California Resources's Business Segments

We are an independent oil and natural gas exploration and production company operating properties within the state of California. We were incorporated in Delaware as a wholly owned subsidiary of Occidental on April 23, 2014, and remained a wholly owned subsidiary of Occidental until November 30, 2014. As of November 30, 2014, all material existing assets, operations and liabilities of Occidentals California business were consolidated under us. On November 30, 2014, Occidental distributed shares of our common stock on a pro rata basis to Occidental stockholders and we became an independent, publicly traded company (the Spin-off).

Our large acreage position and extensive drilling inventory provide us a diversified portfolio of oil and natural gas locations that are economically viable in a variety of operating and commodity price conditions, including many which are high return projects throughout the price cycle. Our acreage position contains numerous development and growth opportunities due to its varied geologic characteristics and multiple stacked pay reservoirs which, in many cases, are thousands of feet thick. We have a large portfolio of low-risk and low-decline conventional opportunities in each of our major oil and gas basins with approximately 70% of our proved reserves associated with conventional opportunities. Conventional reservoirs are capable of natural flow using primary, steamflood and waterflood recovery methods. We also have a significant portfolio of unconventional growth opportunities in lower permeability reservoirs that typically utilize established well stimulation techniques. We have approximately 3,400 net identified drilling locations targeting unconventional reservoirs primarily in the San Joaquin basin. Prior to the severe price declines, we were focused on higher-value unconventional production from seven discrete stacked pay horizons within the Monterey formation, primarily within the upper Monterey. Over the longer term, as project economics improve, we will seek to duplicate our successful upper Monterey results to develop opportunities in the unconventional reservoirs of the lower Monterey, Kreyenhagen and Moreno formations, which have similar geological attributes.

We develop our capital investment programs by prioritizing life of project returns to grow our net asset value over the long term, while balancing the short- and long-term growth potential of each of our assets. We use a Value Creation Index (VCI) metric for project selection and capital allocation across our portfolio of opportunities. We calculate the VCI for each of our projects by dividing the net present value of the projects expected pre-tax cash flow over its life by the present value of the investments, each using a 10% discount rate. Projects are expected to meet a VCI of 1.3, meaning that 30% of expected value is created above our cost of capital for every dollar invested. Our technical teams are consistently working to enhance value by improving the economics of our inventory through detailed geologic studies as well as application of more effective and efficient drilling and completion techniques. As a result, we expect many projects that do not currently meet our investment hurdle today will do so by the time of development. We regularly monitor internal performance and external factors and adjust our capital investment program with the objective of creating the most value from our portfolio of drilling opportunities.

Over the past decade, we have also built a 3D seismic library that covers approximately 4,800 square miles, representing over 90% of the 3D seismic data available in California. We have developed unique, proprietary stratigraphic and structural models of the subsurface geology and hydrocarbon potential in each of the four basins in which we operate. In recent years we have tested and successfully implemented various exploration, drilling, completion and enhanced recovery technologies to increase recoveries, growth and value from our portfolio. We continue working to build depth in our exploration inventory and identify new prospects based on the competitive advantage provided by this proprietary data set and our experience.

 

California Resources Corporation (CRC) is a prominent energy company primarily engaged in oil and natural gas exploration and production. The company operates predominantly within the state of California, capitalizing on various geological formations to deliver fossil fuel resources. Heres a detailed breakdown of the segments, products, and services they offer:

Segments

1. Upstream Operations:
This is the core segment of CRCs business, focusing on exploration, production, and development of oil and gas reserves. CRC employs a range of techniques to extract resources effectively, including traditional drilling and advanced technologies to enhance recovery rates.

- Oil Production: Significant focus is placed on crude oil extraction. CRC operates several oil fields across California, utilizing both onshore and offshore drilling practices. The company emphasizes enhanced oil recovery techniques, including water flooding and steam injection, to maximize yield from mature fields.

- Natural Gas Production: Alongside oil, CRC produces natural gas, which is utilized for residential, commercial, and industrial purposes. Natural gas production is often a byproduct of oil extraction, and the company manages these operations to ensure efficient recovery and delivery.

2. Midstream Operations:
Although CRCs primary focus is upstream, it also includes elements of midstream operations related to the transportation and storage of hydrocarbons. This segment is concerned with facilitating the movement of crude oil and natural gas from production sites to processing facilities and end-users.

- Transportation Infrastructure: CRC may utilize pipelines, trucking, and rail systems to transport crude oil and gas. The company invests in maintaining and upgrading infrastructure to ensure efficient and safe logistics.

- Storage Facilities: CRC manages various storage facilities to handle fluctuations in production and demand, ensuring that resources are stored safely and can be accessed promptly as needed.

3. Environmental Stewardship and Sustainability Initiatives:
CRC places significant emphasis on responsible operations, aiming to minimize environmental impacts. This segment reflects the companys commitment to integrating environmentally sustainable practices into its operations.

- Carbon Management: CRC is exploring opportunities for carbon capture and storage (CCS) as part of its longer-term strategy to reduce greenhouse gas emissions from its operations.

- Water Management: Given Californias unique water challenges, CRC implements water recycling and conservation strategies, aiming to use water resources efficiently and responsibly.

Products

1. Crude Oil:
As one of its primary products, CRC produces various grades of crude oil, tailored for different refining processes. The quality of crude oil can affect prices, with lighter, sweeter crudes typically commanding a premium in the market.

2. Natural Gas:
CRC contributes to the natural gas market by supplying this critical energy resource. Their natural gas operations support both domestic consumption and regional export considerations.

3. Refined Products:
Although CRC focuses on upstream activities, its production contributes to the supply chain for refined petroleum products. These products include gasoline, diesel, and jet fuel, which are produced by third-party refineries that process the crude oil supplied by CRC.

4. Water Solutions:
As water resources are vital in oil extraction, CRC may offer solutions that involve water sourcing, treatment, and recycling, supporting both its operations and local communities.

Services

1. Exploration Services:
CRC employs geological surveys, seismic imaging, and exploratory drilling to identify new hydrocarbon reserves, ensuring a continuous supply of resources for its production operations.

2. Drilling and Completion Services:
The company handles the operational aspects of drilling new wells, including the coordination of drilling rigs, crews, and logistics, as well as the completion processes to bring wells into production.

3. Production Management:
CRC manages ongoing production operations, employing various techniques for monitoring and optimizing well performance. This includes regular maintenance, workovers, and interventions to enhance production efficiency.

4. Technical Consulting:
CRC may offer consulting services based on its extensive industry knowledge and expertise, assisting other operators or stakeholders with exploration and production challenges.

5. Community Engagement and Social Responsibility:
CRC is committed to engaging with local communities and stakeholders, promoting transparency and responsible development. This includes community investment programs and initiatives that support local economic development.

Conclusion

California Resources Corporation is a multifaceted energy company with a strong focus on oil and natural gas production within California. Through its various segments, products, and services, CRC aims to meet the energy demands of the region while maintaining a commitment to environmental responsibility and community engagement. The companys integrated approach allows it to navigate the complexities of the energy market while contributing to Californias economy.