The Number

California Resources Corp., the Valley’s newest public company, has a lot going for it. But much of its growth may depend on its crucial San Joaquin Valley reserves, which are heading downward. Downward revision of CRC’s barrels of San Joaquin oil reserves The reserves are in the Monterey Shale formation that lie under California’s central valley. A 2011 report conducted for the U.S. Energy Information Administration estimated the Monterey play had 13.7 billion barrels of recoverable oil due to advances in drilling technology such as hydraulic fracturing or “fracking.” But last year, another agency study put the estimate at 600 million barrels – a 96 percent haircut from the previous estimate after determining that the techniques that have led to explosive drilling growth elsewhere in the country may not work in the San Joaquin Valley due to more difficult geological conditions. The Chatsworth spinoff of Occidental Petroleium Corp. holds oil leases for 1.9 million acres in the San Joaquin Valley and has 6,379 operable wells, according to its annual report. But last year it revised estimates of its proven reserves downward by 41 million barrels, following the federal agency’s revisions. The annual report cited “performance related adjustments” to wells in Kern County. California Resources now figures its wells eventually can produce 340 million barrels in the San Joaquin field. Closer to home, the company estimates it has 160 million barrels in the Los Angeles Basin (an upward revision of 8 million barrels). But while reserve revisions can affect the company’s valuation, the immediate effect is negligible compared to the drop in oil prices. And while a price drop doesn’t change the amount of oil in the ground, it can make that oil too expensive to pump, thus impacting “recoverable” reserves. – Joel Russell