Long Beach-based oil and natural gas giant California Resources Corp. recently announced a new chief executive as part of a corporate restructuring aimed at accelerating the development of its new carbon-storage business.
Francisco Leon, California Resources’ current chief financial officer, will take over as chief executive at the company’s annual meeting in April, the company announced on Feb. 24. Current Chief Executive Mark McFarland will become non-executive board chair of the company’s Carbon Terra Vault unit.
Leon, 46, has been chief financial officer since 2020. He has been with the company since before it was spun off from Houston-based Occidental Petroleum Corp. in 2014; he joined Occidental in 2008. McFarland, 53, became chief executive in 2021. He joined the company in 2020 as interim chief executive during the company’s nearly year-long bankruptcy; prior to that he held several executive posts with other energy companies.
Concurrent with the C-suite restructuring, California Resources also announced some cost-cutting measures, including the reduction of new drilling activity and a reduction of up to 10% in non-energy operating costs. The company also announced it plans to increase its share buyback program by 30% to $1.1 billion.
“While the company’s financial performance has been strong, our market has evolved and therefore we are adjusting accordingly by optimizing our capital plan and increasing our focus on reducing costs,” Leon said.
But it’s the company’s carbon-storage business that is drawing much of its attention. Launched in the summer of 2021 shortly after California Resources emerged from bankruptcy, the Carbon Terra Vault program aims to store enough carbon underground at the company’s Elk Hills oil field holdings to completely offset carbon emissions from oil and gas operations by 2045.
Last summer, California Resources enlisted Toronto, Canada-based Brookfield Renewable as its financial partner. The two companies formed a joint venture – 51% controlled by California Resources and 49% by Brookfield Renewable – to implement the massive carbon dioxide injection program. Brookfield, through its global transition fund, committed to contributing $500 million upfront and as much as $1 billion in total to the joint venture, called the California Carbon Management Partnership.
In December, California Resources announced its first carbon storage project with Tulsa, Oklahoma-based Lone Cypress Energy Services to store 100,000 metric tons of carbon dioxide at the Elk Hills oil field as part of a plant that would produce at least 30 tons per day of hydrogen by 2025.
The company plans several more similar projects this year.
It’s all part of a plan to eventually spin off the carbon storage unit as a separate company, the company said in its restructuring announcement. In the first step toward that eventual goal, the company has established a new board for the Carbon Terra Vault unit, with McFarland as its chair.
