Good day and welcome to the California Resources Corporation Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. I would now like to turn the conference over to Joanna Park, Vice President of Investor Relations and Treasurer. Please go ahead..

Thanks. Welcome to California Resources Corporation's Fourth Quarter 2021 conference call. Participating on today's call is Mac McFarland, President and Chief Executive Officer, and Francisco Leon, 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.com. These slides provide additional information into our operations and fourth quarter results.

And we have 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. A replay will be made available for 30 days following the call on our website.

As a reminder, we have allotted additional time for 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 Mac..

Great. Thank you, Joanna. 2021 was the year in which we repositioned 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 CR seems -- 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 100,000 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 as a key element of our business strategy, which we continued in February by also divesting our non-core non-operated interest in the lost field assets.

We exited the year with approximately 95,000 BOE per day of production, which reflects our 2021 portfolio activity and we expect just under a 2,000 BOE per day impact from the loss tools 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 and elaborate 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's 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'll continue to advance our strategy in 2022.

We are 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, stakeholders, and technology providers.

We are advancing CTV admitter discussions for the first 1 million tons per annum for Carbon TerraVault 1 and we plan to provide additional details on these discussions later this year.

While prospects and details continue to be discussed, the recurring theme in our discussions is the significant interest in the commercial scale solution of carbon sequestration. Further, we are preparing additional permit applications to meet our targeted injection of five million tons per annum in 2027.

CRC is targeting filing new EPA Class VI 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 CTV 1.

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 five million tons of injection by 2027. Over the past few months, we have received fairly comprehensive comments from the EPA on the permits for A1A2, and 26R, the combination of which is known as CTV 1.

The dialogue has been, and continues to be, constructive with the EPA in support of our previously outlined timing expectations. In addition to the EPA process, the local land-use permit and environmental analysis for CTV 1 are advancing under current county's 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 you'll see with -- on the company slides, we're deploying approximately $85 million in our Carbon Management business across capital, OpEx, and G&A.

This allows us to advance pending permits, do early stage development and file the new applications for that first 200 million metric tons, unlock the next several 100 millions of tons of pour space after this initial 200 million metric tons and deploy initial capital for CTV 1.

We believe this investment is consistent with our previously disclosed economic type curve and will develop projects with significant returns. And these dollars represented tangible investment 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 solution couple -- coupling this with California's Net Zero Ambition seriously 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 1.7% and by raising the share repurchase program from $250 million to $350 million. And we are extending the program through the end of 2022.

This increase in dollars represents a 40% increase to the overall program. As always, none of this is possible without the contributions of our CRC employees. I'd like to thank the team for all your efforts. Delivering these impressive results in 2021 during a transformative year, as well as dealing with COVID-19 was truly remarkable.

We appreciate all of those joining on the call today and thank you for your ongoing interest in CRC. And with that, I'll turn the call over to Francisco. Francisco..

Thanks, Mac. 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 a 100,000 net barrels of oil equivalent per day, and 60,000 net barrels of oil per day.

By pursuing our inventory of high return quick payback maintenance projects in addition to select horizontal opportunities, CRC health oil production relatively flat throughout 2021 after adjusting for acquisitions and divestitures and PSC effects.

The uniqueness of California 's Market dynamics continue to showcase that the mine -- the demand for our low carbon intensity product. CRC's commodity realizations remain strong across all of our streams, and we expect 2022 realizations to range within historical norms.

As laid out in our hedging slides and in conjunction with an increasing 2021 commodity price environment, we experienced a $319 million cash loss on commodity derivative contracts. As a reminder, the majority of these losses are from legacy hedges that were put -- were put on as a requirement of the 2020 RBL.

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 costs, excluding PSC effects, declined modestly by $0.14 per BOE compared to the 2019 cost when we were operating on the pre-COVID conditions in a relatively similar commodity environment.

These results are 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 costs, CRC benefits from higher natural gas prices as we are net long natural gas.

Our 2021 G&A costs 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 maintained production throughout the year due to our backlog of OpEx maintenance opportunities on our drilling program, which yielded estimated wellhead IRRs of over 100%. These results contributed to CRC's 2021 EBITDAX of $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 or 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 reused our net leverage ratio to less than half a turn by year-end.

The value of our oil-weighted proven reserves is evidenced by our PV of $6.2 billion at 2021 SCC price deck which expands close to $8 billion at $80 brands, which is more than double our current enterprise value.

The significant cash flow-generation capability of our declining and low capital intensive assets allows us to continue to self-fund our low carbon E&P business continued to deploy additional shareholder returns and fund our Carbon Management activities. In our view, 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 1,900 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 it's carried carbon intensity was approximately 21% higher than our portfolio's average.

As a part of this transaction, CRC retained the right to pursue, capture, transport, and storage of 100% of the CO2 produced from the Lost Hills steam generators.

This transaction closed on February 1st, 2022, and complements our low carbon intensity ambitions, reduces our cost structure, and brings forward value that in our perspective can be further deployed towards future carbon management goals.

In addition to this transaction, we were able to further bolster our liquidity by adding $60 million to our commitments and their 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 to 2022 December exit despite previously discussed portfolio transaction and the potential adverse impacts of PSCs at higher oil prices.

As a rule of thumb, for every $10 increase in Brent prices, there is approximately 1,000 BOE per day -- sorry, barrel of oil per day reduction to our net oil production as a result of our PSCs. The opposite also applies with every $10 decrease in Brent, we gain approximately 1,000 BOE per day in net oil production.

This is why our guidance slide shows lower production with higher financial metrics. We've provided 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% as it builds off our successful horizontal BOE drilling program. Our current 2022 plan has four drilling rigs in 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's 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 turnaround at CRC's cryogenic gas plant, or CGP1. The plant processes NGLs and natural gas from the Elk Hills and surrounding fields. And we expect it will return to full pre -turnaround production levels by the second quarter of '22.

The plant's downtime is expected to have appro -- an approximate 6,000 BOE per day impact on our first quarter, and an approximate 2,000 BOE per day impact on our full-year production.

While this maintenance period was expected to start during the summer of '22, we decided to pull forward the timing of this turnaround to benefit from lower procurement cost and better expected end-year deals in the summer of '22.

Our 2022 guidance is consistent with our capital allocation strategy, which prioritizes the financial, operational, and future growth boast of 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 worth production is expected to be above 58,000 barrels of oil per day.

Second, our $300 million to $335 million EMP capital program includes drilling and completion and work over capital of approximately $250 million to keep our oil production flat from December exit to December exit with the remaining capital covering our CGP1 turnaround, other 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 is before approximately $85 million is deployed into our carbon management 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 of our forward outlook, as evidenced by our share repurchase program increase and the deployment of capital towards our Carbon Management business.

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 of our quarterly and annual financial and operational results in our 2022 guidance in the attachments to our earnings release. Thanks and I will now turn the call back over to Mac for closing remarks..

Yes. Thank you, Francisco and lot in there on the production and getting to the overall net numbers, but we'll get into that in the Q&A. Look, CRC has 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 of, one, building upon our carbon management and two, 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 today's call. We'll now open the line for questions and I'll turn it back to the operator..

We will now begin the question-and-answer session. If you were using a speaker phone, please pick up your handset before pressing the keys. At this time, we will pause momentarily to assemble our roster. First question will be from Scott Hanold of RBC Capital Markets..

Hey, good afternoon. I guess good morning, to you all out there..

Hey, Scott..

I 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 8, 9 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 that I -- the first question I think that there is a desire to get some more clarity is, what is the status of those that want to participate in Carbon TerraVault? And 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, do you feel the inbound interest is -- do they feel motivated like they need to do something? And what are the types of questions do you find that you need to answer from them?.

Yeah, 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 that these projects, as we have shown, as we did back in our Carbon Strategy Day, take -- take significant time.

I think we showed the development timeframe as 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 pour space.

And so we are building up that pour space across that time frame by which we get the permits. Eventually, we will cross to where the critical path is signing up. The emitter or the source of CO2 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 it these deals have not been done. There has not been -- there were 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 are working with our counter parties to put in place executable contracts that we could then can underwrite a project to.

And doing that, it's requiring first of a kind of activities, whether it'd be deciding take-or-pay on contracts, deciding minimum volumes, minimum takes. There's 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 have 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 as a state, is leading the nation in the energy transition.

And by doing some of the regulatory things such as LCFS, it is compelling people to look at these opportunities. Let me stop there and see if Chris Gould to sustainability's Officer has anything to add to that..

Yeah. Thanks, Mac. I think you covered it. And I would just add in terms of the motivation aspect to that. As Mac said, California has a net zero goal that the -- parts of the -- of the segments that are covered under that are part of the 40% reduction by 2030. So there certainly is a motivation by those sorts of emission sources.

And I will remind everybody that the total emissions of 425 million tons in California, EFI, Stanford, and alike of estimated that approximately 60 million of that is addressable for CCS. And our 20 million tons per annum is roughly 1/3 of that addressable market.

So from my perspective, we're seeing that's a great indication of 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 pull in terms of these discussions with the admitters.

Do you need to convince them of why they need to do this or are they 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 caret 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 will call it stick if you will, which is going to look like a cost of doing business just like you have -- as I'm sure you're aware, Scott, which the CCA, the greenhouse gas allowances have gone up 50% in 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 regulations looking more like a cost of doing business in a penalty that people will have to remove. 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're very engaged on the need.

It's all about the -- getting to an agreement on Ts and Cs in the price discovery.

And Scott, I will tell you I'm fairly short on patience myself, and I understand the impatience 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 them permitted. So you have some place to put the carbon..

Got it. Okay. Now that makes sense, and then my second question, on the dollars, you are spending $30 million, $40 million, you're just spending on capital on CCS projects or I guess the Carbon Management projects.

What is that going to accomplish? $30, $40 million of capex, what is that going to do?.

Yeah. Again, these are -- Carbon TerraVault 1 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 the site completely ready so that there's nothing there that needs to be done in the future, other than the injection wells and the piping, if you will, midstream..

Understood. Thank you..

The next question will be from Doug Leggate of Bank of America.

Good afternoon, Doug..

Doug your line is open if you wish to ask a question. Perhaps your line is muted. We will move on then to the next question from Leo Mariani of KeyBanc. Doug you can always re-queue when you're ready..

Just wanted to ask a question on the oil guidance here in 2022. Just want to make sure I understood this.

Do you talked about exit '21 oil being the same as exit ' 22? That's pretty clear, but I guess what I'm asking is, are you factoring in the 1,900 barrels a day of divestiture which is occurring in 2022? So are we seeing a situation where exit '22 is 1,900 barrels a day lower than exit '21 or is it flat so you actually have 1,900 barrels a day of growth in '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..

Yeah. Leo, so yes, the answer is flat entry to exit taking into account the loss of divestiture. So we offset the barrels that we divested with the drilling wedge that we're going to bring forward with the four drilling rigs..

Okay. That's helpful.

And can you all just talk to the current kind of regulatory environment, and permitting environment in California around the oil well that you're drilling here in 2022? Can you maybe talk to kind of how much inventory you have on permit side, is there a year or two of backlog? Is it only a handful of months? What can you tell us around that?.

Leo, the permitting place that we're at. Well, let me talk about our drilling program, the wedge as we described on page -- that 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 EIR that is tied up in litigation and permits in that particular area they're not already in hand are not necessarily being issued right now and so when we look at that, we've built that in to our overall development plan and think that we can accommodate it in one of two fashions and moving rigs around, things of that nature.

But, it's not going to impact us here and we believe that that lawsuit will hopefully clear itself out this year and we'll return to normal activity in Kern county.

Mike Preston, our General Counsel, is on, anything, Mike, you 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 suit through year-end. We have more permits than we have wells that we're planning to drill this year. So as you already indicated, we have flexibility depending on whether that E IR lawsuit is resolved in the near-term versus the long-term.

And we've gotten -- we've had constructive dialog with the regulators on a process forward around the issues that are raised in that suit..

Okay..

Leo, I would just say it as this, as simply as this, we are confident that based off of the permits in hand and our drilling program that we can deliver our edge..

Okay. Now, that's really helpful.

And I guess is the state itself kind the CalGEM side, actually issuing much in the way of permits right now? Or, is there maybe a little kind of gridlock on their side these days?.

Mac, I will go ahead..

Yes. Sorry..

We're getting permits outside of Kern County. There are permit issues for other types of production methods that don't impact us, as you may know, around WST, well stimulation around high-pressure cyclic steaming. So there are permit issues that are impacting others in the industry that don't really have an impact on us.

We feel like we have a constructive dialog within this Kern 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 been working with us to try and unstick that..

Okay. Thanks guys..

Thanks, Leo..

And the next question is from Doug Leggate with Bank of America. Please go ahead..

Good morning, guys. I'm so sorry. I had you on speaker phone, and when you called my name, I hit the wrong button and hung up on you. So I am so sorry. Just full disclosure, that's what happened..

No worries, Doug..

I got a couple of questions.

So Mac, I know we've touched on this before, but just in light of Leo's questions around climate change, I'm just curious, are you wedded to pursuing the carbon sequestration permits separate and an isolation from any EUR permits? And if so, then what -- is there any movement there on the side of the regulator or the state? Because obviously, the economics would be kind of turbocharged in that event..

Yes, I wouldn't say that -- I'm not sure I understood the wed part. Are we wed to not doing it or wed to doing it? What I would say 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 the enhanced oil recovery message of CO2 flood has 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 solutions. So I wouldn't say we are wed to it or not wed to it.

I would say that we continue to advance our CalCapture project, which as you know, was based on the premise of capturing the carbon and using it for CO2 flood recovery in the Stevens formation that are at Elk Hills. So we are continuing to look at it and believe that when you really get down to the science of it, you are storing carbon by doing that.

And in fact, when you do use CO2 flood, you are creating -- if you're grabbing CO2 off of an industrial source, you are 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 -- getting the storage done, continuing to evaluate CalCapture. And then we'll have an eye towards that in the future..

Thanks. I don't want to labour 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 that theoretically puts you back on 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 a -- we have a tremendous opportunity.

I mean, I think it's no -- it's no secret that when you go from primary recovery to water flood, which is where we are focused and that's why we have such a low carbon intensity crude production right now across the vast majority of our fields, that you then -- after water flood, the next form of recovery that is possible is obviously CO2 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 is really if you can tolerate that is just a quick one on hedging. I mean, obviously as kind of a shame where you guys are in 2022, but 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 you're thinking about the hedging strategy beyond what you had to do fewer RBL. And I'll leave it there. Thanks..

So we -- you're exactly right. We have to do things per the RBL. And we have been doing active hedging. So I know there were 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 strike of our puts, so in other words, leaving the upside there but rolling up the $40 puts to $70 or $75 to protect the downside. And doing that as well as buying incremental puts, leaving again the upside.

So that's been our hedging philosophy some of the puts -- some of the swaps that have to be put on are per the RBL because it has been a combination of both..

Great stuff, thanks, fellas, and sorry about the mishap..

Hey, no problem, Doug. Take care..

The next question is from Eric Seeve 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 CGP1, and it sounds like that's a once in ten years type project.

Is facilities capex $15 million per year higher-than-normal because of that or are there other things that are also included that may or making higher than it would be in a normal year?.

Hey, Eric.

No, you're absolutely right on just trying to find a page in the presentation here, it's page 21 that shows that -- I 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, you know we've got a lot of fuel gathering systems, water management, we've got the power plant, etc.

This is a onetime, well not one-time, but every 10-years as you described, 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 do you want to elaborate on the capital?.

Yeah. No, happy to, Eric. So yeah, the NCN workover versus 250 or plus or minus. So that's the activity to maintain our oil production. As you pointed out, you have the CGP1 average which is a one-time or every ten years or so type of expenditure.

And then once you back that out, you have -- it's a, I would say, a fairly normal year from a facility standpoint. We have -- so there is still some mechanical integrity work.

We do have some one-time items like solar, we have small solar investment and some corporate items around IT that are one-time, but I would say the CGP1 average is the -- really the one-time item. What we liked though is we're seeing where coming in this year on a lower capital to maintain production, it's 250 bids versus why we guided up to 275.

But still $275 million is that number over multiple years that plays out, but this year is going to commit inside of that. So and continue to watch the performance of our horizontal drilling. So but ultimately that's the answer, TPP1 is the one thing that's a one thing from our capital -- E and P capital..

This concludes our question-and-answer session. I will now turn the conference back over to Mac McFarland for any closing remarks..

Yeah, again, we think CRC, 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 in a growing carbon management business.

We believe we have a very strong financial position by 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 is now concluded. Thank you all for attending today's presentation. You may now disconnect your lines. Have a great day..