Author Topic: CRC - California Resources  (Read 2135 times)

5xEBITDA

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Re: CRC - California Resources
« Reply #10 on: January 13, 2021, 08:17:34 AM »
thanks, can you point me to the source of $2.4B / $3.4B numbers.

I'm confused as to the progression from the 7/31/2020 numbers to the much lower 12/2020 numbers despite brent and natural gas prices going up.

https://www.sec.gov/Archives/edgar/data/1609253/000160925321000004/a20210113prosupp.htm


bizaro86

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Re: CRC - California Resources
« Reply #11 on: January 13, 2021, 08:21:30 AM »

The problem with something like CRC is that a discount to PDP is nice, but what is the catalyst? There are not that many incremental buyers of discounted E&P stock already. Goldentree et al are not interested in being long term, thoughtful owners of this business. They're most interested in finding a way to exit, although in a smarter way than banks would.

Yeah. Basically you need to hold for value to be its own catalyst here. Maybe a dividend at some point?

I think an acquisition is very unlikely. They got spun out because previous management didn't want to deal with California any more. I doubt CA will change, and I don't know what level of discount it would take for another management team to voluntarily take on the brain damage of dealing with them, but its probably significant.

thepupil

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Re: CRC - California Resources
« Reply #12 on: January 13, 2021, 08:25:55 AM »


some moody's:

CRC's B1 CFR reflects current low oil prices that limit the company's ability to generate free cash flow, the high cost of its production relative to oil prices, and the potential for lower production volumes in 2021, while the company limits its capital expenditures to internally generated cash flow. Moody's expects the company's investments in 2021 to focus on maintaining production levels while generating flat to positive free cash flow. Even so, production volumes may decline somewhat if Brent prices do not remain above $50 per bbl. The company has focused on reducing its costs since it became a public company in 2014, however, its margins are not sufficient to support investments to grow production, despite selling its production at prices close to the Brent index price.
The company benefits from its large scale and legacy production with significant infrastructure as one of the largest operators in California. CRC's well-defined, mature asset base, which has a shallow decline rate of 10% - 15% per year, and the quality of CRC's reserves base are positives. The predominately oil reserves (about three-quarters of production is liquids) are in multiple basins in California and have a reserve life index that is longer than most peers.
The SGL-3 Speculative Grade Liquidity (SGL) Rating reflects Moody's expectation that CRC will have adequate liquidity through 2021, supported by cash flow from operations and its revolver credit facility due April 2024. Moody's expects CRC will limit its capital spending such that it does not materially outspend internally generated cash flow, but if Brent oil prices are below $50 per bbl, production volumes could remain flat or decline modestly. The revolver has a $1.2 billion borrowing base and $540 million of commitments. Moody's expects the company will have ample headroom under the credit agreement's financial covenants - a maximum total net leverage ratio of 3.0x and minimum current ratio of 1.0x. The next debt maturity is in 2024.
The stable outlook reflects Moody's expectation that CRC will weather the low and volatile oil & gas price environment and limit any decline in production volumes without needing significant debt financing.

samwise

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Re: CRC - California Resources
« Reply #13 on: January 13, 2021, 08:53:31 AM »
FWIW, they provided a FCF guidance at emergence, but its not in the latest investor presentation. Maybe its out of date now.

It was ~500M over two year 2021/22 with Brent assumed at ~48. So its ~250 per year, which is a >10% FCF yield.

See the "aggregate FCF/total debt" chart on slide 13 and the footnotes on debt level and pricing assumptions.
https://s23.q4cdn.com/941458137/files/doc_presentations/2020/CRC-Emergence-Strategy-2020-Final.pdf

CorpRaider

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Re: CRC - California Resources
« Reply #14 on: January 13, 2021, 08:46:28 PM »
Man I owned this one time back when they spun it (doing my little Greenblatt yellow book sheeat).  Got lucky AF and sold it after for a decent gain.  Don't they own like most of the rights to some shale basin in California that they claim could be bigger than the total Permian if only Cali would let them experiment and frac the heck out of it?

I got so lucky messing around with OXY, Sandridge, and some canadian E&P that Repsol bailed me out of before oil cratered.

On an unrelated note, I don't invest in E&P. 
« Last Edit: January 13, 2021, 08:51:49 PM by CorpRaider »

thepupil

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Re: CRC - California Resources
« Reply #15 on: January 14, 2021, 10:50:17 AM »
Just updating here that the notes are likely to be 7-7.5%.

"Refi'ing all their debt into a simple relatively cheap (for a ShitCo E&P) debt is a nice start to CRC's post re-org life" - said the future bagholder of his low conviction meaningless position



5xEBITDA

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Re: CRC - California Resources
« Reply #16 on: January 14, 2021, 02:40:44 PM »
Priced 7.125%. Few marginal buyers of this, my color is that a large majority were existing exit lenders moving into the bond to support their equity option.

thepupil

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Re: CRC - California Resources
« Reply #17 on: January 14, 2021, 03:46:33 PM »
Thanks! That actually makes a lot of sense given the relative size of the bonds to the equity.

They found at least one sucker who likes it and interpreted the 7% money as a vote of confidence.