• Net Production: 141,000 BOE per day.
• Realized Oil Prices: 99% of Brent.
• Adjusted EBITDA: $360 million.
• Free Cash Flow: $118 million for the quarter; $355 million for the year.
• Operating and Transportation Costs: $344 million, 4% lower than initial guidance.
• G&A Reduction: 10% quarter over quarter to $95 million.
• Gross Production: 163,000 BOE per day for 2024.
• Annual Gross Decline Rate: Approximately 6%.
• Drilling Capital: $123 million.
• Adjusted EBITDAX for 2024: Over $1 billion.
• Shareholder Returns: 85% of 2024 free cash flow returned through dividends and share repurchases.
• 2025 Capital Investment Expectation: $285 million to $335 million.
• 2025 Targeted Controllable Cost Structure: Estimated at $220 million, nearly 16% lower than 2023.
• 2025 Annual Net Production Estimate: About 135,000 BOE per day, with oil comprising nearly 80%.
• 2025 Oil Production Hedging: More than 70% hedged at $67 per barrel.
• 2025 Fuel Gas Hedging: More than 60% hedged at $3.95 per MMBTU.
• Resource Adequacy Power Capacity Payments: Expected to increase 50% to $150 million.
• Liquidity: More than $1 billion, with cash on hand over $350 million at year-end 2024.
• 2026 Senior Notes Redemption: Half redeemed at par, with plans to act on remaining $122 million later in the year.
• Leverage Ratio: Less than one turn.
• Buyback Authorization Remaining: More than $550 million as of year-end 2024.

• Warning! GuruFocus has detected 5 Warning Sign with CRC.

Release Date: March 03, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• California Resources Corp (NYSE:CRC) delivered robust financial results in 2024, exceeding expectations with net production of 141,000 BOE per day and generating $118 million in free cash flow.
• The company announced a significant partnership with National Cement to develop California's first net-zero cement facility, backed by up to $500 million in DOE funding.
• CRC's carbon management business is expanding rapidly, with the nation's first EPA Class 6 permits received, allowing the advancement of California's first CCS project at Elk Hills.
• The company has achieved 70% of its targeted synergies from the era merger, improving its 2025 cost structure and reinforcing asset management.
• CRC is actively pursuing agreements to advance new AI data centers in California, leveraging its available behind-the-meter power capacity.

Negative Points

• CRC's stock price has underperformed compared to peers, despite progress and positive developments, partly due to market conditions and potential lockup agreements from era owners.
• The company faces challenges in the permitting process, with expectations to receive new permits by the end of the year, impacting future drilling activities.
• CRC's carbon management projects are contingent on the development of CO2 pipelines, which are currently under a moratorium in California, delaying project execution.
• The company has significant cash flow commitments in the near term, including bonus payments and merger-related retention payments, impacting liquidity.
• CRC's financial strategy involves maintaining a strong balance sheet, which may limit aggressive capital returns to shareholders in the short term.

Q & A Highlights

Q: Your stock price has been underperforming despite progress. Do you think the lockup from the era owners is influencing this, and is there a way to mitigate the impact? Also, is this a point where you get aggressive in buying back your stock? A: Francisco Leon, CEO: We can't comment on what other investors will do, but we see tremendous value in our stock, trading below intrinsic value. We are buyers of CRC shares. Cleo Crespy, CFO: CTPIB, ICA, and Oaktree are under a lockup agreement post-merger. A third of the shares are no longer under lockup. We have a buyback program with over $550 million remaining, representing over 12 million shares at current prices.

Q: Can you provide more details on the data center front and what structures you are looking at? A: Francisco Leon, CEO: We are talking to multiple parties and see big potential. We have a strategic infrastructure advantage, allowing us to get to market quickly. We are looking at a high-value long-term PPA, about 150 to 200 megawatts, and unlocking low carbon emissions solutions with CCS. We have 90 acres of land at Elk Hills identified for data centers and can provide a firm supply of natural gas.

Q: How are you addressing power redundancy for the PPA development? A: Francisco Leon, CEO: Our plant runs 24/7 as a base load plant, one of the most efficient in California. We have standby agreements backing up the plant and assets. Nate Pendleton, Analyst: We have import and export capacity at the plant, well in excess of the plant's capacity and anticipated load.

Q: Can you share milestones for the MOU with National Cement and thoughts on CO2 transportation? A: Francisco Leon, CEO: National Cement is a significant opportunity, generating about a million tons per year of emissions. We will be the transport and storage solution. We are working with the federal government to move forward with CO2 pipeline regulations, crucial for California's climate goals.

Q: Can you update on the CTV JV with Brookfield and the timing for permits? A: Francisco Leon, CEO: The JV is working well, and the delay is due to timing and capital deployment. We received $92 million to date. We expect to break ground on our cryogenic plant project in Q2, with first injection and cash flow by year-end. We anticipate converting MOUs to formal agreements as permits are approved.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.