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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ___________ to ___________
 
Commission file number 001-36478
California Resources Corporation
(Exact name of registrant as specified in its charter)
Delaware46-5670947
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
1 World Trade Center, Suite 1500
Long Beach, California 90831
(Address of principal executive offices) (Zip Code)

(888) 848-4754
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common StockCRCNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes    No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes    No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large Accelerated FilerAccelerated FilerNon-Accelerated Filer
Smaller Reporting CompanyEmerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes    No



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes    No   

Indicate the number of shares outstanding for each of the issuer's classes of common stock, as of the last practicable date.
The number of shares of common stock outstanding as of September 30, 2022 was 73,470,932.



California Resources Corporation and Subsidiaries

Table of Contents
Page
Part I 
Item 1
Financial Statements (unaudited)
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Operations
Condensed Consolidated Statements of Comprehensive Income (Loss)
Condensed Consolidated Statements of Stockholders' Equity
Condensed Consolidated Statements of Cash Flows
Notes to the Condensed Consolidated Financial Statements
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Carbon TerraVault Joint Venture
Dividends
Share Repurchase Program
Divestitures and Acquisitions
Business Environment and Industry Outlook
Regulatory Updates
Production
Prices and Realizations
Statements of Operations Analysis
Liquidity and Capital Resources
2022 Capital Program
Lawsuits, Claims, Commitments and Contingencies
Critical Accounting Estimates and Significant Accounting and Disclosure Changes
Forward-Looking Statements
Item 3
Quantitative and Qualitative Disclosures About Market Risk
Item 4
Controls and Procedures
Part II
Item 1
Legal Proceedings
Item 1A
Risk Factors
Item 2
Unregistered Sales of Equity Securities and Use of Proceeds
Item 5
Other Disclosures
Item 6
Exhibits

1


GLOSSARY AND SELECTED ABBREVIATIONS

The following are abbreviations and definitions of certain terms used within this Form 10-Q:

ABR - Alternate base rate.
ASC - Accounting Standards Codification.
ARO - Asset retirement obligation.
Bbl - Barrel.
Bbl/d - Barrels per day.
Bcf - Billion cubic feet.
Bcfe - Billion cubic feet of natural gas equivalent using the ratio of one barrel of oil, condensate, or NGLs converted to six thousand cubic feet of natural gas.
Boe - We convert natural gas volumes to crude oil equivalents using a ratio of six thousand cubic feet (Mcf) to one barrel of crude oil equivalent based on energy content. This is a widely used conversion method in the oil and gas industry.
Boe/d - Barrel of oil equivalent per day.
Btu - British thermal unit.
CalGEM - California Geologic Energy Management Division.
CCS - Carbon capture and storage.
CO2 - Carbon dioxide.
DD&A - Depletion, depreciation, and amortization.
EOR - Enhanced oil recovery.
EPA - United States Environmental Protection Agency.
ESG - Environmental, social and governance.
E&P - Exploration and production.
FEED - Front-end engineering design.
Full-Scope Net Zero - Achieving permanent storage of captured or removed carbon emissions in a volume equal to all of our scope 1, 2 and 3 emissions by 2045.
GAAP - United States Generally Accepted Accounting Principles.
GHG - Greenhouse gases.
JV - Joint venture.
LCFS - Low Carbon Fuel Standard.
LIBOR - London Interbank Offered Rate.
MBbl - One thousand barrels of crude oil, condensate or NGLs.
MBbl/d - One thousand barrels per day.
MBoe/d - One thousand barrels of oil equivalent per day.
MBw/d - One thousand barrels of water per day
Mcf - One thousand cubic feet of natural gas equivalent, with liquids converted to an equivalent volume of natural gas using the ratio of one barrel of oil to six thousand cubic feet of natural gas.
MHp - One thousand horsepower.
MMBbl - One million barrels of crude oil, condensate or NGLs.
MMBoe - One million barrels of oil equivalent.
MMBtu - One million British thermal units.
MMcf/d - One million cubic feet of natural gas per day.
MMT - Million metric tons
MW - Megawatts of power.
NGLs - Natural gas liquids. Hydrocarbons found in natural gas that may be extracted as purity products such as ethane, propane, isobutane and normal butane, and natural gasoline.
NYMEX - The New York Mercantile Exchange.
OPEC - Organization of the Petroleum Exporting Countries.
OPEC+ - OPEC and together with Russia and other allied producing countries
PHMS - Pipeline and Hazardous Materials Safety Administration.
Proved developed reserves - Proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods.
Proved reserves - The estimated quantities of natural gas, NGLs, and oil that geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic conditions, operating methods and government regulations.
2


Proved undeveloped reserves - Proved reserves that are expected to be recovered from new wells on undrilled acreage that are reasonably certain of production when drilled or from existing wells where a relatively major expenditure is required for recompletion.
PSCs - Production-sharing contracts.
PV-10 - Non-GAAP financial measure and represents the year-end present value of estimated future cash flows from proved oil and natural gas reserves, less future development and operating costs, discounted at 10% per annum and using SEC Prices. PV-10 facilitates the comparisons to other companies as it is not dependent on the tax-paying status of the entity.
SDWA - Safe Drinking Water Act.
SEC - United States Securities and Exchange Commission.
SEC Prices - The unweighted arithmetic average of the first day-of-the-month price for each month within the year used to determine estimated volumes and cash flows for our proved reserves.
SOFR - Secured overnight financing rate as administered by the Federal Reserve Bank of New York.
Standardized measure - The year-end present value of after-tax estimated future cash flows from proved oil and natural gas reserves, less future development and operating costs, discounted at 10% per annum and using SEC Prices. Standardized measure is prescribed by the SEC as an industry standard asset value measure to compare reserves with consistent pricing, costs and discount assumptions.
Working interest - The right granted to a lessee of a property to explore for and to produce and own oil, natural gas or other minerals in-place. A working interest owner bears the cost of development and operations of the property.
WTI - West Texas Intermediate.
3


PART I    FINANCIAL INFORMATION
 

Item 1Financial Statements (unaudited)

CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of September 30, 2022 and December 31, 2021
(in millions, except share data)

September 30,December 31,
 20222021
CURRENT ASSETS  
Cash and cash equivalents$358 $305 
Trade receivables289 245 
Inventories59 60 
Assets held for sale3 22 
Receivable from affiliate32  
Other current assets143 121 
Total current assets884 753 
PROPERTY, PLANT AND EQUIPMENT
3,126 2,845 
Accumulated depreciation, depletion and amortization
(392)(246)
Total property, plant and equipment, net2,734 2,599 
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY14  
DEFERRED TAX ASSET230 396 
OTHER NONCURRENT ASSETS124 98 
TOTAL ASSETS$3,986 $3,846 
CURRENT LIABILITIES  
Accounts payable305 266 
Liabilities associated with assets held for sale2 21 
Fair value of derivative contracts254 270 
Accrued liabilities371 297 
Total current liabilities932 854 
NONCURRENT LIABILITIES
Long-term debt, net591 589 
Fair value of derivative contracts26 132 
Asset retirement obligations397 438 
Other long-term liabilities185 145 
STOCKHOLDERS' EQUITY  
Preferred stock (20,000,000 shares authorized at $0.01 par value) no shares outstanding at September 30, 2022 and December 31, 2021
  
Common stock (200,000,000 shares authorized at $0.01 par value) (83,406,002 and 83,389,210 shares issued; 73,470,932 and 79,299,222 shares outstanding at September 30, 2022 and December 31, 2021)
1 1 
Treasury stock (9,935,070 shares held at cost at September 30, 2022 and 4,089,988 shares held at cost at December 31, 2021)
(395)(148)
Additional paid-in capital1,301 1,288 
Retained earnings876 475 
Accumulated other comprehensive income72 72 
Total stockholders' equity1,855 1,688 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$3,986 $3,846 



The accompanying notes are an integral part of these condensed consolidated financial statements.


4


CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the three and nine months ended September 30, 2022 and 2021
(dollars in millions, except per share data)
Three months ended
September 30,
Nine months ended
September 30,
 2022202120222021
REVENUES    
Oil, natural gas and NGL sales$680 $549 $2,026 $1,459 
Net gain (loss) from commodity derivatives243 (125)(419)(603)
Sales of purchased natural gas113 95 220 241 
Electricity sales88 65 171 131 
Other revenue1 4 27 27 
Total operating revenues1,125 588 2,025 1,255 
OPERATING EXPENSES    
Operating costs214 190 586 523 
General and administrative expenses59 51 163 147 
Depreciation, depletion and amortization50 54 149 160 
Asset impairments  25 2 28 
Taxes other than on income44 36 120 113 
Exploration expense1 2 3 6 
Purchased natural gas expense98 53 186 144 
Electricity generation expenses42 29 99 70 
Transportation costs13 11 37 37 
Accretion expense10 13 32 39 
Other operating expenses, net5 4 28 31 
Total operating expenses536 468 1,405 1,298 
Net gain on asset divestitures2 2 60 4 
OPERATING INCOME (LOSS)591 122 680 (39)
NON-OPERATING (EXPENSES) INCOME
Reorganization items, net (1) (5)
Interest and debt expense, net (13)(14)(39)(40)
Net loss on early extinguishment of debt   (2)
Other non-operating expenses, net1  3 (3)
INCOME (LOSS) BEFORE INCOME TAXES579 107 644 (89)
Income tax provision(153) (203) 
NET INCOME (LOSS)426 107 441 (89)
Net income attributable to noncontrolling interests (4) (13)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK$426 $103 $441 $(102)
Net income (loss) attributable to common stock per share
Basic $5.75 $1.26 $5.77 $(1.23)
Diluted$5.58 $1.25 $5.62 $(1.23)
Weighted-average common shares outstanding
Basic74.1 81.6 76.4 82.6 
Diluted76.3 82.4 78.5 82.6 

The accompanying notes are an integral part of these condensed consolidated financial statements.


5



CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Loss)
For the three and nine months ended September 30, 2022 and 2021
(in millions)

Three months ended
September 30,
Nine months ended
September 30,
 2022202120222021
Net income (loss)$426 $107 $441 $(89)
Net income attributable to noncontrolling interest (4) (13)
Other comprehensive income:
Actuarial gain associated with pension and postretirement plans(a)
 17  17 
Net prior service cost credit(a)
 65  65 
Comprehensive income (loss) attributable to common stock$426 $185 $441 $(20)
(a)No associated tax has been recorded for the components of other comprehensive income (loss) for the three and nine months ended September 30, 2021.

The accompanying notes are an integral part of these condensed consolidated financial statements.


6



CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
For the three and nine months ended September 30, 2022
(in millions)

Three months ended September 30, 2022
 Common StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other
Comprehensive
Income
Total
Equity
Balance, June 30, 2022$1 $(315)$1,296 $463 $72 $1,517 
Net income— — — 426 — 426 
Share-based compensation— — 6 — — 6 
Repurchases of common stock— (80)— — — (80)
Cash dividend ($0.17 per share)
— — — (13)— (13)
Other— — (1)— — (1)
Balance, September 30, 2022$1 $(395)$1,301 $876 $72 $1,855 

Nine months ended September 30, 2022
 Common StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other
Comprehensive
Income
Total
Equity
Balance, December 31, 2021$1 $(148)$1,288 $475 $72 $1,688 
Net income— — — 441 — 441 
Share-based compensation— — 14 — — 14 
Repurchases of common stock— (247)— — — (247)
Cash dividends ($0.17 per share)
— — — (40)— (40)
Other— — (1)— — (1)
Balance, September 30, 2022$1 $(395)$1,301 $876 $72 $1,855 


The accompanying notes are an integral part of these condensed consolidated financial statements.


7



CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
For the three and nine months ended September 30, 2021
(in millions)

Three months ended September 30, 2021
 Common StockTreasury StockAdditional Paid-in CapitalAccumulated (Deficit)Accumulated Other
Comprehensive
(Loss) Income
Equity Attributable to Common StockEquity Attributable to Noncontrolling InterestsTotal
Equity
Balance, June 30, 2021$1 $(45)$1,273 $(328)$(8)$893 $22 $915 
Net (loss) income— — — 103 — 103 4 107 
Distributions to noncontrolling interest holders— — — — — — (19)(19)
Redemption of noncontrolling interest— — 7 — — 7 (7) 
Share-based compensation— — 4 — — 4 — 4 
Repurchases of common stock— (39)— — — (39)— (39)
Issuance of common stock— — 2 — — 2 — 2 
Other comprehensive income— — — — 82 82 — 82 
Balance, September 30, 2021$1 $(84)$1,286 $(225)$74 $1,052 $ $1,052 

Nine months ended September 30, 2021
 Common StockTreasury StockAdditional Paid-in CapitalAccumulated (Deficit)Accumulated Other
Comprehensive
(Loss) Income
Equity Attributable to Common StockEquity Attributable to Noncontrolling InterestsTotal
Equity
Balance, December 31, 2020$1 $ $1,268 $(123)$(8)$1,138 $44 $1,182 
Net (loss) income— — — (102)— (102)13 (89)
Distributions to noncontrolling interest holders— — — — — — (50)(50)
Redemption of noncontrolling interest— — 7 — — 7 (7) 
Share-based compensation— — 10 — — 10 — 10 
Repurchases of common stock— (84)— — — (84)— (84)
Issuance of common stock— — 2 — — 2 — 2 
Other— — (1)— — (1)— (1)
Other comprehensive income— — — — 82 82 — 82 
Balance, September 30, 2021$1 $(84)$1,286 $(225)$74 $1,052 $ $1,052 

The accompanying notes are an integral part of these condensed consolidated financial statements.


8



CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the three and nine months ended September 30, 2022 and 2021
(in millions)
Three months ended September 30,Nine months ended September 30,
 2022202120222021
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)$426 $107 $441 $(89)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization50 54 149 160 
Deferred income tax provision137  166  
Asset impairments 25 2 28 
Net (gain) loss from commodity derivatives(243)125 419 603 
Net payments on settled commodity derivatives(182)(99)(604)(220)
Net loss on early extinguishment of debt   2 
Net gain on asset divestitures(2)(2)(60)(4)
Other non-cash charges to income, net15 17 42 46 
Changes in operating assets and liabilities, net34 (45)21 (70)
Net cash provided by operating activities235 182 576 456 
CASH FLOW FROM INVESTING ACTIVITIES
Capital investments(107)(51)(304)(128)
Changes in accrued capital investments(4)5 5 18 
Proceeds from asset divestitures, net3 11 79 13 
Acquisitions (53)(17)(53)
Distribution related to the Carbon TerraVault JV12  12  
Capitalized joint venture transaction costs(12) (12) 
Other(1) (1)(1)
Net cash used in investing activities(109)(88)(238)(151)
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Revolving Credit Facility   16 
Repayments of Revolving Credit Facility   (115)
Proceeds from Senior Notes   600 
Debt issuance costs   (13)
Repayment of Second Lien Term Loan   (200)
Repayment of EHP Notes   (300)
Repurchases of common stock(80)(39)(247)(84)
Common stock dividends(13) (39) 
Proceeds from warrants exercised 2  2 
Distributions paid to a noncontrolling interest holder (19) (50)
Issuance of common stock1  1  
Net cash used in financing activities(92)(56)(285)(144)
Increase in cash and cash equivalents34 38 53 161 
Cash and cash equivalents—beginning of period324 151 305 28 
Cash and cash equivalents—end of period$358 $189 $358 $189 

The accompanying notes are an integral part of these condensed consolidated financial statements.


9



CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
September 30, 2022

NOTE 1    BASIS OF PRESENTATION

We are an independent oil and natural gas exploration and production company operating properties exclusively within California. We are committed to energy transition and have some of the lowest carbon intensity production in the United States. We are in the early stages of permitting several carbon capture and storage projects in California. Our subsidiary Carbon TerraVault is expected to build, install, operate and maintain CO2 capture equipment, transportation assets and storage facilities in California. In August 2022, Carbon TerraVault entered into a joint venture with BGTF Sierra Aggregator LLC (Brookfield) to pursue certain of these opportunities (Carbon TerraVault JV). See Note 2 Accounting Policy and Disclosure Changes for our accounting policy related to joint ventures and investments in unconsolidated subsidiaries and Note 8 Investments and Related Party Transactions for more information on the Carbon TerraVault JV. Separately, we are evaluating the feasibility of a carbon capture system to be located at our Elk Hills power plant.

Except when the context otherwise requires or where otherwise indicated, all references to ‘‘CRC,’’ the ‘‘Company,’’ ‘‘we,’’ ‘‘us’’ and ‘‘our’’ refer to California Resources Corporation and its subsidiaries.

In the opinion of our management, the accompanying unaudited financial statements contain all adjustments necessary to fairly present our financial position, results of operations, comprehensive income, equity and cash flows for all periods presented. We have eliminated all significant intercompany transactions and accounts. We account for our share of oil and natural gas producing activities, in which we have a direct working interest, by reporting our proportionate share of assets, liabilities, revenues, costs and cash flows within the relevant lines on our condensed consolidated financial statements.

We have prepared this report in accordance with generally accepted accounting principles (GAAP) in the United States and the rules and regulations of the U.S. Securities and Exchange Commission applicable to interim financial information which permit the omission of certain disclosures to the extent they have not changed materially since the latest annual financial statements. We believe our disclosures are adequate to make the information presented not misleading.

The preparation of financial statements in conformity with GAAP requires management to select appropriate accounting policies and make informed estimates and judgments regarding certain types of financial statement balances and disclosures. Actual results could differ. Management believes that these estimates and judgments provide a reasonable basis for the fair presentation of our condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Annual Report).

The carrying amounts of cash and on-balance sheet financial instruments, other than debt, approximate fair value. Refer to Note 6 Debt for the fair value of our debt.

10


NOTE 2    ACCOUNTING POLICY AND DISCLOSURE CHANGES

Accounting Policy Update

Joint Ventures and Investments in Unconsolidated Subsidiaries

We may enter into joint ventures that are considered to be a variable interest entity (VIE). A VIE is a legal entity that possesses any of the following conditions: the entity's equity at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, equity owners are unable to direct the activities that most significantly impact the legal entity's economic performance (or they possess disproportionate voting rights in relation to the economic interest in the legal entity), or the equity owners lack the obligation to absorb the legal entity's expected losses or the right to receive the legal entity's expected residual returns. We consolidate a VIE if we determine that we have (i) the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) the obligation to absorb losses or the right to receive benefits from the VIE that are more than insignificant to the VIE. If an entity is determined to be a VIE but we do not have a controlling interest, the entity is accounted for under either the cost or equity method depending on whether we exercise significant influence. See Note 8 Investments and Related Party Transactions for more information on the Carbon TerraVault JV. These evaluations are highly complex and involve management judgment and may involve the use of estimates and assumptions based on available information. The evaluation requires continual assessment.

Investments in unconsolidated entities are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value may have occurred, which is other than temporary.

Recently Adopted Accounting and Disclosure Changes

ASC Topic 848, Reference Rate Reform contains guidance for applying U.S. GAAP to contracts, hedging relationships and other transactions that are impacted by reference rate reform. Under this guidance, we elected to account for the February 2022 amendment of our Revolving Credit Facility described in Note 6 Debt as a modification of the original instrument. The debt modification did not have a material impact to our condensed consolidated financial statements.

NOTE 3    SUPPLEMENTAL BALANCE SHEET INFORMATION

Other current assetsOther current assets includes the following:
September 30,December 31,
20222021
(in millions)
Amounts due from joint interest partners$39 $47 
Fair value of derivative contracts64 6 
Prepaid expenses14 16 
Greenhouse gas allowances14 31 
Natural gas margin deposits5 12 
Other7 9 
Other current assets$143 $121 

11


Other noncurrent assets Other noncurrent assets includes the following:
September 30,December 31,
20222021
(in millions)
Operating lease right-of-use assets$40 $43 
Deferred financing costs - Revolving Credit Facility7 11 
Emission reduction credits 11 11 
Prepaid power plant maintenance26 21 
Fair value of derivative contracts25 1 
Deposits and other 15 11 
Other noncurrent assets$124 $98 

Accrued liabilitiesAccrued liabilities includes the following:
September 30,December 31,
20222021
(in millions)
Accrued employee-related costs$64 $61 
Accrued taxes other than on income43 30 
Asset retirement obligations78 51 
Accrued interest9 19 
Lease liability12 11 
Premiums due on derivative contracts64 57 
Liability for settlement payments on derivative contracts48 25 
Amounts due under production-sharing contracts9 14 
Income taxes payable17  
Marketing prepayments4 5 
Other23 24 
 Accrued liabilities$371 $297 

Other long-term liabilitiesOther long-term liabilities includes the following:

September 30,December 31,
20222021
(in millions)
Compensation-related liabilities$34 $38 
Postretirement and pension benefit plans54 59 
Lease liability32 37 
Premiums due on derivative contracts13 5 
Contingent liability related to Carbon TerraVault JV put and call rights46  
Other6 6 
Other long-term liabilities$185 $145 

NOTE 4    SUPPLEMENTAL CASH FLOW INFORMATION

We paid $20 million of U.S. federal income tax payments during the nine months ended September 30, 2022. We did not make U.S. federal and state income tax payments during the three months ended September 30, 2022 or the three and nine months ended September 30, 2021.

Interest paid, net of capitalized amounts was $21 million and $23 million for the three months ended September 30, 2022 and 2021, respectively. Interest paid, net of capitalized amounts was $43 million and $27 million for the nine months ended September 30, 2022 and 2021, respectively.

12


Non-cash financing activities in the three and nine months ended September 30, 2022 included $1 million of dividends accrued for stock-based compensation awards. No dividends were accrued for the three and nine months ended September 30, 2021.

For the three and nine months ended September 30, 2022, we made a non-cash contribution of $2 million to the Carbon TerraVault JV to satisfy a capital call. See Note 8 Investments and Related Party Transactions for more information on our joint venture.

NOTE 5    INVENTORIES

Materials and supplies, which primarily consist of well equipment and tubular goods used in our oil and natural gas operations, are valued at weighted-average cost and are reviewed periodically for obsolescence. Finished goods include produced oil and NGLs in storage, which are valued at the lower of cost or net realizable value. Inventories, by category, are as follows:
September 30,December 31,
20222021
(in millions)
Materials and supplies$53 $54 
Finished goods6 6 
Inventories$59 $60 

NOTE 6    DEBT

As of September 30, 2022 and December 31, 2021, our long-term debt consisted of the following:

September 30,December 31,
20222021Interest RateMaturity
(in millions)
Revolving Credit Facility$ $ 
SOFR plus 3%-4%
ABR plus 2%-3%
April 29, 2024
Senior Notes600 600 7.125%February 1, 2026
Principal amount$600 $600 
Unamortized debt issuance costs(9)(11)
Long-term debt, net$591 $589 

Revolving Credit Facility

On October 27, 2020, we entered into a Credit Agreement with Citibank, N.A., as administrative agent, and certain other lenders. This credit agreement currently consists of a senior revolving loan facility (Revolving Credit Facility) with an aggregate commitment of $602 million, which we are permitted to increase if we obtain additional commitments from new or existing lenders. This amount includes $110 million of additional commitments from new lenders that joined this facility in February 2022 and September 2022. Our Revolving Credit Facility also includes a sub-limit of $200 million for the issuance of letters of credit. Letters of credit were issued to support ordinary course marketing, insurance, regulatory and other matters.

The borrowing base is redetermined semi-annually and was reaffirmed at $1.2 billion on October 25, 2022. The borrowing base takes into account the estimated value of our proved reserves, total indebtedness and other relevant factors consistent with customary reserves-based lending criteria. The amount we are able to borrow under our Revolving Credit Facility is limited to the amount of the commitment described above.

13


In February 2022, we amended our Revolving Credit Facility to replace the benchmark rate from the London Interbank Offered Rate to the secured overnight financing rate (SOFR). We can elect to borrow at either an adjusted SOFR rate or an alternate base rate (ABR), subject to a 1% floor and 2% floor, respectively, plus an applicable margin. The ABR is equal to the highest of (i) the federal funds effective rate plus 0.50%, (ii) the administrative agent prime rate and (iii) the one-month S