California Resources Corp 10-Q

Item 1 Financial Statements (unaudited) CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets As of September 30, 2021 and December 31, 2020 (in millions, except share data) Successor September 30, December 31, 2021 2020 CURRENT ASSETS Cash $ 189 $ 28 Trade receivables 261 177 Inventories 60 61 Assets held for sale 53 — Other current assets 94 63 Total current assets 657 329 PROPERTY, PLANT AND EQUIPMENT 2,779 2,689 Accumulated depreciation, depletion and amortization ( 192 ) ( 34 ) Total property, plant and equipment, net 2,587 2,655 OTHER NONCURRENT ASSETS 98 90 TOTAL ASSETS $ 3,342 $ 3,074 CURRENT LIABILITIES Accounts payable 259 212 Liabilities associated with assets held for sale 124 — Fair value of derivative contracts 275 50 Accrued liabilities 299 211 Total current liabilities 957 473 NONCURRENT LIABILITIES Long-term debt, net 589 597 Fair value of derivative contracts 153 6 Asset retirement obligations 428 547 Other long-term liabilities 163 269 STOCKHOLDERS' EQUITY Preferred stock ( 20,000,000 shares authorized at $ 0.01 par value) no shares outstanding at September 30, 2021 and December 31, 2020 — — Common stock ( 200,000,000 shares authorized at $ 0.01 par value) ( 83,367,076 and 83,319,660 shares issued; 80,775,277 and 83,319,660 shares outstanding at September 30, 2021 and December 31, 2020) 1 1 Treasury stock ( 2,591,799 shares held at cost at September 30, 2021 and no shares held at December 31, 2020) ( 84 ) — Additional paid-in capital 1,286 1,268 Accumulated deficit ( 225 ) ( 123 ) Accumulated other comprehensive gain (loss) 74 ( 8 ) Total equity attributable to common stock 1,052 1,138 Equity attributable to noncontrolling interests — 44 Total stockholders' equity 1,052 1,182 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,342 $ 3,074 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations For the three and nine months ended September 30, 2021 and 2020 (dollars in millions, except per share data) Successor Predecessor Successor Predecessor Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 REVENUES Oil, natural gas and NGL sales $ 549 $ 312 $ 1,459 $ 987 Net (loss) gain from commodity derivatives ( 125 ) — ( 603 ) 75 Sales of purchased natural gas 95 50 241 109 Electricity sales 65 43 131 75 Other revenue 4 4 27 12 Total operating revenues 588 409 1,255 1,258 OPERATING EXPENSES Operating costs 190 141 523 460 General and administrative expenses 51 64 147 193 Depreciation, depletion and amortization 54 89 160 296 Asset impairments 25 — 28 1,736 Taxes other than on income 36 42 113 121 Exploration expense 2 2 6 9 Purchased natural gas expense 53 35 144 67 Electricity generation expenses 29 17 70 47 Transportation costs 11 10 37 31 Accretion expense 13 10 39 30 Other operating expenses, net 4 12 31 45 Total operating expenses 468 422 1,298 3,035 Gain on asset divestitures ( 2 ) — ( 4 ) — OPERATING INCOME (LOSS) 122 ( 13 ) ( 39 ) ( 1,777 ) NON-OPERATING (EXPENSES) INCOME Reorganization items, net ( 1 ) 66 ( 5 ) 66 Interest and debt expense, net ( 14 ) ( 28 ) ( 40 ) ( 200 ) Net (loss) gain on early extinguishment of debt — — ( 2 ) 5 Other non-operating expenses, net — ( 32 ) ( 3 ) ( 93 ) INCOME (LOSS) BEFORE INCOME TAXES 107 ( 7 ) ( 89 ) ( 1,999 ) Income taxes — — — — NET INCOME (LOSS) 107 ( 7 ) ( 89 ) ( 1,999 ) NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS Mezzanine equity — ( 25 ) — ( 85 ) Stockholders' equity ( 4 ) 3 ( 13 ) ( 12 ) Net income attributable to noncontrolling interests ( 4 ) ( 22 ) ( 13 ) ( 97 ) NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCK $ 103 $ ( 29 ) $ ( 102 ) $ ( 2,096 ) Net income (loss) attributable to common stock per share Basic $ 1.26 $ 2.20 $ ( 1.23 ) $ ( 39.64 ) Diluted $ 1.25 $ 2.20 $ ( 1.23 ) $ ( 39.64 ) Weighted average common shares outstanding Basic 81.6 49.5 82.6 49.4 Diluted 82.4 49.5 82.6 49.4 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Income (Loss) For the three and nine months ended September 30, 2021 and 2020 (dollars in millions) Successor Predecessor Successor Predecessor Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 Net income (loss) $ 107 $ ( 7 ) $ ( 89 ) $ ( 1,999 ) Net income attributable to noncontrolling interests ( 4 ) ( 22 ) ( 13 ) ( 97 ) 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 $ 185 $ ( 29 ) $ ( 20 ) $ ( 2,096 ) (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 and 2020. The accompanying notes are an integral part of these condensed consolidated financial statements. 4 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Equity For the three and nine months ended September 30, 2021 (dollars in millions) Three months ended September 30, 2021 (Successor) Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Equity Attributable to Common Stock Equity Attributable to Noncontrolling Interests Total Equity Balance, June 30, 2021 $ 1 $ ( 45 ) $ 1,273 $ ( 328 ) $ ( 8 ) $ 893 $ 22 $ 915 Net 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 (Successor) Common Stock Treasury Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Equity Attributable to Common Stock Equity Attributable to Noncontrolling Interests Total 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. 5 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Equity For the three and nine months ended September 30, 2020 (dollars in millions) Three months ended September 30, 2020 (Predecessor) Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Equity Attributable to Common Stock Equity Attributable to Noncontrolling Interests Total Equity Redeemable Noncontrolling Interests (b) Balance, June 30, 2020 $ — $ 5,008 $ ( 7,437 ) $ ( 23 ) ( 2,452 ) $ 76 $ ( 2,376 ) $ 828 Net (loss) income (a) — — ( 29 ) — ( 29 ) ( 3 ) ( 32 ) 25 Distributions to noncontrolling interest holders — — — — — ( 5 ) ( 5 ) ( 22 ) Share-based compensation — 2 — — 2 — 2 — Modification of noncontrolling interest — 138 — — 138 — 138 ( 138 ) Shares cancelled for taxes and other — — — — — — — ( 1 ) Balance, September 30, 2020 $ — $ 5,148 $ ( 7,466 ) $ ( 23 ) $ ( 2,341 ) $ 68 $ ( 2,273 ) $ 692 Nine months ended September 30, 2020 (Predecessor) Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Equity Attributable to Common Stock Equity Attributable to Noncontrolling Interests Total Equity Redeemable Noncontrolling Interests (b) Balance, December 31, 2019 $ — $ 5,004 $ ( 5,370 ) $ ( 23 ) ( 389 ) $ 93 $ ( 296 ) $ 802 Net (loss) income (a) — — ( 2,096 ) — ( 2,096 ) 12 ( 2,084 ) 85 Contributions from noncontrolling interest holders — — — — — — — 1 Distributions to noncontrolling interest holders — — — — — ( 37 ) ( 37 ) ( 58 ) Share-based compensation — 6 — — 6 — 6 — Modification of noncontrolling interest — 138 — — 138 — 138 ( 138 ) Balance, September 30, 2020 $ — $ 5,148 $ ( 7,466 ) $ ( 23 ) $ ( 2,341 ) $ 68 $ ( 2,273 ) $ 692 (a) For the three months ended September 30, 2020, we allocated $ 22 million of net income to noncontrolling interest holders, of which a $ 3 million net loss was included in stockholders' equity and $ 25 million was included in mezzanine equity on our condensed consolidated balance sheet. The remaining net loss of $ 29 million for the three months ended September 30, 2020 was attributed to holders of our common stock and included in stockholders' equity on our condensed consolidated balance sheet. For the nine months ended September 30, 2020, we allocated $ 97 million of net income to noncontrolling interest holders, of which $ 12 million was included in stockholders' equity and $ 85 million was included in mezzanine equity on our condensed consolidated balance sheet. The remaining net loss of $ 2,096 million for the nine months ended September 30, 2020 was attributed to holders of our common stock and included in stockholders' equity on our condensed consolidated balance sheet. (b) Redeemable noncontrolling interests are reported in mezzanine equity on our condensed consolidated balance sheets in Predecessor periods. See Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Joint Ventures in our 2020 Annual Report for more information about our noncontrolling interests in the Ares and Elk Hills Carbon joint ventures. The accompanying notes are an integral part of these condensed consolidated financial statements. 6 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows For the three and nine months ended September 30, 2021 and 2020 (dollars in millions) Successor Predecessor Successor Predecessor Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 CASH FLOW FROM OPERATING ACTIVITIES Net income (loss) $ 107 $ ( 7 ) $ ( 89 ) $ ( 1,999 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion and amortization 54 89 160 296 Asset impairments 25 — 28 1,736 Net loss (gain) from commodity derivatives 125 — 603 ( 75 ) Net settlement (payments) proceeds from commodity derivatives ( 99 ) 2 ( 220 ) 105 Net loss (gain) on early extinguishment of debt — — 2 ( 5 ) Amortization of deferred gain — ( 6 ) — ( 39 ) Gain on asset divestitures ( 2 ) — ( 4 ) — Reorganization items, net (non-cash) — ( 125 ) — ( 125 ) Reorganization items, net (debtor-in-possession financing costs) — 25 — 25 Other non-cash charges to income, net 17 47 46 69 Changes in operating assets and liabilities, net ( 45 ) 23 ( 70 ) 153 Net cash provided by operating activities 182 48 456 141 CASH FLOW FROM INVESTING ACTIVITIES Capital investments ( 51 ) ( 4 ) ( 128 ) ( 37 ) Changes in accrued capital investments 5 3 18 ( 25 ) Proceeds from asset divestitures 11 — 13 41 Acquisitions ( 53 ) — ( 53 ) — Other — — ( 1 ) ( 7 ) Net cash used in investing activities ( 88 ) ( 1 ) ( 151 ) ( 28 ) CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Revolving Credit Facility — — 16 — Repayments of Revolving Credit Facility — — ( 115 ) — Proceeds from 2014 Revolving Credit Facility — 2 — 797 Repayments of 2014 Revolving Credit Facility — ( 733 ) — ( 1,315 ) Proceeds from debtor-in-possession facilities — 782 — 782 Repayments of debtor-in-possession facilities — ( 49 ) — ( 49 ) Debtor-in-possession financing costs — ( 25 ) — ( 25 ) Proceeds from Senior Notes — — 600 — Debt repurchases — — — ( 3 ) Debt issuance costs — — ( 13 ) — Repayment of Second Lien Term Loan — — ( 200 ) — Repayment of EHP Notes — — ( 300 ) — Repayment of 2020 Senior Notes — — — ( 100 ) Repurchases of common stock ( 39 ) — ( 84 ) — Proceeds from warrants exercised 2 — 2 — Contribution from noncontrolling interest holders — — — 1 Distributions paid to noncontrolling interest holders ( 19 ) ( 27 ) ( 50 ) ( 95 ) Shares cancelled for taxes and other — ( 1 ) — ( 1 ) Net cash used in financing activities ( 56 ) ( 51 ) ( 144 ) ( 8 ) Increase (decrease) in cash 38 ( 4 ) 161 105 Cash—beginning of period 151 126 28 17 Cash—end of period $ 189 $ 122 $ 189 $ 122 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 CALIFORNIA RESOURCES CORPORATION AND SUBSIDIARIES Notes to the Condensed Consolidated Financial Statements September 30, 2021 NOTE 1 BASIS OF PRESENTATION We are an independent oil and natural gas exploration and production company operating properties exclusively within California. 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 (consisting of normal recurring 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, 2020 (2020 Annual Report). Certain prior period amounts have been reclassified to conform to the current period presentation. NOTE 2 ACCOUNTING AND DISCLOSURE CHANGES On July 15, 2020, we filed voluntary petitions for relief under Chapter 11 of Title 11 of the Bankruptcy Code. On October 13, 2020, the Bankruptcy Court confirmed our joint plan of reorganization (the Plan) and we subsequently emerged from Chapter 11 on October 27, 2020 with a new Board of Directors, new equity owners and a significantly improved financial position. We qualified for and adopted fresh start accounting upon emergence from bankruptcy at which point we became a new entity for financial reporting purposes. We adopted an accounting convenience date of October 31, 2020 for the application of fresh start accounting. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, the financial statements after October 31, 2020 may not be comparable to the financial statements prior to that date. Accordingly, “black-line” financial statements are presented to distinguish between the Predecessor and Successor companies. References to "Predecessor” refer to the Company for periods ended on or prior to October 31, 2020 and references to “Successor” refer to the Company for periods subsequent to October 31, 2020. See Part II, Item 8 – Financial Statements and Supplementary Data, Note 2 Chapter 11 Proceedings and Note 3 Fresh Start Accounting in our 2020 Annual Report for additional information on the terms of the Plan, our emergence from bankruptcy and application of fresh start accounting. We adopted new accounting guidance on current expected credit losses on January 1, 2020, using a modified retrospective approach to the first period in which the guidance was effective. The new rules changed the measurement of credit losses for financial assets and certain other instruments, including trade and other receivables with a right to receive cash, and require the use of a new forward-looking expected loss model that results in the earlier recognition of an allowance for losses. The adoption of these new rules did not have a significant impact on our condensed consolidated financial statements. 8 NOTE 3 OTHER INFORMATION Other current assets — Other current assets includes the following: Successor September 30, December 31, 2021 2020 (in millions) Amounts due from joint interest partners $ 37 $ 42 Receivables for premiums on derivative contracts 7 — Fair value of derivative contracts 8 — Prepaid expenses 13 20 Prepaid greenhouse gas allowances 25 — Other 4 1 Other current assets $ 94 $ 63 Other noncurrent assets - Other noncurrent assets includes the following: Successor September 30, December 31, 2021 2020 (in millions) Operating lease right-of-use assets $ 42 $ 38 Deferred financing costs - Revolving Credit Facility 12 17 Emission reduction credits 11 11 Prepaid power plant maintenance 19 14 Fair value of derivative contracts 2 — Long-term deposits and other 12 10 Other noncurrent assets $ 98 $ 90 Accrued liabilities — Accrued liabilities includes the following: Successor September 30, December 31, 2021 2020 (in millions) Accrued employee-related costs $ 62 $ 72 Accrued taxes other than on income 39 36 Asset retirement obligations 51 50 Accrued interest 8 1 Lease liability 8 7 Deferred premiums on derivative contracts 56 18 Net settlement payments due on derivative contracts 37 3 Other 38 24 Accrued liabilities $ 299 $ 211 9 Other long-term liabilities — Other long-term liabilities includes the following: Successor September 30, December 31, 2021 2020 (in millions) Deferred compensation and postretirement $ 97 $ 184 Lease liability 38 35 Deferred premiums on derivative contracts 14 31 Other 14 19 Other long-term liabilities $ 163 $ 269 Oil, natural gas and NGL sales — Disaggregated revenue for sales of oil, natural gas and natural gas liquids (NGLs) to customers includes the following: Successor Predecessor Successor Predecessor Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in millions) Oil $ 413 $ 246 $ 1,124 $ 795 Natural gas 69 34 161 98 NGLs 67 32 174 94 Oil, natural gas and NGL sales $ 549 $ 312 $ 1,459 $ 987 Other operating expenses, net — Other operating expenses, net includes the following: Successor Predecessor Successor Predecessor Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in millions) Severance and termination costs $ — $ — $ 15 $ — Deficiency payment on a pipeline delivery contract — — — 20 Idle well fees — — 6 4 Power plant interruption — — — 7 Ad valorem fees — 4 — 4 Other, net 4 8 10 10 Other expenses, net $ 4 $ 12 $ 31 $ 45 10 Reorganization items, net represent the one-time costs related to our reorganization and consists of the following: Successor Predecessor Successor Predecessor Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in millions) Unamortized deferred gain and issuance costs, net (a) $ — $ 125 $ — $ 125 Legal, professional and other, net ( 1 ) ( 34 ) ( 5 ) ( 34 ) Debtor-in-possession financing costs — ( 25 ) — ( 25 ) Total reorganization items, net $ ( 1 ) $ 66 $ ( 5 ) $ 66 (a) Reflects a non-cash adjustment to the carrying amount of our pre-emergence long-term debt to state such amounts at face value upon filing our bankruptcy petition on July 15,2020. Supplemental Cash Flow Information We did no t make U.S. federal and state income tax payments during the three and nine months ended September 30, 2021 and 2020. Interest paid, net of capitalized amounts, totaled $ 23 million and $ 21 million for the three months ended September 30, 2021 and 2020, respectively. Interest paid, net of capitalized amounts, totaled $ 27 million and $ 72 million for the nine months ended September 30, 2021 and 2020, respectively. Cash paid for reorganization items during the three and nine months ended September 30, 2021 was $ 1 million and $ 5 million respectively, for legal, professional and other fees, net. Cash paid for reorganization items during the three and nine months ended September 30, 2020 was $ 7 million for legal, professional and other fees, net. Non-cash investing activities included $ 2 million of purchase price adjustments related to the acquisition of the working interests held by Macquarie Infrastructure and Real Assets Inc. (MIRA) for the three and nine months ended September 30, 2021. Non-cash financing activities in the three and nine months ended September 30, 2020 included a $ 138 million downward adjustment to mezzanine equity related to a Settlement Agreement with one of our joint venture partners. See Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Joint Ventures in our 2020 Annual Report for more on the Settlement Agreement. Fair Value of Financial Instruments The carrying amounts of cash and on-balance sheet financial instruments, other than debt, approximate fair value. Refer to Note 5 Debt for the fair value of our debt. Refer to Note 13 Asset Impairments for impairment charges related to our long-lived assets. 11 NOTE 4 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 predominantly comprise produced oil and NGLs in storage, which are valued at the lower of cost or net realizable value. Inventories, by category, are as follows: Successor September 30, December 31, 2021 2020 (in millions) Materials and supplies $ 55 $ 58 Finished goods 5 3 Inventories $ 60 $ 61 NOTE 5 DEBT As of September 30, 2021 and December 31, 2020, our long-term debt consisted of the following: Successor September 30, December 31, 2021 2020 Interest Rate Maturity (in millions) Revolving Credit Facility $ — $ 99 LIBOR plus 3 %- 4 % ABR plus 2 %- 3 % April 29, 2024 Second Lien Term Loan — 200 LIBOR plus 9 %- 10.5 % ABR plus 8 %- 9.5 % October 27, 2025 EHP Notes — 300 6 % October 27, 2027 Senior Notes 600 — 7.125 % February 1, 2026 Principal amount $ 600 $ 599 Unamortized debt issuance costs ( 11 ) ( 2 ) Long-term debt, net $ 589 $ 597 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 consists of a senior revolving loan facility (Revolving Credit Facility) with an aggregate commitment of $ 492 million, which we are permitted to increase if we obtain additional commitments from new or existing lenders. Our Revolving Credit Facility also includes a sub-limit of $ 200 million for the issuance of letters of credit. The 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 in November 2021. 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. As of September 30, 2021, our availability under our Revolving Credit Facility was as follows: Successor September 30, 2021 (in millions) Borrowing capacity $ 492 Outstanding letters of credit ( 133 ) Availability $ 359 12 Senior Notes On January 20, 2021, we issued $ 600 million in aggregate principal amount of our 7.125 % senior unsecured notes due 2026 (Senior Notes). The net proceeds of $ 587 million, after $ 13 million of debt issuance costs, were used to repay in full our Second Lien Term Loan and EHP Notes, with the remainder used to repay substantially all of the then outstanding borrowings under our Revolving Credit Facility. See Part II, Item 8 – Financial Statements and Supplementary Data, Note 8 Debt in our 2020 Annual Report for a description of our Second Lien Term Loan and EHP Notes. We recognized a $ 2 million loss on extinguishment of debt, including unamortized debt issuance costs, associated with these repayments. Other At September 30, 2021, we were in compliance with all financial and other debt covenants under our Revolving Credit Facility and Senior Notes. Predecessor Note Repurchases In the first quarter of 2020, we repurchased $ 7 million in face value of our Second Lien Notes for $ 3 million in cash resulting in a pre-tax gain of $ 5 million, including the effect of unamortized deferred gain and issuance costs. See Part II, Item 8 – Financial Statements and Supplementary Data, Note 8 Debt in our 2020 Annual Report for a description of our Second Lien Notes. Fair Value We estimate that the fair value of our variable rate debt approximates its carrying value because the interest rate approximates current market rates. As shown in the table below, we estimate the fair value of our fixed rate Senior Notes based on observable inputs (Level 1) and the fair value of our EHP Notes with no observable inputs (Level 3). Successor September 30, December 31, 2021 2020 (in millions) Variable rate debt $ — $ 299 Fixed rate debt Senior Notes 634 — EHP Notes — 300 Fair Value of Long-Term Debt $ 634 $ 599 NOTE 6 ASSETS HELD FOR SALE During the second quarter of 2021, we entered into agreements to sell our Ventura basin operations. We expect to receive cash consideration of up to $ 102 million, before purchase price adjustments, plus additional earn-out consideration that is linked to future commodity prices. The consideration, exclusive of the earn-out, includes $ 82 million of cash to be paid at closing (subject to purchase price adjustments) and up to $ 20 million of potential additional consideration if the buyer does not perform certain abandonment obligations with respect to the divested properties. The additional consideration is secured by production payments of $ 20 million over a five-year period. To the extent the buyer satisfies all of the required abandonment obligations within a five-year period following the close date, none of the $ 20 million of potential additional consideration will be paid to us. The closing of the transaction is subject to customary closing conditions, including satisfaction of land and environmental due diligence and third-party consents. The sale of our Ventura basin operations met the criteria for assets held for sale and is classified as such on our condensed consolidated balance sheet as of September 30, 2021. The amount reported as assets held for sale primarily consists of property, plant and equipment along with associated asset retirement obligations. Refer to Note 16 Subsequent Events for information on the closing of this sale. 13 NOTE 7 ACQUISITIONS AND DIVESTITURES Acquisitions In April 2017, we entered into a development joint venture with MIRA to develop certain of our oil and natural gas properties in the San Joaquin basin in exchange for a 90 % working interest in the related properties. In August 2021, we purchased MIRA’s entire working interest share in the conveyed assets for $ 53 million, before purchase prices adjustments and transaction costs. We accounted for this transaction as an asset acquisition. Prior to the acquisition, our consolidated results reflect only our 10 % working interest share in the productive wells. Divestitures During the three months ended September 30, 2021, we sold unimproved land for $ 11 million in proceeds recognizing a $ 2 million gain. During the nine months ended September 30, 2021 we sold non-core assets, including unimproved land, for $ 13 million in proceeds recognizing a $ 4 million gain. During the nine months ended September 30, 2020, we sold royalty interests and a non-core asset for $ 41 million. These divestitures were accounted for as normal retirements with no gain or loss recognized. NOTE 8 LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES Litigation and Claims We are involved, in the normal course of business, in lawsuits, environmental and other claims and other contingencies that seek, among other things, compensation for alleged personal injury, breach of contract, property damage or other losses, punitive damages, civil penalties, or injunctive or declaratory relief. We accrue reserves for currently outstanding lawsuits, claims and proceedings when it is probable that a liability has been incurred and the liability can be reasonably estimated. Reserve balances for these items at September 30, 2021 and December 31, 2020 were not material to our condensed consolidated balance sheets as of such dates. We also evaluate the amount of reasonably possible losses that we could incur as a result of these matters. We believe that reasonably possible losses that we could incur in excess of reserves cannot be accurately determined. In October 2020, Signal Hill Services, Inc. defaulted on its decommissioning obligations associated with two offshore platforms. The Bureau of Safety and Environmental Enforcement (BSEE) determined that former lessees, including our former parent, Occidental Petroleum Corporation (Oxy) with a 37.5 % share, are responsible for accrued decommissioning obligations associated with these offshore platforms. Oxy sold its interest in the platforms approximately 30 years ago and it is our understanding that Oxy has not had any connection to the operations since that time and is challenging BSEE's order. Oxy notified us of the claim under the indemnification provisions of the Separation and Distribution Agreement between us and Oxy. In September 2021, we accepted the indemnification claim from Oxy and will be challenging the order from BSEE. NOTE 9 DERIVATIVES We maintain a commodity hedging program primarily focused on crude oil to help protect our cash flows, margins and capital program from the volatility of commodity prices. We did not have any derivative instruments designated as accounting hedges as of and for the three and nine months ended September 30, 2021 and 2020. Unless otherwise indicated, we use the term "hedge" to describe derivative instruments that are designed to achieve our hedging requirements and program goals, even though they are not accounted for as accounting hedges. Our Revolving Credit Facility requires us to maintain hedges on a minimum amount of crude oil production, determined semi-annually, of no less than (i) 75 % of our reasonably anticipated oil production from our proved reserves for the first 24 months after the closing of the Revolving Credit Facility on October 27, 2020, and (ii) 50 % of our reasonably anticipated oil production from our proved reserves for a period from the 25th month through the 36th month after the same date. The Revolving Credit Facility specifies the forms of hedges and prices (which can be prevailing prices) that must be used for a portion of those hedges. 14 Our Revolving Credit Facility also requires us to maintain acceptable commodity hedges for no less than 50 % of the reasonably anticipated oil production from our proved reserves for at least 24 months following the date of delivery of each reserve report if our leverage ratio is greater than 2.00 :1.00. If our leverage ratio is less than 2.00 :1.00, then the minimum amount of hedges that we are required to maintain is reduced from 50 % to 33 %. Currently, we may not hedge more than 85 % of reasonably anticipated total forecasted production of crude oil, natural gas and NGLs from our oil and gas properties for a 48 -month period, except that we may purchase puts and floors up to 100 % of such production. The percentage of our crude oil production hedged is calculated exclusive of offsetting positions on our derivative contracts. Summary of open derivative contracts — We held the following Brent-based crude oil contracts as of September 30, 2021: Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 2023 Sold Calls Barrels per day 37,037 35,347 35,343 34,380 25,167 14,790 Weighted-average price per barrel $ 60.75 $ 60.37 $ 60.63 $ 60.76 $ 57.82 $ 58.01 Purchased Puts Barrels per day 35,820 56,814 57,850 57,855 43,121 14,790 Weighted-average price per barrel $ 40.19 $ 48.29 $ 48.98 $ 49.48 $ 50.05 $ 40.00 Sold Puts Barrels per day 14,193 28,336 22,507 27,475 19,302 — Weighted-average price per barrel $ 32.00 $ 38.06 $ 40.00 $ 38.84 $ 39.44 $ — Swaps Barrels per day 13,922 12,369 10,669 10,476 17,263 10,101 Weighted-average price per barrel $ 54.86 $ 54.38 $ 54.12 $ 53.97 $ 58.79 $ 55.69 The outcomes of the derivative positions are as follows: • Sold calls – we make settlement payments for prices above the indicated weighted-average price per barrel. • Purchased puts – we receive settlement payments for prices below the indicated weighted-average price per barrel. • Sold puts – we make settlement payments for prices below the indicated weighted-average price per barrel. • Swaps – we make settlement payments for prices above the indicated weighted-average price per barrel and receive settlement payments for prices below the indicated weighted-average price per barrel. We use combinations of these positions to meet the requirements of our Revolving Credit Facility and to increase the efficacy of our hedging program. 15 Fair value of derivatives — The following tables present the fair values on a recurring basis (at gross and net) of our outstanding commodity derivatives as of September 30, 2021 and December 31, 2020: September 30, 2021 (Successor) Classification Gross Amounts at Fair Value Netting Net Fair Value Assets (in millions) Other current assets $ 29 $ ( 21 ) $ 8 Other noncurrent assets 27 ( 25 ) 2 Liabilities Current - Fair value of derivative contracts ( 296 ) 21 ( 275 ) Noncurrent - Fair value of derivative contracts ( 178 ) 25 ( 153 ) $ ( 418 ) $ — $ ( 418 ) December 31, 2020 (Successor) Classification Gross Amounts at Fair Value Netting Net Fair Value Assets (in millions) Other current assets $ 21 $ ( 21 ) $ — Other noncurrent assets 63 ( 63 ) — Liabilities Current - Fair value of derivative contracts ( 71 ) 21 ( 50 ) Noncurrent - Fair value of derivative contracts ( 69 ) 63 ( 6 ) $ ( 56 ) $ — $ ( 56 ) Our derivative contracts are measured at fair value using industry-standard models with various inputs, including quoted forward prices, and are classified as Level 2 in the required fair value hierarchy for the periods presented. We recognized fair value changes on derivative instruments each reporting period in net (loss) gain from commodity derivatives on our condensed consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020. The changes in fair value result from the relationship between our existing positions, volatility, time to expiration, contract prices and the associated forward curves. NOTE 10 EARNINGS PER SHARE Basic and diluted earnings per share (EPS) were calculated using the treasury stock method for the three and nine months ended September 30, 2021 and the two-class method for the three and nine months ended September 30, 2020, which is required for participating securities. Certain of our restricted and performance stock unit awards outstanding during the nine months ended September 30, 2020 were considered participating securities because they had non-forfeitable dividend rights at the same rate as our pre-emergence common stock. Our restricted and performance stock unit awards granted subsequent to our emergence from bankruptcy, as described in Note 14 Stock-Based Compensation , are not considered participating securities since the dividend rights on unvested shares are forfeitable. Under the two-class method, undistributed earnings allocated to participating securities are subtracted from net income attributable to common stock in determining net income available to common stockholders. In loss periods, no allocation is made to participating securities because participating securities do not share in losses. For basic EPS, the weighted-average number of common shares outstanding excludes underlying shares related to unvested equity-settled awards and warrants. For diluted EPS, the basic shares outstanding are adjusted by adding potential common shares, if dilutive. 16 The following table presents the calculation of basic and diluted EPS, for the three and nine months ended September 30, 2021 and 2020: Successor Predecessor Successor Predecessor Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in millions, except per-share amounts) Numerator for Basic and Diluted EPS Net income (loss) $ 107 $ ( 7 ) $ ( 89 ) $ ( 1,999 ) Less : net income attributable to noncontrolling interests ( 4 ) ( 22 ) ( 13 ) ( 97 ) Net income (loss) attributable to common stock 103 ( 29 ) ( 102 ) ( 2,096 ) Modification of noncontrolling interest (a) — 138 — 138 Net income (loss) available to common stockholders $ 103 $ 109 $ ( 102 ) $ ( 1,958 ) Denominator for Basic EPS Weighted-average shares 81.6 49.5 82.6 49.4 Potential Dilutive Common Shares: Restricted Stock Units 0.4 — — — Performance Stock Units 0.4 — — — Denominator for Diluted Earnings per Share Weighted Average Shares - Diluted 82.4 49.5 82.6 49.4 EPS Basic $ 1.26 $ 2.20 $ ( 1.23 ) $ ( 39.64 ) Diluted $ 1.25 $ 2.20 $ ( 1.23 ) $ ( 39.64 ) (a) Modification of noncontrolling interest relates to the deemed redemption of ECR's noncontrolling interest in the Ares JV in the third quarter of 2020. For more information on the Ares JV and the Settlement Agreement, see Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Joint Ventures in our 2020 Annual Report. Diluted earnings per share for the three and nine months ended September 30, 2021 excludes 4.3 million common shares issuable upon exercise of warrants that were out-of-the-money based on the average stock price for those periods. See Note 15 Equity for information on the terms of the warrants. Diluted earnings per share for the nine months ended September 30, 2021 excludes 0.9 million weighted-average common shares underlying our Restricted Stock Units and 0.6 million weighted-average common shares underlying our Performance Stock Units. Our Performance Stock Units have a market condition, and an additional 0.2 million potential common shares did not meet the market-based criteria as of September 30, 2021. 17 Diluted earnings per share for the three and nine months ended September 30, 2020 excludes 1.25 million potential common shares issuable upon exercise of warrants that were out-of-the-money based on the average stock price for those periods. See Part II, Item 8 – Financial Statements and Supplementary Data, Note 7 Joint Ventures in our 2020 Annual Report for more information on the terms of these warrants. Diluted earnings per share for the three months ended September 30, 2020 excludes 0.2 million, 0.5 million and 1.4 million weighted-average common shares underlying our then Restricted Stock Units, Performance Stock Units and stock options, respectively. Diluted earnings per share for the nine months ended September 30, 2020 calculation excludes 0.6 million, 0.8 million and 1.7 million weighted-average common shares underlying our then Restricted Stock Units, Performance Stock Units, and stock options, respectively. NOTE 11 PENSION AND POSTRETIREMENT BENEFIT PLANS The following table sets forth the components of the net periodic benefit costs for our defined benefit pension and postretirement benefit plans for the three and nine months ended September 30, 2021 and 2020: Successor Predecessor Three months ended September 30, Three months ended September 30, 2021 2020 Pension Benefit Postretirement Benefit Pension Benefit Postretirement Benefit (in millions) Service cost $ — $ 1 $ — $ 1 Interest cost 1 — — 1 Curtailment gain — ( 1 ) — — Total $ 1 $ — $ — $ 2 Successor Predecessor Nine months ended September 30, Nine months ended September 30, 2021 2020 Pension Benefit Postretirement Benefit Pension Benefit Postretirement Benefit (in millions) Service cost $ 1 $ 3 $ 1 $ 3 Interest cost 1 2 1 3 Expected return on plan assets ( 1 ) — ( 1 ) — Recognized actuarial loss — — 1 — Curtailment gain — ( 1 ) $ — $ — Total $ 1 $ 4 $ 2 $ 6 We contributed $ 1 million and $ 2 million to our defined benefit plans during the three and nine months ended September 30, 2021, respectively. We do not expect to make any significant contributions to our defined benefit pension plans during the remainder of 2021. We did no t make significant contributions to our defined benefit pension plans for the three and nine months ended September 30, 2020. During these periods, we deferred contributions to our defined benefit pension plans of approximately $ 5 million under the Coronavirus Aid, Relief, and Economic Security Act, which was enacted on March 27, 2020. Our 2020 plan contributions were funded in December 2020. 18 In the third quarter of 2021, we adopted a postretirement benefit design change, which terminated the employer cost sharing for post age 65 retiree health benefits effective as of January 1, 2022. Our retiree health care benefits provided up to age 65 to current and future retirees who meet certain eligibility requirements were not affected by this change. As a result of this change, our postretirement medical benefit obligation was remeasured as of September 30, 2021. The remeasurement resulted in a decrease to the benefit obligation of $ 82 million with a corresponding increase to accumulated other comprehensive income. The benefit from the change in plan design will be recognized in our statement of operations over the average remaining years of future service for active employees as a component of other non-operating expenses, net. NOTE 12 INCOME TAXES We estimate our annual effective income tax rate to record our quarterly income tax provision in the jurisdictions in which we operate. Statutory tax rate changes and other significant or unusual items, if any, are not included in our annual effective income tax rate and are instead recognized as discrete items in the quarter in which they occur. For the nine months ended September 30, 2021 and 2020, we did not provide any current or deferred income tax provision or benefit. The difference between our statutory tax rate and our effective tax rate of zero for all periods presented includes changes to maintain our full valuation allowance against our net deferred tax assets given our recent and anticipated future earnings trends. We believe that if oil prices continue at current levels, there is a reasonable possibility that some or all of this valuation allowance could be released in the foreseeable future. However, the amount of the net deferred tax assets considered realizable depends on the sustained level of profitability that we can achieve. NOTE 13 ASSET IMPAIRMENTS The following table presents a summary of our asset impairments: Successor Predecessor Successor Predecessor Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in millions) Proved oil and natural gas properties $ — $ — $ — $ 1,487 Unproved properties — — — 228 Other 25 — 28 21 Total $ 25 $ — $ 28 $ 1,736 We recorded an impairment charge of $ 25 million during the three months ended September 30, 2021 related to the write-down of a commercial office building located in Bakersfield, California to fair value, which was determined based on a market approach (using Level 3 inputs in the fair value hierarchy). The decline in value of the commercial office building primarily relates to limited demand for office space of this size and type in the Bakersfield market and general trends in commercial real estate due to the COVID-19 pandemic. We do not own any other commercial office buildings. No impairment charges were recorded during the same period in 2020. We recorded impairment charges of $ 28 million for the nine months ended September 30, 2021 which included the $ 25 million write-down of commercial office space in Bakersfield, California to fair value and a $ 3 million write-off of capitalized costs related to projects which were abandoned. For the same period in 2020, we recorded an impairment charge of $ 1,736 million due to the sharp drop in commodity prices in March 2020, which included $ 1,487 million related to certain of our proved properties and approximately $ 228 million related to unproved acreage that was no longer included in our development plans at that time. See Part II, Item 8 – Financial Statements and Supplementary Data, Note 13 Asset Impairment in our 2020 Annual Report for a description of our impairment of proved and unproved oil and gas properties and other asset impairments during the nine months ended September 30, 2020. 19 NOTE 14 STOCK-BASED COMPENSATION The California Resources Corporation 2021 Long Term Incentive Plan (Long Term Incentive Plan) provides for potential grants of stock options, stock appreciation rights, restricted stock awards, restricted stock units, vested stock awards, dividend equivalents, other stock-based awards and substitute awards to employees, officers, non-employee directors and other service providers of the Company and its affiliates. The Long Term Incentive Plan replaces the earlier Amended and Restated California Resources Corporation Long Term Incentive Plan which was cancelled upon our emergence from bankruptcy, along with all outstanding stock-based compensation awards granted thereunder. Shares of our common stock may be withheld by us in satisfaction of tax withholding obligations arising upon the vesting of restricted stock units (RSUs) and performance stock units (PSUs). Stock-based compensation expense is recorded on our condensed consolidated statements of operations based on job function of the employees receiving the grants as shown in the table below. Successor Predecessor Successor Predecessor Three months ended September 30, Three months ended September 30, Nine months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in millions) General and administrative expenses $ 5 $ 1 $ 11 $ 3 Operating costs 1 — 1 — Total stock-based compensation expense $ 6 $ 1 $ 12 $ 3 For the three and nine months ended September 30, 2021 and 2020, we did no t recognize any income tax benefit related to our stock-based compensation. For the three months ended September 30, 2020, we made insignificant cash payments for the cash-settled portion of our pre-emergence awards. For the nine months ended September 30, 2020, we made cash payments of $ 15 million for the cash-settled portion of our pre-emergence awards. Management Incentive Plan Restricted Stock Units Executives and non-employee directors were granted RSUs during the first nine months of 2021 which are in the form of, or equivalent in value to, actual shares of our common stock. The awards generally vest ratably over three years , with one third of the granted units vesting on each of the first three anniversaries of the applicable date of grant. RSUs are settled in shares of our common stock at the end of the third year of the three-year vesting period. The following table sets forth RSU activity for the nine months ended September 30, 2021: Number of Units Weighted-Average Grant-Date Fair Value (in thousands) Unvested at December 31, 2020 (Successor) — $ — Granted 1,185 $ 24.75 Cancelled or Forfeited ( 67 ) $ 24.50 Unvested at September 30, 2021 (Successor) 1,118 Compensation expense was measured on the date of grant using the quoted market price of our common stock and is recognized on a straight-line basis over the requisite service periods adjusted for actual forfeitures, if any. 20 As of September 30, 2021, the unrecognized compensation expense for our unvested RSUs was approximately $ 22 million and is expected to be recognized over a weighted-average remaining service period of approximately two years . Performance Stock Units Executives were granted PSUs during the first nine months of 2021. PSUs are earned upon the attainment of specified 60 -trading day volume weighted average prices for shares of our common stock generally during a three-year service period commencing on the grant date. Once units are earned, the earned units are not reduced for subsequent decreases in stock price. For the duration of the three-year period, a minimum of 0 % and a maximum of 100 % of the PSUs granted could be earned. Earned PSUs generally vest on the third anniversary of the grant date and are settled in shares of our common stock at that time. The following table sets forth PSU activity for the nine months ended September 30, 2021: Number of Units Weighted-Average Grant-Date Fair Value (in thousands) Unvested at December 31, 2020 (Successor) — $ — Granted 969 $ 19.72 Cancelled or Forfeited ( 53 ) $ 19.31 Unvested at September 30, 2021 (Successor) 916 The grant date fair value and associated equity compensation expense was measured using a Monte Carlo simulation model which runs a probabilistic assessment of the number of units that will be earned based on a projection of our stock price during the three-year service period. The range of assumptions used in the Monte Carlo simulation model for the PSUs granted during the first nine months of 2021 were as follows: Successor Nine months ended September 30, 2021 Expected volatility (a) 60.00 % - 65.00 % Risk-free interest rate (b) 0.16 % - 0.32 % Dividend yield — % Forecast period (in years) 2 - 3 (a) Expected volatility was calculated using a peer group due to our limited trading history since our emergence from bankruptcy. (b) Based on the U.S. Treasury yield for a two - or three-year term at the grant date. Compensation expense is recognized on a straight-line basis over the requisite service periods adjusted for actual forfeitures, if any. As of September 30, 2021, the unrecognized compensation expense for our unvested PSUs was approximately $ 14 million and is expected to be recognized over a weighted-average remaining service period of approximately two years . Long-Term Cash Incentive Awards On June 30, 2021, we granted $ 16 million of performance cash awards to approximately 500 non-executive employees where half of the award is variable with payouts ranging from 75 % to 150 % of the grant value. The variable portion of the award is determined based upon the attainment of specified 60 -trading day volume weighted average prices for shares of our common stock preceding each vesting date. These awards vest over a three-year service period commencing on the grant date and are settled in cash. The fair value of the awards is adjusted on a quarterly basis for the cumulative change in the value determined using a Monte Carlo simulation model which runs a probabilistic assessment of our stock price during each of the three-year service periods. 21 The assumptions used in the Monte Carlo simulation model for the performance cash awards as of September 30, 2021 were as follows: Successor Nine months ended September 30, 2021 Expected volatility (a) 60 % Risk-free interest rate (b) 0.47 % Dividend yield — % Forecast period (in years) 2.7 (a) Expected volatility was calculated using a peer group due to our limited trading history since our emergence from bankruptcy. (b) Based on the U.S. Treasury yield for the 2.7 year remaining term. As of September 30, 2021, the unrecognized compensation expense for all of our unvested cash-settled awards was $ 14 million and is expected to be recognized over a weighted-average remaining service period of approximately three years . The awards forfeited during the three months ended September 30, 2021 were insignificant. NOTE 15 EQUITY Share Repurchase Program In 2021, our Board of Directors authorized a Share Repurchase Program to acquire up to $ 250 million of our common stock through March 31, 2022, which was extended through June 30, 2022 as described in Note 16 Subsequent Events . The repurchases may be effected from time-to-time through open market purchases, privately negotiated transactions, Rule 10b5-1 plans, accelerated stock repurchases, derivative contracts or otherwise in compliance with Rule 10b-18, subject to market conditions. The Share Repurchase Program does not obligate us to repurchase any dollar amount or number of shares and our Board of Directors may modify, suspend, or discontinue authorization of the program at any time. As of September 30, 2021, we repurchased 2.6 million shares of our common stock, at an average price of $ 32.39 per share, through either open market purchases or our Rule 10b5-1 plan for $ 84 million. Shares repurchased were held as treasury stock as of September 30, 2021. Warrants In accordance with the Plan, we reserved an aggregate 4.4 million shares of our common stock for warrants issued to holders of our Predecessor debt claims. The warrants are exercisable at an initial exercise price of $ 36 per share for a period of four years beginning October 27, 2020, the effective date of the Plan. The Warrant Agreement contains customary anti-dilution adjustments in the event of any stock split, reverse stock split, stock dividend, equity awards under a management incentive plan that our Board of Directors may establish pursuant to the Plan (if any) or other distributions. The warrant holder may elect, in its sole discretion, to pay cash or to exercise on a cashless basis, pursuant to which the holder will not be required to pay cash for shares of common stock upon exercise of the warrant but will instead receive fewer shares. See Part II, Item 8 – Financial Statements and Supplementary Data, Note 15 Equity in our 2020 Annual Report for a description of our warrants. During the three and nine months ended September 30, 2021, we issued 47,416 shares of common stock and received approximately $ 2 million related to warrants exercised. 22 BSP JV In February 2017, we entered into a development joint venture (JV) with Benefit Street Partners (BSP) to develop certain oil and natural gas assets in exchange for a preferred interest in the BSP JV. BSP invested $ 200 million and was entitled to preferred distributions and, upon receiving cash distributions equal to a predetermined threshold in September 2021, the preferred interest was automatically redeemed in full under the terms of the joint venture agreement. For the three and nine months ended September 30, 2021, we distributed $ 19 million and $ 50 million, respectively, to BSP. Upon redemption, we reduced the remaining balance in noncontrolling interest to zero and increased our additional paid-in capital by the same amount. See Part II, Item 8 – Financial Statements and Supplementary Data, Note 6 Joint Ventures in our 2020 Annual Report for more information on our BSP JV. NOTE 16 SUBSEQUENT EVENTS Ventura Basin Divestiture After the quarter-end, closings for the sale of our Ventura basin operations occurred with respect to the majority of the basin's assets and subsequent closings are expected to occur in the following quarters. With the divestitures closed to date, we realized $ 62 million of cash paid at closing (before purchase price adjustments) and our liability for related asset retirement obligations was approximately $ 100 million which were assumed by the buyer. See Note 6 Assets Held for Sale for more information regarding this transaction. Dividends On November 11, 2021, our Board of Directors declared a quarterly cash dividend of $ 0.17 per share of common stock. The dividend is payable to shareholders of record at the close of business on December 1, 2021 and is expected to be paid on December 16, 2021. This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $ 0.68 , payable in quarterly increments of $ 0.17 per share of common stock. The actual declaration of future cash dividends, and the establishment of record and payment dates, is subject to final determination by our Board of Directors each quarter after reviewing our financial performance and position. The dividend will be recorded as a reduction of additional paid-in capital. Share Repurchase Program On November 11, 2021, our Board of Directors extended the time period for our Share Repurchase Program through June 30, 2022. 23