Good day, and welcome to the California Resources Corporation and Aera Energy Merger Announcement Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there'll be an opportunity to ask questions. To ask a question, press star then one on a touch-tone phone. To withdraw your question, press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Joanna Park, Vice President, Investor Relations, and Treasurer. Please go ahead. Thanks. Thanks, and welcome to the California Resources and Aera Energy Merger Announcement Conference Call. Today's call will be led by our President and CEO, Francisco Leon. We also have other members of our executive team here today to take your specific questions following our prepared remarks. There are supplemental slides posted under the Investor Relations section of our website, crc.com. These slides highlight our compelling value we see behind today's combination. In addition, 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 today's release. Today, we will be making some forward-looking statements based on current expectations. Actual results may differ due to factors described in today's press release and in our periodic SEC filings. During Q&A, please limit your time to one question and one follow-up. This will allow us to get through more, to more of your questions today. Thanks, and now I'll turn the call over to Francisco. Good morning, everyone, and thanks for joining us. We're incredibly excited about today's news and the tremendous value it unlocks. This transaction enhances our conventional energy business and provides cash flow to help expand our carbon management business and decarbonize California. The transaction truly benefits all of our stakeholders. This combination demonstrates the merits of consolidation and reinforces our belief that CRC is a different kind of energy company. Over the next few minutes, I will highlight the key value drivers and how they position us to succeed on the road ahead. Many of you are likely familiar with Aera and its successful history in California over the last two-plus decades. Aera was founded as a private joint venture by Exxon and Shell and is currently owned by IKAV and Canada Pension Plan Investment, CPPIB. Aera operates high-quality assets, including five of the largest oil fields in the state, and has been profitable throughout its 25 years of existence. Here are four things to know about the deal. The assets are a great fit, and they're an exceptional fit, with CRC. The deal is priced right. The combination creates critical scale in our operations, making us a more durable business. It more than doubles our free cash flow, allowing us to return more cash to shareholders and provides meaningful opportunities to capture synergies. Let me take a minute to expand on these four points. First, this deal fits and is priced right. The Aera assets are very complementary to our existing portfolio and are very accretive. 45% accretion to operating cash flow per share and 90% accretion to free cash flow per share. The combination will double our production and make us the largest native producer in the state. This is a great thing for California. Let me explain. California needs oil production. In a recent report issued by the state, their experts acknowledge that California will need oil production through at least two more decades through 2045. We are working to rapidly decarbonize all sectors of the California economy, including the energy sector, to provide cleaner, more affordable, and lower carbon energy. There is no better company to do that than CRC. Our in-state production reduces reliance on more expensive, higher carbon foreign barrels, and today's deal helps us build a material decarbonization business to benefit all stakeholders. As long as California needs oil, CRC will be here to provide it. This transaction is also great for shareholders. Aera brings a high-return conventional energy business that will significantly boost future cash flow and provide an engine to fund the expansion of our carbon management business. The deal is priced at about 2.6x enterprise value to estimated 2024 Adjusted EBITDA and reflects a valuation of less than $30,000 per flowing barrel. The value of this transaction is substantially underwritten by the value of PDP reserves alone. As a reminder, this is an all-stock transaction, with CRC issuing 21.2 million shares. CRC shareholders will own about 77% of the pro forma company. Using our current share price, the enterprise value of the pro forma company will be approximately $5.6 billion. Second, this deal creates scale and durability. There's no denying the benefits of scale in today's energy business. Recently, industry has been rapidly consolidating and assets are migrating to larger, better operators with proven practices and the ability to deliver significant synergies. Today's transaction does the same for CRC, and will allow us to deliver more sustainable results through commodity price cycles. Once closed, we will have more scale in our conventional energy business, with equivalent production of nearly 150,000 per day and an incremental 220,000 net mineral acres. This will provide important flexibility for us through capital allocation and direct control of projects. Next, this transaction is expected to more than double our 2024 free cash flow and expand cash returns to shareholders. In 2024, and at current strip prices, we expect to generate approximately $700 million of pro forma free cash flow. That's before any synergies. Because of the low decline nature of our combined portfolio at 10%-15%, we have a low reinvestment ratio and can maintain our production using less than 50% of our pro forma cash flow. The fourth highlight relates to the $150 million in meaningful synergies we expect to achieve within 15 months of closing. Cumulative synergies over the next decade have an estimated PV-10 value of $1 billion. The largest synergies will come through operational, capital, and G&A efficiencies as we apply best practices. This transaction creates resiliency in our returns, and we expect our breakeven price to improve by approximately 10% before synergies. Together with Aera's organization, we have great confidence in our ability to deliver on these projections and more. Lastly, we will continue to be a sustainability leader in California energy. Our track record in this regard is proven, and with Aera, we will have more direct control of emissions and more capacity to accelerate the decarbonization of our portfolio and California's emissions. Now, let me take a moment to outline our priorities for free cash flow pro forma for this deal. Priority number one for free cash is to enhance shareholder returns. Over the last three years, we have returned nearly $800 million to shareholders through stock buybacks and dividends. Yesterday, our board authorized an increase to our share repurchase program to $1.35 billion and extended the authorization through the year-end 2025. That means we have approximately $750 million remaining under the plan. Post-closing, we expect to again boost our quarterly dividend, which will be the fourth consecutive increase in as many years. As our enterprise grows, we will continue to prioritize cash returns to shareholders. Priority number two will be to maintain our strong balance sheet. Aera has $1.1 billion of debt, but provides a substantial stream of cash flow. With an effective date of January 1, we plan to use Aera's free cash to maintain our strong capital structure. We project leverage of less than 0.5x within 12 months of closing. We will opportunistically look to refinance the Aera debt. Our balance sheet and increased scale will provide deeper liquidity, improved credit, and access to capital at more competitive rates. Our third priority is to build for the future. Free cash flow from today's high-return oil development will help fund tomorrow's expansion of our carbon management business. Aera expands our surface footprint with overlapping developments and infrastructure and provides a 27% to our premium pore space suitable for Class VI permit application. This moves us closer to achieving our target of 5 million metric tons of annual CO2 injection. CRC will be in an advantage position as the market leader for carbon capture and sequestration in California. Before moving to Q&A, let me clarify the value this transaction brings to our carbon management business. The combination doubles our premium pore space, and in the near term, adds about 54 million metric tons of storage capacity in the San Joaquin Basin. Premium pore space is unique, and not all reservoirs are suitable for storage. Aera's assets are fee simple, meaning we control the surface and the minerals. This is a powerful combination and allows us to drive the timing of future carbon projects and develop many of them under existing regulations. Located in our backyard, Aera expects to receive approval on their 27 million metric ton Class VI permit at Carbon Frontier next year, and we plan to submit an additional Class VI permit at Coles Levee once this transaction is closed. Including these potential permits, our premium pore space capacity increases to more than 100 million metric tons in the San Joaquin Basin. Next, today's transaction has enormous economic potential for our Carbon TerraVault subsidiary, allowing us a platform to scale this business. The new reservoirs, Carbon Frontier and the planned submission at Coles Levee, will be eligible to be dropped into our existing CTV JV with Brookfield. If accepted, these new reservoirs could result in potentially new Brookfield pore space contributions. Additionally, once the reservoir capacity is fully subscribed, we see further potential of $70 million-$180 million in EBITDA generation based on our previous type curve assumptions. Lastly, the deal drives value for all stakeholders through the decarbonization of hard-to-abate sectors. With new scale and operatorships of Aera's brownfield emissions, we expect to lower the carbon intensity of production and apply our decarbonization solutions to address the large amount of nearby third-party annual emissions in the San Joaquin Basin. We will have an enhanced ability to store third-party emissions and accelerate the decarbonization of California. We also see incremental potential for other clean technologies, such as direct air capture and solar, to help California meet its climate goals. We will be California's decarbonization partner of choice. The benefits of today's transactions are compelling. This deal is attractively priced, highly accretive, and enhances our conventional energy business, creating scale in our operations and capital allocation flexibility. We have identified $150 million in synergies with upside. This will enhance returns, and we will gain valuable cash flow to grow our business, reduce debt, return cash to shareholders, and opportunistically expand our Carbon TerraVault platform. We will be well-positioned to provide sustainable energy solutions for the state. CRC will have the leading land and mineral position and proven experience partnering with regulators and other stakeholders to advance common interests. By combining with Aera, we see a stronger and more viable path to higher cash flows, lower carbon emissions, and a better California. Thank you for joining us on the call today. We will now open the line for questions. Operator? We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question today comes from Scott Hanold, RBC Cap. Hey, all. Thanks, and congratulations on the transaction. Looks like a pretty good deal. You know, my first question, Francisco, is how does this combination affect the timing and structure of that potential separation of the two businesses that you spoke about down the road? Can you give a little bit of color on that? Hey, Scott. Good morning. Yeah, thanks. Thanks for the question. You know, this combination really strengthens our business on both sides, upstream, the upstream business and the low carbon. We're continuing to assess the best way to unlock shareholder value. That may mean a separation down the road. And but the transaction actually expands the options and allows us to extend the runway in case we need it. We're committed to the value unlock and, you know, there's a lot of excitement of our Carbon TerraVault business, but I thought we needed scale in our upstream business, a growth story, and more cash flow to be able to deliver on that vision. So we're continuing to work on the view on a separation. We don't necessarily see the market being receptive to that right now. We're looking to advance and really mature the Carbon TerraVault business as we get permits, as we get first projects off the ground and injection of CO2 next year. But excited to bring a lot of cash flow and really good assets into the portfolio that can help expand the business, both ways, upstream and low carbon. I appreciate that, and good to hear you kinda slipped in that, you know, you're still committed to the 2025 first injection. Good to hear. My follow-up question is on the oil and gas permitting, and it's, you know, I guess, less directly on, on obviously the hearing that was held a couple of weeks ago, but more so on, you know, with Aera. Like, what permits do they have in hand? And, you know, when you step back and think about, like, you know, that you're, you're going through a dual track on getting the permits, do you feel confident in, in having, regardless of the outcome of that hearing, you know, permits to, you know, execute this plan? Again, in part of that discussion, can you talk about the permits that Aera would have in hand to allow you to do so? Yeah. No, I appreciate the question again. So our business and, and all the assumptions behind this transaction were planned around market certainty and what we can get done today under the current regulatory environment. So what that means is that, there hasn't been an update on the current county EIR. We still expect to be increasing activity in the second half of the year. So that hasn't changed. We're, we're awaiting an update after the appeal court listened to the arguments on both sides. So nothing has changed from that perspective, but the, the value of this transaction doesn't contemplate incremental permits. We, we really valued this, and the underwriting was done at a PDP level. So when the projections that we laid out in our materials assume a fully permitted plan for the Aera assets. So all the permits on hand that they need to deliver those cash flow projections is what we have today. So that also means there's upside. The upside comes from permits to both groups and the ability to ramp up production down the road. But that's the way we looked at it to make sure that we reflected what we know today and we priced the deal accordingly. Appreciate the color. Thank you. Thanks, Scott. Thank you. Our next question comes from Kalei Akamine, Bank of America. Hey, good morning, guys. I guess first off, the industrial logic of this price makes a lot of sense. So congrats on getting this done. My first question goes to the durability of the production base. First off, I can't help but notice this returns CRC to its legacy scale when it first spun out of Oxy. But that also suggests that California production has declined. So can you talk through that decline rate at the Aera asset? Where do you see the production plateau, and what is the capital to hold that production flat, and how many years can you do it for? Hey, Kalei. Good morning. Thanks for the question. So, yeah, full circle in terms of the production rates, as you mentioned. We see the combined capital to maintain production around $600 million per year. So that would be fully permitted with all the rigs that that entails. And, you know, as you know, these are massive oil and gas fields that we own and that Aera owns as well, and now forming a combined company. Stacked pay, multiple producing horizons, just phenomenal rock that has really strong recovery factors. I mean, in the 40%-50% recovery factor range. We're able to do a lot of our production activities through sidetracks, workovers, water injection. So we feel good about the inventory. We feel good about the recovery of the oil assets and expect to be able to continue to deliver the, you know, local oil as we continue to have more and more foreign oil coming into California that's driving prices higher. I think the solution is really to encourage local production, and excited to kind of take this on and showcase what we can do with this combined asset. But these are just phenomenal fields that Aera owns. This is not a follow-up, just a clarification. Is the $600 million number fully baked for facilities, maintenance, et cetera? We're still reviewing the facilities cost, but no, I would say the $600 million. It's more D&C inclusive of workovers and sidetracks. Thank you for that. My follow-up just goes to the timing and perhaps to the value of the deal. I guess, big picture, why now? Why, why before the EA- the EIS has been decided? And I guess why were both parties comfortable with that uncertainty? Yeah, why now? You know, it's always very difficult to time and M&A deals, and we stayed opportunistic. I think we really focused on improving our company over the last two and a half years, and we've done that. We've executed in a significant way, improving the balance sheet, reducing cost, delivering on everything we said we could do. I think that put us in a position to establish conversations with the Aera ownership today, and glad that we were able to do this, and very excited about how we priced the deal and look forward to it. You know, there's you know, I think the comfort comes from in terms of drilling inventory. It comes from you know, the state needs that local production. And again, I think we could have waited. So we could have done, you know, too along the year, but this was the right time. This is the right time, and the pricing of the deal is spot on. And, you know, it's hard to speculate what would have happened if the permits had come in now, but we think we're better together, and look forward to reranking the portfolio, looking at this broader set of assets and delivering a high-graded view of the business. So why now? Because it was the right time, we were ready, and I think this is a great opportunity for us and the shareholders. Thanks for that color, Francisco. I'll leave it there. Good luck, guys. Thanks, Kalei. Our next question comes from Nate Pendleton with Stifel. Good morning. Congrats on the cleared transaction. Thanks. In your prepared remarks, you spoke about four oil and gas in the state and your low carbon barrel relative to imports. On slide 11, you talked about maintaining flat production post-close. I wanted to get your perspective on if you view flat production as the right level longer term with this strengthened asset base. Yeah, I think that's where we'd like to be right now. It's a flat production allows us to deliver cash flow, cash flow growth, as we continue to achieve the synergies, then that should result in a cash flow growth projection for the oil and gas business, and get us to the future of our carbon business. There's always gonna be an opportunity with this inventory, with this asset base, to go beyond the stay flat case. We don't see investors rewarding that strategy, and we're coming from a place right now where we're not there yet. So, but the assets are more than capable of that, and, it will be, you know, we'll continue to be very efficient with our capital, and, once we get the permitting resolved, it's something that we consider. But right now, we feel it's a stay flat case is in the best interest of the shareholders, and that's what they're rewarding. So, that's our current strategy, but definitely the assets can deliver more, and look forward to getting the permits and talking about this in the future. But, stay flat is the way to go for now. Got it. Thanks. And referencing slide 6 on the carbon management business, can you provide some details on the acquired Carbon Frontier project and how that fits in with your overall vision for CTV? Yeah, absolutely. You know, excited to see. You know, we started our Carbon TerraVault business over two years ago, and we're able to get to our draft permit for Elk Hills and CTV I in December. We have been at the leading edge of carbon, doing first of a kind on a number of things and making good progress. It was good to see Aera following and coming up with their own what looks to be a very strong permit on their own assets. The way I would describe it, maybe to simplify it, is we see Belridge as Elk Hills 2.0. Very similar asset base, you know, deep reservoirs that are very conducive to storage. We own all the land, fee simple, and that's a permit that should be very actionable in the near term. It's undergoing a review. You can see, you can follow that in the EPA tracker. But we see an absolute way to accelerate and bring forward another project that also will have emissions on top of the reservoir. So exciting to be able to look at on Elk Hills some of the new technologies and some of the new forms of energy, but with that, the Aera fields, we feel that we can decarbonize the oil field with emissions from the oil and gas production. So, a lot of synergies there, a lot of similarities in the type of project, and excited to get that project, the Carbon Frontier, off to the finish line, and enhance the platform that we're building at CTV. Appreciate the detail. Thanks for taking my questions. Thanks, Nate. Our next question comes from Nitin Kumar with Mizuho. Hi, good morning, Francisco and team, and, thanks for taking my questions. I want to start off just, you know, going back to what Kalei was saying, this does concentrate—bring you back to, a pretty sizable player in the oil and gas, business in California. Any early thoughts? You know, we've seen recent deals, getting second requests from, from the FTC and stuff like that. Any thoughts on the regulatory section, of the deal? Hey, Nitin. So, the primary approval that drives the timing of this transaction is at the federal level with the FTC, as you said. You know, the process that the FTC takes, and you have the 30-day waiting period that's prescribed by under the HSR Act. We have seen, you know, second requests. They seem to be common for transactions in the oil and gas industry. But ultimately, we expect the transaction to be cleared by antitrust regulators. You know, the fact again, that California imports over 70% of its oil and over 90% of its gas from out of state, it's important that we highlight the pricing is really driven by this imports. As the largest local producer, we don't see in any way affecting competition because we'll continue to compete with those producers from, from across the sea and in the Middle East and, and outside of the state. Got it. Thanks. That's very helpful, Francisco. And, you know, I noticed you said you're looking to increase your dividend post the close of this deal, the fixed dividend. You're already at a 2.7% yield, which is pretty competitive. So if you could help frame for us, how are you or the board thinking about the dividend payout? You know, is it a percentage of free cash flow? Is it a certain target yield? Like, how are you trying to... You know, what's the, what kind of mechanism that you might be employing? Yeah, as you know, we've we really like the combination of doing the share buybacks and having a fixed dividend. We've been able to do both extremely well for a couple of years, while we also have been building cash in the balance sheet. We're evaluating the dividend policy in light of this transaction. We have to come back and talk about the more specifics later. As we talked about, there's a lot of synergies, $150 million of synergies. There's a lot of cash flow, and we're gonna look to be, you know, to really optimize how we return that cash to shareholders. So, it's premature to talk about a target rate, or to be more specific than that, but it's something we're doing and are prepared to discuss once the transaction gets finalized. Great. And if I can sneak one more in, you had 80% of your oil for next year is hedged, post the deal. I'm curious, is that something we should expect to see going forward, or is that just a short-term thing, based on the leverage profile you have right now? Yeah, Nate, so the 80% refers to the incoming hedge portfolio from Aera. You know, and I'll ask Jay to provide a little more details and color on this. But as you know, we have a different hedging strategy now, which we look at more of a collar, where Aera has been doing more swaps. So maybe, Jay, if you can give a little color on what we see in the Aera hedge book and how we're likely to think about this on a go-forward basis. As Francisco pointed out, it's serendipity that both books are approximately 80%, 75%-80% hedged next year. It wasn't by design, but they do use some different instruments. They are swap-based. We tend to be a little more option-based. You should expect, you know, based upon the cash flow needs of the business, which will be on an aggregate now, evaluated. There'll be different, likely different, tools to employ. It may be more options, it may be more swaps, but that's yet to be figured out. But they had some RBL requirements that asked them to hedge. They've hedged in certain cases, and, you know, with the change in the capital structure, you should probably expect a little bit of a change in their hedge book and probably ours. Yeah. So we'll continue to evaluate the hedge book, but what I like about the transaction with the effective date right now and the way we're looking at this deal is the cash and the significant cash generated by the Aera assets until we get to closing will be used to pay down the debt. So the hedge book and the swap instruments actually accomplish that in a way that we can track that and predict that in a more effective way. So we'll reevaluate the hedge book once we have the closing. But the hedges are at a reasonable level and allows us to kind of see a roll forward balance sheet that's much improved by the time we close. Great. Excellent. Thanks, guys. Thanks, Nathan. Thank you. Our next question comes from Noel Parks with Tuohy Brothers Investment Research. Hi, good morning. Good morning. Just had a couple of things. One, these are sort of like housekeeping items. There's a mention in the release about lockup conditions, and it mentions something about greater than six months, but then, a certain percentage of the, the new shares has 12 months lock up, another 18 months. So I was just a little confused about the, the six-month piece of it. And also, just wondering, is there any sort of, contingent consideration in the deal in case, I don't know, you have a, a massive commodity price swing between now and, and the close? Yeah, it's definitely, you know, lock-up period. It's a great question, Noel. Thanks for asking. We're excited to see IKAV and CPP really be committed to the combined company. And they've agreed to an extensive lock-up period. So the way it's gonna work is, they will be able to sell shares, about one third of this 21.2 million shares after six months. So they're restricted only to one third. Then after 12 months, they were gonna be able to sell two-thirds of the total shares. And then the final third or the total of their own shares, they can sell after 18 months. So to fully clear, they need to wait to 18 months. That was a point of negotiation, which we found a lot of alignment from both parties that again look at the strengths of the combined business, look at the power of being able to put these assets together and generate cash flow together. So the lock-up period may look a little bit unusual, definitely more extended, but that was the intent is to be together. As you know, they're gonna nominate two board members as well. So this is an enhanced team all the way, and we're looking to work together and add a lot of shareholder value. Contingent consideration or collar or anything like that? No contingent considerations. Okay. It's 100% stock. Okay, great. Thanks for the clarification. Could you just talk a little bit about Aera's sort of recent history, like what their activity levels have been like, kind of what, you know, how they manage activity sort of before, during, and after COVID? And I'm just wondering, you had a mention about technology, and I think you meaning San Joaquin Basin. Could you just talk a little bit about, are you bringing, like, a much more extensive technical staff or, you know, background with data, seismic, or whatever, to the combined organization? Or is it really gonna be just a matter of more capital to sort of just chase out the potential they have? Yeah, on the first question, you know, we, we worked alongside with, with Aera for, for many years, as Oxy and, and then as CRC. We, we see a lot of things really well. Really, fantastic practices in, in the, just the high bar of operatorship. Coming from, from two majors, you would expect that. And, so the track record is very strong. I think, they, they've had some, some declines just like we have, in the, in the last year, due to the lack of permits, but their production's hanging in there nicely. It's a nice thing about California assets. It's a nice thing about the rock that we have here. You don't have the shale problem where, you know, 40%, 50% of your company goes away if you don't drill. So here you have a very well-managed asset, and we've spent a lot of time talking to Aera and their team, and we're able to confirm kind of the best practices that they follow and excited to confirm that everything that we can see from afar, we can verify once we get closer to the transaction. So we see a well-run business, a very, very strong asset base that has a lot of potential on a go-forward basis. And again, it's a fantastic team. As I said before, we see optimally trying to get to a stay flat on the business. That's about $600 million. I would think about that as about roughly split 50/50, $300 million of capital for CRC, $300 million for Aera. So that's a little bit about the asset base. Yeah, in terms of technology, you know, we have we see a lot of opportunity around optimizations around artificial intelligence. We see coverage that you know, trying to get more technology into California. I mean, the unfortunate thing is we don't have hundreds of operators that you have in other basins, so it's gonna be more centralized to a few folks that ultimately can drive those technologies. But we're seeing some great things from our team. We're seeing some great things from the Aera team. Now, the challenge is gonna be, and the challenge for the team is gonna be, put our heads together and integrate and optimize those technologies. So I don't see anything that I would say is a high capital dollar requirement. What I see is high impact technology that can be applied to really productive reservoirs to look to bring more oil off the ground and to be able to reduce cost over time. So I would say the enhancements on technology are of that sort and nothing around really anything that costs a lot of capital. Terrific. Thanks a lot. Our next question comes from Leo Mariani with Roth MKM. Yeah. Hi, guys. Wanted to follow up a little bit, just kind of on the background of the transaction here. So it's generally my understanding that this asset was kind of transacted in sort of, I don't know, late 2022 and closed sometime in early 2023, around $4 billion. You guys are kind of coming in and buying this, you know, for roughly half of that. So would love to just get, you know, a little bit of color around that, and just kind of less than 12 months later, you guys are agreeing to buy something that was, you know, previously sold. I'm assuming that you guys were kind of the only, you know, bidder here, and this was sort of a negotiated process. Can you just provide a little more color around the deal background here? Yeah. Hey, hey, Leo. So, it was a bilateral discussion. So yeah, they didn't run a process. We... I think the reason they approached us is because they see the quality of our operations and the strength and power of the combination. I would say, you know, it's very hard to comment on prior deals and what may have been public or not, but, you know, I don't think that the full details of the transaction from that IKAV and CPP Investments were really public. And what I would say is that the full purchase price details were likely different from what was disclosed. There were a lot of effective date and in different considerations that were not known to the public. What we know is this is a good deal for everybody. I think the highlights to us are clear. We talked about growth in cash flow per share, we talked about the significant synergies, and we talked about the expansion of our business. So it's clear, and the owners of IKAV and CPPIB now own 23% of the combined company in that upside, and they see this as a deal that's very positive for them. And again, I don't wanna comment on what was known or not known as the last deal. What I know is this deal is priced in a way that's attractive to the shareholders, but it's a win-win across the board. Okay. Understood. And then, look, I think from a high level, you know, some people may interpret this as CRC somewhat, you know, doubling down on California Oil. Certainly understand the merits that you guys have outlined, certainly understand the financial numbers seem to make a world of sense. But I think, as you guys are well aware, just, you know, California Oil in general, probably hasn't been the most popular strategy, you know, with the average shareholder, over the last several years. So just any kind of comments you just, you know, have around that would be helpful. Yeah, we, we understand California, and we all know how to operate here. We have a proven history and created a lot of value, for over a decade, and do we see this as a tremendous opportunity? Assets of this caliber don't come to market very often, and, you know, we have the scale, phenomenal fit, significant near-term cash flow, premium pore space, and that all gets enhanced by synergies. So we see this as a transformative transaction for CRC. Something we needed to look at and excited, about where that puts us, in terms of the trajectory of the business. So, it's an exciting day, Leo. We're very, very happy to be here. And, again, we want to be solutions- provide solutions to the state of California. Fifth largest economy, they need energy. Our Californian people that live here, they need the energy and affordable energy, and we can deliver that. And excited to take that and talk to our multiple communities and showcase the benefits of California local production. Okay, now understood. And then just on the liability portion, could you address that real quick? You guys are talking about roughly $1.1 billion of liabilities, which sounds like it's exclusive of this $240 million hedge book, which I guess seems to be, you know, a bit underwater, that you guys are taking on. So any kind of more color on that $1.1 billion, is that primarily debt? Does that include, you know, P&A, you know, liabilities? Is that debt more fixed-term debt? Is there kind of more of a, the flexible, you know, sort of bank-type debt that you guys can pay down? Anything you can offer there would be great. Yeah, that's right. So it's most of that is debt that it's part of it is RBL debt that's prepayable. We also they also entered into a second lien piece of paper that has some prepayability aspects of it which we intend to refinance at some point in the near future. So the bulk of it is gonna be second lien note and the RBL. There is a make-whole that's attached to that second lien note that comes down with time. It's against prepayable but with a make-whole. So as more time passes here to get the closing that naturally comes down. And there are there's a little bit of that that's contingent payments to the prior owners. So those are kind of the four buckets, but the bigger amounts are the RBL draws and the second lien piece of paper. Okay, thank you. That was helpful. Thanks, Leo. Thank you. As a reminder, if you would like to ask a question, please press star, then one. Our next question comes from Scott Hanold with RBC Cap. I'm sorry, our next question actually comes from Fernando Zavala with Pickering Energy Partners. Please go ahead. Hey, good morning. Just a quick one for me. On the pro forma capital, can you give a breakout of how much is CCS spend versus E&P, or if that's only EMP spend? Yeah. So in terms of the capital, the bulk of the capital for both companies is still very much on the oil and gas business. I think we talked about, you know, our average spend on carbon is around, you know, $40 million-$50 million. We haven't guided for 2024 in specifics, but that's what we had assumed when we last had our earnings call. It's a smaller amount for the Aera business. They're a little bit earlier in the process, so not significant capital. So the bulk of the capital that we see is gonna be more traditional oil and gas. Okay, got it. Thank you. And then just a quick follow-up. When you talk about the $600 million of maintenance capital, is that to maintain the pro forma 2024 production that you provided, or is that like a fourth quarter number? No, correct. It would be fully... If we had all the permits to drill and maintain production in that 145-150 range that we guided, that would be the capital needed to maintain that production. Okay, great. Thank you all. Congrats. Thanks, Fernando. Thank you. And our next question comes from Scott Hanold with RBC Cap. Hey, thanks for letting me back in here. You know, beyond the Class VI permits, can you and I think it's in the Belridge Field, can you talk about the CCS efforts that Aera had? I mean, did they have any, you know, plans with off-takers or, you know, any kind of greenfield plans on their business? Can you give a little color there? Hey, Scott. Yeah, the way we see the approach that they were taking was more of self-help. They were in talks with third-party emitters, but it's really more about the emissions that they were generating or that they are generating. So, more of a brownfield self-solution strategy. And like I said earlier, a lot of these emissions are on top of the reservoir, so they can be, they don't require long-range transportation to be able to store them. So yeah, we're looking forward to spending more time on the carbon side of the business and looking at potential opportunities to bring synergies and think through those projects in different ways. But that's kind of the short answer, more brownfield self-solution. Got it, understood. Really quickly, you had mentioned that... And just to clarify, when you look at the purchase price, that is basically underpinned by PDP only value when you look at it. So when you look at the $2.1 billion, that's basically the value of the PDP, you know, blowdown reserves. Is that correct? It's the value of the PDP. Yes, the PDP assumption is what ultimately underpins the enterprise value of the business. So that means no value attributed to the carbon business, no value attributed to the real estate portfolio or the land assets. So we were able to transact on the right to deal on a PDP basis. Okay. And you mentioned real estate and other assets. I mean, obviously, you guys got a significant sort of marketing midstream power business as well as real estate. Do they have anything else under the hood outside of the upstream and CMB business? They do. They do, I think, cogen, so they're able to generate their own power in some of the fields. There's a lot of infrastructure and gathering lines and pipelines, rights of way that are gonna be very valuable as we think about this business on a go-forward basis. They have a pretty advanced project on water treatment. So yeah, very high quality facilities, and look forward to a further and more specific rollout of all the Aera assets. But it's like CRC integrated business, with a lot of investments that have been made by Oxy and Shell and Exxon that deliver a higher realizations and more control over your assets. So, again, another of the aspects where this is very complementary. Okay, appreciate that. Sounds like you got another Hemi under the hood here. Thanks, Scott. Thank you. We have a follow-up from Kalei Akamine with Bank of America. Hey, guys. Sorry for the very quick follow-up. Just wondering what the inventory depth of the asset is. How many years can you hold the 76,000 barrels per day flat at, at the $600 million combined capital number that you talked about? Yeah. The way to think about these assets are they're just great recovery factors. And the inventory in our portfolio, and it's the same with Aera, it's never really an issue in terms of quality profitable, high return inventory. As you know, the challenge we've had is getting the permits in a timely fashion to develop it. So that's the way I would think about this. You know, rich inventory, you know, decade plus of activity that we could pursue as we rectify and get the permitting back on track. Appreciate it. Thank you. Thanks, Kalei. Thank you. This concludes our question- and- answer session. I would like to turn the conference back over to Francisco Leon for any closing remarks. Thanks again, everybody. Again, what I repeat, the excitement that we have of the combination today. We're focused on enhancing shareholder value, and we see this transaction as delivering that, day one, and as we execute on the business plans and the synergies of the combined companies after closing. Thanks so much, and please follow up with any questions. Thank you. The conference has concluded. Thank you for attending today's presentation.