California Resources Corporation Announces 3rd Quarter and Nine Month 2014 Financial Results

California Resources Corporation, a subsidiary of Occidental Petroleum Corporation (NYSE:OXY), announced net income of $188 million for the third quarter of 2014, compared with $235 million for the third quarter of 2013. Net income for the first nine months of 2014 was unchanged from the same period of 2013 at $657 million.

In announcing the results, Todd Stevens, President and Chief Executive Officer, said, "As we near separation from Occidental, California Resources Corporation has posted robust third quarter 2014 results, including record oil production of 100,000 barrels per day and strong earnings and operating cash flow from our world class resources. Our record oil production is a result of our strategic focus on drilling for high margin oil to maximize shareholder value."

In October, California Resources Corporation raised $5 billion through a senior notes offering and distributed the net proceeds to Occidental. The company also secured a term loan for $1 billion and a revolving credit facility of up to $2 billion and will make another distribution to Occidental of approximately $1 billion prior to the spin-off. Mr. Stevens noted that "The spin-off is expected to be completed as planned on November 30, 2014. We are completely focused on developing our diverse portfolio to increase shareholder value." Once separated from Occidental, California Resources Corporation will become an independent publicly traded company on the NYSE under the symbol CRC. Occidental will initially distribute to its shareholders at least 80.1 percent of CRC common stock with the remaining up to 19.9 percent to be disposed of within eighteen months.

QUARTERLY RESULTS

Net income was $188 million for the third quarter of 2014, compared with $235 million for the third quarter of 2013. The current quarter reflects higher oil volumes and higher realized gas prices offset by lower realized oil prices and increased production costs. Excluding increases due to higher volumes, production costs increased on a dollar per barrel of oil equivalent (BOE) basis mostly due to higher costs for natural gas used in our steam flood operations and other higher energy costs. EBITDAX for the third quarter of 2014 was $648 million compared with $721 million for the third quarter of 2013.¹

Daily oil and gas production volumes averaged 160,000 BOE in the third quarter of 2014, compared with 153,000 BOE in the third quarter of 2013. Average oil production increased 11,000 barrels per day, or by 12 percent, from 89,000 barrels per day in 2013 to 100,000 barrels per day in 2014, reflecting our focus on high margin oil drilling. NGL and natural gas production decreased by 2,000 barrels and 11 million cubic feet (MMcf) per day respectively.

Realized crude oil prices decreased ten percent to $96.27 per barrel for the third quarter of 2014 from $107.20 per barrel for the third quarter of 2013. The decrease reflects the drop in oil prices during this period and widening differentials to Brent. NGL prices decreased three percent to $47.20 per barrel in the third quarter of 2014, from $48.46 per barrel in the third quarter of 2013. Natural gas realized prices increased 17 percent in the third quarter of 2014 to $4.24 per thousand cubic feet (Mcf), compared with $3.61 per Mcf in the third quarter of 2013.

NINE-MONTH RESULTS

Net income for the first nine months of 2014 was unchanged from the same period of 2013 at $657 million. Higher oil production and higher realized natural gas and NGL prices in 2014 were offset by lower realized oil prices for the 2014 period and increased production costs, depletion rates, taxes other than on income and selling, general and administrative costs. Excluding increases due to higher volumes, production costs increased due to higher natural gas and other energy costs. EBITDAX for the first nine months of 2014 was $2.1 billion, compared with $2.0 billion for the first nine months of 2013.

For the first nine months of 2014, daily oil and gas production volumes averaged 157,000 BOE, compared with 153,000 BOE in the first nine months of 2013. Average oil production increased 9,000 barrels per day, or by 10 percent, from 88,000 barrels per day in 2013 to 97,000 barrels per day in 2014. NGL and natural gas production decreased by 2,000 barrels and 15MMcf per day, respectively.

Realized crude oil prices decreased five percent to $100.94 per barrel for the first nine months of 2014, compared with $105.89 per barrel for the first nine months of 2013. NGL prices increased nine percent to $52.26 per barrel for the first nine months of 2014, from $48.09 per barrel for the first nine months of 2013. Natural gas prices increased 21 percent in the first nine months of 2014 to $4.53 per Mcf, compared with $3.75 per Mcf in the first nine months of 2013.

CURRENT MARKET CONDITIONS

We are closely monitoring the recent volatility in the commodity markets, in particular the recent drop in oil prices. In line with our stated goal of self-funding our operations, we are developing plans to adapt to changes that are occurring in the marketplace. Our 2015 plans will include a variety of spending levels affording us the flexibility to respond rapidly as the commodity price environment dictates.

OPERATIONS

We continued progress on our development and operating plans during the third quarter. In the San Joaquin basin, our third quarter production averaged 113,000 BOE per day, which was an increase of five percent from the prior year quarter. Almost all of this increase in production came from oil, which increased by 7,000 barrels per day or 12 percent. During the third quarter we operated 19 rigs and drilled 200 wells. We continue to emphasize oil drilling, in particular steamfloods where the favorable oil-to-gas price ratio provides attractive returns. Our third quarter capital was $379 million in the basin and we expect our activity to remain at similar levels in the fourth quarter.

In the Sacramento basin, we produced 56MMcf per day of gas in the third quarter, compared to 65 MMcf per day in the third quarter of last year. We did not perform any new drilling during the quarter in this predominantly gas basin. However, we are monitoring gas prices closely and continuing to build our project inventory to take advantage of a more favorable product price environment in the future.

In the Los Angeles basin, our operations continued to emphasize development of our waterflood opportunities. Our third quarter production was 29,000 BOE per day compared to 25,000 BOE per day in the prior year quarter. We operated seven rigs in the basin last quarter and drilled 29 wells. Our third quarter capital was $117 million in the basin and we expect our activity in the fourth quarter to remain similar to third quarter levels.

In our Ventura basin operations, production remained flat for the third quarter of 2014, compared to the third quarter of last year. We continue to invest in oil projects in the basin, and drilled six wells during the quarter with one rig. Our third quarter capital was $42 million in the basin and we expect our activity in the fourth quarter to be similar to third quarter levels.

¹ _{For an explanation of how we calculate and use EBITDAX (non-GAAP) and a reconciliation of net income (GAAP) to EBITDAX (non-GAAP), please see “Non-GAAP Financial Measures and Reconciliations” below.}

About California Resources Corporation

California Resources Corporation will, following the spin-off from Occidental Petroleum Corporation, be an independent publicly traded oil and natural gas exploration and production company and the largest combined oil and natural gas producer in California on a gross-operated basis. The Company operates its world class resource base exclusively within the State of California, and uses integrated infrastructure to gather, process and market its production. Using advanced technology, California Resources Corporation’s workforce of over 8,000 employees and contractors focuses on safely and responsibly supplying affordable energy for California by Californians.

About Occidental Petroleum

Occidental Petroleum Corporation is an international oil and gas exploration and production company with operations in the United States, Middle East/North Africa and Latin America. Headquartered in Houston, Occidental is one of the largest U.S. oil and gas companies, based on equity market capitalization. Occidental’s midstream and marketing segment gathers, processes, transports, stores, purchases and markets hydrocarbons and other commodities in support of Occidental’s businesses. The company’s wholly owned subsidiary OxyChem manufactures and markets chlor-alkali products and vinyls.

Forward-Looking Statements

Portions of this press release contain forward-looking statements and involve risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows and business prospects. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. Factors that could cause results to differ include, but are not limited to: commodity pricing fluctuations; supply and demand considerations for California Resources Corporation's products; higher-than-expected costs; the regulatory approval environment; any delay of, or other negative developments affecting, the spin-off of California Resources Corporation; not successfully completing, or any material delay of, field developments, expansion projects, capital investment, efficiency projects, acquisitions or dispositions; lower-than-expected production from development projects or acquisitions; exploration risks; general economic slowdowns; liability under environmental regulations including remedial actions; litigation; disruption or interruption of production, processing or marketing or facility damage due to accidents, labor unrest, weather, natural disasters or cyber attacks; changes in law or regulations; or changes in tax rates. Words such as “estimate,” “project,” “predict,” “will,” “would,” “should,” “could,” “may,” “might,” “anticipate,” “plan,” “intend,” “believe,” “expect,” “aim,” “goal,” “target,” “objective,” “likely” or similar expressions that convey the prospective nature of events or outcomes generally indicate forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this release. Unless legally required, California Resources Corporation does not undertake any obligation to update any forward-looking statements, as a result of new information, future events or otherwise. Material risks that may affect California Resources Corporation's results of operations and financial position appear in “Risk Factors” in our Form 10.

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