California Resources (CRC)2025-03-04 04:59Financial Data and Key Metrics Changes - The company reported net production of 141,000 BOE per day and realized oil prices at 99% of Brent, leading to 118 million in free cash flow for Q4 2024 [19][20] - For the year 2024, the company achieved over 355 million in free cash flow, returning about 85% of free cash flow to shareholders through dividends and share repurchases [24][31] - The company ended 2024 with gross production of 163,000 BOE per day and maintained a low annual gross decline of about 6% [23][24] Business Line Data and Key Metrics Changes - The conventional oil and gas business continues to deliver robust cash flow, supported by quality proved reserves and a deep inventory, unlocking significant synergies from low decline, low capital intensity assets [8][19] - The carbon management business is rapidly expanding, with nearly nine million metric tons per annum of carbon management projects under consideration, including the first EPA class six permits for California's first TCS project at Elk Hills [12][16] Market Data and Key Metrics Changes - The company expects to benefit from new sustainable efficiencies in 2025, with an estimated controllable cost structure of 150 million, with new power purchase agreements being assessed [28] Company Strategy and Development Direction - The company is focused on building a sustainable future through carbon management and power, actively pursuing agreements with well-capitalized parties for new AI data centers in California [9][10] - The recent agreement with National Cement is seen as a major milestone in domestic industrial decarbonization, validating the company's CCS strategy and expertise in carbon management [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong position entering 2025, highlighting the importance of maintaining a strong balance sheet and the ability to invest in high-return opportunities [29][30] - The management team emphasized the significant near-term value drivers and the company's commitment to shareholder returns, with a focus on disciplined capital allocation [33][34] Other Important Information - The company has more than 350 million post-merger [30][90] - The company plans to redeem the remaining 122 million of 2026 senior notes later this year, maintaining a leverage ratio of less than one [31][90] Q&A Session Summary Question: Stock price underperformance compared to peers - Management acknowledged the stock's underperformance but highlighted a strong track record of returning capital to shareholders, with over 1 billion returned since 2021 [41][42] Question: Details on the data center agreements - Management discussed ongoing talks with multiple parties for data centers, emphasizing the strategic infrastructure advantage and the potential for long-term contracts [49][51] Question: Power redundancy and modular generation - Management confirmed that their plant operates 24/7 and has standby agreements for backup power, ensuring reliability [56][58] Question: Update on the MOU with National Cement - Management expressed excitement about the partnership, highlighting the significant market opportunity in California's cement industry and the need for CO2 transportation solutions [76][78] Question: Financial priorities going forward - The CFO outlined priorities including maintaining a strong balance sheet, driving sustainable cash flow, and creating long-term shareholder value [84][86]