California Resources Corp. (CRC), the year-old spinoff from Occidental Petroleum Corp. (Oxy), reported more losses for 3Q2015. Its CEO promised to complete the first of a series of asset sales to reduce debt by the end of this year, with more to follow.
CEO Todd Stevens reported a loss of $86 million (minus 22 cents/share) for the third quarter, compared with adjusted net income of $188 million (48 cents) for the same quarter last year.
As CRC has continued to look for opportunities to whittle away at its debt, Stevens said the company's "integrated infrastructure and significant upstream operations have attracted significant interest from numerous potential investors." He said the company has narrowed the sales opportunities to a "handful" of potential deals, and CRC is exchanging term sheets and in a few cases "drafting significant documents" with prospective buyers.
"We hope to announce at least one transaction by year-end," Stevens said, adding that the goal is to eliminate $1.6 billion in debt by the end of next year.
"We're going to pursue any and all options, trying to do what is best for our shareholders," Stevens said. "We are trying to do that in a way that is most tax-efficient, provides the highest level of operational control of the proceeds, and accomplishes all of our other objectives."
Although earlier in the year Stevens had talked about having multiple asset sales by year-end, he said nothing has changed materially, and he is "comfortable saying we'll get at least one transaction wrapped up by year-end."
Stevens and CFO Marshall Smith said CRC's breakeven in the current commodity price doldrums is in the mid-$30/bbl area.
Stevens responded to questions about CRC's technology advances in steam injection, saying the company is "working diligently on this, and it continues to get better for us." Maintaining and optimizing steam rates and heat levels in the reservoir overtime is going to get better and will bring costs down, he said.
"This all tied very closely to the price of natural gas. As the cost of gas goes up, that can override any benefits we get from the optimization and steam utilization in reservoirs."