On Wednesday, Shares of California Resources Corporation (NYSE: CRC) showed the bearish trend with a lower momentum of -2.44% to $27.64. The company traded total volume of 1,481,697 shares as contrast to its average volume of 2.12M shares. The company has a market value of $1.37B and about 49.60M shares outstanding.
California Resources Corporation (CRC), an independent California-based oil and gas exploration and production company, recently stated net income attributable to common stock (CRC net income) of $346.0M, or $7.00 per diluted share, for the fourth quarter of 2018. Adjusted net income for the fourth quarter of 2018 was $26.0M, or $0.53 per diluted share. For the full year of 2018, CRC net income was $328.0M, or $6.77 per diluted share. Adjusted net income for the full year of 2018 was $61.0M, or $1.27 per diluted share.
Adjusted EBITDAX for the fourth quarter of 2018 was $314.0M and $1,117.0M for the full year of 2018. Cash offered by operating activities was $68.0M for the fourth quarter of 2018 and $461.0M for the full year of 2018, or an 86% increase over the full year $248.0M in 2017.
Fourth Quarter 2018 Results:
For the fourth quarter of 2018, CRC net income was $346.0M, or $7.00 per diluted share, contrast to a net loss attributable to common stock (CRC net loss) of $138.0M, or $3.23 per diluted share for the same period of 2017. Adjusted net income1 for the fourth quarter of 2018 was $26.0M, or $0.53 per diluted share, contrast with an adjusted net loss of $14.0M, or $0.33 per diluted share for the same prior year period. The 2018 results reflected increased production and higher realized commodity prices for oil and natural gas contrast to 2017. The fourth quarter of 2018 adjusted net income excluded $295.0M of non-cash derivative gains on commodity contracts, a $6.0M non-cash derivative loss from interest-rate contracts and a net gain of $31.0M on debt repurchases.
Total daily production volumes averaged 136.0K BOE per day for the fourth quarter of 2018, contrast to 126.0K BOE per day for the fourth quarter of 2017, a boost of 8%, mostly driven by the Elk Hills acquisition in the second quarter of 2018. For the fourth quarter of 2018, oil volumes averaged 86.0K barrels per day, NGL volumes averaged 16.0K barrels per day and gas volumes averaged 204.0K.0K cubic feet (MCF) per day. Organically, oil production grew over 1.0K barrels per day from the third quarter of 2018 to the fourth quarter of 2018, excluding the effects of production sharing-type contracts (PSCs) and acquisitions.
Production costs for the fourth quarter of 2018 were $233.0M, or $18.61 per BOE, contrast to $227.0M, or $19.64 per BOE, for the fourth quarter of 2017. In line with industry practice for reporting PSCs, CRC reports gross field operating costs, but only CRC’s share of production volumes, which results in higher production costs per barrel. Excluding this PSC effect, per unit production costs for the fourth quarter of 2018 would have been $17.44 per BOE contrast to $18.31 for the same prior year period. The decrease in production costs per BOE was mainly driven by higher production between comparative periods, mostly related to the Elk Hills acquisition. Elk Hills’ production costs are lower than the average CRC-wide production cost per barrel. As a result, the Elk Hills acquisition had a favorable effect on production cost per barrel. General and administrative expenses (G&A) were $65.0M for the fourth quarter of 2018 contrast to $66.0M for the prior year period.
CRC stated taxes other than on income of $29.0M for the fourth quarter of 2018 contrast to $33.0M for the same prior year period. Exploration expense was $16.0M for the fourth quarter of 2018, $11.0M higher than the same prior year period because of exploration dry holes.
CRC’s internally funded capital investment for the fourth quarter of 2018 totaled $174.0M, of which $119.0M was directed to drilling and capital workovers. CRC’s JV partner Benefit Street Partners LLC (BSP) funded $12.0M, which is included in CRC’s consolidated results, while JV partner Macquarie Infrastructure and Real Assets Inc. (MIRA) funded an additional $11.0M of investment, which is excluded from our consolidated results.
Cash offered by operating activities was $68.0M for the fourth quarter of 2018, which included interest payments of $157.0M.
Full Year 2018 Results:
For the full year of 2018, CRC net income was $328.0M, or $6.77 per diluted share, contrast to a CRC net loss of $266.0M, or $6.26 per diluted share, for the full year of 2017. Adjusted net income1 for 2018 was $61.0M, or $1.27 per diluted share, contrast with an adjusted net loss1 of $187.0M, or $4.40 per diluted share, for 2017. The 2018 results reflected significantly higher realized prices and higher production, partially offset by increased production costs, as well as higher G&A and interest expense. The 2018 adjusted net income excluded $224.0M of non-cash derivative gains on commodity contracts, a net gain of $57.0M on debt repurchases, a $6.0M non-cash derivative loss from interest rate contracts, a $5.0M gain on asset divestitures and a net $13.0M charge related to other unusual and infrequent items. The 2017 adjusted net loss1excluded $78.0M of non-cash derivative losses, $21.0M of gains from asset divestitures, a $4.0M net gain on debt repurchases and a $26.0M net charge from other unusual and infrequent items.
Total daily production volumes averaged 132.0K BOE per day for the full year of 2018 contrast with 129.0K BOE per day for 2017. This net increase included a 1,300 barrel per day negative PSC effect on production volumes because of higher realized prices for 2018. Oil volumes averaged 82.0K barrels per day, NGL volumes averaged 16.0K barrels per day and gas volumes averaged 202.0K MCF per day.
Production costs for the full year of 2018 were $912.0M, or $18.88 per BOE, contrast to $876.0M, or $18.64 per BOE, for 2017. The Elk Hills acquisition and cash-settled stock-based compensation added $38.0M and $4.0M to full year production costs for 2018, respectively. Synergies captured from the Elk Hills consolidation reduced production costs by $17.0M, partially offset by a boost in energy costs. Per unit production costs, excluding the effect of PSC contracts1, were $17.47 and $17.48 per BOE for the full year of 2018 and 2017, respectively. G&A expenses were $299.0M and $249.0M for the full year of 2018 and 2017, respectively, with the difference mainly related to increased equity compensation expense resulting from CRC’s higher stock price, as well as additional G&A expense as a result of lower cost recovery following the Elk Hills acquisition.
Taxes other than on income of $149.0M for 2018 were $13.0M higher than 2017, mainly because of higher greenhouse gas (GHG) costs related to annual price increases, in addition to a reduction in the number of allowances granted to CRC between periods. CRC stated exploration expenses of $34.0M for the full year of 2018, or $12.0M higher than 2017, because of exploration dry holes.
CRC’s internally funded capital investment for 2018 totaled $641.0M, of which $445.0M was directed to drilling and capital workovers. CRC’s JV partner BSP funded an additional $49.0M, which is included in CRC’s consolidated results, while JV partner MIRA funded an additional $57.0M of investment, which is excluded from our consolidated results.
Cash offered by operating activities for the full year of 2018 was $461.0M, which included interest payments of $441.0M and $98.0M of GHG payments related to prior years’ allowances.
2019 Capital Budget:
With current oil prices slightly above $60 per barrel Brent, CRC estimates its 2019 internally funded capital program will range from $300.0M to $385.0M, which may be adjusted during the course of the year depending on commodity prices. CRC is also in negotiation to obtain additional investments from new and existing JVs that could increase the 2019 capital program by $100 to $150.0M, to support a total capital budget of about $500.0M. CRC’s internally funded investments will be mostly directed to quick payback projects, such as primary drilling and capital workovers, and low-risk projects counting waterflood and steamflood investments that maintain base production.
Balance Sheet Strengthening Update:
For the fourth quarter of 2018, CRC repurchased a total of $55.0M in aggregate principal amount of CRC’s outstanding debt for $50.0M. In 2018, CRC repurchased a total of $232.0M in aggregate principal amount of CRC’s outstanding debt for $199.0M. The majority of CRC’s debt repurchases focused on CRC’s Second Lien Notes.
Year-End 2018 Reserves:
CRC’s proved reserves totaled 712.0M barrels of oil equivalent (MMBOE), a boost from 618 MMBOE in 2017. Excluding positive price revisions, proved undeveloped reserves downgraded at management’s discretion and acquisitions, CRC organically replaced 127% of proved reserves. CRC achieved this strong organic reserve replacement ratio through well-executed capital programs in its Buena Vista, South Valley, Huntington Beach and Long Beach areas of operations. In 2018, total additions to proved reserves from all sources were 142 MMBOE, resulting in an all-in reserve replacement ratio of 296%.
The Company offered net profit margin of 10.40% while its gross profit margin was 70.20%. ROE was recorded as -48.50% while beta factor was 4.82. The stock, as of recent close, has shown the weekly upbeat performance of 0.29% which was maintained at 62.21% in this year.
