side, we are progressing our partnership with SunPower on 24 megawatts of behind-the-meter solar projects at the Kern Front and North Shafter fields. This is in addition to the previously announced 12-megawatt project at Mount Pozo and advances projects on a total of 36 megawatts of the up to previously announced 45 megawatts behind the meter. Again, I'd like to thank the employees for their dedication and hard work. Our operations team continues to deliver strong results on our maintenance and development programs, which have exceeded expectations from a cost and type curve perspective. Thank you for being here today, and I'll turn the call over to Francisca. Thanks, Mac.