The California legislative proposal on oil and natural gas setbacks, Assembly Bill (AB) 345, has caused negative reactions from Sacramento to Wall Street, but cooler heads will prevail, and the legislation will be defeated or changed, according to the CEO of the state’s largest producer, California Resources Corp. (CRC).
CEO Todd Stevens during a conference call to discuss first quarter results discussed California’s latest legislative proposal to restrict energy operations in the nation’s fourth biggest oil-producing state.
The legislation, similar to a ballot issue that was defeated by Colorado voters last November, would establish a 2,500-foot setback rule, among other things.
Stevens said he felt compelled to provide “context to our state energy landscape,” noting California “has an incredible thirst for petroleum products” well beyond fueling vehicles.
The state is the fourth largest global energy consumer, he noted, and oil and gas activities represented 26% of the state general fund budget last year.
Stevens would not speculate on the legislative process. However, he characterized the proposal as one in a long series spurred by groups wanting to de-industrialize the economy.
“It’s really early in the legislative process and premature to speculate on this bill, or any other bills,” Stevens said.
The annual proposal for an oil and gas severance tax is another example of proposed legislation that has so far not gained momentum to be enacted.
“You get through the misguided and irresponsible legislation, so it becomes an ordinary course of business in things we’ll work through,” he said.
Production for 1Q2019 averaged 133,000 boe/d, an 8% increase year/year oil output up 9%. CRC drilled 42 wells with internal capital and another 18 with joint venture funding. The producer also in the quarter sold a 50% working interest and transferred operations in a portion of a field in Lost Hills, which consists mostly of shallow steam-flood operations.
With the volatility in the global oil markets, Stevens lauded the company’s field workers who were able to start up and shut down rigs quickly, leaving seven rigs operating. Two rigs are focused on conventional production, two on waterfloods, one on steam floods and two on unconventional output.
CRC drilled 52 developmental wells and eight exploration wells.
For 1Q2019, CRC reported a net loss of $67 million (minus $1.38/share), compared with a loss of $2 million (minus 5 cents) for the same quarter last year.
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