California Resources Corp., the state’s largest oil and gas producer, is focused on accelerating long-standing debt reduction with plans to sell key assets, management said.
“From our perspective, everything is on the table except our flagship Elk Hills assets,” said CEO Todd Stevens during a 4Q2019 earnings conference call. “We know that we’re going to be doing monetization, or shrinking-to-grow, if you want to look at it that way.
“We need to get debt down, so we will continue to look at creative ways to monetize, whether it be surface land or other assets, and we have a lot of activities going on, but we’re not here to conduct any fire sales.”
Analysts asked management about potential state legislative action, given that Assembly Bill 8345 last year had targeted hydraulic fracturing following Chevron Corp.’s prolonged clean up of the Cymric Field leak in Kern County. Stevens said the bill would have covered cyclic steam moratorium that applied to steaming at high pressures to fracture geologic formations.
Another version of the legislation was passed this year by the Assembly and sent to the Senate, but Stevens said a more “balanced, scientific and nonlegislative approach” is going to win out in the end. He said at the filing deadline last Friday for submitting bills this year, more than 5,000 were submitted and less than 1% mentioned oil and gas.
CRC management also was questioned about executive orders by Gov. Gavin Newsom affecting oil and gas operations. “They were characterized differently by some news media outlets, but he had the national labs look at under the state laws how permits have been handled” by state regulators, Stevens said. “We have some permits pending...and we think they will come out, but with our diversified resource base we don’t depend on one technology…”
CRC produced on average of 123,000 boe/d in 4Q2019, including 91,000 boe/d from joint ventures. For the same period in 2018, production averaged 136,000 boe/d. For the full year, production averaged 128,000 boe/d, with 80,000 b/d oi, compared with 132,000 boe/d with 82,000 b/d of oil in 2018l. The company operated eight drilling rigs in 2019, but it is running one rig to date this year.
CRC reported a net loss in 4Q2019 of $67 million (minus $1.36/share), compared with net income of $346 million ($7.00) in 4Q2018. For the full year, net losses were $28 million (minus 57 cents/share), versus profits of $328 million ($6.77) in 2018.