Chart in Focus: California Resources’ Realized Price Effectiveness

Realized price effectiveness tells us that in 3Q16, California Resources’ (CRC) realized price, without hedging benefits, was ~6% above its production cash costs and ~21% below its total production costs for the quarter.

Sequentially, CRC’s 3Q16 realized price effectiveness in terms of its cash costs has fallen from ~11% in 2Q16 to ~6% in 3Q16. This lower realized price effectiveness in terms of cash costs can be attributed to an ~11% sequential rise in CRC’s cash costs, which we’ll discuss later in this series.

Realized price effectiveness is defined as the excess or shortfall of a realized price-to-cost item, scaled by cost item.

Almost all other upstream companies, including as Murphy Oil (MUR), Southwestern Energy (SWN), and Range Resources (RRC), have reported negative 3Q16 realized price effectiveness in terms of total production costs.

Realized price: Oil and gas revenue scaled by total production

Production cash cost: LOE (lease operating expenses) + production and ad valorem taxes + transportation expenses + G&A (general and administrative) cash expenses + interest cash expenses

Total production cost: Cash cost + DD&A (depletion, depreciation, and amortization)