California Resources Corporation Acquisition Consolidates Interests in Elk Hills Field

LOS ANGELES–(BUSINESS WIRE)–California Resources Corporation (NYSE: CRC) today announced that it has
executed and closed a purchase and sale agreement with Chevron to
acquire the remaining working, surface and mineral interests in the
47,000-acre Elk Hills field in the San Joaquin Basin of California.
Consolidating sole ownership of the Elk Hills field, CRC paid cash
consideration of $460 million and issued 2.85 million CRC common shares
to Chevron, subject to customary post-closing adjustments. The effective
date of the transaction was April 1, 2018.

Todd Stevens, President and Chief Executive Officer, stated, “This
acquisition is a natural fit that immediately accretes value to CRC,
improving our cash flow and credit metrics. With a surface area larger
than Washington, D.C., the Elk Hills field is our flagship asset. We
have operated this field for over 20 years and have developed a deep
knowledge of the geology and strong operational expertise to deliver
robust value from this asset. We intend to apply this know-how to our
newly acquired position, as well as transfer learnings and efficiencies
to enhance CRC’s assets across California. We would like to thank
Chevron for their partnership over the past 20 years. Acquiring sole
ownership of such a prolific field is an ideal use of proceeds from our
recent midstream joint venture transaction, adding both immediate
production and cash flow, while providing for quick synergies and
tremendous long-term development opportunities.”

The acquisition includes Chevron’s non-operated working interests
ranging between 20% to 22% in different producing horizons within the
Elk Hills field. In 2017, the acquired interests produced approximately
13,300 barrels of equivalent (BOE) per day with 46% oil and 9% natural
gas liquids. CRC estimates that if it had owned 100% of the field last
year, these interests would have added approximately 64 million BOE of
proved reserves at year-end 2017, of which approximately 75% are
considered proved developed. CRC estimates that these interests would
have generated approximately $100 million of annual operating cash flow
in 2017 assuming current prices.

CRC now owns Elk Hills in fee simple, the most complete form of
ownership, holding a 100% working interest and a 100% net revenue
interest, as well as all surface lands in the Elk Hills field. The field
has an estimated 8.5 billion BOE of original oil in place and 32 major
producing zones currently identified. CRC expects to achieve
approximately $5 million of annualized operational savings within six
months of closing and approximately $15 million of additional synergies
within the next 18 months as it streamlines processes and leverages its
substantial infrastructure already in place. Elk Hills is CRC’s lowest
cost operating area and with a 100% ownership interest would have
accounted for approximately 43% of its 2017 pro-forma production.
Because of the low operating costs at Elk Hills, this acquisition will
immediately reduce CRC’s corporate per unit production costs by
approximately $0.55 per BOE, in addition to lowering general and
administrative costs by about $0.20 per BOE. Additional information
regarding the transaction described above is available in CRC’s latest
corporate presentation on the “Earnings and Presentations” page in the
Investor Relations section on www.crc.com.

About Elk Hills Field

The Elk Hills Field is a world-class onshore asset located 20 miles
southwest of Bakersfield in Kern County. The field, covering nearly 75
square miles, was discovered in 1911 and has produced over 2 billion
barrels of oil equivalent (BOE), making it one of the most productive
fields in the United States. During 2017, we produced 48,000 BOE per day
(37 percent of CRC’s total production) on average from our 3,000 wells
at Elk Hills. At year-end 2017, CRC’s approximate 78% interest in Elk
Hills had proved reserves of 206 million BOE, of which 75% are
considered proved developed. Elk Hills is the largest natural gas and
natural gas liquids field in California, generating over half of the
state’s natural gas production.

About California Resources Corporation

California Resources Corporation is the largest oil and natural gas
exploration and production company in California on a gross-operated
basis. The Company operates its world class resource base exclusively
within the State of California, applying complementary and integrated
infrastructure to gather, process and market its production. Using
advanced technology, California Resources Corporation focuses on safely
and responsibly supplying affordable energy for California by
Californians.

Forward-Looking Statements

This release contains forward-looking statements that involve risks and
uncertainties that could materially affect our expected results of
operations, liquidity, cash flows and business prospects. Such
statements include those regarding our expectations as to future:
financial position, liquidity, cash flows and results of operations;
business prospects; transactions and projects; operating costs;
operations and operational results including capital investment and
expected VCI; and budgets.

Actual results may differ from anticipated results, sometimes
materially, and reported results should not be considered an indication
of future performance. While we believe the assumptions or bases
underlying our expectations are reasonable and make them in good faith,
they almost always vary from actual results, sometimes materially.
Factors (but not necessarily all the factors) that could cause results
to differ include the factors discussed in “Risk Factors” in our Annual
Report on Form 10-K available on our website at www.crc.com.

Words such as "anticipate," "believe," "continue," "could," "estimate,"
"expect," "goal," "intend," "likely," "may," "might," "plan,"
"potential," "project," "seek," "should," "target, "will" or "would" and
similar words that reflect the prospective nature of events or outcomes
typically identify forward-looking statements. Any forward-looking
statement speaks only as of the date on which such statement is made and
the Company undertakes no obligation to correct or update any
forward-looking statement, whether as a result of new information,
future events or otherwise, except as required by applicable law.

Contacts

California Resources Corporation
Scott Espenshade (Investor
Relations)
818 661-6010
[email protected]
or
Margita
Thompson (Media)
818 661-6005
[email protected]