California Resources Corporation (NYSE: CRC), announced net income of $546 million or $13.06 per share for the third quarter of 2016, compared with a net loss of $104 million or $2.72 per share for the same period in 2015.
The Los Angeles-based company, formerly the California operations of Occidental Petroleum, reported an adjusted net loss for the third quarter of 2016 of $71 million or $1.75 per share, compared with an adjusted net loss of $86 million or $2.25 per share for the same period of 2015.
The adjusted net loss for the quarter excluded gains resulting from debt repurchases and exchanges as well as other items.
Todd Stevens, President and Chief Executive Officer, said, “In the third quarter, we began to ramp up our field activities, while continuing to keep our investments within our cash flow,” adding, “we anticipate our increased drilling activity in the remainder of 2016 and 2017 has the potential to position CRC for an inflection point in our business.”
The company’s debt was reduced by a $625 million in the third quarter as a result of its tender for unsecured bonds, bringing total debt reduction to approximately $1.5 billion from its peak when the company was spun out of Occidental Petroleum.
For the third quarter of 2016, CRC reported net income of $546 million or $13.06 per diluted share, compared with a net loss of $104 million or $2.72 per diluted share for the same period of 2015.
The 2016 quarter reflected the net gain from the Company’s debt tender offer, as well as lower production costs, depreciation, depletion and amortization expense, general and administrative expense, taxes other than on income, and exploration expense, partially offset by lower oil and natural gas realized prices and volumes.
The third quarter 2016 adjusted net loss was $71 million or $1.75 per diluted share, compared with an adjusted net loss of $86 million or $2.25 per diluted share for the same period of 2015.
The 2016 adjusted net loss excluded $660 million of net gains on the early extinguishment of the Company’s notes resulting from the cash tender offer, $25 million of non-cash losses on hedges, a $12 million interest charge for the write-off of deferred debt costs, and $6 million of other charges.
The 2015 adjusted net loss excluded $62 million of severance and early retirement costs, $53 million of non-cash derivative gains, and $9 million of other infrequent net charges and related tax adjustments.
Total daily production volumes averaged 138,000 barrels of oil equivalent (BOE) for the third quarter of 2016, compared with 158,000 BOE for the third quarter of 2015, a 13% decrease. which was in line with CRC’s projected production decline.
The third quarter 2016 production decline reflects management’s decision to withhold development capital and to selectively defer workover and downhole maintenance activity.
Due improved prices, CRC began increasing its activity levels toward the end of the second quarter.
In the third quarter of 2016, realized crude oil prices, including the effect of cash received from settled hedges, decreased 10% to $43.03 per barrel from $47.79 per barrel in the third quarter of 2015.
Production costs for the third quarter of 2016 were $211 million or $16.63 per BOE, compared with $246 million or $16.91 per BOE for the third quarter of 2015, a 14% decline.