California Resources Corporation

Afternoon, good day everyone, and welcome to the California Resources Corporation Second 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 and then one. To withdraw your questions, you may press star and two. Please note today's event is also being recorded. At this time, I would like to turn the conference call over to Joanna Park, Vice President of Investor Relations and Treasurer. Ma'am, please go ahead.

Thanks, and welcome to California Resources Corporation second quarter 2022 conference call. Participating on today's call are Mac McFarland, President and Chief Executive Officer, Francisco Leon, Executive Vice President and Chief Financial Officer, as well as the entire 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 our second quarter results. And we've also provided information reconciling non-GAAP financial measures discussed to the most directly comparable GAAP financial measures on our website, as well as in our earnings release. Today, we'll make some forward-looking statements based on current expectations. Actual results could differ due to the factors described in our earnings release and in our periodic SEC filing. As a reminder, we have allotted additional time for question and answer at the end of our prepared remarks, and we ask that participants limit their questions to a primary and one follow-up. With that, I will now turn the call over to Nick.

Great. Thank you, Joanna. We continue to deliver safe, reliable operations and strong free cash flow generations. while also demonstrating our commitment to prioritizing shareholder returns. For the second quarter in a row, we've returned more than 100% of our free cash flow generated in the quarter through our share repurchase program. In fact, our 2022 year-to-date share repurchase program has already exceeded the 2021 program. Operationally, our results in our revised outlook reflect solid execution amidst today's volatile environment. We are reaffirming our full year total production outlook and raising our EBITDAX and free cash flow guidance. And this is after adjusting for inflationary pressures to our costs and changes to our full year drilling programs related to the Kern County EIR litigation delay. Francisco will describe both these issues in greater detail later on the call. Where others have been forced to pause their programs, CRC continues to leverage our large portfolio of assets, which allows us to continue drilling. In fact, we are running five drilling and completion rigs in California, which is the majority of the active rigs in the state. Even with the earlier than anticipated impacts of inflation and additional capital to support these changes I just described, CRC is raising the midpoints of our full-year guidance by 2% on EBITDAX, and by 10% on free cash flow. Post-quarter end, we advanced our carbon management business by entering into a carbon management partnership with Brookfield to develop industry-leading CCS projects in California. The partnership will be owned 51% by Carbon TerraVol, our wholly owned subsidiary, and 49% by Brookfield to pursue capture, transport, and storage projects. and it's starting out with the initial commitment of $500 million from Brookfield for CCS projects that are jointly approved through the JV. Brookfield will contribute $10 per ton for their 49% share of the storage assets as they are developed. The first project being developed will be our 26R reservoir at the Elk Hills Field. The JV is targeting the injection of 5 million metric tons per year, or 200 million metric tons of permanent storage, achieving these targets would require an estimated 2.5 billion dollars of total capital assuming full participation by brookfield in the 5 million metric tons per annum through the jv suggests a potential follow-on investment of more than a billion dollars from brookfield which to be clear would be incremental to the original 500 million we are excited about our partnership with brookfield and how this partnership can advance decarbonization and the energy transition in California. I'll now turn it over to Francisco to discuss our quarterly results before I provide greater detail on the Brookfield partnership later on the call. Francisco? Thank you, Mac.