Chris Gould: Yes. thanks, Francisco. Nate, thanks for the question. Yes, just to unpack that a bit, obviously California is a national leader in technology. and it’s got a high concentration of data centers in LA, Silicon Valley and Sacramento. And that uniquely overlaps with our footprint for our CTV reservoir. So, you all know CTV 1 is about 120 miles or so from LA and CTV 2 through 5 are 30 to 65 miles from Sacramento or Silicon Valley. So, we’re uniquely positioned to take advantage of that growth and that opportunity by co-locating either hyperscale data centers, which as you know are large megawatt facilities and or co-locators, which are smaller, with a range of different storage volumes and injection to do what Francisco referenced around sourcing that baseload carbon-free energy.
So, very excited about that. As Francisco mentioned, early discussions underway and ultimately, the scale at which we could deliver a solution like that is in the gigawatt range as opposed to the megawatt range and something we’re advancing discussions with.
Nate Pendleton: Got it. I appreciate the detail. It’s a great opportunity. And for my follow-up, referencing Slide 18, can you provide some detail around the potential to use those conditional use permits for Kern County, such as other limitations on the potential size of those programs that such permits could support?
Francisco Leon: So, good potential. So, not only we talked about CRC having in the Q3 conditional use permits, Elk Hills, Buena Vista and Kern Front. Aera has several CUPs in the queue as well. So, we’ll have a lot of opportunity to go back to kind of field specific programs. The packaging of the programs, a number of wells, injectors that’s still to be determined in terms of how ultimately best get the CUPs off the ground. That’s what we’re working through. It still will take some time. We don’t see that process moving quickly. And as we said, it’s going to be more of a second half of next year. But good confidence in the ability to permit using that format. That’s effectively how the rest of the state works in other places, where CalGEM is the lead agency. So, we see this as working well even though it’s not ready today, it’s a very good solution to permit using the CUPs.
Operator: Our next question comes from Betty Jiang of Barclays. Please go ahead.
Betty Jiang: Hello. Thank you for taking my question. I wanted — sorry, just follow-up on the permitting question a bit more. I guess, on the conditional use, some of the two other options beyond the Kern County litigation resolution, when it comes down to the conditional use permit and Francisco, what you just talked about the multi-basin approach, what — is it — can you just get the — get a bit more detail into the legislatures or the organization that’s involved in providing these permits and whether that could completely offset the permits that you guys need, in Kern County, that will be able to compensate the hurdles that you’re currently seeing in Kern County? Thanks.
Francisco Leon: Hey, Betty. Yes. So, we’re in multiple basins. We’re in Long Beach. We’re in Sacramento. And now with Aera, we’ll be in Ventura beyond the San Joaquin Basin, which is primarily Kern County. The attention has been given to Kern County and the process that they had as the lead agency effectively and that’s what’s been challenged in the courts. But outside of Kern County, CalGEM is the lead agency and CalGEM is working through a new standard operating procedure. They’re working through their process in terms of making sure we’re checking all the requirements from a regulation perspective. So, outside of Kern County it’s CalGEM and the discussions are ongoing. We’re actually receiving sidetracks under this process.
Not enough to say that they have more than compensated the loss in Kern County. but there’s progress there and that’s what gives us confidence that we’re going to be able to run a one-rig program this year and next year. There could be some upside as more permits come through, but hard to know at this stage, we just know that CalGEM is working it and progress is starting to show up.
Betty Jiang: Got it. Thank you. And I have a follow-up on the Brookfield payment and how to think about the next catalyst when it comes to the carbon management business. Can you just walk through what we should be looking for to receive the next third installed payment for Brookfield? And when should we expect in terms of FID for the cryo plant for the first injection plant, which I believe, will be followed by the hydrogen plant?
Francisco Leon: Yes, Betty. So, as we looked two plus years ago now with Brookfield, a first of a kind joint venture, there were a lot of unknowns as to how things were going to progress. And we set up as we dropped in reservoirs and we dropped in the first one called 26R, we decided to have a staggered payment system that’s tied to milestones. First payment was for the draft permit, which we received in December. The second permit came in as the public comment period was finalized and completed to Brookfield satisfaction. The third payment is around the final permit effectively and reaching FID. So, that’s I would expect that either later this year, the beginning of next year, it just depends on how things play out in terms of getting to FID.
But if you go back to my conversation earlier, we are looking for final permit in the second half of this year and the gas processing plant, which is our CRC-owned plant 100,000 tons per year of CO2 that we can capture right away. That’s a project that’s within fuel boundaries, it’s already in place and something that we can execute quickly. So, the conversations with Brookfield will be around that FID as the project that triggers the last payment. But it also has the condition of final declaration of the size of the reservoir by the EPA. So, we are seeing upsides to the numbers that we had planned for. So that’s where we provide a range to the third payment that could be higher than the first and second and third payments, kind of a catch up payment if the reservoir is higher.
So, expect more news in the second half of the year once we get closer to final permit. once we get to FID, we’ll update on that Brookfield payment, but I think we’ll be in a position in the near term to collect all three payments and looking forward to adding more reservoirs into the JV.
Operator: The next question comes from Leo Mariani of ROTH MKM. Please go ahead.
