# A MESSAGE TO OUR SHAREHOLDERS

_Source: `DeepSeekOCR_Ardian_pruned_1k/energy-oil-gas-e-p/NYSE_CRC_2022/NYSE_CRC_2022.mmd` · pages 2-8_

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A MESSAGE TO OUR SHAREHOLDERS

Dear Shareholders,

During 2022 we demonstrated the adaptability of our teams, resilience of our assets and optionality of our portfolio. Despite inflationary pressures and an evolving regulatory environment, we remained focused on developing our core low-decline assets in the San Joaquin and Los Angeles basins to deliver some of the lowest carbon intensity barrels in the United States. We generated 91,000 barrels of oil equivalent per day and delivered record operating cash flow and operating margin.

We generated $690 million of operating cash flow, $311 million of free cash flow and returned over 100% of that free cash flow to shareholders through dividends and share repurchases. Since the inception of our share repurchase program in 2021 through year-end 2022, CRC has acquired nearly 14% of our common stock, demonstrating our commitment to shareholder returns.

We also continued to advance our carbon management business. Building off momentum created in 2021, we filed two additional Class VI permits and now have storage applications representing a cumulative total of approximately 140 million metric tons of carbon storage. We also created a joint venture (JV) with Brookfield Renewable targeting sequestration of 5 million metric tons of carbon dioxide. The unique structure of the JV, in which Brookfield may contribute $10 per ton for its 49% share of storage assets under development, provides a marker for the value of our storage reservoirs and is expected to de-risk capital requirements for CRC. Additionally, at the end of 2022 and beginning of 2023, we announced our first two carbon dioxide management agreements – with Lone Cypress Energy Services, LLC, and Grannus, LLC – a significant milestone for our Carbon TerraVault business signifying both the demand for our storage tanks and a pathway to our first carbon capture and storage (CCS) projects.

In addition to advancing CCS, we updated and expanded our ESG goals that build upon CRC's commitment to sustainability and its 2045 Full-Scope Net Zero Goal for Scope 1, 2 and 3 emissions. The ESG goals tie 30% of executive annual incentive pay to ESG metrics; establish ethnic, racial and gender diversity in leadership goals; and enhance our methane and freshwater reduction goals and community giving goal. Our dedication to energy transition and our ongoing sustainability strategy aligns with California's climate goals under the Paris Climate Accord and further positions CRC as one of the leading energy transition companies in the state.

Looking ahead, CRC will maintain its shareholder return mindset with a focus on delivering strong and sustainable cash flows through disciplined capital allocation. CRC continues to adapt and evolve, and I am excited to have Francisco at the helm going forward. I would like to thank the talented women and men of CRC for their dedication and support as we continue to create a different kind of energy company.

Sincerely,

![](images/2_0.jpg)

Mark A. (Mac) McFarland

President and Chief Executive Officer

California Resources Corporation

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