Q4 2021 California Resources Corp Earnings Call
[music].
Good day and welcome to the California Resources Corporation fourth quarter earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask you. A question you May press.
Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Joanna Park, Vice President of Investor Relations and Treasurer. Please go ahead.
Welcome to California Resources Corporation fourth quarter 2021 conference call participating on today's call is Mark Macfarlane, President and Chief Executive Officer, and Fred He's Golan Executive Vice President and Chief Financial Officer, as well as several members of the CRC executive team.
I'd like to highlight that we have provided slides on our Investor Relations section of our website Www CRC dot com <unk>.
These slides provide additional information into our operations and fourth 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 and 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.
Replay will be made available for 30 days following the call on our website.
As a reminder, please a lot of additional time for a 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 Mike.
Great. Thank you Joanna 2021 was a year in which we reposition CRC for the future.
We continued to deliver safe reliable production and advanced our carbon management business for the zero carbon fuel of the future.
In our core oil and gas operations, we demonstrated the strength of our strategy on.
CRC Crc's streamlined business model by generating $466 million in free cash flow in 2021, the highest level of free cash flow since the inception of CRC.
We did that by providing low carbon intensity and low decline production of 100000 barrels.
Equivalent per day, while maintaining our strong environmental and safety record. We also rationalized our portfolio through the previously announced acquisition of the working interest in mirror and the sale of insurer assets demonstrating active portfolio management is a key element of our business strategy.
Which we continued in February by also divesting our non core non operated interest in the lost hills assets.
We exited the year with approximately 95000 Boe per day of production, which reflects our 2021 portfolio activity and we expect just under a 2000 Boe per day impact from the lost Hills divestiture in 2021, which has been included in our 2022 production guidance.
Furthermore, we expect to exit 2022, basically flat on oil production and Francisco will provide additional details.
Library on this further but you can also see this on page 25 of the accompanying presentation.
Active portfolio management allows us to focus on CRC is fully operated fields with lower carbon intensity and future Ccs optionality.
On the carbon management business side, we were very active in 2021, and we will continue to advance our strategy in 2022, we're expanding our new business by progressing CTV deal structures and project milestones exploring future financing options and moving forward with our discussions with numerous potential partners stake.
Holders and technology providers.
We are advancing CTV admit or discussions for the first 1 million tons per annum for carbon terrible at one and we plan to provide additional details on these discussions later this year.
While prospects in details continue to be discussed the recurring theme in our discussions since the significant interest.
In the commercial scale solution for carbon sequestration.
Further we are preparing additional permit applications to meet our targeted injection of 5 million tons per annum. In 2027, CRC is targeting filing new EPA classics permits for incremental CTV storage projects.
For a total of 200 million metric tons or more by the end of this year that is inclusive of the applications. We have already filed for CTG won by filing these applications. It puts us on the path to receive permits by the end of 2025.
And that allows us to stay on track for our goal of the 5 million tons of injection by 2027.
Over the past few months, we have received fairly comprehensive comments from the EPA on the permits for a one <unk> and 26 are.
The combination of which is known as a C. T V. One the dialogue has been and continues to be constructive with the EPA and supportive of our previously outlined timing expectations.
In addition to the EPA process, the local land use permit and environmental analysis for CTV Wonder advancing under current counties leadership, and we would expect to see them completed next year.
We look forward to working with both agencies, while advancing our carbon management business.
In 2021 as Youll see on the accompanying slides, we are deploying approximately $85 million.
Our carbon management business across capital Opex and G&A.
This allows us to.
Advanced pending permits do early stage development and file the new applications for that first 200 million metric tonnes.
Unlock the next several.
<unk> hundred.
Millions of tons of poor space. After this initial 200 million metric tonnes.
And deploy initial capital for CTV. One we believe this investment is consistent with our previously disclosed economic type curve. It will develop projects with significant returns.
And these dollars represent a tangible investments in our low carbon strategy and a real commitment to California zero carbon future.
With decades of data and operating experience. We believe CRC is well positioned to provide commercial and scalable carbon management solutions coupled coupling this with California's net zero ambition CRC can make a significant impact not only from an environmental perspective.
But also by creating enduring value for our shareholders.
Lastly, we plan to maintain our solid financial foundation and free cash flow generation looking into 2022 and after adjusting for divestitures. Our core E&P business is expected to generate nearly $400 million in free cash flow.
Before our carbon management investments.
Highlighting the strength of our assets and the efforts of our employees.
By our current forecast with liquidity of over $670 million and a leverage multiple of less than a half a turn net debt to EBITDA CRC has a strong financial foundation that provides further support for our future goals.
Aspirations.
And our strategic initiatives as a result of our robust financial position.
We are expanding our shareholder return strategy.
We're doing this by maintaining our current fixed dividend strategy, which currently yields approximately one 7%.
And by raising the share repurchase program for $250 million.
$350 million and we are extending the program through the end of 2022.
This increase in dollars represents a 40%.
The increase to the overall program.
As always none of this is as possible without the contributions of our CRC employees.
I'd like to thank the team.
For all your efforts delivering.
Delivering these impressive results in 2021 during a tranche formative year as well as dealing with COVID-19 was truly remarkable.
We appreciate all of those we appreciate all of those joining on the call today and thank you for your ongoing interest in CRC and.
And with that I'll turn the call over to Francesco.
Francisco.
Yeah.
Thanks, Matt Good afternoon, everyone and thank you for joining us on this call.
During this year of transformation the company achieved all of our key strategic objectives.
In 2021, CRC produced 100000 net barrels of oil equivalent per day, and 60000 net barrels of oil per day.
By pursuing our inventory of hybrid high return quick payback maintenance projects. In addition to select horizontal opportunities.
Darcy held oil production relatively flat throughout 2021, after adjusting for acquisitions and divestitures and PSC effects.
The uniqueness of California's market dynamics continued to showcase at the mine the demand for our low carbon intensity product.
Crc's commodity realizations remained strong across all of our streams and we expect 2022 realizations the range within historical norms.
As laid out in our hedging slides and in conjunction with an increasing 2021 commodity price environment, we experienced at $319 million cash loss on commodity derivative contracts. As a reminder, the majority of these losses are from legacy hedges that were put on as a requirement of the 2002.
<unk> RVO.
Turning to the cost side of the business and on slide 11.
I'm, particularly proud of the efforts of our operations team.
Our 2021 operating cost excluding PSC effects declined modestly by 14 per Boe.
Impaired to the 2019 cost when we were operating under pre COVID-19 conditions, and a relatively similar commodity environment.
These results are more of a more remarkable when considering energy prices increased nearly 40% from the comparative 2019 period.
As a reminder, although higher natural gas prices increase our energy cost.
Benefits from higher natural gas prices as we are net long natural gas.
Our 2021 DNA cost declined year over year, primarily due to our ongoing cost saving efforts and previously announced workforce reductions.
In 2021, we invested $194 million in capital.
This level of investment largely maintain production throughout the year due to our backlog of opex maintenance opportunities and our drilling program, which yielded estimated well hit irr's of over 100%.
These results contributed to Crc's 2021 EBITDAX.
$860 million and record free cash flow of $466 million.
Throughout the year CRC demonstrated our commitment to shareholder returns and financial strength by buying back approximately $150 million of.
CRC shares were approximately $4 1 million shares through our share repurchase program.
And initiating a quarterly dividend in the fourth quarter, returning approximately 35% of 2021 free cash flow to shareholders.
Our strong financial Foundation was further enhanced as we built our cash balance to $305 million at year end.
Up from $28 million of cash at the end of 2020 and reduced our net leverage ratio to less than half a turn by year end.
The value of our oil weighted proven research is evidenced by our PV 10 of $6 2 billion.
2021, SEC price deck.
Which expands close to $8 billion at $80 Brent.
Which is more than double our current enterprise value.
Significant cash flow generation capability of our declining in low capital intensive assets.
Now for us to continue to self fund our low carbon E&P business continued to deploy additional shareholder returns and fund our carbon management activities.
CRC represents a unique investment.
That is rare in the energy sector.
As we step into 2022 CRC divested our non operated lost hills field, which in 2021 produced approximately 1900 net barrels of oil per day for proceeds of $55 million.
The lost Hills field had one of the highest cost structures in our portfolio and its carbon intensity was approximately 21% higher than our portfolio average.
As a part of this transaction CRC retained the right to pursue capture transport and storage of 100% of the shield to produce from the lost hills steam generators.
This transaction closed on February one 2022, and complements our low carbon intensity ambitions.
This reduces our cost structure and brings forward value that in our perspective can be further at that point.
Its future carbon management goals.
In addition to this transaction, we were able to able to further bolster our liquidity by adding $60 million to our commitment under our revolving credit facility.
Which now has commitments of $552 million.
Up from $492 million.
Moving to our 2022 operational outlook on slide 18, we expect to maintain our oil production from 2021 December exit through 2022 December exit. Despite previously discussed portfolio transaction and the potential adverse impacts of PSC at higher oil prices.
As a rule of thumb for every $10 increase in Brent prices. There is approximately 1000 Boe per day, sorry barrel of oil per day.
The reduction to our net oil production as a result of our PSS.
The opposite also applies with every $10 decrease in Brent we gain approximately 1000 Boe.
<unk> per day in net oil production.
This is why our guidance slides shows lower production with higher financial metrics.
We provide additional details on the PSC effects in the supplemental materials of our earnings presentation.
Our operations team is expected to further reduce our controllable non energy costs by an additional 5% asset build so far successful horizontal drilling program.
Our current 2022 plan has four drilling rigs and operations throughout the year.
As you are all aware CRC benefits not only from low decline low capital intensive production, but also from a large integrated infrastructure across California.
It helps because it helps us reduce our costs optimize production and provide supplemental revenue streams that further increase our earnings capability.
In the first quarter of 2022, we're undergoing a required 10 year maintenance turnarounds as crc's cryogenic gas plant or CGP one.
The plant processed Ngls and natural gas from the Elk Hills and surrounding fields and we expect they will return to full pre turnaround production levels by the second quarter of 'twenty two.
The planned downtime is expected to have an approximate 6000 Boe per day impact on our first quarter and an approximate 2000 Boe per day impact on a full year production.
While this maintenance period was expected to start during the summer of 'twenty, two we decided to pull forward the timing of this turnaround to benefit from lower procurement cost and better expected NGL yields in the summer of 'twenty two.
Our 2022 guidance is consistent with our capital allocation strategy, which prioritizes the financial operational and future growth goals for CRC.
First we expect to continue our strong operational and production performance.
Based on our current guidance at $82 50 per barrel Brent Crc's 2022 average net oil production is expected to be above 58000 barrels of oil per day.
Second our $300 million to $335 million E&P capital program includes drilling and completion and Workover capital of approximately $250 million.
To keep our oil production flat from December exit to December exit.
With the remaining capital covering our CGP one turnaround.
There are mechanical integrity and field upgrade projects.
After these investments we expect to deliver at the midpoint of our guide close to $400 million in free cash flow in an $82 Brent price environment.
This this is before approximately $85 million is deployed into our carbon magnitude business.
And would allow for roughly $250 million of potential shareholder returns.
Further underscoring the strength of our business.
Finally, I am very excited about crc's current position and the strength.
Our forward outlook as evidenced by our share repurchase program increase and the deployment of capital towards our carbon management business we.
We are forecasting significant and sustainable free cash flow, which could translate into additional shareholder returns and further growth optionality with our carbon management business.
Please note that we have provided detailed analysis.
Our quarterly and annual financial and operational results and our 2022 guidance in the attachments to our earnings release.
Thanks, and I'll now turn the call back over to Max for closing remarks.
Yes, Thank you Francisco and brought in there on the production and.
And getting to the overall net numbers, but.
We'll get into that in the Q&A.
Look CRC as a uniquely positioned asset base that allows us to provide the needed energy today and meet the goals of tomorrow with net zero fuel for the future we remain committed to our cash flow priorities.
One building upon our carbon management and to shareholder returns.
As an investment we believe CRC represents a large low decline production base with significant inventory for stable cash flows coupled with a unique energy transition opportunity and solid financial footing.
Thank you for your interest in CRC and thank you for joining us on the call todays call well now open the line for questions and I'll turn it back to the operator.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you were using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
First question will be from Scott Hanold of RBC capital markets.
Yeah, Hey, good afternoon, I guess, good morning to you all up there.
Hey, Scott.
Hey.
Feel like I'm going to be somewhat repetitive to the last quarter in terms of.
My questioning but.
As I step back and look over the last say nine to 12 months as you guys have transformed the strategy and goals of CRC.
I think this carbon management business certainly was met with a lot of excitement from investors in the fall of last year in particular.
It feels like now it's moving to a bit of impatience right and I think everybody wants answers sooner than later and I guess the first answer the first question I think that the.
Uh huh.
There's a desire to get some more clarity as is.
What is the status of those that wanted to participate in in.
Carbon terrible.
I know you guys remain committed to getting a million tons by the end of this year, but if you could provide us a little bit more details on a couple of things. One is is is do you feel the inbound interest is is.
Do they feel motivated like they need to do something and and what are the types of questions. Do you find that you need to answer from them.
Yes, Scott.
Thanks for the question. So let me take the first stab at that and then.
We'll see where it goes I think that the.
What I would say is is that these projects as we have shown.
You know as we did back in our carbon strategy day.
I think it takes significant time I think we showed the development timeframe.
As is being years and the capital being deployed over years.
As we've said in the past we are working on advancing what we see as and still believe is the longest lead time item, which is securing and permitting poor space and so we are building up that poor space.
Across that timeframe by which we get the permits.
Eventually we will cross to where the critical path is signing up.
The emitter or the source of C O two for the storage we're not there yet as we've always said it's through the end of 2022 and that's why we remain committed to doing so I think the biggest question is is that these deals have not been done.
There has not been you know there was some recent announcements this morning, but there hasn't been a significant amount of deals done and so there is a lot of I'll call. It price discovery contracting discovery things that need to work themselves out by which we.
We are working with our Counterparties to put in place you know executable contracts that they then can underwrite a project too.
And in doing that.
It's requiring first of a kind act.
Activities, whether it be deciding.
Take or pay on contracts deciding minimum volumes minimum takes theirs.
A lot to this that has never been done and so as you work your way through that that also has an impact on financials terms and conditions.
Their impact on financials. So we are working with our counterparties.
Through that and at the same time I think they're working through price discovery and I think people remain motivated to do it.
And over time are going to become even more motivated to do it because California as you know as many of our investors know and the reason why we think we have a.
Substantial place with a carbon management business is California is a state is leading the nation in the energy transition and by doing some of the regulatory things such as El CFS. It has compelling people to look at these opportunities.
Let me stop there and see if.
Chris Gould.
Chief Sustainability officer has anything to add to that.
Yeah. Thanks Mac.
I think you've covered it and I would just add in terms of the motivation.
Aspect to that.
As Mac said, California has a netsuite oracle that the parts of the of the.
The segments that are covered under that.
Part of the 40% reduction by 2030, so there certainly is a motivation bye bye.
By those sorts of emission sources.
And I'll remind everybody that the.
The total admissions of 425 million tons in California, EFI Stanford.
And alike have estimated that approximately $60 million of that.
Is addressable for Ccs and our 20 million tons per annum is roughly one third of that addressable market.
From my perspective, we're seeing that's a that's a great indication of our.
A large scale pipeline that is meaningful in the context of.
The demand in California.
Okay.
Just to clarify one thing do you find it's more of a push or a pull in terms of these discussions with with the emitters do you need to sort of convince them of why they need to do this or.
They're very clear on the issues, there and what they need to do.
Yes, Scott.
What I would say is that I think everybody is aware of the need some people view it as a carrot because they can find an incremental.
Cash flow stream.
Via the carbon regulations and the credits that are given other people see the impending.
I'll call. It stick if you will which is going to look like a cost of doing business just like you have.
You know.
As I'm sure you're aware, Scott, but you know the CCA the greenhouse gas allowances went from have gone up 50% and price. It went from $20 a ton to basically $30 a ton and that makes it more of a stick I think you'll see these.
These regulations looking more like a cost of doing business in a penalty that people will have to be removed. So I think people whether they come from it that they need to remove this cost of doing business or they see it as a new revenue stream.
They are very engaged on the need it's all about the getting to an agreement on Ts and CS and the price discovery and Scott I will tell you.
You know I'm fairly short on patients myself and I understand patients associated with this but this is these are long lived projects. It will take time, but we're doing the steps necessary, which is the very first thing which is get the tanks in place and have been permitted. So you have some place to put the carbon.
Got it okay, no that makes sense and then as my second question on the.
Dollars, you're spending $30 million to $40 million, you're spending on <unk>.
Capital on on you.
You know our Ccs projects, Alright, I guess, the carbon management projects, what is that going to accomplish the $30 million to $40 million of Capex, what is that going to do.
Yeah again these are.
Carbon terrible one is a depleted oil and gas field and so we're going in and.
Doing the plugging and abandonment of wells in advance and trying to get this completely ready. So that there is nothing there that needs to be done in the future.
Other than new injection wells and the piping if you will.
Midstream.
Understood. Thank you.
The next question will be from Doug Leggate of Bank of America.
Okay.
Afternoon, Doug.
Doug Your line is open if you wish to ask a question.
Perhaps your line is muted.
Move on to the next question from Leo Mari.
Keybanc, Doug you can always re queue when youre ready.
Yeah.
Hey, guys just wanted to ask a question on the oil guidance here in 2020, I just want to make sure I understood. This can you talk about exit 'twenty, one oil being the same as exit 'twenty, two that's pretty clear, but I guess, what I'm asking is are you factoring in the 19 100 barrels a day of divestiture, which is occurring in 2022. So are we.
You see in a situation where exit 'twenty two is 9100 barrels a day lower than exit 'twenty, one or is it flat. So you actually have 9100 barrels a day a growth of 22.
Yeah, Leo let me.
Francisco covers a lot of this in detail, but let me point you to page 25.
In the presentation that accompanies our earnings release.
And I'll, let Francisco walk you through this chart I think will answer that question for you.
Yes Leo.
So yes, the answer is flat entry to exit.
In to account the lost hills divestiture, so we offset the barrels that we divested with the drilling wedge that we're going to bring forward with four drilling rigs.
Okay. That's helpful.
And can you just talk to the.
The current kind of regulatory environment in permitting environment in California around the oil wells that you're drilling here in 2022 can you maybe talk to kind of how much inventory you have on the Permian side is there a <unk>.
There are two our backlog is it only a handful of months what can you kind of tell us around that.
So Leo.
The the permitting.
Place well, let me talk about our drilling program. The wedge as we described on page then Francisco just covered on page 25, we feel very comfortable we have a flexible plan.
That allows us to implement that four rig program in multiple fashions, depending upon permits the reason why I say that is obviously there is the Kern County.
That is tied up in litigation and permits in that particular area, if they're not already in hand.
Not necessarily being issued right now.
And so when we look at that we've built that in to our overall development plan I think that we can accommodate it.
And one or two fashions and you know me.
Moving rigs around things of that nature, but it's not going to impact us here and we believe that that that.
That lawsuit.
Well hopefully clear itself out this year and we will.
We returned to normal activity in Kern County.
Our press our general counsel is off anything might want to add about the suit.
I think I would just say that we have permits in hand.
Whether or not things are delayed as a result of the suite through year end. We have more permits then we have wells that we're planning to drill this year. So as you already indicated we have flexibility.
Depending on whether that that lawsuit is kind of resolved in the near term versus the long term and we've gotten we've had constructive dialogue with the regulators on kind of a process forward.
Around the issues that are raised in that suite.
Okay.
We.
I would just say it as simply as this we're confident that based off of the permits in hand, and our drilling program, we can deliver all edge.
Okay. No that's really helpful and I guess is the state itself on the <unk> side actually issuing much in the way of permits right now or is there maybe a little kind of grid lock on their side. These days.
Mac I'll go ahead you want.
Yes, yes, yes, sorry.
We're getting permits outside.
Outside of Kern County, there are permit issues for other types of production methods that don't impact us as you may know around Ws T well stimulation around high pressure cyclic steaming. So there are permit issues that are impacting others in the industry.
Don't really have an impact on us we feel like we have a constructive dialogue with them. This current county.
Litigation has slowed the process, but we think that we'll get to the other side of that in the meantime, the regulator has.
<unk> been working with us to try and stick that.
Okay. Thanks, guys.
Thanks Leo.
And the next question is from Doug Leggate with Bank of America. Please go ahead.
Oh, good morning, guys I am so sorry.
How'd, you on speaker phone and when you called my name I hit the pause button.
So.
No.
That's what happened.
So we're fine with that.
I've got a couple of questions. So Mike I know we've touched on this before but just in light of leos questions around permitting.
I'm just curious are you wedded to pursuing the car.
Carbon sequestration permits.
Separately on an isolation from any U R permits.
If sold then.
Is there any movement on the site of the regulator or the state.
Because obviously, the economics would be kind of turbocharged.
You bet.
Yes, I wouldn't say that I'm not sure I understood. The web part of our we went to not doing it are went to doing it what I, what I would say Doug is that.
We are focused right now on permitting for carbon.
Sequestration or storage.
The use of carbon.
For oil recovery.
I tend to think of that as carbon.
Storage plus oil recovery, if you will.
And.
I think that it has a future I think where California is right now because.
Enhanced oil recovery methods of Sidoti fluid have not been done.
In recent past or even not so recent past.
It is something that will come on the heels of the permanent storage solutions are just storage solution. So I wouldn't say, we're wed to it or not weigh into it I would say that we continue to advance our Cal capture project, which as you know.
Was based on the premise of capturing the carbon and using it for Cotwo flood recovery.
Stephen's formations I heard Elk Hills. So we are continuing to look at it and believe that.
When you when you really get down to the science of it you are storing carbon by doing that and in fact, when you do use C. O. Two flood you are creating.
If youre grabbing C O two off of an industrial source you were you were creating basically.
Zero or negative Ci crude or have the potential to so I think it is something that is going to have to be advanced in the future, but right now we're doing it in sequence, which is looking at getting the storage dawn continuing to evaluate Cal capture and then we will have an eye towards that in the future.
So I don't want to labor the point, but I guess one of the things. We think is missing from the market's understanding of your story is that.
At some point.
Theoretically could you by Kona, a modest growth path, presumably do you think that's fair I know, it's several years away, but do you think that's a fair way of thinking about the successful conclusion of the permitting.
I think that there's we have a tremendous opportunity.
I think it's no it's no secret that when you go from you know.
Primary recovery to waterflood, which is where we're focused and that's why we have such a low carbon intensity crude production right now across the vast majority of our field that.
You then after waterflood the next form of recovery.
As possible as C O two floods. So we're right we're thinking about it but right now we're focused on the storage.
Okay. Thank you my last question really if you can tolerate it is just a quick one on hedging I mean, obviously, it's kind of a shame.
You guys are in 2022, but this.
It seems to me that you're going to have a pretty tremendous inflection if the strip holds into 2023 I'm just wondering if.
How youre thinking about the hedging strategy beyond what you had to do for your RVO and I'll leave it there. Thanks.
So.
You're exactly right, we have to do things per the RV.
And we have been doing active hedging so.
There was some discussion of some of the swaps that were put on out there.
But for the most part what we've been doing.
To hedge our position is either rolling up the strikes of our Puds. So in other words, leaving the up leaving the upside there, but rolling up the $40 puts to 70 or $75 to protect the downside.
And doing that.
As well as by.
Buying incremental put leaving.
Leaving against the upside so that's been our hedging philosophy.
Some of the puts I mean, some of the swaps that have to be put on our per the RV L. Because it has to be a combination of both.
Great stuff, thanks, and sorry about the mix up.
No no problem.
Take care.
The next question is from Eric Steve of Goldentree. Please go ahead.
Hey, guys. Thanks for the call a few questions first on the facilities Capex.
I know that that includes $15 million being spent on CPG wanted it sounds like that's a once in 10 years type project.
Is it is it is.
Facilities, capex $15 million per year higher than normal because of that or are there other things that are also.
Included that are making it higher than it would be in a normal year.
Hey, Eric No Youre, absolutely right I'm, just trying to find the page in the presentation here, It's page 21 that shows that.
I'll, let francisco get into the details, but if you remove that you get to a more typical facility spend you know we have a lot of surface operations as an integrated we've got a lot of field gathering systems water management, we've got the power plant et cetera.
This is a onetime.
One time, but every 10 years, you describe where we're doing vessel inspections that you have to shut the plant down to do pressure vessel inspections that is required.
Regulatory as well so Francisco you want to elaborate on the capital.
Yeah happy to Hey, Eric.
D&C and Workovers as $2 50, plus or minus so.
That's the that's the activity to maintain our oil production.
As you pointed out you have a CDP one out into sort of onetime or every 10 years or so type of expenditure and then once you back that out.
<unk>.
It's a I would say a fairly normal year from a facility standpoint do we have.
So theres some mechanical integrity work, we do have some one time items like solar we have small solar investments.
Some corporate items around <unk> that are one time, but I would say the CGP one now they choose the really the one time item.
We like though is we've seen we're coming in this year on a lower capital to maintain production at $2 50 bps versus the way, we guided up 275, we still $275 million of that number over over multiple years that plays out but this year is going to commit entitled that so.
<unk> continued to watch the performance of our horizontal drilling so.
But ultimately that's the answer TEP one is the one thing Thats, a one time from the capital E&P Kathryn.
Thanks Kurt.
This concludes our question and answer session I will now turn the conference back over to Carlin for any closing remarks.
Yeah again, we think.
<unk> and I appreciate everybody being on the call today, we appreciate your interest.
We believe CRC is uniquely positioned with low carbon.
Low decline assets and a growing carbon management business.
We believe we have a very strong financial position.
Which to build upon that allows us to pursue these strategic objectives as well as to provide strong shareholder returns through our share repurchase.
And quarterly dividends.
With that thank you for joining today's call.
And goodbye.
Thank you. The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect your lines have a great day.
[music].
Yeah.
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