California Resources (CRC) Q2 2024 earnings summary

Executive summary

• Closed the Aera merger on July 1, 2024, doubling daily production volumes, expanding operational scale, and issuing 21.3M shares while paying $990M to extinguish Aera's debt.

• Increased quarterly dividend by 25% to $0.3875/share, with annual dividend policy raised to $1.55/share, and returned $136 million to shareholders YTD, including $93 million in share repurchases.

• Achieved mid-teens cash flow per share growth from 2021 to 2023, targeting further growth in 2024, and generated $139 million in adjusted EBITDAX in Q2 2024.

• Advanced carbon management leadership by submitting EPA Class VI permits and expanding CO₂ storage agreements, aiming to double Central California CO₂ storage capacity to ~320 MMT.

• Focused on operational synergies, cost savings, and integrating Aera's oil-weighted asset base.

Financial highlights

• Q2 2024 revenues were $514 million, with adjusted EBITDAX of $139 million and free cash flow of $63 million.

• Net income for Q2 2024 was $8 million ($0.11/share diluted); adjusted net income was $42 million ($0.60/share diluted).

• Q2 production averaged 76,000 BOE/d, with oil at 47,000 Bbl/d, and operating costs per BOE (excluding PSCs) at $20.58.

• Refinanced $600 million of Aera's debt, reducing annual interest expense by $60 million.

• Total assets at June 30, 2024: $4.49 billion; cash and equivalents: $1.03 billion; long-term debt: $1.16 billion.

Outlook and guidance

• 2H24 net total production expected at 140–146 MBOE/D (~79% oil), with 3Q24 guidance at 141–145 MBOE/D.

• 2H24 Adjusted EBITDAX guidance: $720–$760 million; capital guidance: $170–$210 million.

• Guidance includes $30 million of targeted synergies in 2024 and $60 million in annual interest savings.

• Expect cash flow and free cash flow to more than double in the second half of 2024.

• Sufficient liquidity to meet obligations for the next twelve months; ongoing evaluation of refinancing 2026 Senior Notes.