California Resources (CRC)2025-03-03 22:20Aera Merger Impact - The Aera Merger added significant oil-weighted production and proved developed reserves, with 21,315,707 shares issued to former Aera owners and approximately 376 million in net income, including Aera's operations for the second half of the year[18]. - The company expects to implement annual cost savings of 65 million in 2025 following the Aera Merger[18]. - Acquisitions during the year included 236 MMBoe from the Aera Merger, significantly impacting total proved reserves[50]. - The Aera Merger, completed on July 1, 2024, added significant oil-weighted production and proved developed reserves, primarily in the San Joaquin and Ventura basins, with existing stockholders owning 76% and former Aera owners 24% of CRC[15]. Financial Performance - As of December 31, 2024, the company had 983 million available for borrowing and 2,255 million, while total oil, natural gas, and NGL sales reached 2,155 million in 2023[74]. - The PV-10 of cash flows as of December 31, 2024, was 77.91 per barrel for oil and 2,175 million[57]. Production and Reserves - Total net production for the year ended December 31, 2024, was 40 MMBoe, with an average daily net production of 110 MBoe/d, representing a 28% increase from 86 MBoe/d in 2023[36]. - Proved reserves as of December 31, 2024, included 443 MMBbl of oil, 34 MMBbl of NGLs, and 409 Bcf of natural gas, totaling 545 MMBoe[20]. - The reserves to production ratio was 14 years for total proved reserves as of December 31, 2024[45]. - Proved undeveloped reserves decreased to 39 MMBoe as of December 31, 2024, primarily due to regulatory challenges and performance-related revisions[51]. - The company anticipates that approximately 9,000 net mineral acres will expire in 2025, representing 2% of total net undeveloped acreage, but does not expect a material adverse effect from these expirations[34]. Operational Efficiency - Operating costs per Boe decreased to 26.24 in 2023, indicating improved cost efficiency[36]. - Operating costs for 2024 were 24.51, compared to 26.24 per barrel in 2023[41]. - The company operates 65 producing fields, with 38 in the San Joaquin Basin, 4 in the Los Angeles Basin, and 21 in the Sacramento Basin[20]. - The company holds 1,863 thousand net mineral acres, with 79% held in fee and 85% of leased acreage held by production[33]. - The company plans to maintain a disciplined capital program, focusing on workovers and sidetracks in the short term, and investing in high-return wells when permitting resumes[18]. Carbon Management and Environmental Initiatives - The company aims to advance its carbon management business, leveraging the Carbon TerraVault joint venture with Brookfield to reduce capital investments in decarbonization projects[19]. - The company is committed to reducing CO and methane emissions and managing idle wells while maintaining transparency in its environmental stewardship efforts[19]. - The company is developing carbon capture and sequestration (CCS) projects, with the first EPA Class VI permits issued in California for underground injection and storage of CO2 at the Elk Hills field[89]. - The company announced a capital investment of 18 million for the installation of carbon capture equipment at the Elk Hills facility, with operations expected to commence in late 2025[90]. - The company expects growth in projects related to carbon management services, reflecting its strategic expansion in this segment[90]. Regulatory Environment - The company emphasizes proactive engagement with regulators to minimize adverse impacts from new legislation and regulations on its operations[19]. - California's Senate Bill No. 1137 establishes a minimum setback of 3,200 feet for new oil and natural gas production wells from sensitive receptors, effective June 27, 2024[121]. - Assembly Bill 1866 increases annual fees for idle wells based on the duration of idleness, effective January 1, 2025, and mandates operators to submit plans for idle well management[123]. - The company is subject to numerous federal and state regulations that may restrict operations and increase costs, including those related to health, safety, and environmental protection[134]. - Recent litigation against the company regarding environmental compliance is not expected to have a material adverse effect on operations following a favorable court ruling[132]. Workforce and Safety - The company had approximately 1,550 employees as of December 31, 2024, a significant increase from approximately 970 employees as of December 31, 2023, primarily due to the Aera Merger[102]. - The company achieved a 99.999% oil spill prevention rate in 2024 and a total recordable incident rate (TRIR) of 0.39, reflecting strong safety performance[105]. - The company plans to operate one active drilling rig in Kern County in the first half of 2025, with plans to increase to two rigs in the second half of 2025[118]. - The company has submitted applications for conditional use permits for projects in Kern County, with uncertain timelines for approval that could extend into the first half of 2026[111]. - The company is evaluating the feasibility of developing a carbon capture system for its 550 MW Elk Hills power plant, indicating a focus on carbon management expansion[90].