California Resources Corporation (NYSE:CRC) Q1 2022 Earnings Conference Call May 5, 2022 1:00 PM ET

Company Participants

Joanna Park - Vice President, Investor Relations and Treasurer

Mac McFarland - President and Chief Executive Officer

Francisco Leon - Executive Vice President and Chief Financial Officer

Jay Bys - Chief Commercial Officer

Chris Gould - Chief Sustainability Officer

Shawn Kerns - Chief Operating Officer

Conference Call Participants

Scott Hanold - RBC Capital

Leo Mariani - KeyBanc

Doug Leggate - Bank of America

Scott Hanold - RBC Capital

Eric Seeve - GoldenTree

Ray Deacon - Petro Lotus

Operator

Good afternoon and welcome to the California Resources Corporation 2022 First Quarter Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Joanna Park, VP of Investor Relations and Treasurer. Please go ahead.

Joanna Park

Thanks. Welcome to California Resources Corporation’s first quarter 2022 conference call. Participating on today’s call is Mac McFarland, President and Chief Executive Officer; Francisco Leon, Executive Vice President and Chief Financial Officer as well as the entire CRC executive team.

I’d like to highlight that we have provided slides on our Investor Relations section of our website, www.crc.com. These slides provide additional information into our operations and first quarter results. And we’ve also provided information reconciling non-GAAP financial measures discussed to the most directly comparable GAAP financial measures on our website as well as in our earnings release.

Today’s conference call contains certain projections and other forward-looking statements, and these statements are subject to risks and uncertainties that may cause actual results to differ. Additional information on factors that could cause our results to differ are available in the company’s 10-Q and 10-K. A replay will be made available for 30 days following the call on our website.

As a reminder, we have allotted additional time for question and answer at the end of our prepared remarks. We ask that participants limit their questions to a primary and one follow-up.

With that, I will now turn the call over to Mac.

Mac McFarland

Thank you, Joanna. 2022 began with a reminder about the importance of reliable and affordable energy as well as a continued focus on energy transition and CRC made progress on both. First, our core low-carbon intensity E&P business delivered on expectations. Quarterly production was in line with guidance, which accounted for our previously announced CGP1 Maintenance, along with the Lost Hills divestiture. And the business generated $61 million of free cash flow during the first quarter after the impacts of these two events. If you normalize for the CGP1 outage, our free cash flow would have been $105 million. Due to a favorable commodity outlook and strong anticipated returns, we are expanding our drilling program in the Los Angeles Basin by adding an additional rig in our Wilmington Field for a total of 5 drilling rigs in our overall operations.