Message from the CEO

A Message From The CEO

2024 was a transformative year for California Resources Corporation (CRC), marked by growth, operational excellence and innovation. We made remarkable progress across our business and continue to demonstrate that CRC is truly a Different Kind of Energy Company. By successfully executing our business plan, we delivered meaningful value to shareholders and positioned CRC for long-term success.

Our success in 2024 can be attributed to three key factors:

1. Our combination with Aera Energy was transformative, creating scale and a more sustainable enterprise. We demonstrated our ability to execute on a strategic merger and capture synergies that drive future returns. As the industry continues to consolidate into stronger and more financially sound companies, CRC is well positioned to lead.
    
2. CRC’s conventional oil and gas business performed exceptionally well. Our low decline, quality reservoirs generated a significant amount of cash flow, which we strategically allocated to strengthen our balance sheet, reward shareholders and expand into new growth opportunities.
    
3. Our Carbon TerraVault (CTV) business achieved key milestones reinforcing our path to future revenues and profitability. We cleared critical regulatory gateways, announced our first carbon capture project and strengthened CTV’s position as a premier carbon management solutions provider. Today, leading companies recognize our unique value proposition and are partnering with us on large scale projects to decarbonize California.
    

A key driver of our 2024 financial performance was the successful integration of Aera, which significantly expanded our scale, strengthened cash flow, and drove operational efficiencies. With Aera, CRC’s gross production increased by over 70% and exited the year at 163 thousand barrels of oil equivalent per day (Mboe/d), with 79% oil. This accretive growth helped CRC generate $610 million of net cash flow provided by operating activities, $355 million in free cash flow¹ and adjusted EBITDAX¹ exceeded $1 billion—reflecting the strength and resilience of our expanded portfolio. 

The operational and financial impact of the merger was immediate, nearly doubling our proved reserves while enhancing cash flow resilience through a more diversified asset portfolio. Beyond scale, we rapidly executed on synergies—originally targeting $150 million, we increased this to $235 million, with over 70% already actioned. These efficiencies lowered our breakevens, enabling us to maintain capital discipline while significantly growing shareholder returns. 

We remained committed to returning capital to shareholders, increasing our dividend by 25% and distributing approximatively 85% of free cash flow¹ through dividends and share buybacks. 

Our strong balance sheet also benefited from the Aera merger—we quickly rebuilt cash reserves, exiting 2024 with $1.3 billion in liquidity¹ and over $350 million in cash on hand. With a larger, stronger, and more resilient business, we enter 2025 well-positioned to drive further efficiencies, sustain strong free cash flow generation, and execute on new growth opportunities. 

Looking Ahead to 2025 

Our 2025 business plan includes capital investments in the range of $285 million to $335 million, targeting average net production of 135 Mboe/d, with 79% oil. We continue to capture Aera-related synergies and drive operational efficiencies; our controllable costs are expected to decline by approximatively 11% year-over-year in 2025. 

CTV is entering a new stage as we expect to break ground on critical projects, including our Elk Hills cryogenic gas plant and an agreement with National Cement for a first-of-its-kind initiative to produce carbon-neutral cement at National Cement’s facility in California. We also have seven Class VI permits pending Environmental Protection Agency approval, with nearly 9 million metric tons per annum of carbon projects under consideration² across key economic sectors such as power, construction, agriculture, renewable fuels and others. 

Other aspects of our business, like power, are gaining momentum. Today, we have access to nearly 850 MW of capacity³, and our Resource Adequacy payments are set to increase by 50% in 2025 to $150 million. As California’s largest natural gas producer, we see additional upside driven by growing demand. 

As our business flourishes, we expect that our shareholders will continue to be rewarded. We recognize the importance of sustainable capital returns and since mid-2021, we have returned more than $1.1 billion to stakeholders through repurchases, dividends and debt reduction. 

We believe CRC is uniquely positioned with high quality assets, a proven track record of execution, a strong capital structure and emerging growth opportunities. Our achievements would not be possible without the dedication and expertise of our talented workforce. Their commitment to safety, innovation, and operational excellence continues to drive our success. Thank you to our employees for their hard work, and to our investors for your continued trust in CRC. 

We are excited for the future and tackling California’s complex energy challenges while advancing the state’s emissions reduction goals. One thing is clear: demand for low-carbon, reliable energy is growing in California and CRC will be here to provide it.

Sincerely,

Francisco J. Leon
President and Chief Executive Officer
California Resources Corporation