While acknowledging his newly independent oil and natural gas company has been hammered by the global oil price crash, California Resources Corp. (CRC) CEO Todd Stevens told financial analysts Tuesday in New York City that once oil prices rebound, his company is poised for growth.
Speaking at the annual symposium sponsored by the Independent Petroleum Association of America (IPAA), Stevens said California is primed to relive its rich history through water and steam flooding, as well as exploration and production (E&P) technological advances in its mature fields and elsewhere in the state. CRS was spun off from Occidental Petroleum Corp. (Oxy) last year.
Stevens said Kern County in San Joaquin Valley is still a top producer in the Lower 48 states and said Elk Hills in Kern County and Wilmington Basin in Los Angeles County still have billions of barrels of production to be tapped.
"The reality is that California is one of the largest oil and gas producing provinces in the United States," Stevens said. "Kern County is barely edged out by the county with the most North Slope production in Alaska from being the top producing county in all of the nation,” not only the Lower 48.
Stevens said California is "the Permian with tectonics,” referring to the geological formations. He touted the state's low decline rates and relatively low well production costs with enhanced oil recovery (EOR) techniques.
The Plato Ranch play was cited by Stevens as part of the hidden value in California. "It was producing a few hundred barrels per day when we bought it, and we used modern technology to define vertically and horizontally the real reservoir, and it is now producing more than 3,000 b/d, and this is on primary production, so we still have to go to water flood and potentially tertiary recovery.”
The play is a "microcosm of California in general" from CRC's perspective.
However, Stevens acknowledged that CRC won't be able to take advantage of this until oil prices "get a little bit higher." The company has struggled financially since it spun off from Oxy late last year (see Shale Daily, March 2). CRC obtained a 24-month extension of credit to "buy some time" for commodity prices to strengthen, he said.
"Clearly our capital structure was built for a $100/bbl oil price environment and that's a long way in the past at this point in time, even though it is only a few months ago," he told the audience. CRC is exposed to global Brent oil prices in California because 65% of the state's oil supplies are imported.
He said water and steam flooding EOR is CRC's main focus today with 137 different fields, 94 of which are in the primary production phase. Stevens said the company controls the operations in all of its fields. In response to oil prices, it has dropped its rig count to three from 27 in late November.