Q3 2022 California Resources Corp Earnings Call
Good day and welcome to the California Resources Corporation third quarter earnings Conference call.
All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone.
To withdraw your question. Please press Star then two please.
Please note. This event is being recorded I would now like to turn the conference over to Joanna Parks V. P of Investor Relations and Treasurer. Please go ahead.
Welcome to California Resources Corporation third quarter 2022.
Participating on today's call are Mark Macfarlane, President and Chief Executive Officer.
Please go down executive Vice President and Chief Financial Officer, as well as the entire executive.
I'd like to highlight that the provided slides on our Investor Relations section of our.
Website www dot CRC.
These slides provide additional information to our operation and our third quarter results we.
We have also provided information reconciling non-GAAP financial measures.
The most directly comparable GAAP financial measures on our website as well as in our earnings release.
Today, we are making some forward looking statements based on current expectations.
Actual results could differ due to factors described on our earnings release.
Got it.
As a reminder, we have a lot of additional time for Q&A at the end of our prepared remarks.
We ask that participants limit their questions, Jeff primary and one follow up with that I will now turn the call over to Mike.
Great and thank you Joanna.
At CRC, we are a different kind of energy company.
Focused on delivering consistent and predictable free cash flow, we are focused on disciplined capital allocation and shareholder returns from a free cash we generate.
And we are focused on advancing and accelerating our carbon management business.
A simple but focused strategy so let's discuss each of these in greater detail.
First consistent predictable cash flow during the third quarter, we continued to deliver strong results by producing 92000 barrels of oil equivalent per day.
$128 million of after tax free cash flow.
We did this despite externalities, including the continued litigation over the Kern County or are you just been recently resolved in the courts.
As well as ongoing inflationary pressures.
We were able to accomplish these results because we have a robust portfolio of assets and allows us to adapt to the ever changing landscape.
Our portfolio allowed us to ramp up to five D&C rigs during the year and increase our downhole maintenance activity to deliver on our production goals for.
For the full year 2022, we are projecting approximately $235 million of D&C capital expenditures, while maintaining oil production essentially flat entry to exit.
And that's after adding back excuse me the impact from the Kern County E. I R litigation delay.
Taking into account A&D transactions from earlier this year.
And while inflation has impacted our non energy opex and capex cost.
And as a result.
We squeezed our margins we are still delivering on full year 2022 expectations on the current price deck.
Francisco will describe this in greater detail, but as we have said, we anticipate long term average D&C capital of approximately $300 million per year to keep oil production flat.
After adjusting for the inflationary pressures that we're seeing.
We have a resilient portfolio that delivers consistent and predictable cash flow.
Second disciplined capital allocation.
Until recently, we had a stated long term capital allocation.
Framework of recycling, approximately 50% or less of our operating free cash flow to maintain our oil production and then we would split the remaining free cash flow 50.
50, 50 between shareholder returns and investment in our carbon management business.
Now that has significantly changed with our carbon terrible JV with Brookfield.
Because the JV excuse me.
As expected to fund the carbon management business Mira farm down of carbon terrible into the JV and the 10 ton by.
Buy in.
Two these balls by Brookfield, our carbon management.
This is essentially self funding through the end of the decade.
If the JV is successful in its objectives that means we can now focus our free cash flow after capex for shareholder returns and after making limited investments in early stage CTV storage vaults and as we've said previously.
And that is our new disciplined capital allocation framework.
In fact through the third quarter, we have returned 105% of free cash flow through our share repurchase program and our dividend.
And because we are further committing to shareholder returns, we are increasing our dividend by 66% to 28, and a quarter cents per share and increasing our share repurchase program by an additional 200 million for a total program with the $850 million.
And we're also extending the program through the end of 2023.
In fact, if we complete our entire share repurchase program by year end 2023 and include our fixed quarterly dividend CRC is on pace for nearly $1 billion of total shareholder returns on accumulative basis.
Finally.
We continue to advance and accelerate our carbon management business last quarter, we closed CTV Brookfield JV.
And we are now focused on execution and continued to see a tremendous opportunity.
With the passing of the inflation reduction act and the increase of 45, Q incentives, we see a growing and expanding target market opportunity.
For permanent.
Sequestration, we see a growing set of new opportunities for carbon terrible in the new energy economy, new counterparties and hydrogen and ammonia renewable diesel.
These are greenfield opportunities that we believe can fit within our economic type curve.
For CMV, our carbon management business, because they have lower cost of capture and can be constructed in close proximity to our.
Storage vault, which limits transportation requirements.
This target market opportunity is not.
Yet define.
As our existing sources in the state many of the Counterparties. We have recently engaged with are part of this new emerging economy and something we find very exciting we continue to make progress and are advancing multiple cdma's or carbon dioxide management agreements with our counterparties. These CD amaze or detailed frameworks, which address the key project.
Including pore space volume commitments economics development milestones.
<unk> M of light.
<unk> are also subject to conditions and provide a useful roadmap to reach agreement on final investment decisions on an expedited basis.
We remain confident in our goal of signing a CDMA by the year in putting us on track for first injection by the end of 2025.
On the permitting front, we expect to end the year with approximately 140 million tons of final permits.
And while our previous stated goal was 200 million tons of permit on file by year end, we remain confident in our backlog of permits.
The fact is as we advance permits for permanent storage in a constructive dialogue with the EPA, we are continuing to refine and define best in class permit applications and our standards for best in class continued to increase in the level of detail and rigor something we are keenly positioned to lead.
That being said, we have a significant backlog of permit applications, but we are assuring that we filed permits are the highest quality, while maintaining our credibility as a leader in carbon management.
Our carbon management business was also bolstered by Senate Bill nine O five which was focused on advancing and streamlining the process for permitting Ccs in California.
While the law itself can be improved with further details and clarification.
Clarifications, the author of the Bill has acknowledged the willingness to work to improve the law further and we look forward to engaging on these fronts.
Given C O. Two E. R was banned from Senate Bill 905, and the increase in 45 Q tax credits, we are shifting our Cal capture project, a permanent storage and continuing to advance the beat study.
We remain excited about the prospects of this project.
So in summary, consisting cash flows disciplined capital allocation with focus on shareholder returns.
And growing our carbon management business that is how we are building a different kind of energy company.
I'll now turn it over to Francisco for further details on our results, including how we continue to refine our portfolio Francisco.
Thank you Mac, our assets continued to perform well delivering consistent and predictable results.
Third quarter production averaged 92000 barrels of oil equivalent per day up.
1% from the second quarter.
Changes in our development plan and well mix in response to the Kern County, Yeah, Our litigation and the heap related electricity outages throughout the state impacted our quarterly production volumes.
Yesterday afternoon, the court issued a favorable ruling lifting the stay in the Kern County E. Our litigation.
We expect the counting me accounted to promptly begin processing permits in accordance with that ruling.
Okay.
From a commodity realizations standpoint, he or she continued to benefit from strong realized prices across all three hydrocarbons.
Our average realized price for oil in the third quarter after settlement payment on our derivative contracts registered at $62 45 per barrel.
Third quarter NGL realizations declined from the second quarter, which were in line with seasonal pricing and expectations at $57.68 per barrel.
Californian natural gas prices remained strong registering five consecutive quarters of increases.
He or she realized 109% of Nymex after hedges at $8.58 per Mcf.
As we turn to the cost side of the business. We saw total quarterly non energy operating costs rise by 77 cents per year in quarter over quarter.
Mainly as a result of increased downhole maintenance activity.
In addition increases to natural gas prices drove energy related operating cost of the dollar and 63 cents per <unk> or 17% from the previous quarter.
As California's largest natural gas producer, we are net long the commodity which means that we produce and sell what we produce and sell is greater than the natural gas purchased for use in our operations.
During the third quarter CRC generated $234 million of adjusted EBITDAX and quarterly operating cash flow of $235 million.
Demonstrating crc's significant cash generation capability.
We remain disciplined and invested $107 million in Capex, which had $9 million above the second quarter, mainly due to the addition of a fifth rig in the L. A basin.
In the fourth quarter, we were temporarily shifting a rig from the San Joaquin basin through our Huntington Beach field to conduct a six to eight well program and to prioritize available permits on hand.
CRC and third in the fourth quarter with four drilling rigs and we expect to exit the year with not with 94000 Boe's per day in total production and 55000 barrels per day of oil production.
For the year, we are maintaining net oil production relatively flat entry to exit after adjusting for A&D activity with approximately $235 million in D&C capital.
Below our stated maintenance Capex, though.
After funding our capital program, we generated $128 million of free cash flow for the quarter.
Through the third quarter, we have generated $272 million in free cash flow.
It provides another example of the financial results our business model delivers and as Mac mentioned earlier provides ample opportunity to accelerate CRC shareholder return strategy.
This quarter, we are increasing both the fixed dividend the share repurchase program.
We believe this allows us to provide competitive returns, which put us in the top quartile of small and mid cap peers from a fixed dividend standpoint.
Further we continued to execute on our stock repurchase program and have used $424 million of cash today to reap.
<unk> nearly 13% of our shared some standing.
We'd be expanded and extended SRP program, we have a lot of dry powder left.
We also continued to build our cash balance of nearly $360 million at the end of the third quarter.
From $305 million at the end of 2021.
And we have a net leverage ratio of approximately three times.
Active portfolio management is a key pillar of CRC strategy.
Just as we have focused on our core operations to optimize cash flow and leverage our asset position to develop develop carbon terrible.
He or she continuously optimize each and evaluates its assets as part of the value proposition.
Many of our assets hold depreciable value beyond the use of oil and gas producing assets.
Neither the Cts or real estate development.
As such we're evaluating a potential sale of a small parcel of land near our Huntington Beach field to test the real estate market and to optimize future plans for the larger strip.
Looking forward to next year, we see a handful of items to keep in mind.
First consistent with our strategy CRC will continue to advance operations for carbon terrible.
These may require some additional facility spend to prepare certain restaurants to receive shield to injection.
As a reminder, we expect the majority of these costs will be recouped through the $10 per metric ton by into our partnership.
Second we will begin to see more commodity exposure in our results as our legacy hedges begin to roll off.
This should exceed and offset inflation that we're seeing across several categories in our business.
Third as we have demonstrated this year, we believe that on average over the next five years drilling and completion capital requirements to hold oil flat requires approximately $300 million per year.
Our portfolio of assets allows us to deliver predictable results, which support our consistent free cash flow.
Given our continued strong financial results and our limited NOL position, we expect to be a cash income taxpayer in the range of 15% to 20% of taxable income in 2023.
Crc's outstanding return total return profile combined with our leading carbon management business.
Further reinforces the exceptional investment opportunity CRC offers as we create a different kind of any company.
Now I'll turn the call over back to Mike Mack.
Thanks.
Right.
Yes.
Sorry about that I had the microphone needed before we conclude and thanks Francisco.
I'd like to thank the employees of CRC for their tireless dedication as well as their safety and environmental stewardship, nothing is possible and the results that we achieved without their hard work.
Thank you for your interest in CRC and thank you for joining us on today's call. We'll now open the line for questions.
Turn it back to the operator.
Thank you 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 are using a speakerphone. Please pick up your handset before pressing the keys if at anytime. Your question has been addressed and we'd like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
And our first question will come from David Davis, Patroness with RBC capital markets. Please go ahead.
Yeah, Hey, it's Scott handle here with RBC.
Just kind of curious now that the Kern County oil and gas.
Permitting is a kind of a green lit.
Can you talk about like what you know how many I guess permits you have in there and in we'll call it backlog and how long do you think it's going to take you to get some of those so you know ultimately.
When do you think you can get kind of back on pace to what you view as the most optimized drilling program in 2023.
Hey, good morning, Scott its Mike.
Flip this over to Sean <unk>, our Chief operating officer, but it's it's late breaking news, Okay, and it's good news and we're optimistic about what this brings to us.
But I'll, let John tell you about some of the process and we're looking at from here Yeah. Good morning, Scott.
Yeah, you know late breaking news.
Encouraged by what we heard.
Through the courts decision.
As Youre aware were having conversations with the permitting agencies about how they're going to restart in a orderly manner. So we are.
<unk> been engaged in conversations throughout the year anticipating that this may happen.
And so I think it'll take a little bit of time to unpack the permitting backlog, but.
We're very very excited about what this could mean for 2023.
Do you have a sense.
Kind of curious on your backlog.
Oh go ahead, Scott sorry.
Yeah.
A number of permits that are kind of in in in place and under hole and so you know there are some some conversations going of how do we get those restarted and then we have a number there just waiting on the permits system to reopen.
That's kind of the way I'd say it is is that there's a number of permits is not just us. It has created a backlog in there that has to be worked through both through certifying under this <unk> as well as going through the <unk> process, but we remain cautiously optimistic that it will return to normalized activity in 2023.
That's good to hear thanks, and as my follow up and it's it was good to hear you kind of reaffirm your view that you know the you know you're you hope to have an emitters signed up by the end of the year.
And.
A couple of things with that you know first of all it is is there certain things that we should look for is is you know sort of steps that need to occur I know theres, an EIA are in Kern County for 26 are that I think we should be getting some kind of flow on soon and then also to the point of.
You know the slide that you all have on your presentation on page 19, where you define those those existing sources that can.
Can be greenfield projects.
Currently I think a lot of those may not be in the L. P. F. S compliant molecules, but you know are you seeing any progress to kind of get that put into an LCR compliance.
Bucket to even make them more enhanced opportunities.
Yes, there's a lot to unpack there I mean, it's a look.
As far as the overall process is concerned you mentioned 26 are where we're passing we're just passing a year and the permitting process. As we've always said, we expect to get that permit by the end of next year.
Now onto one of that two year timeframe.
So we're excited about that and that permit as well as the <unk> hundred to permit continued to progress through as well as our other permits and.
On that timeline, we said we're targeting a <unk>.
<unk> contract, which we're calling a CDMA at this point and there's <unk>.
Sure.
We attained our objective by the end of this year sort of puts us on track for going to final investment decision hopefully right around the time that we have the the the permit.
So we remain confident that we'll be able to do that I think what's exciting about the page that you brought up on page 19 in the prior page on page 18, which just shows and an expanded market opportunity is that when you think about some of these the new energy economy, whether it be hydrogen ammonia ethanol etcetera. There is a lot that is.
<unk> is coming to the forefront and why has that happened is because with the changes in the inflation reduction Act and.
The $85 for permanent storage that has moved things that don't have a lot of captured capital.
Into the into the economic discussions things that we think would fit within the economic type curves that we laid out the other advantages is that they will be.
Can be cut.
Co located next to our sites and so therefore.
That has an advantaged for elimination of transportation and things alike, whether you want to add Francesco.
To build on that point back.
We have 47000 surface acres in Elk Hills, we were one of the largest surface owners in the state. So it's a really good way to think about how to leverage our land position.
And Scott I think you also asked about Elsea passenger a pathway. So for example on ammonia and hydrogen.
Not an established pathway that I'm aware, but if theyre.
Well there is for hydrogen fueling stations, but if they're used for transportation fuels.
There is an ability to apply for a pathway and so then that would allow you to do the stacking as well, but this is you know.
I think these are pretty exciting as well as you know there are ongoing conversations associated with with the direct air capture in California's.
In addition to that.
I appreciate all that color. Thank you.
Our next question will come from Doug Leggate with Bank of America. Please go ahead.
Hey, Good morning, guys. This is clay on for Doug Thanks for taking the questions.
My first one is a follow up on the current E. I R. So my understanding was that when they are willing occurred in may some of the permits that you hadn't for frozen can you talk about whether or not those permits are now viable again, and if and what would happen to the permits if the opposition ship Iowan appeal.
Yeah, Colin this is Shawn yeah those permits.
Hum.
Yeah correct yeah.
Yeah. Those permits that were present in may are still viable. So they were just really pending the outcome of AR and AI are kind of sequel notification. So you have some into Q. Some that are yet to be filed but you know.
As a team we've been thinking through different scenarios and planning for this event so.
There'll be more conversations in the near future, but how to get this we started in an orderly fashion.
Got it what happens in an appeal Sean.
Yeah.
Yeah.
Let me take this.
So the stay was lifted and the permitting process can begin immediately however, obviously the litigation is not completely resolved and the petitioner original petitioners will have the opportunity to seek an appeal and to stay the new process if they so choose.
That's certainly not a foregone conclusion that they would be able to.
Achieve a further stay than you think.
As an observer of the litigation that both the county and the judge had been very careful in addressing all of the issues that were raised in the first appeal. So no.
Guarantees about kind of future results from the litigation, but we're optimistic.
Got it so maybe if I could summarize it sounds like.
You are not totally out of the woods, yet, but it feels like the worst of the bus lockdowns. It now behind US we're past that point is that fair.
Yeah, Glenn I would say the indications we get right now is where it's resuming so the teams are meeting on how to how to restart permitting and that's what we're going to be focused on.
Okay I appreciate it my next question is on the step back will as it relates to L. A basin as you assert that impact can you talk about how you're thinking about the production cadence and the inventory depth at those assets.
Maybe maybe to add on we came across a comment in our notes slide deck presentation that stated that workovers in L. A basin provided about 3500 Doa per year in terms of production. So it seems like the impact if it does affect the workovers can be quite meaningful how do you guys see the cadence.
Yeah on the 11 37 again it still has to go through a rule making process there.
To fully kind of understand the impact we've put out what we think preliminary the.
The impact could be on certain portions of our asset there's other areas of the field.
It's a very large field, where you can continue.
Developing our drilling from different locations. So it's kind of yet to be seen what the what the impact is.
And as you saw the latest Francisco, we changed our drilling rigs to come into this year to drill some wells in the basin that we know we had dislocations identifier that prime candidates for the beginning of next year, we're moving them into this year.
As a result of that they might be potentially impacted by setbacks in the future. So we're we're accelerating activity in that basin because of that reason.
Francisco, maybe just to put a finer point on it what do you see the inventory depth in L. A and the L. A basin how long can you hold current production flat.
Yes, I mean, we're still evaluating the impact of delayed but it's as Sean indicated these are large fields.
That half.
We will still have running room to go in the setback doesn't impact the entirety of the field. So we're still evaluating the numbers, we still obviously have to see what the final rules are going to be but we.
We do have inventory left and we will talk about it at the future once we have more clarity as to what the inventory looks like.
I appreciate it thank you.
Our next question will come from Leo Mariani with M. K M partners. Please go ahead.
Okay.
Hey, guys just wanted to follow up a little bit on the Brookfield deal here that you guys saw in the release that you made some comments that you'd put it.
A handful of maybe new projects in front of Brookfield can you provide any more color around that and is there some kind of timeframe. They have to kind of look at these projects and decided to move forward on them that how does the mechanics of that work there.
Yeah.
Yeah, Hey, Leo it's Mack good morning or afternoon.
So we did submit a couple other.
Hum.
The 802 <unk> two in CTV three to the J D. As farm downs into the structure and there is the commercial terms I don't know that we'd necessarily disclosed there's a defined timeframe by which they have an opportunity to respond if they decided not to pull those into the JV or drop them in and from our perspective.
Deferral mechanism with some carry on it.
And then it's basically part of the rider first.
Offer et cetera.
As we've described for them to take a look at it until we go through RFID and then than it is.
And ultimate decision that has to be made.
So right now we're in the waiting time frame and it should here relatively shortly as to whether or not those will be dropped in immediately or deferred.
Okay.
And then also in your prepared comments I think you said that it sounds like youre going to get.
<unk> six <unk> around 120.
20 tons this year and I think your goal was 200, it sounds like a come up a little bit short there I heard that right just any color around that and we're just looking at maybe some minor delays what are you seeing happening there on those problems.
I'm going to let.
Crude schooled a jump in and explain because he's handling that process, but I would say in a simple fashion is that the states are being taken off with the EPA and we've been building credibility all along the way was the quality of our permits and so we want to make sure that we have the highest quality of permits and so we're just not going to rush anything.
But Chris you want to provide additional color yeah. Good morning, I think that's right. We've we've always been committed to setting the highest standards and given the previously limited amount of classics application before Ccs has really come onto the scene here.
Unexpected the EPA can alert and adjusting and frankly, we appreciate the need to have the highest standards on projects of its importance. So.
Where we are well positioned.
We keep our standards high meet their standards.
And we're talking about things related to data requests and and you know additional requirements around the edges, but nonetheless things that we wanted to be deliberate very thoughtful and very careful about.
How we deliver these permits at the highest standards. So we remain on track for.
Our our I said for 200 million tons of permits.
And to hit our 5 million tonne per annum.
Goal in 2027.
Alright, I just wanted to follow up on the oil production here. So I think if I heard right. The comments you guys were talking about a 50000 55000 barrel a day.
The hit rate.
We are expecting I guess that kind of flat where you were in.
In the third quarter.
Just wanted to get inquired as to the text in the press release, where I think you referenced that maybe have lost.
Another kind of thousand barrels a day just to kind of reshuffling of the permits and moving the rigs around.
Can I kind of hear those numbers right.
In terms of the ops, Yeah, you know zero a little behind on the oil just because of having to reshuffle. The program is that continuing to kind of.
An issue and I would assume that if this E. R. R is not appealed and is fully resolved. This issue would pretty much go away in 2023.
Yeah, that's right Leo this is francisco.
1000 barrel impact shown on slide 10, it's a full year impact.
We look at Okay look back at the Kern County, EIA or delays and we'd want to make sure okay, how much wood.
We could have done if it wasn't for that litigation to about 1000 barrels.
For the full year, our exit rate numbers already take this into account there's no northern to obtain this week just wanted to say okay. This is the impact based on the litigation and expect to be back at equal on a normalized basis in 2023.
Okay. Thanks.
Our next question will come from Nate Pendleton with Stifel. Please go ahead.
Good morning, Thanks for taking my questions.
For my first question regarding your carbon terrible business can you speak to the potential logistics. Your team is working through to move the captured cotwo to the plant sequestration sites and how transportation impacts your assessment of potential sources of C O two.
Yes.
Hey, good morning, its Matt.
[laughter], Yeah, obviously, one of the things that we're talking about with this new energy economy.
The ability to not have to move it very far.
With respect to the existing sources and being able to move we've looked at things that are within close proximity.
You know call it 30 mile radius.
And those are longer term because you would have to basically create a point to point.
Hum.
Pipe, if you will because theres no trunk line here of C O two movement so.
It goes into our.
Into our calculation as to what are the best opportunities. Okay from an economic standpoint, because obviously, there's an economic cost of having a pipeline to connect sources sink. However, as we mentioned in these greenfield opportunities, we decided right at Elk Hills as Francisco mentioned earlier, you don't have a lot of piping.
To do its all infield for.
For all practical purposes.
Okay.
Got it I appreciate that and then as my follow up given your subsurface understanding and progress in the class six process can you help us understand how you are positioning differentiated for sequestration from a geologic perspective in the state, especially the reservoir is presented to the JV and how widespread that opportunity is for high quality sequestration.
Across your acreage.
Yeah. Good morning, so we're.
We're positioned wallet Greig, we've talked about.
Many times here, our subsurface expertise in the reservoirs that we.
We brought forth thus far you know.
It comes down to.
One of the largest holders if not the largest of seismic data three D seismic.
State of California, So obviously when you're characterizing reservoir is you have to know how they how they will act.
Oh, two and you need the data.
Subsurface data to be able to do that which we have one of the largest holder that then translates into.
As being the largest and one of the largest depending on mineral and surface owners in that.
<unk> put that together and you combine that with the skills and expertise of.
A company that's been focused.
On California for decades, and that is why our competitive advantage comes into play.
Alright, thanks for your time.
Again, if you have a question. Please press Star then one our next question will come from Eric <unk> with Goldentree. Please go ahead.
Hey, guys. Congratulations on the favorable ruling in the Kern County, IR litigation I understand that you guys are still working through.
The permitting process with the regulators there and are still working through your 2023 budget.
But.
My question is sort of a qualitative one given that I know youre still working through those things. If you can achieve flat oil production with $300 million of D&C Capex.
On my numbers it seems to imply really spectacular our return on capital for the drilling program. So my question is.
What is your intent and what is your ability with respect to.
The drilling program in 'twenty three.
If you can achieve such.
Terrific return on capital is there any.
Our intent to grow and.
Do you have clarity yet on the <unk>.
The permanent constraints would that be a constraint to growth. Thanks.
Hey, Eric It's Francisco, Yeah, we're still working through and we were we had multiple different.
Variations of the business plan for next year anticipating favorable resolution, but also thinking about okay. What happens if it doesn't come through right. So we're looking at all the options, we're going to deliver in optimized plan next year and.
We haven't.
Haven't come to a decision as to how many rigs and what the pacing of that is going to be United will focus on finishing the year strong focusing on accelerating some of these these wells that are that we felt could be could be impacted down the road. So I.
I think it's just a matter of we saw the ruling yesterday after the market closed and we're working hard to provide more clarity.
Okay, great. Thank you.
My other question is on the Huntington Beach.
Ask that you guys mentioned youre going to Youre going to do with sort of an exploratory process with a small part of.
The real estate, there just trying to get a rough sense of.
How big is that piece.
And is it contiguous with with the rest of it I just just curious how you size it and how big it is and how youre thinking about that thanks.
Yeah, Hey, Eric So, yes, we have a number of properties.
Attractive future real estate development.
This one in particular is not going to use to our bigger Huntington Beach strip, but it's close it's within a few blocks also beachfront property and that's where the next product. We think this is a very markman will property its.
It's an oilfield today, but it will we will do the work to get it in a position so that it tries to maximize real estate value. So we're going to work through that.
Yeah.
You said between property and Simpson picture. So you can look at it.
So I mixed my next to the hotel.
How many acres is it.
It's one acre approximately.
Okay, Hey, Thanks, a lot guys.
Thanks, Eric.
This concludes our question and answer session I would like to turn the conference back over to Mac Mcfarland for any closing remarks.
Yeah.
Well, great. Thanks, everyone for joining us and we look forward to your continued support at CRC.
Have a good day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.