California Resources Corp. (CRC) in 1Q2021 reported red ink and a shift in focus to renewables and decarbonization, following its emergence from Chapter 11 bankruptcy last year.
CRC drilled 17 wells with one drilling rig in place during the quarter, according to CEO Mark McFarland. He also said the anti-hydraulic fracturing move by California Gov. Gavin Newsom would have no material impact on operations and plans.
“We will see no material impact because less than 1% of our proved reserves require well stimulation and our current long-term development plans do not include well stimulation.
In fact, CRC’s operations also do not require high pressure cyclic steam,” McFarland said.
CRC reported net quarterly production of 99,000 boe/d and 60,000 b/d. Net oil production was down 3,000 b/d sequentially, primarily because of adjustments associated with higher oil prices.
“On a gross basis, oil production was essentially flat quarter-over-quarter while operating just one drilling rig in the San Joaquin Basin,” said CFO Francisco Leon.
McFarland said CRC completed 40 capital workovers and performed 570 downhole maintenance jobs bringing back online nearly 3,300 boe/d of gross production.
“In May, we added a second drilling rig and increased our maintenance rig count from 30 to 38, and we expect to maintain this level over the next six months to focus on quick payback, high-return backlog of wells,” he said.
McFarland talked about “multiple sustainability opportunities” and plans for a “total review” of the environmental, social and governance (ESG) efforts. “The company is successfully delivering on our current 2030 sustainability goals,” he said, citing progress in water recycling and methane reduction. “Our future efforts will focus on renewables integration and decarbonization projects.”
CRC plans to revamp the environmental approach for its ESG strategy “to make a bigger impact on the state’s decarbonization and energy transition plans” by focusing on renewables and carbon capture and storage (CCS). “This may include opportunities outside of the Elk Hill CCS and enhanced oil recovery projects,” McFarland said.
In 1Q2021, CRC reported a loss of $94 million (minus $1.13/share), compared with year-ago losses of $1.7 billion (minus $36.43).
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