CRC Stock Jumps on Share Buyback Plan Despite First Quarter Loss of $ 94 Million | New
One of Kern’s major oilfield operators, California Resources Corp., reported a first-quarter loss of $ 94 million on Thursday as part of an otherwise bullish earnings report that helped boost the price. of its action to end the day by nearly 6%.
It has been suggested that the positive market reaction was fueled by CRC’s morning announcement that it planned to repurchase up to $ 150 million of its stock, funded primarily by $ 120 million in free cash flow over the course of the year. of the first trimester. Share buyback plans are generally seen as a sign of confidence.
Other highlights from Thursday’s earnings report include plans to accelerate the Santa Clarita-based company’s carbon capture and renewable energy efforts, as well as successes in reducing spending. operating and overhead costs.
“It was a good start to the year which shows CRC’s ability to successfully execute our corporate strategy based on strong business financial fundamentals, disciplined capital allocation and strong cash flow generation. available, ”company spokesperson Richard Venn said via email.
CRC, which emerged from bankruptcy last year under a very different ownership structure, said its average daily production in the first quarter was 18% below the level recorded a year earlier.
The company said it embezzled $ 15 million from new drilling and well completions, putting that money in place of what’s known as downhole maintenance, which increases the efficiency of existing wells. Seventeen new wells were drilled during the first quarter, he said, against 40 “workovers” of existing wells.
In a morning call with stock analysts, President and CEO Mark A. “Mac” McFarland said that the recently announced plan by Gov. Gavin Newsom to ban fracking by 2024 does not ‘would have “no material impact” on the business because less than 1% of reserves require such technology.
Additionally, he noted that the company’s operations did not involve the use of high-pressure cyclic steam, a controversial technique on which the Newsom administration has imposed a moratorium.
During the conference call, KeyBanc analyst Leo Mariani said he believed the favorable reaction of the stock market to Thursday’s earnings report was primarily a reaction to the announcement of the share buyback.
McFarland, responding to a question from Mariani on this point, said he believed the buyback program was in the best interests of shareholders.
“Over the remainder of the year, we will continue to assess all the different forms of ability to return money to shareholders, as well as potentially looking at little, I will say, potential additions or recycling of capital into. the company, ”McFarland said, according to a transcript posted online by The Motley Fool.
When another analyst, Noel Parks of Tuohy Brothers, asked about the company’s reference to decarbonization projects, McFarland replied that the company was considering moving forward with a variety of initiatives in more than a previously disclosed project to capture and bury carbon dioxide emissions from its Elk Hills power plant.
The CEO added that the company plans to use “a number” of its depleted oil fields for carbon capture and sequestration, where carbon dioxide is stored indefinitely underground in order to combat climate change. McFarland mentioned the possibility of deploying solar power development over part of its acreage, although he noted that it was not clear how these various projects would be funded.
“But we would also look for alternative financing structures to attract our potential partners, because the renewable space, for example, has a different cost of capital than what we as an oil and gas company are looking for, bringing the right kind of capital structure, but leveraging our assets to be part of this energy transition, ”he said, according to Motley Fool’s transcript.
The company’s shares, which trade on the New York Stock Exchange under the symbol “CRC”, closed Thursday at $ 25.86, 8% below their high last year.