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Will California Resources Report Positive Free Cash Flow in 1Q18?

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Dec. 4 2020, Updated 3:53 p.m. ET

California Resources’ 1Q18 operating cash flow estimates

Wall Street analysts expect California Resources (CRC) to report a year-over-year fall of ~32% in its operating cash flow to ~$91 million in 1Q18 compared to ~$133 million in 1Q17. On a sequential basis, CRC’s estimated 1Q18 operating cash flow is ~296% higher than its 4Q17 operating cash flow of ~$23 million.

CRC’s lower expected 1Q18 operating cash flow can be attributed to its lower production in 1Q18.

Wall Street analysts expect CRC’s 1Q18 capex (capital expenditure) to be ~$123 million, meaning that CRC’s 1Q18 free cash flow will likely be negative.

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California Resources’ 2018 capex guidance

For 2018, California Resources expects capex in the range of $425 million–$450 million, higher than its 2017 capex of ~$371 million. CRC’s capex guidance includes $100 million–$150 million in joint venture capital. California Resources plans to direct the majority of its capital to waterflood and steamflood investments and expects it to drive production growth into 2019. CRC’s capex could increase further through the use of cash at hand, additional tranches from existing joint ventures, and potential new joint ventures.

CRC’s peer Devon Energy (DVN) expects its capex to be in the range of $2.3 billion–$2.6 billion. DVN’s 2018 capex guidance excludes expenditures related to EnLink. In 1Q18, Devon Energy expects its capex to be in the range of $585 million–$700 million.

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