California Resources Corp (Form: 10-12B/A, Received: 10/08/2014 16:23:31)

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

/s/ Maddy Hall

Maddy Hall

Vice President

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As filed with the Securities and Exchange Commission on October 8, 2014

Registration No. 001-36478

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 4
to

Form 10

GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934

California Resources Corporation
(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		46-5670947 (I.R.S. Employer Identification No.)


10889 Wilshire Blvd.
Los Angeles, California		90024
(Address of Principal Executive Offices)		(Zip Code)

Registrant's telephone number, including area code:
888-848-4754

Securities to be registered pursuant to Section 12(b) of the Act:

Title of Each Class to be so Registered		Name of Each Exchange on Which Each Class is to be Registered

Common stock, par value $0.01 per share		The New York Stock Exchange

Securities to be registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. (Check one):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer ý (Do not check if a smaller reporting company)		Smaller reporting company o

INFORMATION REQUIRED IN REGISTRATION STATEMENT

CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10

The information required by the following Form 10 Registration Statement items is contained in the sections identified below of the information statement attached hereto as Exhibit 99.1, each of which are incorporated in this Form 10 Registration Statement by reference:

Item 1. Business

The information required by this item is contained under the sections "Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business," "Arrangements Between Occidental and Our Company" and "Other Related Party Transactions" of the Information Statement. Those sections are incorporated herein by reference.

Item 1A. Risk Factors

The information required by this item is contained under the section "Risk Factors" of the Information Statement. That section is incorporated herein by reference.

Item 2. Financial Information

The information required by this item is contained under the sections "Summary," "Selected Historical Combined Financial Data," "Unaudited Pro Forma Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Description of Capital Stock" and "Index to Financial Statements and Supplementary Information" of the Information Statement. Those sections are incorporated herein by reference.

Item 3. Properties

The information required by this item is contained under the section "Business" of the Information Statement. That section is incorporated herein by reference.

Item 4. Security Ownership of Certain Beneficial Owners and Management

The information required by this item is contained under the section "Security Ownership of Certain Beneficial Owners and Management" of the Information Statement. That section is incorporated herein by reference.

Item 5. Directors and Executive Officers

The information required by this item is contained under the section "Management" of the Information Statement. That section is incorporated herein by reference.

Item 6. Executive Compensation

The information required by this item is contained under the section "Executive Compensation" of the Information Statement. That section is incorporated herein by reference.

Item 7. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is contained under the sections "Management," "Executive Compensation," "Arrangements Between Occidental and Our Company" and "Other Related Party Transactions" of the Information Statement. Those sections are incorporated herein by reference.

Item 8. Legal Proceedings

The information required by this item is contained under the sections "Business—Legal Proceedings" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Lawsuits, Claims and Contingencies" of the Information Statement. Those sections are incorporated herein by reference.

Item 9. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters

The information required by this item is contained under the sections "Risk Factors," "The Spin-Off," "Dividend Policy," "Executive Compensation" and "Description of Capital Stock" of the Information Statement. Those sections are incorporated herein by reference.

Item 10. Recent Sales of Unregistered Securities

The information required by this item is contained under the section "Description of Capital Stock." That section is incorporated herein by reference.

Item 11. Description of Registrant's Securities to be Registered

The information required by this item is contained under the section "Description of Capital Stock" of the Information Statement. That section is incorporated herein by reference.

Item 12. Indemnification of Directors and Officers

The information required by this item is contained under the section "Description of Capital Stock—Limitation of Liability and Indemnification Matters" of the Information Statement. That section is incorporated herein by reference.

Item 13. Financial Statements and Supplementary Data

The information required by this item is contained under the sections "Selected Historical Combined Financial Data," "Unaudited Pro Forma Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Description of Capital Stock" and "Index to Financial Statements and Supplementary Information" of the Information Statement. Those sections are incorporated herein by reference.

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 15. Financial Statements and Exhibits

(a): Financial Statements

The information required by this item is contained under the section "Index to Financial Statements and Supplementary Information" beginning on page F-1 of the Information Statement. That section is incorporated herein by reference.

(b): Exhibits

The following documents are filed as exhibits hereto:

		Description

2.1	*	Form of Separation and Distribution Agreement between Occidental Petroleum Corporation and California Resources Corporation
3.1	*	Amended and Restated Certificate of Incorporation of California Resources Corporation
3.2	*	Bylaws of California Resources Corporation
3.3	*	Form of Amended and Restated Certificate of Incorporation of California Resources Corporation
3.4	*	Form of Amended and Restated Bylaws of California Resources Corporation
4.1	*	Form of Stockholder's and Registration Rights Agreement
4.2		Indenture, dated October 1, 2014, by and among the Company, the Guarantors and Wells Fargo Bank, National Association
4.3		Registration Rights Agreement, dated October 1, 2014, by and among the Company, the Guarantors and the Initial Purchasers
4.4		Form of 5% Senior Note due 2020 (included in Exhibit 4.2)
4.5		Form of 5 ¹ / 2 % Senior Note due 2021 (included in Exhibit 4.2)
4.6		Form of 6% Senior Note due 2024 (included in Exhibit 4.2)
10.1	*	Form of Transition Services Agreement between Occidental Petroleum Corporation and California Resources Corporation
10.2	*	Form of Tax Sharing Agreement between Occidental Petroleum Corporation and California Resources Corporation
10.3	*	Form of Employee Matters Agreement between Occidental Petroleum Corporation and California Resources Corporation
10.4	*	Form of Intellectual Property License Agreement between Occidental Petroleum Corporation and California Resources Corporation
10.5	*	Form of California Resources Corporation Long-Term Incentive Plan
10.6	*	Form of Nonstatutory Stock Option Award Terms and Conditions
10.7	*	Form of Restricted Stock Incentive Award Terms and Conditions (Performance-Based)
10.8	*	Form of Restricted Stock Incentive Award Terms and Conditions (Not Performance-Based)
10.9	*	Form of Restricted Stock Unit Award for Non-Employee Directors Grant Agreement
10.10	*	Form of Long-Term Incentive Award Terms and Conditions (Replacement Award)
10.11	*	Form of Restricted Stock Incentive Award Terms and Conditions (Replacement Award—Performance-Based)
10.12	*	Form of Restricted Stock Incentive Award Terms and Conditions (Replacement Award—Not Performance-Based)
10.13	*	Form of Phantom Share Unit Award Terms and Conditions (Replacement Award)
10.14	*	Form of Indemnification Agreements
10.15	*	Form of Area of Mutual Interest Agreement between Occidental Petroleum Corporation and California Resources Corporation
10.16	*	Form of Confidentiality and Trade Secret Protection Agreement between Occidental Petroleum Corporation and California Resources Corporation

		Description

10.17	*	Agreement for Implementation of an Optimized Waterflood Program for the Long Beach Unit, dated November 5, 1991, by and among the State of California, by and through the State Lands Commission, the City of Long Beach, Atlantic Richfield Company and ARCO Long Beach, Inc.
10.18	*	Amendment to the Agreement for Implementation of an Optimized Waterflood Program for the Long Beach Unit, dated January 16, 2009, by and among the State of California, by and through the State Lands Commission, the City of Long Beach, and Oxy Long Beach, Inc.
10.19	*	Contractors' Agreement, by and between the City of Long Beach, Humble Oil & Refining Company, Shell Oil Company, Socony Mobil Oil Company, Inc., Texaco, Inc., Union Oil Company of California, Pauley Petroleum, Inc., Allied Chemical Corporation, Richfield Oil Corporation and Standard Oil Company of California
10.20	*	Form of Retention Letter Assignment and Assumption Agreement
10.21	*	Bonus Acknowledgement Agreement between Occidental Petroleum Corporation and William E. Albrecht
10.22	*	Retention and Separation Arrangement with Todd A. Stevens
10.23	*	Retention and Separation Arrangement with William E. Albrecht
10.24	*	Retention and Separation Arrangement with Robert A. Barnes
10.25		Credit Agreement, dated as of September 24, 2014, among California Resources Corporation, the Lenders and JPMorgan Chase Bank, N.A. as Administrative Agent, a Swingline Lender and a Letter of Credit Issuer and Bank of America, N.A. as Syndication Agent, a Swingline Lender and a Letter of Credit Issuer
10.26		Form of California Resources Corporation Supplemental Savings Plan
10.27		Form of California Resources Corporation Supplemental Retirement Plan II
10.28		Form of California Resources Corporation Deferred Compensation Plan
21.1		List of Subsidiaries of California Resources Corporation
99.1		Information Statement, preliminary and subject to completion, dated October 8, 2014
99.2	*	Report of Independent Petroleum Engineers, Ryder Scott Company, L.P.
99.3	*	Information extracted from Occidental's Annual Report on Form 10-K for the year ended December 31, 2013.
99.4		Form of Notice of Internet Availability of Information Statement Materials

*: Previously filed.

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.


		California Resources Corporation
		By:		/s/ TODD A. STEVENS Todd A. Stevens President and Chief Executive Officer Date: October 8, 2014

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INFORMATION REQUIRED IN REGISTRATION STATEMENT CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND ITEMS OF FORM 10

Item 1. Business

Item 1A. Risk Factors

Item 2. Financial Information

Item 3. Properties

Item 4. Security Ownership of Certain Beneficial Owners and Management

Item 5. Directors and Executive Officers

Item 6. Executive Compensation

Item 7. Certain Relationships and Related Transactions, and Director Independence

Item 8. Legal Proceedings

Item 9. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters

Item 10. Recent Sales of Unregistered Securities

Item 11. Description of Registrant's Securities to be Registered

Item 12. Indemnification of Directors and Officers

Item 13. Financial Statements and Supplementary Data

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 15. Financial Statements and Exhibits

SIGNATURES

Exhibit 4.2

CALIFORNIA RESOURCES CORPORATION,

THE GUARANTORS PARTY HERETO

and

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

INDENTURE

Dated as of October 1, 2014

5% Senior Notes due 2020

5½% Senior Notes due 2021

6% Senior Notes due 2024

CROSS-REFERENCE TABLE*

TRUST INDENTURE ACT SECTION		INDENTURE SECTION
310(a)(1)		7.10
(a)(2)		7.10
(a)(3)		N.A.
(a)(4)		N.A.
(a)(5)		7.10
(b)		7.10
(c)		N.A.
311(a)		7.11
(b)		7.11
(c)		N.A.
312(a)		2.06
(b)		12.03
(c)		12.03
313(a)		7.06(a)
(b)(1)		N.A.
(b)(2)		7.06(a)
(c)		7.06(a), 12.02
(d)		7.06(b)
314(a)(4)		12.05
(b)		N.A.
(c)(1)		N.A.
(c)(2)		N.A.
(c)(3)		N.A.
(d)		N.A.
(e)		12.05
(f)		N.A.
315(a)		N.A.
(b)		N.A.
(c)		N.A.
(d)		N.A.
(e)		N.A.
316(a)(last sentence)		N.A.
(a)(1)(A)		N.A.
(a)(1)(B)		6.04
(a)(2)		N.A.
(b)		N.A.
(c)		12.15(d)
317(a)(1)		N.A.
(a)(2)		N.A.
(b)		N.A.
318(a)		N.A.
(b)		N.A.
(c)		12.11

N.A. means not applicable.

* This Cross-Reference Table is not part of this Indenture.

TABLE OF CONTENTS

		Page

ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE		1

Section 1.01.	Definitions	1

Section 1.02.	Other Definitions	17

Section 1.03.	Incorporation by Reference of Trust Indenture Act	17

Section 1.04.	Rules of Construction	17

ARTICLE TWO THE NOTES		18

Section 2.01.	Form and Dating	18

Section 2.02.	Execution and Authentication	20

Section 2.03.	Methods of Receiving Payments on the Notes	21

Section 2.04.	Registrar and Paying Agent	21

Section 2.05.	Paying Agent to Hold Money in Trust	21

Section 2.06.	Holder Lists	22

Section 2.07.	Transfer and Exchange	22

Section 2.08.	Replacement Notes	37

Section 2.09.	Outstanding Notes	37

Section 2.10.	Treasury Notes	38

Section 2.11.	Temporary Notes	38

Section 2.12.	Cancellation	38

Section 2.13.	Defaulted Interest	38

Section 2.14.	CUSIP Numbers	39

Section 2.15.	Additional Interest	39

Section 2.16.	Issuance of Additional Notes	39

ARTICLE THREE REDEMPTION AND PREPAYMENT		40

Section 3.01.	Notice to Trustee	40

Section 3.02.	Selection of Notes to Be Redeemed	40

Section 3.03.	Notice of Redemption	40

Section 3.04.	Effect of Notice of Redemption	41

Section 3.05.	Deposit of Redemption Price	41

Section 3.06.	Notes Redeemed in Part	42

Section 3.07.	Optional Redemption	42

Section 3.08.	Mandatory Redemption	43

Section 3.09.	Application of Trust Money	43

Section 3.10.	Special Mandatory Redemption	43

ARTICLE FOUR COVENANTS		44

Section 4.01.	Payment of Notes	44

Section 4.02.	Maintenance of Office or Agency	44

Section 4.03.	Reports	45

Section 4.04.	Compliance Certificate	45

Section 4.05.	Taxes	46

Section 4.06.	Stay, Extension and Usury Laws	46

Section 4.07.	Liens Securing Funded Debt	46

Section 4.08.	Future Guarantees	47

Section 4.09.	Offer to Repurchase Upon a Change of Control	47

Section 4.10.	Corporate Existence	50

ARTICLE FIVE SUCCESSORS		51

Section 5.01.	Consolidation, Merger and Sale of Assets	51

ARTICLE SIX DEFAULTS AND REMEDIES		52

Section 6.01.	Events of Default	52

Section 6.02.	Acceleration	53

Section 6.03.	Other Remedies	54

Section 6.04.	Waiver of Past Defaults	55

Section 6.05.	Control by Majority	55

Section 6.06.	Limitation on Suits	55

Section 6.07.	Rights of Holders of Notes to Receive Payment	56

Section 6.08.	Collection Suit by Trustee	56

Section 6.09.	Trustee May File Proofs of Claim	56

Section 6.10.	Priorities	57

Section 6.11.	Undertaking for Costs	57

ARTICLE SEVEN TRUSTEE		57

Section 7.01.	Duties of Trustee	57

Section 7.02.	Certain Rights of Trustee	58

Section 7.03.	Individual Rights of Trustee	60

Section 7.04.	Trustee’s Disclaimer	60

Section 7.05.	Notice of Default	60

Section 7.06.	Reports by Trustee to Holders of the Notes	60

iii

Section 7.07.	Compensation and Indemnity	61

Section 7.08.	Replacement of Trustee	62

Section 7.09.	Successor Trustee by Merger, Etc.	63

Section 7.10.	Eligibility; Disqualification	63

Section 7.11.	Preferential Collection of Claims Against Company	63

ARTICLE EIGHT DEFEASANCE AND COVENANT DEFEASANCE		63

Section 8.01.	Option to Effect Legal Defeasance or Covenant Defeasance	63

Section 8.02.	Legal Defeasance and Discharge	63

Section 8.03.	Covenant Defeasance	64

Section 8.04.	Conditions to Legal Defeasance or Covenant Defeasance	65

Section 8.05.	Deposited Money and U.S. Government Securities to Be Held in Trust; Other Miscellaneous Provisions	66

Section 8.06.	Repayment to the Company	66

Section 8.07.	Reinstatement	67

ARTICLE NINE AMENDMENT, SUPPLEMENT AND WAIVER		67

Section 9.01.	Without Consent of Holders of Notes	67

Section 9.02.	With Consent of Holders of Notes	69

Section 9.03.	Compliance with Trust Indenture Act	70

Section 9.04.	Revocation and Effect of Consents	70

Section 9.05.	Notation on or Exchange of Notes	70

Section 9.06.	Trustee to Sign Amendments, Etc.	71

ARTICLE TEN GUARANTEES		71

Section 10.01.	Guarantee	71

Section 10.02.	Limitation on Guarantor Liability	72

Section 10.03.	Execution and Delivery of Notation of Guarantee	72

Section 10.04.	Releases of Guarantors	73

ARTICLE ELEVEN SATISFACTION AND DISCHARGE		74

Section 11.01.	Satisfaction and Discharge	74

Section 11.02.	Deposited Money and U.S. Government Securities to Be Held in Trust; Other Miscellaneous Provisions	74

Section 11.03.	Repayment to the Company	75

ARTICLE TWELVE MISCELLANEOUS		75

Section 12.01.	No Adverse Interpretation of Other Agreements	75

Section 12.02.	Notices	75

Section 12.03.	Communication by Holders of Notes with Other Holders of Notes	77

Section 12.04.	Certificate and Opinion as to Conditions Precedent	77

Section 12.05.	Statements Required in Certificate or Opinion	77

Section 12.06.	Rules by Trustee and Agents	77

Section 12.07.	No Personal Liability of Directors, Officers, Employees and Stockholders	78

Section 12.08.	Governing Law	78

Section 12.09.	Waiver of Jury Trial	78

Section 12.10.	Consent to Jurisdiction	78

Section 12.11.	Trust Indenture Act Controls	78

Section 12.12.	Successors	78

Section 12.13.	Severability	79

Section 12.14.	Counterpart Originals	79

Section 12.15.	Acts of Holders	79

Section 12.16.	Benefit of Indenture	80

Section 12.17.	Table of Contents, Headings, Etc.	80

Section 12.18.	Force Majeure	81

Section 12.19.	U.S.A. Patriot Act	81

EXHIBITS

Exhibit A	Form of Note
Exhibit B-1	Form of Certificate of Transfer
Exhibit B-2	Form of Certificate of Transfer for Institutional Accredited Investors
Exhibit C	Form of Certificate of Exchange
Exhibit D	Form of Guarantor Supplemental Indenture

INDENTURE (this “ Indenture ”), dated as of October 1, 2014, among California Resources Corporation, a Delaware corporation (the “ Company ”), the Guarantors named on the signature pages hereto (the “ Initial Guarantors ”) and Wells Fargo Bank, National Association, a national banking association organized under the laws of the United States, as trustee (the “ Trustee ”).

The Company, the Initial Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined below) of the Notes (as defined below), which are being issued in three separate series, one series consisting of the 5% Senior Notes due 2020 (the “ 2020 Notes ”), one series consisting of the 5½% Senior Notes due 2021 (the “ 2021 Notes ”) and one series consisting of the 6% Senior Notes due 2024 (the “ 2024 Notes ”), as in this Indenture provided:

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01. Definitions .

“ 144A Global Note ” means one or more global notes each evidencing all or part of a series of Notes, each substantially in the form of Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee for such series, that collectively shall be initially issued in a denomination equal to the outstanding principal amount of the Notes of such series sold in reliance on Rule 144A.

“ 2020 Notes ” has the meaning stated in the second paragraph of this Indenture and more particularly means (i) all Initial Notes of such series, (ii) all Exchange Notes of such series that are issued and exchanged for the Initial Notes of such series and (iii) all Additional Notes of such series issued hereunder and Exchange Notes of such series that are issued and exchanged for such Additional Notes, all of which shall be treated as a single series.

“ 2021 Notes ” has the meaning stated in the second paragraph of this Indenture and more particularly means (i) all Initial Notes of such series, (ii) all Exchange Notes of such series that are issued and exchanged for the Initial Notes of such series and (iii) all Additional Notes of such series issued hereunder and Exchange Notes of such series that are issued and exchanged for such Additional Notes, all of which shall be treated as a single series.

“ 2024 Notes ” has the meaning stated in the second paragraph of this Indenture and more particularly means (i) all Initial Notes of such series, (ii) all Exchange Notes of such series that are issued and exchanged for the Initial Notes of such series and (iii) all Additional Notes of such series issued hereunder and Exchange Notes of such series that are issued and exchanged for such Additional Notes, all of which shall be treated as a single series.

“ Acquired Debt ” means Indebtedness of a Person (1) existing at the time such Person becomes a Restricted Subsidiary or merges with or into the Company or a Restricted Subsidiary or (2) assumed in connection with the acquisition of assets from such Person, in each case, other than Indebtedness incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary or such acquisition, as the case may be. Acquired Debt shall be deemed to

be incurred on the date of the related acquisition of assets from any Person or the date the acquired Person becomes a Restricted Subsidiary or merges with or into the Company or a Restricted Subsidiary, as the case may be.

“ Additional Interest ” means any additional interest payable pursuant to a Registration Rights Agreement.

“ Additional Notes ” means any further Notes of any series (other than (i) the Initial Notes of such series issued on the date of this Indenture and (ii) any Exchange Notes of such series issued in exchange for such Initial Notes) issued under this Indenture in accordance with the terms of this Indenture, including Sections 2.01(f), 2.02 and 2.16, as part of the same series as the Initial Notes of such series issued on the date of this Indenture, ranking equally with those Initial Notes and having identical terms to the Initial Notes of such series (in all respects other than (a) the date of issuance, (b) the issue price, (c) rights under a related Registration Rights Agreement, if any, (d) at the option of the Company, as to the payment of interest accruing prior to the issue date of such Additional Notes, and (e) the first payment of interest following the issue date of such Additional Notes), subject to compliance with Article Two. The Initial Notes of a series, any Additional Notes of such series subsequently issued under this Indenture and all Exchange Notes of such series issued in exchange therefor shall be treated as a single series of securities for all purposes under this Indenture, including, without limitation, directions, waivers, amendments, consents, redemptions and offers to purchase.

“ Adjusted Consolidated Net Tangible Assets ” means (without duplication), as of the date of determination:

(i) the sum of:

(a) discounted future net revenues from proved oil and gas reserves of the Company and its Restricted Subsidiaries calculated in accordance with Commission guidelines before any state, federal or foreign income taxes (“ pre-tax ”), as estimated by the Company in a reserve report prepared as of the end of the Company’s most recently completed fiscal year for which audited financial statements are then available, as increased by, as of the date of determination, the estimated discounted future net revenues from (1) estimated proved oil and gas reserves acquired since such year-end, which reserves were not reflected in such year-end reserve report, and (2) estimated increases in proved oil and gas reserves since such year-end due to exploration, development or exploitation activities or due to changes in geological conditions (or understandings thereof) or other factors which would, in accordance with standard industry practice, cause such revisions, in each case on a pre-tax basis calculated in accordance with Commission guidelines (utilizing the prices utilized in such year-end reserve report) increased by the accretion of the discount from the date of the reserve report to the date of determination and the effect to proved reserves and future net revenues from estimated development cost incurred, and decreased by, as of the date of determination, the estimated discounted future net revenues from (3) estimated proved oil and gas reserves reflected in such year-end report produced or disposed of since such year-end and (4) estimated oil and gas reserves attributable to downward revisions of estimates of proved oil and gas reserves since such year-end due to changes in geological conditions (or understandings thereof) or other factors which would, in accordance with standard industry practice, cause such revisions, in each case on a pre-tax basis calculated in

accordance with Commission guidelines (utilizing the prices utilized in such year-end reserve report); provided that, in the case of each of the determinations made pursuant to clauses (1) through (4), such increases and decreases shall be as estimated by the Company’s petroleum engineers, plus

(b) the capitalized costs that are attributable to oil and gas properties of the Company and its Restricted Subsidiaries to which no proved oil and gas reserves are attributable, based on the Company’s books and records as of a date no earlier than the date of the Company’s latest annual or quarterly financial statements, plus

(c) the Net Working Capital on a date no earlier than the date of the Company’s latest annual or quarterly financial statements, plus

(d) the greater of (1) the net book value on a date no earlier than the date of the Company’s latest annual or quarterly financial consolidated statements and (2) the appraised value, as estimated by independent appraisers, of other tangible assets (including, without duplication, investments in unconsolidated Restricted Subsidiaries) of the Company and its Restricted Subsidiaries, as of the date no earlier than the date of the Company’s latest audited financial statements (provided that the Company shall not be required to obtain such appraisal of such assets if no such appraisal has been performed), plus

(e) any net gas balancing assets of the Company and its Restricted Subsidiaries reflected in the Company’s latest annual or quarterly consolidated financial statements,

minus (ii) the sum of:

(a) minority interests, plus

(b) any net gas balancing liabilities of the Company and its Restricted Subsidiaries reflected in the Company’s latest annual or quarterly consolidated financial statements (to the extent not deducted in calculating Net Working Capital in accordance with clause (i)(c) of this definition), plus

(c) to the extent included in (i)(a) above, the discounted future net revenues, calculated on a pre-tax basis in accordance with Commission guidelines (utilizing the prices utilized in the Company’s year-end reserve report), attributable to reserves which are required to be delivered to third parties to fully satisfy the obligations of the Company and its Restricted Subsidiaries with respect to Volumetric Production Payments (determined, if applicable, using the schedules specified with respect thereto), plus

(d) the discounted future net revenues, calculated on a pre-tax basis in accordance with Commission guidelines, attributable to reserves subject to Dollar-Denominated Production Payments which, based on the estimates of production and price assumptions included in determining the discounted future net revenues specified in (i)(a) above, would be necessary to fully satisfy the payment obligations of the Company and its Restricted Subsidiaries with respect to Dollar-Denominated Production Payments (determined, if applicable, using the schedules specified with respect thereto).

“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ Agent ” means any Registrar or Paying Agent.

“ Applicable Procedures ” means, with respect to any transfer or exchange of, or for beneficial interests in, any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

“ Bankruptcy Law ” means Title 11, United States Bankruptcy Code of 1978, as amended, or any similar United States federal or state law relating to bankruptcy, insolvency, receivership, winding up, liquidation, reorganization or relief of debtors or any amendment to, succession to or change in any such law.

“ Beneficial Owner ” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all such shares that such “person” has the right to acquire, whether such right is exercisable immediately or only after the passage of time. The term “Beneficial Ownership” shall have a corresponding meaning.

“ Board of Directors ” means, with respect to any Person, the board of directors or other governing body of such Person or any committee thereof duly authorized to act on behalf of such board of directors or such other governing body.

“ Board Resolution ” means, with respect to a Board of Directors, a copy of a resolution certified by the Secretary or an Assistant Secretary of the Person or, in the case of a Person that is a partnership that has no such officers, the Secretary or an Assistant Secretary of a general partner of such Person, to have been duly adopted by such Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.

“ Broker-Dealer ” has the meaning set forth in the Registration Rights Agreement.

“ Business Day ” means any day other than a Saturday, a Sunday or a day on which commercial banks and trust companies in The City of New York or any other place of payment with respect to the Notes are not required by law or executive order to be open.

“ Capital Stock ” of any Person means any and all shares, units, interests, participations, rights in or other equivalents (however designated) of such Person’s capital stock, other equity interests whether now outstanding or issued after the Issue Date, partnership interests (whether general or limited), joint venture interests, limited liability company interests, any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, including any Preferred Stock, and any rights (other

than debt securities convertible into Capital Stock), warrants or options exchangeable for or convertible into such Capital Stock.

“ Change of Control ” means the occurrence of any of the following events:

(1) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than, prior to the completion of the Spin-Off Distribution, Occidental or any Subsidiary or Affiliate thereof, is or becomes the Beneficial Owner, directly or indirectly, of more than 50% of the total outstanding Voting Stock of the Company (measured by voting power rather than the number of shares), other than any such transaction in which the outstanding Voting Stock of the Company is changed into or exchanged for Voting Stock of the surviving Person or any parent thereof that collectively represents at least 50% of the total outstanding Voting Stock (measured by voting power rather than the number of shares) of the surviving Person or such parent immediately following such transaction;

(2) the Company sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any Person other than the Company or a Subsidiary; or

(3) the Company is liquidated or dissolved or adopts a plan of liquidation or dissolution other than in a transaction which complies with Section 5.01.

Notwithstanding the foregoing, a Change of Control shall not be deemed to occur upon the consummation of any actions undertaken by the Company or any Restricted Subsidiary solely for the purpose of changing the legal structure of the Company or such Restricted Subsidiary. None of the Spin-Off or the Transactions (each as defined in the Offering Memorandum) will constitute a Change of Control.

“ Change of Control Triggering Event ” means the occurrence of both a Change of Control and a Rating Decline.

“ Clearstream ” means Clearstream Banking, société anonyme, Luxembourg, and its successors.

“ Commission ” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Securities Act and the Exchange Act, then the body performing such duties at such time.

“ Company ” means California Resources Corporation, a Delaware corporation, until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.

“ Corporate Trust Office of the Trustee ” shall be at the address of the Trustee specified in Section 12.02 or such other address as to which the Trustee may give notice to the Company. With respect to presentation and registration of transfer or for exchange of Notes such address shall be 608 North 2nd Avenue South, 12th Floor, Minneapolis, Minnesota 55402.

“ Credit Agreement ” means the Credit Agreement dated September 24, 2014, among the Company, the Guarantors, JPMorgan Chase Bank, N.A., as administrative agent, a swingline lender and a letter of credit issuer, and the lenders party thereto from time to time, as such agreement, in whole or in part, in one or more instances, may thereafter be amended, renewed, extended, increased, substituted, refinanced, restructured, replaced, supplemented or otherwise modified from time to time (including, without limitation, any successive renewals, extensions, increases, substitutions, refinancings, restructurings, replacements, supplementations or other modifications of the foregoing).

“ Credit Facility ” means, one or more debt facilities (including, without limitation, the debt facilities arising pursuant to the Credit Agreement), loan agreements or commercial paper facilities, in each case with banks, investment banks, insurance companies, mutual funds and/or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from (or sell receivables to) such lenders against such receivables) or letters of credit, in each case, as amended, extended, restated, renewed, refunded, replaced (whether contemporaneously or otherwise) or refinanced (in each case with Credit Facilities with such lenders), supplemented or otherwise modified (in whole or in part and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time.

“ Custodian ” means the Trustee, as custodian with respect to the Notes of any series in global form, or any successor entity thereto.

“ Default ” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“ Definitive Note ” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.07, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“ Depositary ” means, unless otherwise specified by the Company with respect to any Notes issuable or issued in whole or in part in the form of one or more Global Notes, the Person specified in Section 2.04 as the Depositary with respect to such Notes, or any successor thereto registered as a clearing agency under the Exchange Act or other applicable statute or regulations, appointed as depositary hereunder and having become such pursuant to the applicable provisions of this Indenture.

“ Dollar-Denominated Production Payment ” means a production payment required to be recorded as a borrowing in accordance with GAAP, together with all undertakings and obligations in connection therewith.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated by the Commission thereunder.

“ Exchange Notes ” means the Notes of any series issued in an Exchange Offer in accordance with Section 2.07(f) hereof.

“ Exchange Offer ” means an exchange offer that may be effected pursuant to a Registration Rights Agreement.

“ Exchange Offer Registration Statement ” means an Exchange Offer Registration Statement that may be filed pursuant to a Registration Rights Agreement.

“ Euroclear ” means Euroclear Bank S.A./N.V., as operator of the Euroclear system, and its successors.

“ Funded Debt ” means, with regard to any Person, all Indebtedness incurred, created, assumed or guaranteed by such Person, which matures, or is renewable by such Person to a date, more than one year after the date as of which Funded Debt is being determined.

“ GAAP ” means United States generally accepted accounting principles as in effect from time to time.

“ Global Note Legend ” means the legend set forth in Section 2.07(g)(ii), which is required to be placed on all Global Notes issued under this Indenture.

“ Global Notes ” means a Note in global form that evidences all or part of the Notes of a series and registered in the name of the Depositary for the Notes of such series or a nominee thereof, and includes, individually and collectively, each of the Restricted Global Notes of such series and the Unrestricted Global Notes of such series, each substantially in the form of Exhibit A hereto, as appropriate, issued in accordance with Sections 2.01, 2.07(b)(iii), 2.07(b)(iv), 2.07(d)(i), 2.07(d)(ii) or 2.07(d)(iii) of this Indenture.

“ Guarantee ” means the guarantee by any Guarantor of the Company’s Indenture Obligations.

“ guarantee ” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person; or

(2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term “ guarantee ” will not include endorsements for collection or deposit in the ordinary course of business. The term “ guarantee ” used as a verb has a corresponding meaning.

“ Guarantor ” means any Subsidiary of the Company which is a guarantor of the Notes, including each of the Initial Guarantors and any other Person that is required after the Issue Date to guarantee the Notes pursuant to Section 4.08, in each case, until the Guarantee of such Guarantor is released in accordance with this Indenture or a successor replaces such Person pursuant to the applicable provisions of this Indenture (and, thereafter, means such successor).

“ Holder ” means the Person in whose name a Note is, at the time of determination, registered on the Registrar’s register of Notes.

“ Indebtedness ” means, without duplication, with respect to any Person:

(1) all obligations of such Person, including those evidenced by bonds, notes, debentures or similar instruments, for the repayment of money borrowed (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); and

(2) all liabilities of others of the kind described in the preceding clause (1) that such Person has guaranteed.

Neither Dollar-Denominated Production Payments nor Volumetric Production Payments shall be deemed to be Indebtedness.

“ Indenture ” means this Indenture, as amended or supplemented from time to time.

“ Indenture Obligations ” means the obligations of the Company and any other obligor under this Indenture or under the Notes, including any Guarantor, to pay principal of, premium, if any, and interest when due and payable, and all other amounts due or to become due under or in connection with this Indenture, the Notes and the performance of all other obligations to the Trustee and the Holders under this Indenture and the Notes, according to the respective terms thereof.

“ Indirect Participant ” means a Person who holds a beneficial interest in a Global Note through a Participant.

“ Initial Notes ” means Notes of a series, other than any Exchange Notes of such series and Additional Notes of such series, issued under this Indenture on the Issue Date.

“ Initial Purchasers ” means (i) Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Goldman, Sachs & Co., HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, Mitsubishi UFJ Securities (USA), Inc., U.S. Bancorp Investments, Inc., BB&T Capital Markets, a division of BB&T Securities, LLC, BBVA Securities Inc., DNB Markets, Inc., Mizuho Securities USA Inc., PNC Capital Markets LLC, Scotia Capital (USA) Inc., SG Americas Securities, LLC, Banca IMI S.p.A., BNY Mellon Capital Markets, LLC, KeyBanc Capital Markets Inc. and SMBC Nikko Securities America, Inc. and (ii) with respect to any Additional Notes issued subsequent to the Issue Date, any one or more investment banks acting as an initial purchaser in connection with the issuance and sale of such Additional Notes.

“ Interest Payment Date ” with respect to any series of Notes, means the dates specified as such for Notes of such series.

“ Investment Grade Rating ” means a rating equal to or higher than (1) Baa3 (or the equivalent) with a stable or better outlook by Moody’s and (2) BBB- (or the equivalent) with a stable or better outlook by S&P; or if either such entity ceases to rate Notes for reasons outside

of the Company’s control, the equivalent investment grade rating from another nationally recognized statistical rating agency or agencies, as the case may be, selected by the Company.

“ Issue Date ” means, with respect to the Notes, the date of original issuance of the Initial Notes under this Indenture.

“ Letter of Transmittal ” means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with an Exchange Offer.

“ Lien ” means any mortgage or deed of trust, charge, pledge, lien (statutory or otherwise), privilege, security interest, assignment, deposit, arrangement, hypothecation, claim, preference, priority or other encumbrance for security purposes upon or with respect to any property of any kind (including any conditional sale, capital lease or other title retention agreement, any leases in the nature thereof, and any agreement to give any security interest), real or personal, movable or immovable, now owned or hereafter acquired. References herein to Liens allowed to exist upon any particular item of Property shall also be deemed (whether or not stated specifically) to allow Liens to exist upon any accessions, improvements or additions to, such property, upon any contractual rights relating primarily to such Property, and upon any replacements or proceeds of such Property or of such accessions, improvements, additions or contractual rights.

“ Make-Whole Amount ” with respect to a Note of a series means an amount equal to any excess of (i) the present value of the remaining principal and interest payments due on such Note (excluding any portion of such payments of interest accrued as of the redemption date) through the Maturity Date of such Notes, computed using a discount rate equal to the Treasury Rate plus 50 basis points over (ii) the outstanding principal amount of such Note. Calculation of the Make-Whole Amount shall be made by the Company or on behalf of the Company by such Person as the Company shall designate; provided, however, that such calculation shall not be a duty or obligation of the Trustee.

“ Make-Whole Remaining Life ” means the number of years (calculated to the nearest one-twelfth) between the date of redemption and the Maturity Date applicable to the relevant series of the Notes being redeemed.

“ Make-Whole Redemption Price ” means the sum of the outstanding principal amount of the Notes to be redeemed plus the Make-Whole Amount of such Notes. Calculation or verification of the calculation of the Make-Whole Redemption Price is not the responsibility of the Trustee and the Trustee may conclusively rely on an Officers’ Certificate with respect thereto without investigation.

“ Maturity ” means, with respect to the applicable series of Notes, the date on which the principal of such series of Notes or an installment of principal becomes due and payable as provided therein or by this Indenture, whether at the applicable Maturity Date or by declaration of acceleration, call for redemption or otherwise.

“ Maturity Date ” means, with respect to the applicable series of Notes, the fixed date specified pursuant to this Indenture as to such series of Notes on which the principal of such series of Notes becomes due and payable as provided therein or by this Indenture.

“ MLP Subsidiary ” means a Subsidiary of the Company that is a master limited partnership or limited liability company or other pass through entity, in each case having a class of equity securities that is listed for trading (or that is reasonably expected to be so listed for trading within six months) on a national securities exchange.

“ Moody’s ” means Moody’s Investor Services Inc., or any successor thereto, including a replacement rating agency selected by the Company as provided in the definition of Rating Agency.

“ Net Working Capital ” means the sum of (i) all current assets of the Company and its Restricted Subsidiaries plus (ii) the amount of borrowings available to be incurred under the Credit Agreement, less all current liabilities of the Company and its Restricted Subsidiaries, except current liabilities included in Indebtedness, in each case (other than in respect of the amount of borrowings available referred to in the preceding clause (ii)) as set forth in consolidated financial statements of the Company prepared in accordance with GAAP; provided, however, that all of the following shall be excluded in the calculation of Net Working Capital: (a) current assets or liabilities relating to the mark-to-market value of hedging arrangements, (b) any current assets or liabilities relating to non-cash charges arising from any grant of Capital Stock, options to acquire Capital Stock, or other equity based awards, and (c) any current assets or liabilities relating to non-cash charges or accruals for future abandonment liabilities.

“ Non-U.S. Person ” means a Person who is not a U.S. Person.

“ Notes ” means collectively any 2020 Notes, 2021 Notes and 2024 Notes authenticated and delivered under this Indenture. For all purposes of this Indenture the term “Notes” as used in respect to a series of Notes shall include all Additional Notes of such series issued hereunder and any Exchange Notes of such series to be issued and exchanged for any Notes of such series pursuant to an applicable Registration Rights Agreement and this Indenture.

“ Obligations ” means, in respect to any reference to Indebtedness, any principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing such Indebtedness.

“ Occidental ” means Occidental Petroleum Corporation, a Delaware corporation, or its successors.

“ Offering Memorandum ” means the Offering Memorandum, dated September 11, 2014 relating to the offering of the Initial Notes.

“ Officer ” means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary, any Assistant Secretary or any Vice-President of such Person and, in the case of a limited liability company, any manager of such Person, or in the case of a Person that is a partnership that has no such officers, any such officer of a general partner of such Person.

“ Officers’ Certificate ” means a certificate signed on behalf of the Company by at least two Officers of the Company one of whom must be the principal executive officer, the principal

financial officer or the principal accounting officer of the Company in relation to any Officers’ Certificate delivered pursuant to Section 4.04(a) that meets the requirements of Section 12.05.

“ Opinion of Counsel ” means an opinion from legal counsel who is reasonably acceptable to the Trustee that meets the requirements of Section 12.05. Except as otherwise provided in this Indenture, the counsel may be an employee of, or counsel to, the Company or any Subsidiary of the Company.

“ Participant ” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and with respect to DTC, shall include Euroclear and Clearstream).

“ Permitted Lien ” means:

(1) Liens existing on the Issue Date;

(2) Liens securing Indebtedness under Credit Facilities in an aggregate principal amount outstanding at any one time not to exceed $4,000.0 million;

(3) Liens securing any renewal, extension, substitution, refinancing or replacement of secured Indebtedness; provided that such Liens extend to or cover only the property or assets then securing the Indebtedness being refinanced and that the Indebtedness being refinanced was not incurred under the Credit Facilities in reliance on clause (2) above;

(4) Liens on, or related to, oil and gas properties to secure all or part of the costs incurred in the ordinary course of business of exploration, drilling, development, production, gathering, processing, marketing or operation thereof, in each case, which are not incurred in connection with the borrowing of money;

(5) any Lien arising by reason of:

(A) any judgment, decree or order of any court, so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired;

(B) taxes, assessments or governmental charges or claims that are not yet delinquent or which are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted; provided that any reserve or other appropriate provision as will be required in conformity with GAAP will have been made therefor;

(C) security made in the ordinary course of business in connection with workers’ compensation, unemployment insurance or other types of social security;

(D) good faith deposits in connection with tenders, leases and contracts (other than contracts for the payment of Indebtedness);

(E) zoning restrictions, easements, licenses, reservations, title defects, rights of others for rights of way, utilities, sewers, electric lines, telephone or telegraph lines, and other similar purposes, provisions, covenants, conditions, waivers, restrictions on the use of property or minor irregularities of title (and with respect to leasehold interests, mortgages, obligations, Liens and other encumbrances incurred, created, assumed or permitted to exist and arising by, through or under a landlord or owner of the leased property, with or without consent of the lessee), none of which materially impairs the use of any parcel of property material to the operation of the business of the Company or any Subsidiary or the value of such property for the purpose of such business;

(F) deposits to secure public or statutory obligations, or in lieu of surety or appeal bonds;

(G) operation of law or contract in favor of mechanics, carriers, warehousemen, landlords, materialmen, laborers, employees, suppliers and similar persons, incurred in the ordinary course of business for sums which are not yet delinquent for more than 30 days or are being contested in good faith by negotiations or by appropriate proceedings which suspend the collection thereof;

(6) Liens in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of the Company or any Subsidiary on deposit with or in possession of such bank;

(7) Liens in favor of the United States, any state thereof, any foreign country or any department, agency or instrumentality or political subdivision of any such jurisdiction, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any Indebtedness incurred for the purpose of financing all or any part of the purchase price or the cost of constructing or improving the property subject to such Liens, including, without limitation, Liens to secure Funded Debt of the pollution control or industrial revenue bond type;

(8) any Lien securing Acquired Debt created prior to (and not created in connection with, or in contemplation of) the incurrence of such Indebtedness by the Company or any Subsidiary and Liens on any Property at the time of (and not created in connection with, or in contemplation of) acquisition thereof by the Company or a Restricted Subsidiary; provided that such Liens do not encumber other Property of the Company or any Restricted Subsidiary;

(9) any Lien on Property to secure (i) all or any portion of the cost of acquiring, constructing, altering, improving or repairing any Property or assets or improvements used in connection with such Property, and (ii) Indebtedness incurred by the Company or any Subsidiary to provide funds for the activities set forth in clause (i) above; provided that the aggregate principal amount of Indebtedness secured by such Liens does not exceed the cost of the Property so acquired, constructed or improved and such Liens are created within 365 days of construction, acquisition or improvement of such Property and do not encumber any other Property of the Company or any Subsidiary other than such Property and assets affixed or appurtenant thereto;

(10) any Lien to secure performance bids, leases (including, without limitation, statutory and common law landlord’s liens), statutory obligations, letters of credit and other obligations of

a like nature and incurred in the ordinary course of business of the Company or any Subsidiary and not securing or supporting Indebtedness, and any Lien to secure statutory or appeal bonds;

(11) leases and subleases of real property which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

(12) any Lien created by a mortgage related to a property or building that is used as the Company’s headquarters or other principal place of business;

(13) Liens on the Capital Stock of any Subsidiary other than a Restricted Subsidiary;

(14) Liens in favor of the Company or any Guarantor; or

(15) any Lien in favor of the Trustee for the benefit of the Trustee or the holders of the Notes or otherwise securing the Notes or the Subsidiary Guarantees, or liens on funds held in trust for the benefit of third parties.

“ Person ” means any individual, corporation, partnership, limited liability company, joint venture, trust, estate, association, unincorporated organization or government or any agency or political subdivision thereof.

“ Predecessor Note ” of any particular Note means every previous Note evidencing all or a portion of the same Indebtedness as that evidenced by such particular Note; and any Note authenticated and delivered under Section 2.08 in lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same Indebtedness as the lost, destroyed or stolen Note.

“ Preferred Stock ” means, with respect to any Person, any Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over the Capital Stock of any other class in such Person.

“ Private Placement Legend ” means the legend set forth in Section 2.07(g)(i) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

“ Property ” means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including Capital Stock and other securities issued by any other Person (but excluding Capital Stock or other securities issued by such first mentioned Person).

“ QIB ” means a “qualified institutional buyer” as defined in Rule 144A.

“ Rating Agency ” means

(1) each of Moody’s and S&P; and

(2) if either of Moody’s or S&P ceases to rate a series of Notes or fails to make a rating of such series of Notes publicly available for reasons outside of the Company’s control, a

“nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act selected by the Company as a replacement rating agency for Moody’s or S&P, or both, as the case may be.

“ Rating Date ” means the earlier of the date of public notice of (i) the occurrence of a Change of Control or (ii) the Company’s intention to effect a Change of Control.

“ Rating Decline ” shall be deemed to have occurred with respect to a series of Notes if, no later than 30 days after the Rating Date (which period shall be extended so long as the rating of any series of Notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies and the other Rating Agency has either downgraded, or publicly announced that it is considering downgrading, such Notes), each of the Rating Agencies decreases its rating of such series of Notes to a rating that is below its rating of such series of Notes on the day immediately prior to the earlier of (i) the date of the first public announcement of the possibility of a proposed transaction that would result in a Change of Control or (ii) the date that the possibility of such transaction is disclosed to either of the Rating Agencies. Notwithstanding the foregoing, if such Notes have an Investment Grade Rating by each of the Rating Agencies immediately prior to the Rating Date, then “Rating Decline” means a decrease in the ratings of such Notes by one or more gradations (including gradations within categories as well as between rating categories) by each of the Rating Agencies such that the rating of such Notes by each of the Rating Agencies falls below an Investment Grade Rating no later than 30 days after the Rating Date (which 30-day period will be extended so long as the rating of such Notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies and the other Rating Agency has either downgraded, or publicly announced that it is considering downgrading, such Notes), provided, however, that the Trustee shall not have any duty to monitor any ratings.

“ Registration Rights Agreement ” means (i) the Registration Rights Agreement among the Company, the Initial Guarantors and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the Initial Purchasers named therein, dated as of October 1, 2014, relating to the Initial Notes, and (ii) with respect to any Additional Notes issued subsequent to the Issue Date, any registration rights agreement entered into for the benefit of the holders of such Additional Notes, if any.

“ Regulation S ” means Regulation S promulgated under the Securities Act.

“ Responsible Officer ,” when used with respect to the Trustee, means any officer within the corporate trust department of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject, in each case, who has responsibility for the administration of this Indenture.

“ Restricted Definitive Note ” means a Definitive Note bearing the Private Placement Legend.

“ Restricted Global Note ” means a Global Note bearing the Private Placement Legend.

“ Restricted Period ” means the 40-day distribution compliance period, as defined in Rule 902(f) of Regulation S.

“ Restricted Subsidiary ” of any Person means any Subsidiary of the Person that is not a MLP Subsidiary or a royalty trust.

“ Rule 144 ” means Rule 144 promulgated under the Securities Act.

“ Rule 144A ” means Rule 144A promulgated under the Securities Act.

“ Rule 903 ” means Rule 903 promulgated under the Securities Act.

“ Rule 904 ” means Rule 904 promulgated under the Securities Act.

“ S&P ” means Standard & Poor’s Ratings Services, a division of McGraw-Hill, Inc., or any successor thereto, including a replacement rating agency selected by the Company as provided in the definition of Rating Agency.

“ Securities Act ” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated by the Commission thereunder.

“ Shelf Registration Statement ” means a Shelf Registration Statement that may be filed pursuant to a Registration Rights Agreement.

“ Significant Subsidiary ” has the meaning set forth in Rule 1-02 of Regulation S-X under the Securities Act as in effect on the Issue Date.

“ Spin-Off Distribution ” means the distribution by Occidental of shares of the Company’s Capital Stock to its shareholders.

“ Stated Maturity ” means, when used with respect to any Indebtedness or any installment of interest thereon, the dates specified in such Indebtedness as the fixed date on which the principal of such Indebtedness or such installment of interest, as the case may be, is due and payable.

“ Subsidiary ” of a Person means:

(1) any corporation more than 50% of the outstanding voting power of the Voting Stock of which is owned or controlled, directly or indirectly, by such Person or by one or more other Subsidiaries of such Person, or by such Person and one or more other Subsidiaries thereof; or

(2) any limited partnership of which such Person or any Subsidiary of such Person is the sole general partner or general partners; or

(3) any other Person in which such Person, or one or more other Subsidiaries of such Person, or such Person and one or more other Subsidiaries, directly or indirectly, owns more than 50% of the outstanding partnership or similar interests having the power, by contract or otherwise, to direct or cause the direction of the policies, management and affairs thereof.

“ Treasury Rate ” means the yield to maturity (calculated on a semi-annual bond equivalent basis) at the time of the computation of United States Treasury securities with a constant maturity (as compiled by and published in the most recent Federal Reserve Statistical Release H.15 (519) or any successor publication which is published weekly by the Board of Governors of the Federal Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption “Treasury Constant Maturities”), which has become publicly available at least two Business Days prior to the date of the redemption notice (or, if such Federal Reserve Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal to the then remaining maturity of the relevant series of the Notes being redeemed; provided, however, that if the Make-Whole Remaining Life of such Notes is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation or extrapolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the Make-Whole Remaining Life of such Notes is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used.

“ Trust Indenture Act ” or “ TIA ” means the Trust Indenture Act of 1939, as amended, or any successor statute.

“ Trustee ” means Wells Fargo Bank, National Association, a national banking association organized under the laws of the United States of America, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

“ Unrestricted Definitive Note ” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.

“ Unrestricted Global Note ” means a permanent Global Note that does not bear the Private Placement Legend.

“ U.S. Government Securities ” means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case under clauses (i) or (ii) are not callable or redeemable at the option of the issuer thereof.

“ U.S. Legal Tender ” means such coin or currency of the United States as at the time of payment shall be legal tender for the payment of public and private debts.

“ U.S. Person ” means a U.S. person as defined in Rule 902(k) under the Securities Act.

“ Volumetric Production Payment ” means a production payment that is recorded as a sale in accordance with GAAP, whether or not the sale price must be recorded as deferred revenue, together with all undertakings and obligations in connection therewith.

“ Voting Stock ” of a Person means Capital Stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors, managers or trustees of such Person (irrespective of whether or not at the time Capital Stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

Section 1.02. Other Definitions .

Term		Defined in
Act		Section 12.15
Authentication Order		Section 2.02
Change of Control Offer		Section 4.09
Change of Control Purchase Date		Section 4.09
Change of Control Purchase Notice		Section 4.09
Change of Control Purchase Price		Section 4.09
Covenant Defeasance		Section 8.03
DTC		Section 2.01
Event of Default		Section 6.01
Funds in Trust		Section 8.04
IAI		Section 2.01
Institutional Accredited Investor Global Note		Section 2.01
Legal Defeasance		Section 8.02
Paying Agent		Section 2.04
Payment Default		Section 6.01
Permanent Regulation S Global Note		Section 2.01(c)
Registrar		Section 2.04
Regulation S Global Note		Section 2.01(c)
Related Proceedings		Section 12.10
Specified Courts		Section 12.10
Successor		Section 5.01
Temporary Regulation S Global Note		Section 2.01(c)

Section 1.03. Incorporation by Reference of Trust Indenture Act .

Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.

All terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule under the TIA have the meanings so assigned to them.

Section 1.04. Rules of Construction .

Unless the context otherwise requires:

(i) a term has the meaning assigned to it;

(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(iii) words in the singular include the plural, and in the plural include the singular;

(iv) references to sections of or rules under the Securities Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the Commission from time to time;

(v) all references herein to “interest” include Additional Interest to the extent then owed;

(vi) “or” is not exclusive, and “including” means “including without limitation”, “including but not limited to” or words of similar import; and

(vii) the words “herein”, “hereof” and “hereunder” and words of similar import shall be construed to refer to this Indenture in its entirety and not to any particular provision.

ARTICLE TWO
THE NOTES

Section 2.01. Form and Dating .

(a) General . Each series of Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A attached hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes of each series shall be issued in registered, global form without interest coupons and shall be in minimum denominations of $2,000 and integral multiples of $1,000 in excess thereof.

The terms and provisions contained in each series of Notes shall constitute, and are hereby expressly made, a part of this Indenture with respect to such series of Notes and the Company, any Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(b) Global Notes . Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note of a series shall represent such of the outstanding Notes of such series as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of the outstanding Notes of such series from time to time endorsed thereon and that the aggregate principal amount of the outstanding Notes of such series

represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note of a series to reflect the amount of any increase or decrease in the aggregate principal amount of the outstanding Notes of such series represented thereby shall be made by the Trustee, as Custodian, in accordance with instructions given by the Holder thereof as required by Section 2.07.

(c) Regulation S Global Notes . Notes offered and sold outside the United States of America in reliance on Regulation S shall be initially issued in the form of a temporary global Note substantially in the form of Annex A, including appropriate legends as set forth in Section 2.07(g)(iii) (the “ Temporary Regulation S Global Notes ”). Within a reasonable period after the termination of the Restricted Period, beneficial interests in the Temporary Regulation S Global Note may be exchanged for beneficial interests in a permanent global Note substantially in the form of Annex A, including appropriate the Private Placement Legend (the, “ Permanent Regulation S Global Note ” and, together with the Temporary Regulation S Global Note, each a “ Regulation S Global Note ”). Prior to the end of the Restricted Period, interests in the Temporary Regulation S Global Note may only be transferred to Non-U.S. persons pursuant to Regulation S and to QIBs under Rule 144A in a Global Note in accordance with the transfer and certification requirements described herein.

(d) Institutional Accredited Investor Global Notes . Notes of a series resold after an initial resale thereof to QIBs in reliance on Rule 144A or an initial resale thereof in reliance on Regulation S to “institutional accredited investors” (as defined in Rule 501(a)(1), (2), (3) and (7) under the Securities Act) who are not QIBs (“IAIs”) in the United States of America in accordance with the procedures described herein will be initially issued in the form of a permanent global Note of such series (an “Institutional Accredited Investor Global Note”) deposited with the Trustee, as Custodian, duly executed by the Company and authenticated by the Trustee as hereinafter provided. An Institutional Accredited Investor Global Note may be represented by more than one certificate, if so required by DTC’s rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of an Institutional Accredited Investor Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as Custodian, as hereinafter provided.

(e) Euroclear and Clearstream Procedures Applicable . The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions” of Clearstream and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in the Regulation S Global Notes that are held by Participants through Euroclear or Clearstream.

(f) Additional Notes . Notwithstanding anything else herein, with respect to any Additional Notes of a series issued subsequent to the date of this Indenture, when the context requires, (1) all references in Article Two herein and elsewhere in this Indenture to a Registration Rights Agreement shall be to the registration rights agreement entered into with respect to such Additional Notes, (2) any references in this Indenture to the Exchange Offer, Exchange Offer Registration Statement, Shelf Registration Statement, Initial Purchasers, and any other term related thereto shall be to such terms as they are defined in such Registration Rights Agreement entered into with respect to such Additional Notes, (3) all time periods described in the Notes with respect to the registration of such Additional Notes shall be as provided in such Registration

Rights Agreement entered into with respect to such Additional Notes, (4) any Additional Interest, if set forth in such Registration Rights Agreement, may be paid to the Holders of such Additional Notes immediately prior to the making or the consummation of the Exchange Offer regardless of any other provisions regarding record dates herein and (5) all provisions of this Indenture shall be construed and interpreted to permit the issuance of such Additional Notes and to allow such Additional Notes to become fungible and interchangeable with the Initial Notes of such series originally issued under this Indenture (and Exchange Notes of such series issued in exchange therefor); provided, however, that if any Additional Notes of such series are not fungible with the Initial Notes of such series for U.S. federal income tax purposes, such Additional Notes shall have a different CUSIP number.

Section 2.02. Execution and Authentication .

(a) One Officer of the Company shall sign the Notes for the Company by manual or facsimile signature.

(b) An authorized signer of the Trustee shall, upon a written order of the Company signed by an Officer of the Company (an “ Authentication Order ”) delivered to the Trustee from time to time, authenticate and deliver (i) 2020 Notes for original issue without limit as to the aggregate principal amount thereof, of which $1,000,000,000 will be issued on the Issue Date, (ii) 2021 Notes for original issue without limit as to the aggregate principal amount thereof, of which $1,750,000,000 will be issued on the Issue Date, and (ii) 2024 Notes for original issue without limit as to the aggregate principal amount thereof, of which $2,250,000,000 will be issued on Issue Date. The aggregate principal amount of any series of Notes which may be authenticated and delivered under this Indenture is unlimited.

(c) Upon receipt of an Authentication Order, an authorized signer of the Trustee shall authenticate for original issue Exchange Notes in exchange for Initial Notes in an aggregate principal amount not to exceed $1,000,000,000 (in the case of Exchange Notes representing 2020 Notes), $1,750,000,000 (in the case of Exchange Notes representing the 2021 Notes) and $2,250,000,000 (in the case of Exchange Notes representing 2024 Notes) or Exchange Notes of a series in exchange for Additional Notes of such series; provided that such Exchange Notes shall be issuable only upon the valid surrender for cancellation of Initial Notes issued on the date hereof or Additional Notes, as the case may be, of the same series and of a like aggregate principal amount in accordance with an Exchange Offer pursuant to an applicable Registration Rights Agreement.

(d) If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.

(e) A Note shall not be valid until authenticated by the manual signature of the Trustee. Such signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

(f) The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate Notes of a series. An authenticating agent may authenticate Notes of such series whenever the Trustee may do so. Each reference in this Indenture to

authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.

Section 2.03. Methods of Receiving Payments on the Notes .

Payment of principal, or any premium or interest on Global Notes of a series shall be made in immediately available funds to the Depository’s nominee, as the registered Holder of such Global Notes. If any Notes of such series are no longer represented by a Global Note, payments on the Definitive Notes of such series shall be made at the Corporate Trust Office of the Trustee, as Paying Agent, or by check mailed directly to Holders at their respective addresses set forth in the register of Holders or by wire transfer to an account within the U.S. designated by a Holder. Interest paid on the interest payment date by the Paying Agent to any Holder of a Definitive Note may be by wire transfer to the owner of $5,000,000 or more to a wire transfer address within the continental United States. Payments of interest to the Trustee as Paying Agent, if the Trustee then acts as Paying Agent, with respect to any Interest Payment Date (as defined in the Notes) shall be made by the Company in immediately available funds for receipt by the Trustee no later than 11:00 a.m. New York Time on such Interest Payment Date. Payment of principal with respect to maturity, redemption or otherwise shall be made upon presentation of the security.

Section 2.04. Registrar and Paying Agent .

(a) The Company shall maintain an office or agency where Notes of each series may be presented for registration of transfer or for exchange (“ Registrar ”) and an office or agency where Notes of such series may be presented for payment (“ Paying Agent ”) which initially will be the office of the Trustee located at 608 2nd Avenue South, 12th Floor, Minneapolis, Minnesota 55402, Attention: Bondholder Communications. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without prior notice to any Holder. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.

(b) The Company initially appoints The Depository Trust Company (“ DTC ”) to act as Depositary with respect to the Global Notes.

(c) The Company initially appoints the Trustee to act as the Registrar, Paying Agent and Transfer Agent and to act as Custodian with respect to the Global Notes.

Section 2.05. Paying Agent to Hold Money in Trust .

The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of principal or premium, if any, or interest on the Notes, and shall notify the Trustee in writing of any default by the Company in making any such

payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or one of its Subsidiaries) shall have no further liability for the money. If the Company or any of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee shall serve as Paying Agent for the Notes.

Section 2.06. Holder Lists .

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least five Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes and the Company shall otherwise comply with TIA Section 312(a).

Section 2.07. Transfer and Exchange .

(a) Transfer and Exchange of Global Notes . A Global Note may be transferred, as a whole and not in part, by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. Definitive Notes of a series shall be issued and delivered to each person that the Depositary identifies as a beneficial owner of the related Notes of such series only if:

(i) the Depositary notifies the Company at any time that it is unwilling or unable to continue as Depositary for the Global Notes and a successor depositary is not appointed within 90 days;

(ii) the Depositary ceases to be registered as a clearing agency under the Exchange Act and a successor Depositary is not appointed within 90 days;

(iii) the Company, at its option, executes and delivers to the Trustee and Registrar an Officers’ Certificate pursuant to which it elects to cause the issuance of Definitive Notes; or

(iv) an Event of Default with respect to the Notes of such series has occurred and is continuing and the Depositary requests that its Notes be issued in the form of Definitive Notes.

Upon the occurrence of any of the preceding events in clauses (i), (ii), (iii) or (iv) above, Definitive Notes of such series shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.08 and 2.11. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.07 or Section 2.08 or 2.11, shall be

authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.07; however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.07(b), (c) or (f) hereof.

(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(i) (A) Transfer of Beneficial Interests in the same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend and any Applicable Procedures. Beneficial interests in any Unrestricted Global Note of a series may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series. Except as may be required by any Applicable Procedures, no written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.07(b)(i).

(B) The following provisions shall apply with respect to any proposed transfer of a beneficial interest in a Regulation S Global Note of a series or any Definitive Note of a series issued in exchange therefor prior to the expiration of the Restricted Period:

(i) a transfer thereof to a QIB shall be made upon the representation of the transferee, in the form of a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (1) thereof, that it is purchasing the Note of such series for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A;

(ii) a transfer thereof to an IAI shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Exhibit B-2 hereto from the proposed transferee and, if requested by the Company or the Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them; and

(iii) a transfer thereof to a Non-U.S. Person shall be made upon receipt by the Trustee or its agent of a certificate substantially in the form set forth in Exhibit B-1 hereto, including the certifications in item (2) thereof from the transferor and, if requested by the Company or the Trustee, delivery of an opinion of counsel, certification and/or other information satisfactory to each of them.

After the expiration of the Restricted Period, beneficial interests in a Regulation S Global Note of such series or Definitive Notes of such series issued in exchange therefor may be transferred without requiring the certification set forth in Exhibits B-1 and B-2 or any additional certification.

(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes . In connection with all transfers and exchanges of beneficial interests in Global Notes of a series that are not subject to Section 2.07(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A)(1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note of such series in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) if permitted under Section 2.07(a) hereof, a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above. Upon consummation of an Exchange Offer by the Company in accordance with Section 2.07(f) hereof, the requirements of this Section 2.07(b)(ii) shall be deemed to have been satisfied upon receipt by the Registrar of the instructions contained in the Letter of Transmittal delivered by the Holder of such beneficial interests in the Restricted Global Notes. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount at maturity of the relevant Global Notes pursuant to 0 hereof.

(iii) Transfer of Beneficial Interests to Another Restricted Global Note . A beneficial interest in any Restricted Global Note of a series may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note of such series if the transfer complies with the requirements of Section 2.07(b)(ii) above and the Registrar receives the following:

(A) if the transferee shall take delivery in the form of a beneficial interest in a 144A Global Note of such series, then the transferor must deliver a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (1) thereof or, if permitted by the Applicable Procedures, item (3) thereof; or

(B) if the transferee shall take delivery in the form of a beneficial interest in a Regulation S Global Note of such series, then the transferor must deliver a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (2) thereof.

(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note . A beneficial interest in any Restricted Global Note of a series may be exchanged by any Holder thereof for a beneficial interest in an Unrestricted Global Note of such series or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series if the exchange or transfer complies with the requirements of Section 2.07(b)(ii) above and:

(A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with an applicable Registration Rights Agreement and the holder of the beneficial interest, in the case of an exchange, or the transferee, in the case of a transfer, makes any and all certifications required in the applicable Letter of Transmittal (or is deemed to have made such certifications if delivery is made through the Applicable Procedures) as may be required by such Registration Rights Agreement;

(B) such transfer is effected pursuant to a Shelf Registration Statement in accordance with an applicable Registration Rights Agreement;

(C) such transfer is effected by a Broker-Dealer pursuant to an Exchange Offer Registration Statement in accordance with an applicable Registration Rights Agreement; or

(D) the Registrar receives the following:

(1) if the Holder of such beneficial interest in a Restricted Global Note of such series proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note of such series, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(2) if the Holder of such beneficial interest in a Restricted Global Note of such series proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series, a certificate from such Holder substantially in the form of Exhibit B-1 hereto, including the certifications in item (4) thereof;

and, in each such case set forth in clause (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected pursuant to clause (B) or (D) above at a time when an Unrestricted Global Note of such series has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes of such series in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to clause (B) or (D) above.

(v) Transfer or Exchange of Beneficial Interests in an Unrestricted Global Note for Beneficial Interests in a Restricted Global Note Prohibited . Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes . Subject to Section 2.07(a) hereof, if any Holder of a beneficial interest in a Restricted Global Note of a series proposes to exchange such beneficial interest for a Restricted Definitive Note of such series or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note of such series, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such beneficial interest in a Restricted Global Note of such series proposes to exchange such beneficial interest for a Restricted Definitive Note of such series, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction (as defined in Section 902(h) of Regulation S) in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (2) thereof;

(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (3)(a) thereof;

(E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (3)(b) thereof;

(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (3)(c) thereof; or

(G) if such beneficial interest is transferred to an IAI, a certificate to the effect set forth in Exhibit B-2 hereto from the proposed transferee and, if requested by the Company or Trustee, the delivery of an opinion of counsel, certification and/or other information satisfactory to each of them,

the Trustee shall cause the aggregate principal amount of the applicable Global Note of such series to be reduced accordingly pursuant to 0 hereof, and the Company shall execute and, upon receipt of an Authentication Order pursuant to Section 2.02 hereof, the Trustee shall authenticate and deliver to the Person designated in the Authentication Order a Definitive Note of such series in the appropriate principal amount. Any Definitive Note of a series issued in exchange for a beneficial interest in a Restricted Global Note of such series pursuant to this Section 2.07(c)(i) shall be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note of a series issued in exchange for a beneficial interest in a Restricted Global Note of such series pursuant to this Section 2.07(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(ii) [Reserved]

(iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes . Subject to Section 2.07(a) hereof, a Holder of a beneficial interest in a Restricted Global Note of a series may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note of such series only if:

(B) such transfer is effected pursuant to a Shelf Registration Statement in accordance with an applicable Registration Rights Agreement;

(C) such transfer is effected by a Broker-Dealer pursuant to an Exchange Offer Registration Statement in accordance with an applicable Registration Rights Agreement; or

(D) the Registrar receives the following:

(1) if the Holder of such beneficial interest in a Restricted Global Note of such series proposes to exchange such beneficial interest for a Definitive Note of such series that does not bear the Private Placement Legend, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

(2) if the Holder of such beneficial interest in a Restricted Global Note of such series proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a Definitive Note of such series that does not bear the Private Placement Legend, a certificate from such Holder substantially in the form of Exhibit B-1 hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this subparagraph (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of any of the conditions of any of the clauses of this Section 2.07(c)(iii), the Company shall execute and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver a Definitive Note that does not bear the Private Placement Legend in the appropriate principal amount to the Person designated by the holder of such beneficial interest in instructions delivered to the Registrar by the Depositary and the applicable Participant or Indirect Participant on behalf of such holder, and the Trustee shall reduce or cause to be reduced in a corresponding amount pursuant to 0, the aggregate principal amount of the applicable Restricted Global Note.

(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes . If any Holder of a beneficial interest in an Unrestricted Global Note of a series proposes to exchange such beneficial interest for a Definitive Note of such series or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note of such series, then, upon satisfaction of the conditions set forth in Section 2.07(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to 0 hereof, and the Company shall execute and, upon receipt of an Authentication Order pursuant to Section 2.02 hereof, the Trustee shall authenticate and deliver to the Person designated in the Authentication Order a Definitive Note of such series in the appropriate principal amount. Any Definitive Note of such series issued in exchange for a beneficial interest pursuant to this Section 2.07(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the Holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note of such series issued in exchange for a beneficial interest pursuant to this Section 2.07(c)(iv) shall not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests .

(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note of a series proposes to exchange such Note for a beneficial interest in a Restricted Global Note of such series or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note of such series, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note of such series, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction (as defined in Rule 902(k) of Regulation S) in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (3)(b) thereof;

(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (3)(c) thereof; or

the Trustee shall cancel the Restricted Definitive Note of such series, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the appropriate 144A Global Note, and in the case of clause (C) above, the appropriate Regulation S Global Note.

(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of a Restricted Definitive Note of a series may exchange such Note for a beneficial interest in an Unrestricted Global Note of such series or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series only if:

(A) such exchange or transfer is effected pursuant to the Exchange Offer in accordance with an applicable Registration Rights Agreement and the Holder, in the case of an exchange, or the transferee, in the case of a transfer, makes any and all certifications required in the applicable Letter of Transmittal (or is deemed to have made such certifications if delivery is made through the Applicable Procedures) as may be required by such Registration Rights Agreement;

(B) such transfer is effected pursuant to a Shelf Registration Statement in accordance with an applicable Registration Rights Agreement;

(C) such transfer is effected by a Broker-Dealer pursuant to an Exchange Offer Registration Statement in accordance with an applicable Registration Rights Agreement; or

(D) the Registrar receives the following:

(1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note of such series, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

(2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note of such series, a certificate from such Holder substantially in the form of Exhibit B-1 hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this clause (D), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of any of the conditions of any of the clauses of this Section 2.07(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes . A Holder of an Unrestricted Definitive Note of a series may exchange such Note for a beneficial interest in an Unrestricted Global Note of such series or transfer such Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note of such series at any time. Upon

receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased in a corresponding amount the aggregate principal amount of one of the Unrestricted Global Notes pursuant to Section 2.07(i) hereof;

(iv) Transfer or Exchange of Unrestricted Definitive Notes to Beneficial Interests in Restricted Global Notes Prohibited . An Unrestricted Definitive Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, beneficial interests in a Restricted Global Note.

(v) Issuance of Unrestricted Global Notes . If any such exchange or transfer from a Definitive Note of a series to a beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above at a time when an Unrestricted Global Note of such series has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes of such series in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes . Upon request by a Holder of Definitive Notes of a series and such Holder’s compliance with the provisions of this Section 2.07(e), the Registrar shall register the transfer or exchange of Definitive Notes of such series. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.07(e).

(i) Restricted Definitive Notes to Restricted Definitive Notes . Any Restricted Definitive Note of any series may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note of such series if the Registrar receives the following:

(A) if the transfer shall be made pursuant to Rule 144A, then the transferor must deliver a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (1) thereof;

(B) if the transfer shall be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate substantially in the form of Exhibit B-1 hereto, including the certifications in item (2) thereof; and

(C) if the transfer shall be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate substantially in the form of Exhibit B-1 hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

(ii) Restricted Definitive Notes to Unrestricted Definitive Notes . Any Restricted Definitive Note of a series may be exchanged by the Holder thereof for an Unrestricted Definitive Note of such series or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note of such series only if:

(B) any such transfer is effected pursuant to a Shelf Registration Statement in accordance with an applicable Registration Rights Agreement;

(C) any such transfer is effected by a Broker-Dealer pursuant to an Exchange Offer Registration Statement in accordance with an applicable Registration Rights Agreement; or

(D) the Registrar receives the following:

(1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note of such series, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note of such series, a certificate from such Holder substantially in the form of Exhibit B-1 hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this clause (D), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of the conditions of any of the clauses of this Section 2.07(e)(ii), the Trustee shall cancel the prior Restricted Definitive Note and the Company shall execute, and upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver an Unrestricted Definitive Note in the appropriate aggregate principal amount to the Person designated by the Holder of such prior Restricted Definitive Note in instructions delivered to the Registrar by such Holder.

(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes . A Holder of Unrestricted Definitive Notes of a series may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note of such series.

Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes of such series pursuant to the instructions from the Holder thereof.

(f) Exchange Offer . Upon the occurrence of an Exchange Offer for a series of Notes in accordance with an applicable Registration Rights Agreement, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate (A) one or more Unrestricted Global Notes for such series in an aggregate principal amount equal to the aggregate principal amount of the beneficial interests in the applicable Restricted Global Notes for such series (1) tendered for acceptance by Persons that make any and all certifications in the applicable Letters of Transmittal (or are deemed to have made such certifications if delivery is made through the Applicable Procedures) as may be required by such Registration Rights Agreement and (2) accepted for exchange in such Exchange Offer and (B) Unrestricted Definitive Notes for such series in an aggregate principal amount equal to the aggregate principal amount of the Restricted Definitive Notes for such series tendered for acceptance by Persons who made the foregoing certifications and accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall reduce or cause to be reduced in a corresponding amount the aggregate principal amount of the applicable Restricted Global Notes, and the Company shall execute and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate and deliver to the Persons designated by the Holders of Restricted Definitive Notes so accepted Unrestricted Definitive Notes in the appropriate aggregate principal amount. Any Notes of such series that remain outstanding after the consummation of an Exchange Offer, and Exchange Notes of such series issued in connection with an Exchange Offer, shall be treated as a single series of securities under this Indenture.

(g) Legends . The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.

(i) Private Placement Legend . Except as permitted below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

THIS SECURITY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a) INSIDE THE UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A

QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF APPLICABLE), OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY IF THE COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN CLAUSE (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR RESALE OF THIS SECURITY.

Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) of this Section 2.07 (and all Notes issued in exchange therefor or substitution thereof) (and any note not required by law to have such a legend), shall not bear the Private Placement Legend.

In addition, the foregoing legend may be adjusted for future issuances in accordance with applicable law.

(ii) Global Note Legend . Each Global Note shall bear a legend in substantially the following form:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07 OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

(iii) Temporary Regulation S Global Note Legend . Each Temporary Regulation S Global Note shall bear a legend in substantially the following form:

THIS SECURITY IS A TEMPORARY GLOBAL NOTE. BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR PHYSICAL NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE WITH THE TERMS OF THE INDENTURE.

(h) Cancellation and/or Adjustment of Global Notes . At such time as all beneficial interests in a particular Global Note of a series have been exchanged for Definitive Notes of such series or a particular Global Note of a series has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.12. At any time prior to such cancellation, if any beneficial interest in a Global Note of a series is exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note of such series or for Definitive Notes of such series, the principal amount of Notes of such series represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who shall take delivery thereof in the form of a beneficial interest in another Global Note of such series, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(i) General Provisions Relating to Transfers and Exchanges .

(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company’s order or at the Registrar’s request.

(ii) No service charge shall be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or

exchange, but the Company or the Trustee, if applicable, may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.11, 3.06, 4.09 and 9.05).

(iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

(iv) All Global Notes of a series and Definitive Notes of such series issued upon any registration of transfer or exchange of Global Notes of such series or Definitive Notes of such series shall be the valid and legally binding obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes of such series or Definitive Notes of such series surrendered upon such registration of transfer or exchange.

(v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes of a series during a period beginning at the opening of 15 Business Days before the day of any selection of Notes of such series for redemption under Section 3.02 and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date.

(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.

(vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02.

(viii) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.07 to effect a registration of transfer or exchange may be submitted by facsimile, .pdf attachment or otherwise electronically transmitted, in each case, with the original to follow by first class mail or delivery service.

(ix) Neither the Trustee nor any agent of the Trustee shall have any responsibility for any actions taken or not taken by the Depositary.

(x) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among the Depositary participants or beneficial owners of

interests in any Global Notes) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of the Indenture, and to examine the same to determine substantial compliance as to form with the express requirements of this Indenture.

Section 2.08. Replacement Notes .

(a) If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note of the same series if the Trustee’s requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company or the Trustee may charge the Holder for their expenses in replacing a Note. If, after the delivery of such replacement Note, a protected purchaser of the original Note in lieu of which such replacement Note was issued presents for payment or registration such original Note, the Trustee shall be entitled to recover such replacement Note from the Person to whom it was delivered or any Person taking therefrom, except a protected purchaser, and shall be entitled to recover upon the security or indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Company, the Trustee and any Agent in connection therewith.

(b) Subject to the provisions of the final sentence of the preceding paragraph, every replacement Note is an additional obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.09. Outstanding Notes .

(a) The Notes of a series outstanding at any time are all the Notes of such series authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note of such series effected by the Trustee in accordance with the provisions of this Indenture, and those described in this Section as not outstanding. Except as set forth in Section 2.10, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.

(b) If a Note is replaced pursuant to Section 2.08, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser.

(c) If the principal amount of any Note is considered paid under Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.

(d) If the Paying Agent (other than the Company, a Subsidiary of the Company or an Affiliate of any of the foregoing) holds as of 1:00 p.m. New York Time, on a redemption date or other maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.

Section 2.10. Treasury Notes .

In determining whether the Holders of the required principal amount of Notes of a series have concurred in any direction, waiver or consent, Notes of such series owned by the Company, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes of such series that the Trustee knows are so owned shall be so disregarded.

Section 2.11. Temporary Notes .

(a) Until certificates representing Notes of any series are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes of such series. Temporary Notes of such series shall be substantially in the form of Definitive Notes of such series but may have variations that the Company considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes.

(b) Holders of temporary Notes shall be entitled to all of the benefits of this Indenture.

Section 2.12. Cancellation .

The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of canceled Notes in accordance with its procedures for the disposition of canceled securities in effect as of the date of such disposition (subject to the record retention requirement of the Exchange Act).

Section 2.13. Defaulted Interest .

If the Company defaults in a payment of interest on the Notes of a series, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders of Notes of such series on the record date for the interest payment or a subsequent special record date, in each case at the rate provided in the Notes of such series and in Section 4.01. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note of such series and the date of the proposed payment. The Company shall fix or cause to be fixed each such special record date and payment date, provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall deliver electronically (for Global Notes) or mail or cause to be mailed to Holders of Notes of such series a notice that states the special record date, the related payment date and the amount of such interest to be paid.

Section 2.14. CUSIP Numbers .

The Company in issuing the Notes may use “CUSIP” or “ISIN” numbers (if then generally in use), and, if so, the Trustee shall use such numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee in writing of any change in the “CUSIP” or “ISIN” numbers.

Section 2.15. Additional Interest .

If Additional Interest is payable by the Company pursuant to an applicable Registration Rights Agreement and paragraph 1 of the Notes of a series, no later than 15 days prior to the proposed payment date for such Additional Interest, the Company shall deliver to the Trustee an Officers’ Certificate to that effect stating (i) the amount of such Additional Interest that is payable and (ii) the date on which such interest is payable pursuant to Section 4.01 hereof. If the Company has paid Additional Interest directly to the Persons entitled to it, the Company shall deliver to the Trustee an Officers’ Certificate setting forth the details of such payment.

Section 2.16. Issuance of Additional Notes .

(a) The Company shall be entitled, from time to time, without notice or the consent of the Holders, to issue Additional Notes of any series under this Indenture. Any such Additional Notes shall form a single series with the Initial Notes of such series and have the same terms as to status, redemption or otherwise as the applicable Initial Notes of such series; provided, however, if the Additional Notes are not fungible with the applicable series of Initial Notes for U.S. federal income tax purposes, such Additional Notes shall have a different CUSIP number than the Initial Notes of such series.

(b) With respect to any Additional Notes, the Company shall set forth in the related Authentication Order the following information:

(i) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

(ii) the issue date and the CUSIP and/or ISIN number of such Additional Notes; and

(iii) whether such Additional Notes shall be subject to the restrictions on transfer set forth in Section 2.07 hereof relating to Restricted Global Notes and Restricted Definitive Notes.

ARTICLE THREE
REDEMPTION AND PREPAYMENT

Section 3.01. Notice to Trustee .

If the Company elects to redeem Notes of a series pursuant to the optional redemption provisions of Section 3.07, it shall furnish to the Trustee, at least 5 days (unless the Trustee consents to a shorter period) before giving a notice of redemption pursuant to Section 3.03, an Officers’ Certificate setting forth (i) the clause of this Indenture pursuant to which the redemption shall occur, (ii) the redemption date, (iii) the principal amount of Notes of such series to be redeemed and (iv) the redemption price, if then determined and otherwise the method of its determination.

Section 3.02. Selection of Notes to Be Redeemed .

(a) If less than all of the Notes of a series are to be redeemed at any time, the Trustee shall select the Notes of such series to be redeemed among the Holders of the Notes on a pro rata basis, by lot or in accordance with any other method the Trustee deems fair and appropriate (subject to the procedures of DTC or any other Depositary and by maintaining the authorized denominations for the Notes), or, if the Notes of such series are listed on any securities exchange, by any other method that complies with the requirements of such exchange. In the event of partial redemption by lot, the particular Notes of such series to be redeemed shall be selected prior to giving a notice of such redemption by the Trustee from the outstanding Notes of such series not previously called for redemption.

(b) The Trustee shall promptly notify the Company in writing of the Notes of the applicable series selected for redemption and, in the case of any Note of such series selected for partial redemption, the principal amount at maturity thereof to be redeemed. No Notes of any series in amounts of $2,000 or less shall be redeemed in part. The Trustee may select for redemption portions of the principal of Notes of any series that have denominations larger than $1,000. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000 in excess thereof; except that if all of a Holder’s Notes of a series are to be redeemed, the entire outstanding amount of Notes of such series held by such Holder, even if not a multiple of $1,000, shall be redeemed. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes of a series called for redemption also apply to portions of Notes of such series called for redemption.

Section 3.03. Notice of Redemption .

(a) At least 30 days but not more than 60 days before an optional redemption date, the Company shall deliver electronically (for Global Notes) or mail, by first class mail, a notice of optional redemption to each Holder whose Notes are to be redeemed at its registered address or otherwise in accordance with the procedures of the Depositary and send a copy to the Trustee at the same time; provided that in connection with a defeasance or satisfaction and discharge in accordance with Article Eight or Eleven notice may be given more than 60 days prior to the redemption date.

The notice shall identify the Notes (including CUSIP or ISIN number(s)) to be redeemed and shall state:

(i) the aggregate principal amount of such Notes to be redeemed;

(ii) the redemption date;

(iii) if any Note of a series is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note shall be issued in the name of the Holder thereof upon cancellation of the original Note;

(iv) the name and address of the Paying Agent;

(v) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price and become due on the date fixed for redemption;

(vi) that, unless the Company defaults in making such redemption payment, interest, if any, on Notes called for redemption ceases to accrue on and after the redemption date;

(vii) the paragraph of the Notes and/or section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and

(viii) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes.

(b) At the Company’s request, the Trustee shall give the notice of optional redemption in the Company’s name and at its expense; provided, however, that the Company shall have delivered to the Trustee, as provided in Section 3.01, an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. The notice, if delivered or mailed in the manner provided herein shall be presumed to have been given, whether or not the Holder receives such notice.

Section 3.04. Effect of Notice of Redemption .

Once notice of redemption is delivered or mailed in accordance with Section 3.03, Notes called for redemption become irrevocably due and payable on the redemption date at the applicable redemption price. A notice of redemption may not be conditional.

Section 3.05. Deposit of Redemption Price .

(a) Prior to 11:00 a.m. New York Time on the Business Day that is the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed.

(b) If the Company complies with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption, whether or not such Notes are presented for payment. If a Note (other than a Definitive Note) is redeemed on or after an interest record date but before the

succeeding Interest Payment Date, interest shall be paid to the Holder in whose name such Note was registered at the close of business on such redemption date. If a Definitive Note is redeemed on or after an interest record date but before the succeeding Interest Payment Date, interest shall be paid to the Holder in whose name such Note was registered at the close of business on the interest record date and such interest shall not be included in the redemption price. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01.

Section 3.06. Notes Redeemed in Part .

Upon surrender of a Note that is redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed portion of the Note surrendered. No Notes in denominations of $2,000 or less shall be redeemed in part.

Section 3.07. Optional Redemption .

(a) At any time prior to December 15, 2019, the Company may, at its option, redeem the 2020 Notes, in whole or in part, at a redemption price equal to the Make-Whole Redemption Price, plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable redemption date (subject to Section 3.05(b)).

(b) At any time on or after December 15, 2019, the Company may, at its option, redeem the 2020 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2020 Notes being redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable redemption date (subject to Section 3.05(b)).

(c) At any time prior to June 15, 2021, the Company may, at its option, redeem the 2021 Notes, in whole or in part, at a redemption price equal to the Make-Whole Redemption Price, plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable redemption date (subject to Section 3.05(b)).

(d) At any time on or after June 15, 2021, the Company may, at its option, redeem the 2021 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2021 Notes being redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable redemption date (subject to Section 3.05(b)).

(e) At any time prior to August 15, 2024, the Company may, at its option, redeem the 2024 Notes, in whole or in part, at a redemption price equal to the Make-Whole Redemption Price, plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable redemption date (subject to Section 3.05(b)).

(f) At any time on or after August 15, 2024, the Company may, at its option, redeem the 2024 Notes, in whole or in part, at a redemption price equal to 100% of the principal

amount of the 2024 Notes being redeemed, plus accrued and unpaid interest, if any, thereon to, but excluding, the applicable redemption date (subject to Section 3.05(b)).

(g) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06.

Section 3.08. Mandatory Redemption .

Except for the Special Mandatory Redemption pursuant to Section 3.10 hereof, the Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

Section 3.09. Application of Trust Money .

All money deposited with the Trustee pursuant to Section 3.05 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

Section 3.10. Special Mandatory Redemption .

(a) In the event that the Spin-Off Distribution is not consummated on or prior to January 31, 2015, the Company shall be required to redeem all of the Notes, upon ten Business Days prior written notice to the Trustee and the Holders given within five Business Days of January 31, 2015, at a redemption price for each series of Notes equal to 100% of the initial issue price applicable to such series of Notes, plus accrued and unpaid interest thereon to, but not including, the date of redemption (the “ Mandatory Redemption Price ”). Calculation or verification of the calculation of the Mandatory Redemption Price is not the responsibility of the Trustee and the Trustee may conclusively rely upon an Officers’ Certificate with respect thereto without investigation.

(b) The Company may, at its option, redeem the Notes in whole, but not in part, at the Mandatory Redemption Price if, prior to January 31, 2015, the Company determines in its sole discretion, that the Spin-Off Distribution will not occur on or prior to that date, upon five Business Days prior written notice to the Holders.

(c) Notice of mandatory redemption pursuant to this Section 3.10 (a) or (b) shall be delivered electronically (for Global Notes) or mailed, by first class mail, to each Holder whose Notes are to be redeemed at its registered address or otherwise in accordance with the procedures of the Depositary and shall state (i) the mandatory redemption date; (ii) the Mandatory Redemption Price; (iii) that on the mandatory redemption date, the Mandatory Redemption Price shall become due and payable; and (iv) that the Notes of each series shall cease to bear interest on and after the mandatory redemption date.

(d) Notice of any mandatory redemption shall be given by the Company or, at the Company’s request and upon provision of such notice information at least 5 days (unless the Trustee consents to a shorter period) prior to the date notice of mandatory redemption is to be given to the Holders, by the Trustee in the name and at the expense of the Company.

ARTICLE FOUR
COVENANTS

Section 4.01. Payment of Notes .

(a) The Company shall pay or cause to be paid the principal of, premium, if any, and interest on each series of Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Company or one of its Subsidiaries, holds as of 11:00 a.m. New York Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest on such series of Notes then due. If any Interest Payment Date, Maturity Date, redemption date or other payment date falls on a day that is not a Business Day, the relevant payment will be made on the next Business Day with the same force and effect as if made on the relevant Interest Payment Date, Maturity Date, redemption date or other payment date. No interest will accrue for the period from and after the applicable Interest Payment Date, Maturity Date, redemption date or other payment date, as the case may be. The Company shall pay Additional Interest, if any, on the dates of its choosing in the amounts and in the manner set forth in the Registration Rights Agreement.

(b) The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, in respect of a series of Notes at the rate then in effect on the Notes of such series to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful.

Section 4.02. Maintenance of Office or Agency .

(a) The Company shall maintain an office or agency (which may be an office of the Trustee or an agent of the Trustee or Registrar) where Notes may be surrendered for registration of transfer or for exchange. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations or surrenders may be made at the Corporate Trust Office of the Trustee; provided, however, no service of legal process may be made on the Company at the Corporate Trust Office or any other office of the Trustee.

(b) The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Company shall give prompt written

notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

(c) The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.04 of this Indenture; provided, however, no service of legal process may be made on the Company at the Corporate Trust Office or any other office of the Trustee.

Section 4.03. Reports .

(a) The Company shall furnish or file with the Trustee, within 15 days after it files the same with the Commission, copies of the annual reports and the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) that the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.

(b) If the Company is not subject to the requirements of Section 13 or 15(d) of the Exchange Act and the Notes are subject to restrictions on transfer by Persons other than Affiliates of the Company under Rule 144, the Company will furnish to all Holders of the Notes and prospective purchasers of the Notes designated by the Holders of the Notes, promptly on their request, the information required to be delivered pursuant to Rule 144A(d)(4) promulgated under the Securities Act.

(c) For purposes of this Section 4.03, the Company shall be deemed to have furnished such reports and information to, or filed such reports and information with, the Trustee and the Holders of Notes and prospective purchasers as required by this Section 4.03 if it has filed such reports or information with the Commission via the EDGAR filing system or otherwise made such reports or information publicly available on a freely accessible page on the Company’s website; provided, however, that the Trustee shall have no obligation whatsoever to determine whether or not such reports and information have been posted on such website.

(d) Delivery by the Company of any such reports, information and documents to the Trustee pursuant to this Section 4.03 is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates). The Trustee is under no duty to examine such reports, information or documents to ensure compliance with the provisions of this Indenture or to ascertain the correctness or otherwise of the information or the statements contained therein. The Trustee is entitled to assume such compliance and correctness unless a Responsible Officer of the Trustee is informed, in writing, otherwise.

Section 4.04. Compliance Certificate .

(a) The Company shall deliver to the Trustee, on or before a date not more than 90 days after the end of each fiscal year (commencing with the fiscal year ending December 31, 2014), an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing

Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, the Company has kept, observed, performed and fulfilled its obligations under this Indenture and is not in default in the performance or observance of any of the material terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred and be continuing, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto). To the extent required under the TIA, each Guarantor shall also deliver to the Trustee an Officers’ Certificate meeting the requirement of this paragraph (a) with respect to such Guarantor.

(b) The Company shall, so long as any of the Notes are outstanding, notify the Trustee in writing on or before the thirtieth day after it has knowledge of the occurrence and continuance of any Default and on such day or promptly thereafter, deliver to the Trustee an Officers’ Certificate specifying such Default and what action the Company is taking or proposes to take with respect thereto.

Section 4.05. Taxes .

The Company shall pay, and shall cause each of its Subsidiaries to pay, prior to delinquency, any material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or where the failure to effect such payment would not have a material adverse effect on the Company and its Restricted Subsidiaries, taken as a whole.

Section 4.06. Stay, Extension and Usury Laws .

The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

Section 4.07. Liens Securing Funded Debt .

The Company shall not, and shall not permit any Restricted Subsidiary to, create, incur or assume any Funded Debt secured by any Liens (other than Permitted Liens) upon any Property of the Company or any Restricted Subsidiary or upon the Capital Stock of any Restricted Subsidiary unless the Notes or the Guarantee, if any, of such Restricted Subsidiary, as applicable, (together with, if the Company shall so determine, any other Indebtedness or other obligation of the Company or such Restricted Subsidiary) are equally and ratably secured for so long as such Funded Debt shall be so secured; provided that if such Funded Debt or other obligation is expressly subordinated to the Notes or a related Guarantee, if any, the Lien securing such Funded

Debt or other obligation shall be subordinated and junior to the Lien securing such Notes or such Guarantee.

Notwithstanding the foregoing provisions, the Company or any Restricted Subsidiary may create, incur or assume Funded Debt secured by Liens which would otherwise be subject to the restrictions of this Section 4.07, if the aggregate principal amount of such Funded Debt and all other secured Funded Debt of the Company and any Restricted Subsidiary theretofore created, incurred or assumed pursuant to the exception in this sentence and outstanding at such time does not exceed 15% of the Adjusted Consolidated Net Tangible Assets of the Company.

Section 4.08. Future Guarantees .

The Company shall cause each Restricted Subsidiary (other than a Guarantor) that guarantees Indebtedness of the Company under the Credit Agreement, within 90 days of such guarantee, to execute and deliver to the Trustee a supplement to this Indenture, substantially in the form of Exhibit D hereto, executed by such Restricted Subsidiary, under which such Restricted Subsidiary shall become a Guarantor of the Notes on the terms, and subject to the release and other provisions, set forth in Article Ten of this Indenture.

Section 4.09. Offer to Repurchase Upon a Change of Control .

(a) If a Change of Control Triggering Event occurs with respect to a series of Notes, each Holder of Notes of such series will have the right to require that the Company purchase all or any part (in amounts of $1,000 or whole multiples of $1,000 in excess thereof) of such Holder’s Notes pursuant to the offer described below (the “ Change of Control Offer ”). In the Change of Control Offer, the Company will offer to purchase all of the Notes of such series, at a purchase price (the “ Change of Control Purchase Price ”) in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to the date of purchase (the “ Change of Control Purchase Date ”).

(b) Not later than 30 days after the date upon which any Change of Control Triggering Event occurred with respect to a series of Notes or, at the Company’s option, prior to a Change of Control but after it is publicly announced, the Company must notify the Trustee in writing and give written notice of either such event to each Holder of Notes of such series, at such Holder’s address appearing in the security register or otherwise deliver notice in accordance with the Applicable Procedures (the “ Change of Control Purchase Notice ”). The Change of Control Purchase Notice must state, among other things:

(1) that a Change of Control Triggering Event has occurred or is expected to occur and the date or expected date of such event;

(2) the circumstances and relevant facts regarding such Change of Control Triggering Event;

(3) the Change of Control Purchase Price and the Change of Control Purchase Date, which shall be fixed by the Company on a Business Day no earlier than 30 days nor later than 60 days from the date the notice is mailed or otherwise delivered, or such later date as is necessary to comply with requirements under the Exchange Act;

provided that the Change of Control Purchase Date may not occur prior to the Change of Control Triggering Event and such notice may be contingent on the occurrence of the Change of Control Triggering Event;

(4) that any Note not tendered will continue to accrue interest;

(5) that, unless the Company defaults in the payment of the Change of Control Purchase Price, any Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date; and

(6) other procedures that a Holder of Notes must follow to accept a Change of Control Offer or to withdraw acceptance of the Change of Control Offer.

(c) Upon receipt by the Company of the proper tender of Notes, the Holder of the Note in respect of which such proper tender was made shall (unless the tender of such Note is properly withdrawn at least one Business Day prior to the Change of Control Purchase Date) thereafter be entitled to receive solely the Change of Control Purchase Price with respect to such Notes. On the Change of Control Purchase Date, any such Note surrendered for purchase in accordance with the foregoing provisions and not withdrawn shall be accepted for payment by the Company at the Change of Control Purchase Price; provided, however, that installments of interest whose Stated Maturity is on or prior to the Change of Control Purchase Date shall be payable to the Holders of such Notes, registered as such on the relevant Change of Control Purchase Date (or on the relevant record dates in the case of Definitive Notes) according to the terms and the provisions of Section 2.03. If any Note accepted for payment in accordance with the provisions of this Section 4.09 shall not be paid as provided in Section 4.09(d), the principal thereof (and premium, if any, thereon) shall, until paid, bear interest from the Change of Control Purchase Date at the rate borne by such Note. Holders electing to have Notes purchased will be required to surrender such Notes to the Paying Agent at the address specified in the Change of Control Purchase Notice at least one Business Day prior to the Change of Control Purchase Date. Any Note that is to be purchased only in part shall be surrendered to a Paying Agent at the office of such Paying Agent (with, if the Company, the Registrar or the Trustee so require, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Registrar or the Trustee, as the case may be, duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note, without service charge, one or more new Notes of any authorized denomination as requested by such Holder in an aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Note so surrendered that is not purchased.

(d) The Company shall (i) not later than the Change of Control Purchase Date, accept for payment Notes or portions thereof tendered pursuant to the Change of Control Offer and not validly withdrawn, (ii) not later than 1:00 p.m. (New York time) on the Business Day following the Change of Control Purchase Date, deposit with the Trustee or with a Paying Agent an amount of money in same day funds sufficient to pay the aggregate Change of Control Purchase Price of all the Notes or portions thereof which have been so accepted for payment and (iii) not later than 1:00 p.m. (New York time) on the Business Day following the Change of

Control Purchase Date, deliver to the Paying Agent an Officers’ Certificate stating the Notes or portions thereof accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to Holders of Notes so accepted payment in an amount equal to the Change of Control Purchase Price of the Notes purchased from each such Holder, and the Company shall execute and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Note equal in principal amount to any unpurchased portion of the Note surrendered. Any Notes not so accepted shall be promptly mailed or delivered by the Paying Agent at the Company’s expense to the Holder thereof. The Company will publicly announce the results of the Change of Control Offer on the Change of Control Purchase Date. For purposes of this Section 4.09, the Company shall choose a Paying Agent which shall not be the Company.

(e) A tender made in response to a Change of Control Purchase Notice may be withdrawn if the Company receives, not later than one Business Day prior to the Change of Control Purchase Date, a telegram, telex, facsimile transmission or letter, specifying, as applicable:

(1) the name of the Holder;

(2) the certificate number of the Note in respect of which such notice of withdrawal is being submitted;

(3) the principal amount of the Note (which shall be $1,000 or whole multiples of $1,000 in excess thereof) delivered for purchase by the Company as to which such notice of withdrawal is being submitted;

(4) a statement that such Holder is withdrawing his election to have such principal amount of such Note purchased; and

(5) the principal amount, if any, of such Note (which shall be $1,000 or whole multiples of $1,000 in excess thereof) that remains subject to the original Change of Control Purchase Notice and that has been or will be delivered for purchase by the Company.

Notwithstanding anything herein to the contrary, in the case of Notes held in book-entry form, Notes must be tendered and/or withdrawn in accordance with Applicable Procedures.

(f) The Trustee and the Paying Agent shall return to the Company, upon its request, any cash that remains unclaimed for two years after a Change of Control Purchase Date together with interest or dividends, if any, thereon (subject to Section 7.01(f)), held by them for the payment of the Change of Control Purchase Price; and the Holder of such tendered and accepted Note shall thereafter look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such cash, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense of the Company cause to be published once in The New York Times and The Wall Street Journal (national edition) or send to each Holder entitled to such money notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such

notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Company; provided, further however, that (x) to the extent that the aggregate amount of cash deposited by the Company pursuant to clause (ii) of paragraph (d) of this Section 4.09 exceeds the aggregate Change of Control Purchase Price of the Notes or portions thereof to be purchased, then the Trustee shall hold such excess for the Company and (y) unless otherwise directed by the Company in writing, promptly after the Business Day following the Change of Control Purchase Date the Trustee shall return any such excess to the Company together with interest, if any, thereon (subject to Section 7.01(f)).

(g) The Company shall comply with the applicable tender offer rules, including Rule 14e-1 under the Exchange Act, and any other applicable securities laws or regulations in connection with a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.09, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section 4.09 by virtue of such conflict.

(h) Notwithstanding the foregoing, the Company shall not be required to make a Change of Control Offer (i) if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer or (ii) if notice of redemption for 100% of the aggregate principal amount of the outstanding Notes of the series in respect of which a Change of Control Triggering Event occurred has been given pursuant to Section 3.07, unless and until there is a default in payment of the applicable redemption price.

(i) In the event that Holders of not less than 90% of the aggregate principal amount of the outstanding Notes of the relevant series accept a Change of Control Offer and the Company purchases all of the Notes of such series held by such Holders, the Company will have the right, upon not less than 30 nor more than 60 days’ prior notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described under this Section 4.09, to redeem all of the Notes of such series that remain outstanding following such purchase at a redemption price equal to 101% of the aggregate principal amount of Notes redeemed plus accrued and unpaid interest, if any, thereon to the date of redemption.

Section 4.10. Corporate Existence .

Subject to Article Five, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect the corporate or comparable existence of the Company and each Restricted Subsidiary; provided that the Company is not required to preserve any the existence of any Restricted Subsidiary, if the maintenance or preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole.

ARTICLE FIVE
SUCCESSORS

Section 5.01. Consolidation, Merger and Sale of Assets .

(a) The Company will not consolidate or merge with or into any Person or sell, convey, lease or otherwise dispose of all or substantially all of its assets to any Person, unless:

(1) the Person formed by or surviving such consolidation or merger (if other than the Company), or to which such sale, lease, conveyance or other disposition shall be made (collectively, the “ Successor” ), is a corporation, limited liability company, general partnership or limited partnership organized and existing under the laws of the United States of America or any state thereof or the District of Columbia and the Successor assumes, by supplemental indenture, all the obligations of the Company under this Indenture; provided that unless the Successor is a corporation, a corporate co-issuer of the Notes will be added to this Indenture by such supplemental indenture;

(2) immediately after giving effect to such transaction, no Event of Default shall have occurred and be continuing; and

(3) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such supplemental indenture, if required, complies with this Indenture.

(b) Except in transactions that will result in the release of the Guarantee of a Guarantor as provided in Section 10.04, each Guarantor will not consolidate or merge with or into (whether or not such Guarantor is the surviving Person) any other Person (other than the Company or any other Guarantor), unless:

(1) the Person formed by or surviving any such consolidation or merger (if other than such Guarantor) assumes all the obligations of such Guarantor under this Indenture and the Notes pursuant to a supplemental indenture; and

(2) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.

(c) Upon satisfaction of the requirements in Section 5.01 (a) and (b) with respect to a merger, consolidation or sale or disposition of all or substantially all of the assets of the Company or a Guarantor, the predecessor Company or Guarantor, as the case may be, shall be released from its obligations under this Indenture and the successor Company or Guarantor, as the case may be, shall succeed to, and be substituted for, and may exercise every right and power of, the Company or such Guarantor, as the case may be, under this Indenture, but, in the case of a lease of all or substantially all its assets, the predecessor Company shall not be released from the obligation to pay the principal of and interest on the Notes.

(d) Notwithstanding the foregoing, the Company or any Guarantor may merge with an Affiliate of it incorporated or organized solely for the purpose of reincorporating or reorganizing the Company or Guarantor in another jurisdiction.

ARTICLE SIX
DEFAULTS AND REMEDIES

Section 6.01. Events of Default .

An “Event of Default” will occur with respect to each series of Notes if:

(1) there shall be a default by the Company or any Guarantor in the payment of principal of or any premium on such series of Notes when due and payable at its Maturity;

(2) there shall be a default by the Company or any Guarantor in the payment of any installment of interest on such series of Notes when it becomes due and payable, and such default shall continue for a period of 30 days;

(3) there shall be a default on any other Indebtedness of the Company or any Guarantor and either:

(A) such default results in the acceleration of the maturity of any such Indebtedness having a principal amount of $50.0 million or more individually or, taken together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, in the aggregate; or

(B) such default results from the failure to pay when due principal of any such Indebtedness, after giving effect to any applicable grace period (a “ Payment Default ”), having a principal amount of $50.0 million or more individually or, taken together with the principal amount of any other Indebtedness under which there has been a Payment Default, in the aggregate;

provided that if any such default is cured or waived or any such acceleration is rescinded, or such Indebtedness (or overdue portion thereof) is repaid, within a period of 30 days from the continuation of such default beyond any applicable grace period or the occurrence of such acceleration, as the case may be, such Event of Default and any consequent acceleration of such series of Notes shall be rescinded, so long as any such rescission does not conflict with any judgment or decree or applicable provision of law;

(4) there shall be a default by the Company in the performance or breach of the provisions of Article Five, or the Company shall have failed to make or consummate a Change of Control Offer in accordance with Section 4.09;

(5) there shall be a default in the performance, or breach of, any covenant or agreement of the Company or any Guarantor in this Indenture applicable to such series of Notes and, in each such case, failure to remedy such default within a period of 60 days after written notice thereof from the Trustee or Holders of 25% of the principal amount of such series of Notes; provided, however, that the Company will have 90 days following such written notice to remedy or receive a waiver for any failure to comply with its obligations under this Indenture so long as the Company is attempting to remedy any such failure as promptly as reasonably practicable;

(6) any failure of a Guarantee by a Guarantor that is a Significant Subsidiary of such series of Notes to be in full force and effect, or the denial or disaffirmance by such entity thereof, in each case, except in accordance with Indenture;

(7) the entry by a court having jurisdiction in the premise of (i) a decree or order for relief in respect of the Company or any Guarantor that is a Significant Subsidiary, in an involuntary case or proceeding under any Bankruptcy Law or (ii) a decree or order adjudging the Company or any Guarantor that is a Significant Subsidiary, bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Guarantor that is a Significant Subsidiary, under any applicable Bankruptcy Law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order described in clause (i) or (ii) above unstayed and in effect for a period of 60 consecutive days; or

(8) (i) the commencement by the Company or any Guarantor that is a Significant Subsidiary, of a voluntary case or proceeding under any applicable Bankruptcy Law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or (ii) the consent by the Company, to the entry of a decree or order for relief in respect of the Company or any Guarantor that is a Significant Subsidiary, in an involuntary case or proceeding under any applicable Bankruptcy Law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company, or (iii) the filing by the Company, of a petition or answer or consent seeking reorganization or relief under any applicable Bankruptcy Law, or (iv) the consent by the Company to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or (v) the making by the Company or any Guarantor that is a Significant Subsidiary, of a general assignment for the benefit of creditors, or the admission by the Company or any Guarantor that is a Significant Subsidiary, in writing in a public report or release or bondholder report, of its inability to pay its debts generally as they become due.

Section 6.02. Acceleration .

(a) If an Event of Default (other than as specified in clause (7) or clause (8) of Section 6.01 with respect to the Company) shall occur with respect to any series of Notes and be continuing with respect to this Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes of such series then outstanding may declare all unpaid principal of, premium, if any, and accrued but unpaid interest on, all the Notes of such series then outstanding to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders of the Notes). Upon such a declaration, such principal, premium, if any, and interest shall become due and payable immediately. If an Event of Default specified in clause (7) or clause (8) of Section 6.01 occurs with respect to the Company, then the principal of, any premium, if any, and interest on, all the Notes shall ipso facto be accelerated and become due and payable immediately, without any declaration or other act on the part of the

Trustee or any Holder of Notes. Thereupon, the Trustee may, at its discretion, proceed to protect and enforce the rights of the Holders of Notes by appropriate judicial proceedings.

(b) After an acceleration with respect to a series of Notes, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of the outstanding Notes of such series by written notice to the Company and the Trustee, on behalf of the Holders of Notes of such series, may rescind and annul such acceleration and its consequences if:

(1) the Company has paid or deposited with the Trustee a sum sufficient to pay (A) all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, (B) all overdue interest on all Notes of such series then outstanding, the principal of, and premium, if any, on any Notes of such series then outstanding, in each case, which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Notes of such series and (C) to the extent that payment of such interest is lawful, interest upon overdue interest at the rate borne by the Notes of such series;

(2) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and

(3) all Events of Default, other than the non-payment of principal of, premium, if any, and interest on the Notes of such series which have become due solely by such declaration of acceleration, have been cured or waived as provided in this Indenture.

Section 6.03. Other Remedies .

(a) If an Event of Default occurs and is continuing with respect to a series of Notes, the Trustee may pursue any available remedy to collect the payment of principal, premium, if any, or interest on the Notes of such series or to enforce the performance of any provision of the Notes of such series or this Indenture.

(b) The Trustee may maintain a proceeding even if it does not possess any of the Notes of such series or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note of such series in exercising any right or remedy accruing upon and during the continuance of an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

Section 6.04. Waiver of Past Defaults .

The Holders of not less than a majority in aggregate principal amount of the outstanding Notes of any series of Notes, by written notice to the Trustee and the Company, may on behalf of the Holders of all outstanding Notes of such series waive any existing Default or Event of Default with respect to such series under this Indenture and its consequences, except a continuing Default or Event of Default (1) in the payment of the principal of, premium, if any, or interest on any Note of such series (other than a default in payment that has become due solely because of an acceleration that has been rescinded), which may only be waived with the consent of each Holder of Notes affected or (2) in respect of a covenant or provision which under this Indenture cannot be modified or amended without the consent of the Holder of each Note of such series affected by such modification or amendment. The Company shall deliver to the Trustee an Officers’ Certificate stating that the requisite percentage of Holders have consented to such waiver and attaching copies of such consents. In case of any such waiver, the Company, the Trustee and the Holders shall be restored to their former positions and rights hereunder and under the Notes, respectively. This Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the TIA is hereby expressly excluded from this Indenture and the Notes, as permitted by the TIA. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 6.05. Control by Majority .

Subject to Section 7.01(e), the Holders of a majority in aggregate principal amount of the then outstanding Notes of any series of Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee for such series of Notes or exercising any trust or power conferred on it. However, the Trustee shall be under no obligation and may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes of such series or that may involve the Trustee in personal liability.

Section 6.06. Limitation on Suits .

(a) No Holder of any of the Notes of any series has any right to pursue any remedy with respect to this Indenture unless (1) the Trustee shall have received written notice that an Event of Default has occurred and is continuing, (2) the Trustee shall have received a written request from Holders of at least 25% in aggregate principal amount of the outstanding Notes of such series to pursue such remedy, (3) the Trustee shall have received indemnity from the Holders reasonably satisfactory to it against loss, liability or expense to pursue such remedy as Trustee under the Notes of such series and this Indenture, (4) the Trustee shall have failed to act for a period of 60 days after receipt of such written notice, request and such offer of security or indemnity, and (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the outstanding Notes of such series.

(b) The limitations set forth in paragraph (a) of this Section 6.06 do not, however, apply to a suit instituted by a Holder of a Note of such series for the enforcement of the

payment of the principal of, premium, if any, or interest on such Note on or after the respective due dates expressed in such Note.

Section 6.07. Rights of Holders of Notes to Receive Payment .

Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, or interest on such Note, on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

Section 6.08. Collection Suit by Trustee .

If an Event of Default specified in clause (1) or (2) of Section 6.01 occurs with respect to a series of Notes and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of overdue principal of, premium, if any, interest remaining unpaid on the Notes of such series and to the extent lawful, interest on overdue principal, premium, if any, and interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

Section 6.09. Trustee May File Proofs of Claim .

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of any series of Notes allowed in any judicial proceedings relative to the Company or any Guarantor (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other securities or property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder of Notes of such series to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders of Notes of such series, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders of Notes of such series may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10. Priorities .

(a) If the Trustee collects any money or other property pursuant to this Article Six in respect of a series of Notes, it shall pay out the money and other property in the following order:

First : to the Trustee, its agents and attorneys for amounts due under Section 7.07, including payment of all compensation, expense and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

Second : to the payment of the amounts then due and unpaid upon such series of Notes for principal, premium, if any, and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind; and

Third : to the Company or to such party as a court of competent jurisdiction shall direct.

(b) The Trustee may fix a record date and payment date for any payment to Holders of Notes of such series pursuant to this Section 6.10.

Section 6.11. Undertaking for Costs .

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07, or a suit by Holders of more than ten percent in principal amount of the then outstanding Notes of a series.

ARTICLE SEVEN
TRUSTEE

Section 7.01. Duties of Trustee .

(a) If an Event of Default has occurred and is continuing, and is actually known to the Trustee, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b) Except during the continuance of an Event of Default with respect to a series of Notes:

(i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture with respect to such series and the Trustee need perform only

those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform on their face to the requirements of this Indenture.

(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.

(e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders shall have provided to the Trustee security or indemnity reasonably satisfactory to it against the costs, loss, expenses and liabilities that might be incurred by it in compliance with such request or direction.

(f) Money held in trust by the Trustee need not be segregated from other funds and need not be held in an interest-bearing account, in each case except to the extent required by law or by any other provision of this Indenture. The Trustee (acting in any capacity hereunder) shall not be liable for interest on any money received by it hereunder unless the Trustee otherwise agrees in writing with the Company.

Section 7.02. Certain Rights of Trustee .

(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.

(f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders of a series of Notes unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. In no event shall the Trustee be liable to any Person for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including, but not limited to, lost profits) for any action it takes or omits to take, even if the Trustee has been advised of the likelihood of such loss or damage.

(g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of such event is sent to the Trustee in accordance with Section 12.02, and such notice references the Notes.

(h) Subject to Section 7.01(b)(ii), the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder.

(j) The permissive rights of the Trustee enumerated herein shall not be construed as duties.

(k) The recitals contained herein and in the Notes, except for the Trustee’s certificates of authentication, shall be taken as the statements of the Company and the

Guarantors, as applicable, and shall not be taken as the statements of the Trustee, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate the Notes and perform its obligations hereunder.

(l) The Trustee shall have no duty to ascertain or inquire as to the performance or observance of any of the terms of this Indenture or any other documents or agreements entered into in connection with the transactions contemplated hereby by the Company or any other party hereto.

Section 7.03. Individual Rights of Trustee .

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may become a creditor of, or otherwise deal with, the Company or any of its Affiliates with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest as described in the TIA while any Default exists, it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as Trustee with such conflict or resign as Trustee. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11.

Section 7.04. Trustee’s Disclaimer .

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

Section 7.05. Notice of Default .

If a Default or Event of Default occurs with respect to a series of Notes and is continuing and if it is actually known to the Trustee, the Trustee shall mail or otherwise deliver to Holders of such series of Notes a notice of the Default or Event of Default within 90 days after the Trustee gains knowledge of the Default or Event of Default unless such Default or Event of Default shall have been cured or waived before the giving of such notice. Except in the case of a Default or Event of Default in payment of principal of, premium or interest on any Note of a series, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of such series of Notes.

Section 7.06. Reports by Trustee to Holders of the Notes .

(a) Within 60 days after each February 15 beginning with the February 15 following the date hereof, and for so long as Notes of a series remain outstanding, the Trustee shall mail or otherwise deliver to the Holders of such series of Notes a brief report dated as of

such reporting date that complies with TIA Section 313(a) (but if no event described in TIA Section 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by mail or otherwise deliver all reports as required by TIA Section 313(c).

(b) A copy of each report at the time of its mailing or delivery to the Holders of Notes shall be mailed to the Company and filed with the Commission and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Company shall promptly notify the Trustee in writing when the Notes are listed on any stock exchange or any delisting thereof.

Section 7.07. Compensation and Indemnity .

(a) The Company shall pay to the Trustee (in its capacity as Trustee, and, to the extent it has been appointed as such, as Paying Agent and Registrar) from time to time reasonable compensation for its acceptance of this Indenture and services hereunder in accordance with a written schedule provided by the Trustee to the Company. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and reasonable out-of-pocket expenses incurred or made by it in addition to the compensation for its services, except those resulting from its own negligent action, negligent failure to act or willful misconduct. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

(b) The Company shall indemnify the Trustee in its capacity against any and all losses, liabilities or reasonable out-of-pocket expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by either of the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its negligence or willful misconduct. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may elect to have separate counsel defend the claim, but the Company will be obligated to pay the reasonable fees and expenses of such separate counsel only if the Company fails to assume the Trustee’s defense or there is a conflict of interest between the Company, on the one hand, and the Trustee, on the other hand, with respect to the claim, as reasonably determined by the Trustee. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld.

(c) The obligations of the Company under this Section 7.07 shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee.

(d) To secure the Company’s payment obligations in this section, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee,

except that held in trust to pay principal, premium, if any, and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture and the resignation or removal of the Trustee.

(e) When the Trustee incurs expenses or renders services after an Event of Default specified in clause (7) or (8) of Section 6.01 occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

Section 7.08. Replacement of Trustee .

(a) A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.

(b) The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes of a series may remove the Trustee by so notifying the Trustee with respect to such series of Notes and the Company in writing. The Company may remove the Trustee if:

(i) the Trustee fails to comply with Section 7.10;

(ii) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

(iii) a custodian or public officer takes charge of the Trustee or its property; or

(iv) the Trustee becomes incapable of acting.

(c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes of a series may appoint a successor Trustee with respect to such series of Notes to replace the successor Trustee appointed by the Company.

(d) If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of Notes of at least 10% in principal amount of the then outstanding Notes of a series may petition at the expense of the Company any court of competent jurisdiction for the appointment of a successor Trustee with respect to such series of Notes.

(e) If the Trustee, after written request by any Holder who has been a Holder of a series of Notes for at least three months, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee with respect to such series of Notes.

(f) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail or otherwise deliver a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

Section 7.09. Successor Trustee by Merger, Etc .

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another Person, the successor Person without any further act shall be the successor Trustee.

Section 7.10. Eligibility; Disqualification .

There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trust powers, that is subject to supervision or examination by federal or state authorities and that has (or its corporate parent shall have) a combined capital and surplus of at least $50.0 million as set forth in its most recent published annual report of condition.

This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1), (2) and (5).

Section 7.11. Preferential Collection of Claims Against Company .

The Trustee is subject to TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein.

ARTICLE EIGHT
DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance .

The Company may, at its option and at any time, elect to have either Section 8.02 or 8.03 be applied to all outstanding Notes of a series upon compliance with the conditions set forth below in this Article Eight.

Section 8.02. Legal Defeasance and Discharge .

Upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.02 with respect to a series of Notes, the Company and any Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04, be deemed to have been discharged from

its obligations under this Indenture with respect to such series and all outstanding Notes of such series and all obligations of the Guarantors shall be deemed to have been discharged (and any security granted to secure such Notes shall be released) with respect to their obligations under this Indenture with respect to such series of Notes and the Guarantees of such series of Notes on the date the conditions set forth below are satisfied (hereinafter, “ Legal Defeasance ”).

For this purpose, Legal Defeasance means that the Company and the Guarantors shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes of such series and any Guarantees thereof, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 and the other Sections of this Indenture referred to in clauses (a) and (b) of this Section 8.02, and shall be deemed discharged from the payment and performance of all other obligations under this Indenture with respect to such series of Notes, the Notes of such series and the Guarantees thereof (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:

(a) the rights of Holders of outstanding Notes of such series to receive payments solely from Funds in Trust (as defined in Section 8.04 and as more fully set forth in such Section) in respect of the principal of, and any premium and interest on such Notes when such payments are due;

(b) subject to clause (a) of this Section 8.02, the Company’s obligations with respect to such Notes under Article Two and Section 4.02 concerning the issuance of temporary Notes, transfers and exchanges of the Notes, replacement of mutilated, destroyed, lost or stolen Notes, the maintenance of an office or agency where the Notes may be surrendered for transfer or exchange or presented for payment, and duties of Paying Agents;

(c) the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s obligations in connection therewith; and

(d) this Article Eight.

Subject to compliance with this Article Eight, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03.

Section 8.03. Covenant Defeasance .

Upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.03 with respect to a series of Notes, the Company shall, subject to the satisfaction of the conditions set forth in Section 8.04, be released from its obligations under the covenants contained in Sections 4.03, 4.07, 4.08 and 4.09 with respect to the outstanding Notes of such series, and the Guarantees related to the Notes of such series shall be released pursuant to Section 10.04, on and after the date the conditions set forth in Section 8.04 are satisfied (hereinafter, “ Covenant Defeasance ”), and the Notes of such series shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that

such Notes shall not be deemed outstanding for accounting purposes to the extent permitted by GAAP). For this purpose, Covenant Defeasance means that, with respect to the outstanding Notes of such series, the Company and each Restricted Subsidiary may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a Default or an Event of Default under Section 6.01 with respect to such series, but, except as specified above, the remainder of this Indenture and such Notes shall be unaffected thereby. In addition, upon the Company’s exercise under Section 8.01 of the option applicable to this Section 8.03 with respect to a series of Notes, subject to the satisfaction of the conditions set forth in Section 8.04, Sections 6.01(3) through (6) or, with respect to any Guarantor that is a Significant Subsidiary, Sections 6.01(7) and (8), shall not constitute Events of Default with respect to such series.

Section 8.04. Conditions to Legal Defeasance or Covenant Defeasance .

The following shall be the conditions to the application of either Section 8.02 or 8.03 to the outstanding Notes of a series:

(a) the Company must irrevocably deposit or cause to be deposited with the Trustee, in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders of the Notes of such series, cash in U.S. Legal Tender, U.S. Government Securities, or a combination thereof (“ Funds in Trust ”), in such amounts as, in the aggregate, will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, and any premium and interest on, the outstanding Notes of such series on each date on which such principal, and any premium and interest is due and payable or on any redemption date established pursuant to this Indenture;

(b) in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel confirming that the Company has received from or there has been published by, the Internal Revenue Service a ruling, or since the date of this Indenture, there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders and Beneficial Owners of the outstanding Notes of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(c) in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders and Beneficial Owners of the outstanding Notes of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(d) no Default or Event of Default shall have occurred and be continuing with respect to such series on the date of such deposit (other than as a result of borrowing funds in connection with such defeasance or granting of Liens in connection therewith);

(e) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under any other material agreement, other than this Indenture, or instrument to which the Company is a party or by which the Company is bound;

(f) the Company shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others; and

(g) the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that the Company has complied with all conditions precedent provided for relating to the Legal Defeasance or the Covenant Defeasance, as the case may be.

Section 8.05. Deposited Money and U.S. Government Securities to Be Held in Trust; Other Miscellaneous Provisions .

(a) Subject to Section 8.06, all money and U.S. Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “ Trustee ”) pursuant to Section 8.04 in respect of the outstanding Notes of a series shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and interest, but such money need not be segregated from other funds except to the extent required by law.

(b) The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or U.S. Government Securities deposited pursuant to Section 8.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes of such series.

(c) Anything in this Article Eight to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the request of the Company any money or U.S. Government Securities held by it as provided in Section 8.04 which, in the opinion of a nationally recognized firm of independent public accountants, investment bank, or appraisal firm expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(a)), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06. Repayment to the Company .

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium, if any, or interest on any Note of

a series and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company upon its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense of the Company cause to be published once, in The New York Times and The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Company.

Section 8.07. Reinstatement .

If the Trustee or Paying Agent is unable to apply any United States dollars or U.S. Government Securities in accordance with Section 8.02 or 8.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s obligations to make the related payments under this Indenture and the relevant series of Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03, as the case may be; provided, however, that, if the Company makes any payment of principal of, premium, if any, or interest on any Note of such series following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE NINE
AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01. Without Consent of Holders of Notes .

(a) Notwithstanding Section 9.02, the Company, the Guarantors, any other obligor under the Notes and the Trustee may modify, supplement or amend this Indenture or the Notes of any series without the consent of any Holder of a Note of such series:

(1) to cure any ambiguity, omission, defect or inconsistency, as evidenced in an Officers’ Certificate;

(2) to provide for the assumption of the obligations of the Company or any Guarantor pursuant to Article Five;

(3) to add to, change or eliminate any of the provisions of this Indenture; provided that any such addition, change or elimination shall become effective only after there are no such Notes entitled to the benefit of such provision outstanding;

(4) to establish the forms or terms of the Notes issued under this Indenture;

(5) to evidence the acceptance or appointment by a separate Trustee or successor Trustee with respect to the Notes of such series or otherwise;

(6) to reflect the addition or release of any Guarantor from its Guarantee of the Notes of such series, in the manner provided in this Indenture;

(7) to comply with any requirement of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act;

(8) to provide for uncertificated Notes of such series in addition to certificated Notes of such series;

(9) to mortgage, pledge, hypothecate or grant a security interest in favor of the Trustee for the benefit of the Holders of the Notes of such series as security for the payment and performance of the Company’s and any Guarantor’s obligations under this Indenture, in any property or assets, including any of which are required to be mortgaged, pledged or hypothecated, or in which a security interest is required to be granted to or for the benefit of the Trustee pursuant to this Indenture or otherwise;

(10) to comply with the rules of any applicable Depositary;

(11) to conform the text of this Indenture, the Notes of such series or the Guarantees to any provision of the “Description of Notes” section in the Offering Memorandum to the extent that such provision of the “Description of Notes” was intended to be a verbatim recitation of a provision of this Indenture, the Notes of such series or the Guarantees as evidenced in an Officers’ Certificate; or

(12) to make any change that would provide any additional benefit to the Holders of the Notes of such series or that does not adversely affect the rights of any Holder in any material respect.

(b) Upon the request of the Company, and upon receipt by the Trustee of the documents described in Section 12.04 and Section 9.06, the Trustee shall join with the Company and each Guarantor in the execution of any amended or supplemental Indenture authorized or permitted under this Section 9.01 and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise.

Section 9.02. With Consent of Holders of Notes .

(a) Except as provided below in this Section 9.02, the Company, the Guarantors, any other obligor under the Notes of a series and the Trustee may amend or supplement this Indenture or the Notes of such series with the consent of the Holders of at least a majority in aggregate principal amount of all Notes (taken together as a single class) then outstanding and affected by such amendment or supplement; provided, however, that no such modification or amendment may, without the consent of the Holder of each outstanding Note of such series affected thereby:

(1) reduce the percentage of principal amount of Notes of such series whose Holders must consent to an amendment, supplement or waiver of any provision of this Indenture or the Notes of such series;

(2) reduce the rate or change the time for payment of interest, including default interest, if any, on the Notes of such series;

(3) reduce the principal amount of any Note of such series or change the Maturity Date of the Notes of such series;

(4) reduce the amount payable upon redemption of any Note of such series;

(5) waive any Event of Default in the payment of principal of, any premium or interest on, the Notes of such series (except a default in payment that has become due solely because of an acceleration that has been rescinded);

(6) make any Note of such series payable in money other than that stated in such Note;

(7) impair the right of Holders of Notes of such series to receive payment of the principal of and interest on Notes on the respective due dates therefor and to institute suit for the enforcement of any such payment; or

(8) make any change in the percentage of principal amount of Notes of such series necessary to waive compliance with certain provisions of this Indenture.

For the avoidance of doubt, none of the foregoing clauses (1) through (8) shall apply to any amendment of Section 4.09 or any definitions related thereto.

(b) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any indenture supplemental hereto. If a record date is fixed, the Holders of the relevant series of Notes on such record date, or its duly designated proxies, and only such Persons, shall be entitled to consent to such supplemental indenture, whether or not such Holders remain Holders after such record date; provided that unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 90 days after such record date, any such consent

previously given shall automatically and without further action by any Holder be canceled and of no further effect.

(c) Upon the request of the Company and upon the filing with the Trustee of evidence reasonably satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.06 and Section 12.04, the Trustee shall join with the Company and each Guarantor in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture.

(d) It shall not be necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.

(e) After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall mail or otherwise deliver to the Holders of Notes of the series affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail or deliver such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver.

Section 9.03. Compliance with Trust Indenture Act .

Every amendment or supplement to this Indenture or the Notes shall be set forth in an amended or supplemental Indenture that complies with the TIA as then in effect.

Section 9.04. Revocation and Effect of Consents .

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note of a series is a continuing consent by the Holder of a Note of such series and every subsequent Holder of a Note of such series or portion of a Note of such series that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note of a series or subsequent Holder of a Note of a series may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

Section 9.05. Notation on or Exchange of Notes .

(a) The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

(b) Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

Section 9.06. Trustee to Sign Amendments, Etc .

The Trustee shall sign any amended or supplemental indenture or Note authorized pursuant to this Article Nine if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. In executing any amended or supplemental indenture or Note, the Trustee shall be entitled to receive and (subject to Section 7.01) shall be fully protected in conclusively relying upon, in addition to the documents required by Section 12.04, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.

ARTICLE TEN
GUARANTEES

Section 10.01. Guarantee .

(a) Subject to this Article Ten, each of the Guarantors hereby, jointly and severally, fully and unconditionally, guarantees, on a senior unsecured basis, to each Holder of a Note of each series authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes of such series or the obligations of the Company hereunder or thereunder, that: (i) the principal of, premium, if any, and interest on the Notes of such series will be promptly paid in full when due, whether at Stated Maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of, premium, if any, and interest on the Notes of such series, if any, if lawful (subject in all cases to any applicable grace period provided herein), and all other monetary Obligations of the Company to the Holders or to the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Notes of such series or any of such other Obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

(b) The Guarantors hereby agree that, to the maximum extent permitted under applicable law, their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes of any series or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a Guarantor. Subject to Section 6.06, each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.

(c) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either of the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

(d) Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article Six, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Guarantee.

(e) In respect to its obligations under its Guarantee, each Guarantor agrees to be bound to, and hereby covenants, with respect to itself, the covenant set forth in Section 4.06.

Section 10.02. Limitation on Guarantor Liability .

Each Guarantor, and by its acceptance of Notes of any series, each Holder of such series of Notes, hereby confirms that it is the intention of all such parties that the Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Guarantee. To effectuate the foregoing intention, the Trustee, the Holders of such series and the Guarantors hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount which, after giving effect to all other contingent and fixed liabilities of such Guarantor, and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under this Article Ten, will result in the obligations of such Guarantor under its Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. Until such time as the Notes of such series are paid in full, each Guarantor hereby waives all rights of subrogation or contribution, whether arising by contract or operation of law (including, without limitation, any such right arising under Federal Bankruptcy Law) or otherwise by reason of any payment by it pursuant to the provisions of this Article Ten. Each Guarantor that makes a payment or distribution under its Guarantee will be entitled to seek contribution from each other Guarantor in a pro rata amount based on the net assets of each Guarantor determined in accordance with GAAP, so long as the exercise of such right does not impair the rights of the Holders under the Guarantee.

Section 10.03. Execution and Delivery of Notation of Guarantee .

(a) To evidence its Guarantee set forth in Section 10.01, on the Issue Date, each Initial Guarantor hereby agrees that this Indenture shall be executed on behalf of such Initial Guarantor by an Officer of such Initial Guarantor.

(b) Each Guarantor hereby agrees that its Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Guarantee on the Notes.

(c) If an Officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Notes, the Guarantee shall be valid nevertheless.

(d) The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of the Guarantors.

(e) Subsequent to the date of this Indenture, in the event a Restricted Subsidiary is required by Section 4.08 to guarantee the Company’s obligations under the Notes and this Indenture, the Company shall cause such Restricted Subsidiary to execute a supplemental indenture to this Indenture substantially in the form included in Exhibit D hereto in accordance with Section 4.08 and this Article Ten, to the extent applicable.

Section 10.04. Releases of Guarantors .

(a) A Guarantor will be automatically and unconditionally released and discharged from all of its obligations under its Guarantee without any further action on the part of the Trustee or any Holder of any series of Notes:

(1) in connection with any sale or other disposition of (i) Capital Stock of such Guarantor such that after such sale or disposition the Guarantor is no longer a Subsidiary of the Company or (ii) all or substantially all of the properties or assets of such Guarantor (including by way of merger or consolidation), in each case to one or more Persons that are not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary;

(2) if the Guarantor ceases to provide a guarantee with respect to Indebtedness of the Company under the Credit Agreement;

(3) if such series of Notes are defeased or discharged in accordance with Article Eight or Article Eleven; or

(4) upon the liquidation or dissolution of such Guarantor.

(b) Any Guarantor not released from its obligations under its Guarantee shall remain liable for the full amount of principal of, premium, if any, and interest on the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article Ten.

ARTICLE ELEVEN
SATISFACTION AND DISCHARGE

Section 11.01. Satisfaction and Discharge .

This Indenture will be discharged and will cease to be of further effect (except as to surviving rights of registration of transfer or exchange of the Notes and as otherwise expressly provided for in this Article Eleven) as to all outstanding Notes of any series thereof issued under this Indenture when:

(a) either:

(1) all Notes of such series theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid or Notes whose payment has been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided for in this Indenture) have been delivered to the Trustee for cancellation; or

(2) all Notes of such series not theretofore delivered to the Trustee for cancellation (a) have become due and payable by reason of making of a notice of redemption or otherwise, (b) will become due and payable at their Stated Maturity within one year, or (c) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company;

(b) in the case of clause (a)(2) above, the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust an amount in United States dollars, U.S. Government Securities, or a combination thereof, sufficient to pay and discharge the entire Indebtedness on such series of Notes not theretofore delivered to the Trustee for cancellation, including principal of, premium, if any, and accrued interest at such Maturity, Stated Maturity or redemption date;

(c) the Company or any Guarantor has paid or caused to be paid all other sums due and payable under this Indenture by the Company and any Guarantor with respect to such series of Notes;

(d) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent under this Indenture relating to the satisfaction and discharge of this Indenture have been complied with; and

(e) the Company has delivered irrevocable instructions to the Trustee hereunder to apply any deposited money described in clause (b) above to the payment of the Notes of such series at Stated Maturity or the redemption date, as the case may be.

Section 11.02. Deposited Money and U.S. Government Securities to Be Held in Trust; Other Miscellaneous Provisions .

(a) Subject to Section 11.03, all money and non-callable U.S. Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 11.02, the “ Trustee ”) pursuant to Section 11.01 in respect of the outstanding Notes of a series shall be held in trust and applied by the Trustee, in

accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium and interest, but such money need not be segregated from other funds except to the extent required by law.

(b) Notwithstanding the above, the Trustee shall pay to the Company from time to time upon its request any cash or U.S. Government Securities held by it as provided in this Section 11.02 which, in the opinion of a nationally recognized firm of independent public accountants or investment bank or appraisal firm expressed in a written certification delivered to the Trustee, are in excess of the amount thereof that would then be required to be deposited to effect a satisfaction and discharge under this Article Eleven.

Section 11.03. Repayment to the Company .

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium or interest on any Note of a series and remaining unclaimed for two years after such principal, and premium, if any, or interest has become due and payable shall be paid to the Company on its request or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense of the Company cause to be published once in The New York Times or The Wall Street Journal (national edition) or send to each Holder entitled to such money, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Company.

ARTICLE TWELVE
MISCELLANEOUS

Section 12.01. No Adverse Interpretation of Other Agreements .

This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or any of its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 12.02. Notices .

(a) Any notice or communication by either of the Company or any Guarantor, on the one hand, or the Trustee on the other hand, to the other is duly given if in writing in the English language and delivered in Person or mailed by first class mail (registered or certified, return receipt requested), facsimile or overnight air courier guaranteeing next day delivery, to the others’ address:

If to the Company or any Guarantor:

California Resources Corporation
10889 Wilshire Blvd.
Los Angeles, California 90025
Facsimile: (310) 443-6192
Attention: Chief Financial Officer

If to the Trustee:

Wells Fargo Bank, National Association
333 S. Grand Avenue, 5th Floor

Suite 5A

MAC: E2064-05A
Facsimile: (213) 253-7598
Attention: Corporate, Municipal and Escrow Solutions

(b) The Company, the Guarantors or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications.

(c) All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) five Business Days after being deposited in the mail, postage prepaid, if mailed; (iii) when receipt acknowledged, if telecopied; (iv) and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

(d) Any notice or communication to a Holder shall be delivered electronically (for Global Notes) or mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed or delivered to any Person described in TIA Section 313(c), to the extent required by the TIA. Failure to mail or deliver a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.

(e) If a notice or communication is mailed or delivered in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

(f) If the Company mails or otherwise delivers a notice or communication to Holders, it shall mail a copy to the Trustee and each Agent at the same time.

(g) Notwithstanding any other provision of this Indenture or any Note, where this Indenture or any Note provides for notice of any event or any other communication (including any notice of redemption or repurchase) to a Holder of a Global Note (whether by mail or otherwise), such notice shall be sufficiently given if given to the Depositary (or its designee) pursuant to the standing instructions from the Depositary or its designee, including by electronic mail in accordance with accepted practices at the Depositary.

Section 12.03. Communication by Holders of Notes with Other Holders of Notes .

Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c).

Section 12.04. Certificate and Opinion as to Conditions Precedent .

Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

(i) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and

(ii) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05) stating that, in the opinion of such counsel (who may rely on such Officers’ Certificate as to matters of fact), all such conditions precedent and covenants have been satisfied.

Section 12.05. Statements Required in Certificate or Opinion .

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of the TIA Section 314(e) and shall include:

(i) a statement that the person making such certificate or opinion has read such covenant or condition;

(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(iii) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and

(iv) a statement as to whether or not, in the opinion of such person, such condition or covenant has been satisfied.

Section 12.06. Rules by Trustee and Agents .

The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 12.07. No Personal Liability of Directors, Officers, Employees and Stockholders .

No director, officer, employee, manager, incorporator, member, partner or stockholder or other owner of Capital Stock of the Company or any Restricted Subsidiary, as such, will have any liability for any obligations of the Company or any Guarantor under the Notes, this Indenture or the Guarantees to which they are a party, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Section 12.08. Governing Law .

THIS INDENTURE, THE NOTES AND THE GUARANTEES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 12.09. Waiver of Jury Trial .

THE COMPANY, EACH OF THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 12.10. Consent to Jurisdiction .

Any legal suit, action or proceeding arising out of or based upon this Indenture, the Notes or the transactions contemplated hereby (“ Related Proceedings ”) may be instituted in the competent federal courts of the United States of America located in the City of New York or the courts of the State of New York in each case located in the City of New York (collectively, the “ Specified Courts ”), and each party irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that a Related Proceeding has been brought in an inconvenient forum.

Section 12.11. Trust Indenture Act Controls .

If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA Section 318(c), the imposed duties shall control.

Section 12.12. Successors .

All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Guarantor in this Indenture shall bind its successors, except as otherwise provided in Section 5.01 or 10.04.

Section 12.13. Severability .

In case any provision in this Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 12.14. Counterpart Originals .

The parties may sign any number of copies of this Indenture, and each party hereto may sign any number of separate copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 12.15. Acts of Holders .

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by the Holders of a series of Notes may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agents duly appointed in writing, and may be given or obtained in connection with a purchase of, or tender offer or exchange offer for, outstanding Notes of such series; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “ Act ” of the Holders of such series signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company if made in the manner provided in this Section 12.15.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to such notary or officer the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

(c) Notwithstanding anything to the contrary contained in this Section 12.15, the principal amount and serial numbers of Notes held by any Holder, and the date of holding the same, shall be proved by the register of the Notes maintained by the Registrar as provided in Section 2.04.

(d) If the Company shall solicit from the Holders of a series of Notes any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company

may, at their option, by or pursuant to a resolution of its Board of Directors, fix in advance a record date for the determination of Holders of such series of Notes entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. Notwithstanding TIA Section 316(c), such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders of such series of Notes generally in connection therewith or the date of the most recent list of Holders of such series of Notes forwarded to the Trustee prior to such solicitation pursuant to Section 2.06 and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record of such series of Notes at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of such series of Notes of the requisite proportion of the then outstanding Notes of such series have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the then outstanding Notes of such series shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date.

(e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note of a series shall be conclusive and bind every future Holder of the same Note and the Holder of every Note issued upon the registration or transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.

(f) Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Note of a series may do so itself with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.

(g) For purposes of this Indenture, any action by the Holders of a series of Notes which may be taken in writing may be taken by electronic means or as otherwise reasonably acceptable to the Trustee.

Section 12.16. Benefit of Indenture .

Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any Registrar and its successors hereunder, and the Holders, any benefit or any legal or equitable right, remedy or claim under this Indenture.

Section 12.17. Table of Contents, Headings, Etc .

The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

Section 12.18. Force Majeure .

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services.

Section 12.19. U.S.A. Patriot Act .

The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may reasonably request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

COMPANY:

CALIFORNIA RESOURCES CORPORATION


By:	/s/ Marshall D. Smith
Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer


INITIAL GUARANTORS:

		CRC MARKETING, INC.

CALIFORNIA HEAVY OIL, INC.
		By:	/s/ William E. Albrecht
		Name:	William E. Albrecht
By:	/s/ Marshall D. Smith	Title:	President
Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer


CRC SERVICES, LLC		ELK HILLS POWER LLC


By:	/s/ Marshall D. Smith	By:	/s/ Linda S. Peterson
Name:	Marshall D. Smith	Name:	Linda S. Peterson
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Vice President and Secretary


CALIFORNIA RESOURCES ELK HILLS, LLC		OXY LONG BEACH, INC.


By:	/s/ Marshall D. Smith	By:	/s/ Marshall D. Smith
Name:	Marshall D. Smith	Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Senior Executive Vice President and Chief Financial Officer


OXY TIDELANDS, INC.		OXY WILMINGTON, LLC


By:	/s/ Marshall D. Smith	By:	/s/ Marshall D. Smith
Name:	Marshall D. Smith	Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Senior Executive Vice President and Chief Financial Officer

[ Signature Page to Indenture ]

SOCAL HOLDING, LLC		SOUTHERN SAN JOAQUIN PRODUCTION, INC.

By:	/s/ Marshall D. Smith	By:	/s/ Marshall D. Smith
Name:	Marshall D. Smith	Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Senior Executive Vice President and Chief Financial Officer

THUMS LONG BEACH COMPANY		TIDELANDS OIL PRODUCTION COMPANY


By:	/s/ Marshall D. Smith	By: OXY TIDELANDS, INC., its managing partner
Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	By:	/s/ Marshall D. Smith
		Name:	Marshall D. Smith
		Title:	Senior Executive Vice President and Chief Financial Officer


VINTAGE PETROLEUM, INC.		CALIFORNIA RESOURCES PRODUCTION CORPORATION

By:	/s/ Marshall D. Smith
Name:	Marshall D. Smith	By:	/s/ Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	Name:	Marshall D. Smith
		Title:	Senior Executive Vice President and Chief Financial Officer

[ Signature Page to Indenture ]

[ Signature Page to Indenture ]

EXHIBIT A

[Face of Note]

[Insert the Private Placement Legend, if applicable, pursuant to the provisions of the Indenture]

[Insert the Global Notes Legend, if applicable, pursuant to the provisions of the Indenture]

[Insert the Regulation S Temporary Global Note Legend, if applicable, pursuant to the provisions of the Indenture]

A-1

		CUSIP:
No.		Principal Amount: $

CALIFORNIA RESOURCES CORPORATION

[5% Senior Notes due 2020] / [5½% Senior Notes due 2021] / [6% Senior Notes due 2024]

California Resources Corporation, a Delaware corporation (the “Company”), which term includes any successor under the Indenture hereinafter referred to, for value received, promises to pay to [ ], or its registered assigns, the principal sum of [ ] ($[ ]) UNITED STATES DOLLARS on [ ](1).

Interest Payment Dates: [ ] and [ ] of each year, commencing [ ], 2015.(2)

Regular Record Dates: [ ] and [ ] of each year.( 3)

(1) 2020 Notes: January 15, 2020

2021 Notes: September 15, 2021

2024 Notes: November 15, 2024

(2) 2020 Notes: January 15 and July 15, commencing July 15, 2015

2021 Notes: March 15 and September 15, commencing March 15, 2015

2024 Notes: May 15 and November 15, commencing May 15, 2015

(3) 2020 Notes: January 1 and July 1

2021 Notes: March 1 and September 1

2024 Notes: May 1 and November 1

A-1

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

[ Signature Page Follows ]

A-2

IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers.

	CALIFORNIA RESOURCES CORPORATION, a Delaware corporation

	By:
		Name:
		Title:

A-3

(Form of Trustee’s Certificate of Authentication)

This is one of the [5% Senior Notes due 2020] / [5½% Senior Notes due 2021] / [6% Senior Notes due 2024] described in the within-mentioned Indenture.

	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee

	By:
		Authorized Signatory

Date:

A-4

[Reverse Side of Note]

CALIFORNIA RESOURCES CORPORATION

[5% Senior Notes due 2020] / [5½% Senior Notes due 2021] / [6% Senior Notes due 2024]

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

1. Interest . The Company promises to pay interest on the unpaid principal amount of this Note at [ ]( 4) per annum [and shall pay Additional Interest, if any, as provided in the Registration Rights Agreement, dated October 1, 2014† referred below].* The Company shall pay interest [and Additional Interest, if any,]* semi-annually in arrears on [[ ] and [ ]]( 5) of each year (each, an “ Interest Payment Date ”). Interest shall accrue from the most recent date to which interest has been paid on this Note (or one or more Predecessor Notes) or, if no interest has been paid, from and including the date of original issuance of this Note; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be [ ], 2015( 6) .† The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the rate then in effect on this Note to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest [and Additional Interest, if any,]* (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. If a payment date is not a Business Day, payment may be made on the next succeeding day that is a Business Day, and no interest shall accrue on such payment for the intervening period.

[This Exchange Note was issued in connection with the Exchange Offer pursuant to which the [5% Senior Notes due 2020] / [5½% Senior Notes due 2021] / [6% Senior Notes due

(4) 2020 Notes: 5%;

2021 Notes: 5½%

2024 Notes: 6%

(5) 2020 Notes: January 15 and July 15

2021 Notes: March 15 and September 15

2024 Notes: May 15 and November 15

(6) 2020 Notes: July 15

2021 Notes: March 15

2024 Notes: May 15

A-5

2024] in like principal amount were exchanged for Exchange Notes of the same series. The Exchange Notes rank pari passu in right of payment with the Initial Notes. For any period in which the Initial Note exchanged for this Exchange Note was outstanding, Additional Interest may be due and owing on the Initial Note in connection with the Registration Rights Agreement.]**

2. Method of Payment . The Company shall pay interest on this Note (except defaulted interest [and Additional Interest]* if any) to the Persons in whose name this Note (or one or more Predecessor Notes) is registered at the close of business on the [[ ] or [ ]]( 7) immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.13 of the Indenture with respect to defaulted interest. [The Company shall pay all Additional Interest, if any, on the dates of its choosing and in the amounts set forth in the Registration Rights Agreement.]* The Notes shall be payable as to principal, premium, if any, and interest [(including Additional Interest, if any),]* at the office or agency of the Company maintained for such purpose, or, at the option of the Company, payment of interest [(including Additional Interest, if any),]* may be made through the Paying Agent by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds shall be required with respect to principal of, premium, if any, and interest on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

3. Paying Agent and Registrar . Initially, Wells Fargo Bank, National Association, the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity.

4. Indenture . The Company issued this Note as one of a series of Notes issued under an Indenture dated as of October 1, 2014 (the “ Indenture ”) among the Company, the Initial Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The

(7) 2020 Notes: January 1 and July 1

2021 Notes: March 1 and September 1

2024 Notes: May 1 and November 1

† For Additional Notes, insert the appropriate Interest Payment Date for those Additional Notes.

* Not to be included for Exchange Notes.

‡ For Additional Notes, insert the appropriate Interest Payment Date for those Additional Notes.

** For Exchange Notes

A-6

Indenture pursuant to which this Note is issued provides that an unlimited amount of Additional Notes may be issued thereunder, subject to compliance with the covenants therein.

5. Guarantees : Payments of the principal, premium, if any, and interest on the Notes, when and as the same becomes due and payable, will be fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by the Guarantors. Reference is made to Article 10 of the Indenture for terms relating to the Guarantees, including the release, termination and discharge thereof. None of the Company or any Guarantor shall be required to make any notation on this Note to reflect any Guarantee or any such release, termination or discharge.

6. Optional Redemption . The Company may redeem the Notes during the time periods and at the redemption prices set forth in the Indenture.

7. Mandatory Redemption . Except for the Special Mandatory Redemption described in the next paragraph, the Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

As set forth in Section 3.10 of the Indenture, in the event that the Spin-Off Distribution is not consummated on or prior to January 31, 2015, the Company shall be required to redeem all of the Notes, upon ten Business Days prior written notice to the Trustee and the Holders given within five Business Days of January 31, 2015, at the Mandatory Redemption Price. The Company also may, at its option, redeem the Notes in whole, but not in part, at the Mandatory Redemption Price if, prior to January 31, 2015, the Company determines in its sole discretion, that the Spin-Off Distribution will not occur on or prior to that date, upon five Business Days prior written notice to the Holders.

8. Repurchase at Option of Holders .

Upon the occurrence of a Change of Control Triggering Event, each Holder of Notes may require the Company to purchase such Notes in whole or in part in amounts of $1,000 or whole multiples of $1,000 in excess thereof, at a purchase price in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of purchase, pursuant to a Change of Control Offer in accordance with the procedures set forth in the Indenture.

9. Selection and Notice of Redemption . If less than all of the Notes of a series are to be redeemed at any time, the Trustee shall select the Notes of such series to be redeemed on a pro rata basis, by lot or in accordance with any other method the Trustee deems fair and appropriate (subject to the procedures of DTC or any other Depositary and by maintaining the authorized denominations for the Notes), or, if the Notes are listed on any securities exchange, by any other method that complies with the requirements of such exchange. In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected prior to giving notice of such redemption by the Trustee from the outstanding Notes of such series not previously called for redemption. If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes

A-7

called for redemption become due on the date fixed for redemption. On and after the redemption date, interest [and Additional Interest, if any,]* shall cease to accrue on Notes or portions of them called for redemption.

10. Denominations, Transfer, Exchange . The Notes are in registered form without coupons in denominations of $2,000 and whole multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes or other governmental charges required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 days before a selection of Notes to be redeemed.

11. Persons Deemed Owners . The registered Holder of a Note will be treated as its owner for all purposes.

12. Amendment, Supplement and Waiver . The Indenture, the Notes and the Guarantees may be amended or supplemented only as provided in the Indenture.

13. Defaults . In the case of an Event of Default arising from certain events of bankruptcy, insolvency or reorganization specified in the Indenture, with respect to the Company, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing with respect the Notes, the Trustee or the Holders of not less than 25% in principal amount of the then outstanding Notes may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued but unpaid interest on all the Notes then outstanding to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders of the Notes) and upon any such declaration, such principal, premium, if any, and interest shall become due and payable immediately. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of not less than a majority in aggregate principal amount of Notes of any series outstanding by notice to the Trustee may on behalf of the Holders of all outstanding Notes waive any existing Default or Event of Default with respect to such Notes and its consequences under the Indenture except a continuing Default or Event of Default (1) in the payment of the principal of, premium, if any, or interest on any such Note (other than a default in payment that has become due solely because of an acceleration that has been rescinded), which may only be waived with the consent of each Holder of such Notes or (2) in respect of a covenant or provision which under the Indenture cannot be modified or amended without the consent of the Holder of each Note affected by such modification or amendment.

14. Trustee Dealings with the Company . The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee.

A-8

15. No Recourse Against Others . No director, officer, employee, manager, incorporator, member, partner or stockholder or other owner of Capital Stock of the Company, Guarantors or any Restricted Subsidiary, as such, will have any liability for any obligations of the Company or Guarantors under the Notes, the Indenture or the Guarantees to which they are a party, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

16. Authentication . This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

17. [ Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes . In addition to the rights provided to Holders under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes issued on the Issue Date shall have all the rights set forth in the Registration Rights Agreement dated as of October 1, 2014‡, among the Company, the Guarantors and the parties named on the signature pages thereof.]*

18. CUSIP Numbers . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

19. Governing Law . This Note shall be governed by, and construed in accordance with, the laws of the State of New York.

The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to:

California Resources Corporation
10889 Wilshire Blvd.
Los Angeles, California 90025
Facsimile: (310) 443-6192
Attention: Chief Financial Officer

* Not to be included for Exchange Notes.

‡ For Additional Notes, insert the date of the Registration Rights Agreement for those Additional Notes.

A-9

ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this

Note to:

(Insert assignee’s legal name)

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)

and irrevocably appoint to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:

	Your Signature:
		(Sign exactly as your name appears
		on the face of this Note)

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A-10

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 4.09 of the Indenture, check the box below:

¨ Section 4.09

If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.09 of the Indenture, state the amount you elect to have purchased:

Date:

	Your Signature:
		(Sign exactly as your name appears
		on the face of this Note)

	Tax Identification No.:

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A-11

[SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:]

Date of Exchange	Amount of Decrease in Principal Amount at Maturity of this Global Note	Amount of Increase in Principal Amount at Maturity of this Global Note	Principal Amount at Maturity of this Global Note Following such Decrease (or Increase)	Signature of Authorized Signatory of Trustee or Custodian

* Include for Global Notes only.

A-12

EXHIBIT B-1

FORM OF CERTIFICATE OF TRANSFER

California Resources Corporation
10889 Wilshire Blvd.
Los Angeles, California 90025
Facsimile: (310) 443-6192
Attention: Chief Financial Officer

Wells Fargo Bank, National Association
[ ]

Re: [5% Senior Notes due 2020] / [5½% Senior Notes due 2021] / [6% Senior Notes due 2024]

Reference is hereby made to the Indenture, dated as of October 1, 2014 (the “Indenture”) among California Resources Corporation, a Delaware corporation (the “Company”), the Guarantors and Wells Fargo Bank, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

(the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount at maturity of $ in such Note[s] or interests (the “Transfer”), to (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1. ¨ Check if Transferee will take delivery of a beneficial interest in a 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

2. ¨ Check if Transferee will take delivery of a beneficial interest in a Regulation S Global Note or a Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was

B-1-1

outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

3. ¨ Check and complete if Transferee will take delivery of a beneficial interest in a Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a) ¨ such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

(b) ¨ such Transfer is being effected to the Company or a subsidiary thereof;

(c) ¨ such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act.

4. ¨ Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

(a) ¨ Check if Transfer is Pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

B-1-2

(b) ¨ Check if Transfer is Pursuant to Regulation S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(c) ¨ Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.


	[Insert Name of Transferor]

	By:
		Name:
		Title:

Dated:

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

B-1-3

ANNEX A TO CERTIFICATE OF TRANSFER

1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (A) OR (B)]

¨ (A) a beneficial interest in the:

(i) 144A Global Note (CUSIP ); or

(ii) Regulation S Global Note (CUSIP ); or

¨ (B) a Restricted Definitive Note.

2. After the Transfer the Transferee will hold:

[CHECK ONE]

¨ (A) a beneficial interest in the:

(iv) 144A Global Note (CUSIP ); or

(v) Regulation S Global Note (CUSIP ); or

(vi) Unrestricted Global Note (CUSIP ); or

¨ ¨ (B) a Restricted Definitive Note; or

¨ (C) an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

B-1-4

EXHIBIT B-2

FORM OF INSTITUTIONAL ACCREDITED INVESTOR CERTIFICATE

[Date]

California Resources Corporation
10889 Wilshire Blvd.
Los Angeles, California 90025
Facsimile: (310) 443-6192
Attention: Chief Financial Officer

Wells Fargo Bank, National Association
[ ]

Re: [5% Senior Notes due 2020] / [5½% Senior Notes due 2021] / [6% Senior Notes due 2024]

Ladies and Gentlemen:

This certificate is delivered to request a transfer of $ principal amount of the [5% Senior Notes due 2020] / [5½% Senior Notes due 2021] / [6% Senior Notes due 2024] (the “Securities”) of California Resources Corporation, a Delaware Corporation (the “Company”).

Upon transfer, the Securities would be registered in the name of the new beneficial owner as follows:

Name:

Address:

Taxpayer ID Number:

The undersigned represents and warrants to you that:

1. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”)) purchasing for our own account or for the account of such an institutional “accredited investor” at least $250,000 principal amount of the Securities, and we are acquiring the Securities not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risk of our investment in the Securities and we invest in or purchase securities similar to the Securities in the normal course of our business. We and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

2. We understand that the Securities have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing

B-2-1

Securities to offer, sell or otherwise transfer such Securities prior to the date that is one year after the later of the date of original issue and the last date on which the Company or any affiliate of the Company was the owner of such Securities (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (a) to the Company, (b) pursuant to a registration statement which has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act, to a person we reasonably believe is a qualified institutional buyer under Rule 144A (a “QIB”) that purchases for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act, (e) to an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional “accredited investor,” in each case in a minimum principal amount of Securities of $250,000 or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Securities is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Company and the Trustee, which shall provide, among other things, that the transferee is an institutional “accredited investor” (within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and that it is acquiring such Securities for investment purposes and not for distribution in violation of the Securities Act. Each purchaser acknowledges that the Company and the Trustee reserve the right prior to any offer, sale or other transfer prior to the Resale Termination Date of the Securities pursuant to clauses (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications and/or other information satisfactory to the Company and the Trustee.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.


	[Insert Name of Transferor]


	By:
		Name:
		Title:

Dated:

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

B-2-2

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

California Resources Corporation
10889 Wilshire Blvd.
Los Angeles, California 90025
Facsimile: (310) 443-6192
Attention: Chief Financial Officer

Wells Fargo Bank, National Association
[ ]

Re: [5% Senior Notes due 2020] / [5½% Senior Notes due 2021] / [6% Senior Notes due 2024]

Reference is hereby made to the Indenture, dated as of October 1, 2014 (the “Indenture”), among California Resources Corporation, a Delaware corporation (the “Company”), the Guarantors and Wells Fargo Bank, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

(the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount at maturity of $ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note

(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount at maturity, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is

C-1

being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d) ¨ Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes.

(a) ¨ Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount at maturity, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b) ¨ Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] ¨ 144A Global Note, ¨ Regulation S Global Note, with an equal principal amount at maturity, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

C-2

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.


	[Insert Name of Transferor]


	By:
		Name:
		Title:

Dated:


Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

C-3

EXHIBIT D

FORM OF GUARANTOR SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY GUARANTORS

GUARANTOR SUPPLEMENTAL INDENTURE (this “ Guarantor Supplemental Indenture ”), dated as of , among California Resources Corporation (the “ Company ”), the Company’s Subsidiaries listed on Schedule A hereto (each, a “ New Guarantor ”), the Company’s Subsidiaries listed on Schedule B hereto (collectively the “ Existing Guarantors ”) and Wells Fargo Bank, National Association, as trustee under the Indenture referred to below (the “ Trustee ”).

WITNESSETH

WHEREAS, the Company, the Existing Guarantors and the Trustee are parties to an indenture (the “ Indenture ”), dated as of October 1, 2014, providing for the issuance of [5% / 5½% / 6]% Senior Notes due [2020 / 2021 / 2024] (the “ Notes ”);

WHEREAS, Section 9.01 of the Indenture provides that, without the consent of any Holders, the Company, the Existing Guarantors and the Trustee, at any time and from time to time, may modify, supplement or amend the Indenture to add a Guarantor or additional obligor under the Indenture or permit any Person to guarantee the Notes and/or obligations under the Indenture;

WHEREAS, each New Guarantor wishes to guarantee the Notes pursuant to the Indenture;

WHEREAS, pursuant to the Indenture, the Company, the Existing Guarantors, the New Guarantors and the Trustee have agreed to enter into this Guarantor Supplemental Indenture for the purposes stated herein; and

WHEREAS, all things necessary have been done to make this Guarantor Supplemental Indenture, when executed and delivered by the Company, the Existing Guarantors and each New Guarantor, the legal, valid and binding agreement of the Company, the Existing Guarantors and each New Guarantor, in accordance with its terms.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Company, each New Guarantor, the Existing Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

(1) Capitalized Terms . Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

(2) Guarantee . Each New Guarantor hereby guarantees the obligations of the Company under the Indenture and the Notes related thereto pursuant to the terms and conditions of Article Ten of the Indenture, such Article Ten being incorporated by reference herein as if set forth at length herein (each such guarantee, a “ Guarantee ”) and such New Guarantor agrees to be bound

D-1

as a Guarantor under the Indenture as if it had been an initial signatory thereto; provided that the New Guarantor can be released from its Guarantee to the same extent as any other Guarantor under the Indenture.

(3) GOVERNING LAW . THIS GUARANTOR SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

(4) Counterparts . The parties may sign any number of copies of this Guarantor Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

(5) Effect of Headings . The section headings herein are for convenience only and shall not affect the construction hereof.

(6) The Trustee . The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Guarantor Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company, Existing Guarantors and the New Guarantors.

IN WITNESS WHEREOF, the parties hereto have caused this Guarantor Supplemental Indenture to be duly executed and attested, all as of the date first above written.

Dated:

	CALIFORNIA RESOURCES CORPORATION, a Delaware corporation


	By:
		Name:
		Title:

	EACH GUARANTOR LISTED ON SCHEDULE A HERETO


	By:
		Name:
		Title:

D-2

	EACH GUARANTOR LISTED ON SCHEDULE B HERETO


	By:
		Name:
		Title:


	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Trustee


	By:
		Name:
		Title:

D-3

Exhibit 4.3

REGISTRATION RIGHTS AGREEMENT

by and among

California Resources Corporation,

Subsidiary Guarantors,

listed on the signature pages hereof,

and

Merrill Lynch, Pierce, Fenner & Smith

Incorporated
as representative of the Initial Purchasers

Dated as of October 1, 2014

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of October 1, 2014, by and among California Resources Corporation, a Delaware corporation (the “Company”), the guarantors listed on the signature pages hereto (collectively, the “Guarantors” and each a “Guarantor”), and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the initial purchasers listed on Schedule A to the Purchase Agreement (as defined below) (each an “Initial Purchaser” and, collectively, the “Initial Purchasers”), each of whom has agreed to purchase the Company’s 5% Senior Notes due 2020 (the “Initial 2020 Notes”), the Company’s 5½% Senior Notes due 2021 (the “Initial 2021 Notes”) and the Company’s 6% Senior Notes due 2024 (the “Initial 2024 Notes,” and collectively with the Initial 2020 Notes and the Initial 2021 Notes, the “Initial Notes”) fully and unconditionally guaranteed by the Guarantors (the “Guarantees”) pursuant to the Indenture. The Initial Notes and the Guarantees attached thereto are herein collectively referred to as the “Initial Securities.”

This Agreement is made pursuant to the Purchase Agreement, dated as of September 11, 2014 (the “Purchase Agreement”), by and among the Company, the Guarantors and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative of the Initial Purchasers, (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Securities (as defined below) (including the Initial Purchasers).

In order to induce the Initial Purchasers to purchase the Initial Securities, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 5(g) of the Purchase Agreement.

The parties hereby agree as follows:

SECTION 1. Definitions . As used in this Agreement, the following capitalized terms shall have the following meanings:

Additional Interest : As defined in Section 5 hereof.

Additional Interest Payment Date: With respect to the Initial Securities, each Interest Payment Date.

Broker-Dealer: Any broker or dealer registered under the Exchange Act.

Business Day: Any day other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions or trust companies located in New York, New York are authorized or obligated to be closed.

Closing Date: The date of this Agreement.

Commission: The Securities and Exchange Commission.

Consummate: A registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company to the Registrar under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Initial Securities that were validly tendered by Holders thereof pursuant to the Exchange Offer.

Exchange Act: The Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder.

Exchange 2020 Notes : The 5% Senior Notes due 2020, of the same series under the Indenture as the Initial 2020 Notes, to be issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.

Exchange 2021 Notes : The 5½% Senior Notes due 2021, of the same series under the Indenture as the Initial 2021 Notes, to be issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.

Exchange 2024 Notes : The 6% Senior Notes due 2024, of the same series under the Indenture as the Initial 2024 Notes, to be issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.

Exchange Offer: An offer registered under the Securities Act by the Company and the Guarantors pursuant to a Registration Statement pursuant to which the Company and the Guarantors shall offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Securities in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders and with terms that are identical in all respects to the Transfer Restricted Securities (except that the Exchange Securities will not contain terms with respect to the interest rate step-up provision and transfer restrictions).

Exchange Offer Registration Statement: Any Registration Statement relating to an Exchange Offer, including the related Prospectus.

Exchange 2020 Securities: The Exchange 2020 Notes and the Guarantees attached thereto.

Exchange 2021 Securities: The Exchange 2021 Notes and the Guarantees attached thereto.

Exchange 2024 Securities: The Exchange 2024 Notes and the Guarantees attached thereto.

Exchange Securities: The Exchange 2020 Securities, the Exchange 2021 Securities and the Exchange 2024 Securities.

Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Initial Securities to certain “qualified institutional buyers,” as such term is defined in Rule 144A under the Securities Act, and to Persons in offshore transactions in reliance on Regulation S.

FINRA : Financial Industry Regulatory Authority, Inc.

Guarantees : As defined in the Indenture.

Holders: As defined in Section 2(b) hereof.

Indemnified Holder: As defined in Section 8(a) hereof.

Indenture: The Indenture, dated as of October 1, 2014, by and among the Company, the Guarantors and Wells Fargo Bank, National Association, as trustee (the “Trustee”), pursuant to which the Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof.

Initial Notes: As defined in the preamble hereto, but only for so long as such securities constitute Transfer Restricted Securities.

Initial Placement: The issuance and sale by the Company of the Initial Securities to the Initial Purchasers pursuant to the Purchase Agreement.

Initial Purchasers: As defined in the preamble hereto.

Initial Securities: As defined in the preamble hereto.

Interest Payment Date: As defined in the Indenture and the Securities.

Person: An individual, partnership, limited liability company, corporation, trust, unincorporated organization or other legal entity, or a government or agency or political subdivision thereof.

Prospectus: The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such prospectus.

Record Holder : With respect to any Interest Payment Date relating to the Securities on which Additional Interest is to be paid, each Person who is a Holder of Securities on the record date with respect to the Interest Payment Date on which such Additional Interest Payment Date shall occur.

Registration Default: As defined in Section 5 hereof.

Registration Statement: Any Exchange Offer Registration Statement or Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.

Securities: The Initial Securities and the Exchange Securities.

Securities Act: The Securities Act of 1933, as amended, including the rules and regulations promulgated thereunder.

Shelf Registration Statement: As defined in Section 4(a) hereof.

Transfer Restricted Securities: Each (i) Initial Security, until the earliest to occur of (a) the date on which such Initial Security is exchanged in the Exchange Offer for an Exchange Security and entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Securities Act, (b) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement, (c) if a Shelf Registration Statement is required to be filed in accordance with Section 4 hereof, one year from the effective date of such Shelf Registration Statement and (d) the date on which such Initial Security ceases to be outstanding and (ii) Exchange Security issued to a Broker-Dealer until the date on which such Security has been distributed by a Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein).

Trust Indenture Act: The Trust Indenture Act of 1939, including the rules and regulations promulgated thereunder, as in effect on the date of the Indenture.

Underwritten Registration or Underwritten Offering: A registration in which securities of the Company are sold to an underwriter for reoffering to the public.

SECTION 2. Securities Subject to this Agreement .

(a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities.

(b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a “Holder”) whenever such Person owns Transfer Restricted Securities.

SECTION 3. Registered Exchange Offer .

(a) Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), the Company and the Guarantors shall (i) file with the Commission a Registration Statement under the Securities Act relating to the Exchange Securities and the Exchange Offer, (ii) use their commercially reasonable efforts to cause such Registration Statement to become effective under the Securities Act, (iii) in connection with the foregoing, file (A) all pre-effective

amendments to such Registration Statement as may be necessary in order to cause such Registration Statement to become effective, (B) if applicable, a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Securities Act and (C) cause all necessary filings in connection with the registration and qualification of the Exchange Securities to be made under the state securities or blue sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer, and (iv) promptly after such Registration Statement is declared effective, commence the Exchange Offer. The Exchange Offer Registration Statement shall be on the appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities and to permit resales of Securities held by Broker-Dealers as contemplated by Section 3(c) hereof.

(b) If an Exchange Offer Registration Statement is required pursuant to Section 3(a) above, the Company and the Guarantors shall use their commercially reasonable efforts to keep the Exchange Offer open for not less than 20 Business Days (or longer if required by applicable law) after the date notice of the Exchange Offer is mailed to the Holders. The Company and the Guarantors shall cause each Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Securities shall be included in the Exchange Offer Registration Statement. If an Exchange Offer Registration Statement is required pursuant to Section 3(a) above, the Company and the Guarantors shall use their commercially reasonable efforts to Consummate the Exchange Offer on or prior to the 365th calendar day following the Closing Date (or if such 365th day is not a Business Day, the next succeeding Business Day).

(c) The Company shall indicate in a “Plan of Distribution” section contained in the Prospectus forming a part of any Exchange Offer Registration Statement that any Broker-Dealer who holds Initial Securities that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company), may exchange such Initial Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such “Plan of Distribution” section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Securities held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement.

If an Exchange Offer Registration Statement is required pursuant to Section 3(a) above, the Company and the Guarantors shall use their commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) hereof to the extent necessary to ensure that it is available for resales of Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the

Commission as announced from time to time, for a period ending on the earlier of (i) 180 days from the date on which the Exchange Offer Registration Statement is declared effective and (ii) the date on which Broker-Dealers are no longer required to deliver a prospectus in connection with market-making or other trading activities.

The Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day (or shorter as provided in the foregoing sentence) period in order to facilitate such resales.

SECTION 4. Shelf Registration .

(a) Shelf Registration. If (i) the Company and the Guarantors are not required to file an Exchange Offer Registration Statement or to Consummate the Exchange Offer for the Initial Securities because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 6(a) hereof have been complied with), (ii) for any reason the Exchange Offer for the Securities is not Consummated within 365 calendar days following the Closing Date (or if such 365th day is not a Business Day, the next succeeding Business Day), or (iii) with respect to any Holder of Transfer Restricted Securities (A) such Holder is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) such Holder may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (C) such Holder is a Broker-Dealer and holds Initial Securities acquired directly from the Company or one of its affiliates, then, upon such Holder’s request, the Company and the Guarantors shall

(x) cause to be filed, at their expense, a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the “Shelf Registration Statement”) as promptly as practicable, which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and

(y) use their commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective (or become automatically effective) under the Securities Act.

The Company and the Guarantors shall use their commercially reasonable efforts to keep any such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Securities by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, until the earlier of one year following the effective date of such Shelf Registration Statement or such time when all the Securities covered by such Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement or are freely tradeable by non-affiliates of the Company pursuant to Rule 144.

(b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 Business Days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading.

SECTION 5. Additional Interest. If (a) the Exchange Offer is not consummated on or prior to the 365th calendar day following the Closing Date, (b) a Shelf Registration Statement applicable to the Securities is not filed or declared effective (or does not automatically become effective) on or prior to the 365th calendar day following the Closing Date or (c) a Shelf Registration Statement applicable to the Securities is declared effective (or automatically becomes effective) as required but thereafter fails to remain effective or becomes unusable in connection with resales for more than 60 consecutive days (each such event referred to in clauses (a), (b) and (c) above, a “Registration Default”), the Company hereby agrees that the interest rate borne by the Transfer Restricted Securities shall be increased by 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall such increase exceed 0.50% per annum (“Additional Interest”), until the earlier of the completion of the Exchange Offer or the effectiveness of the Shelf Registration Statement (or such Shelf Registration Statement no longer being required to be effective), after which the interest rate borne by the relevant Transfer Restricted Securities will be reduced to the original interest rate borne by such Transfer Restricted Securities. Notwithstanding the foregoing, if, after the date such Additional Interest ceases to accrue, another Registration Default occurs, Additional Interest will again commence accruing pursuant to the foregoing provisions.

The Additional Interest set forth above shall be the exclusive monetary remedy available to Holders for each Registration Default.

All obligations of the Company and the Guarantors set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full.

SECTION 6. Registration Procedures .

(a) Exchange Offer Registration Statement. In connection with each Exchange Offer, the Company and the Guarantors shall comply with all of the provisions of Section 6(c) hereof, shall use their commercially reasonable efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof. As a condition to its participation in an Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, a written representation to the

Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company, (B) it is acquiring the Exchange Securities in its ordinary course of business and (C) at the time of the commencement of the Exchange Offer, it has no arrangement with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Securities to be issued in the Exchange Offer. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company’s preparations for the Exchange Offer. Each Holder will be required to acknowledge and agree that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters, and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Securities obtained by such Holder in exchange for Initial Securities acquired by such Holder directly from the Company.

(b) Shelf Registration Statement. In connection with the Shelf Registration Statement, the Company and the Guarantors shall comply with all the provisions of Section 6(c) hereof and shall use their commercially reasonable efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto the Company and the Guarantors will as expeditiously as possible prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof.

(c) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Securities by Broker-Dealers), the Company and the Guarantors shall:

(i) use its commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, financial statements of the Guarantors) for the period specified in Section 3 or 4 hereof, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable efforts to cause such amendment to be declared effective and such Registration Statement

and the related Prospectus to become usable for their intended purposes as soon as practicable thereafter;

(ii) prepare and file with the Commission such amendments and post-effective amendments to such Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424, 430A and 430B under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus;

(iii) advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, confirm such advice in writing, (A) when the Prospectus or any prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, or (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in such Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in such Registration Statement or the Prospectus in order to make the statements therein not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or blue sky laws, the Company and the Guarantors shall use their commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest reasonably possible time;

(iv) furnish without charge to each of the Initial Purchasers, each selling Holder named in any Registration Statement, and each of the underwriter(s), if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders and underwriter(s) in connection with such sale, if any, for a period of at least five Business Days, and the Company will not file any such Registration Statement

or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which an Initial Purchaser of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object in writing within five Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such period). The objection of an Initial Purchaser or underwriter, if any, shall be deemed to be reasonable only if such Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission;

(v) make available at reasonable times for inspection by the Initial Purchasers, the managing underwriter(s), if any, participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such Initial Purchasers or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of the Company and the Guarantors and cause the Company’s and the Guarantors’ officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness and to participate in meetings with investors to the extent reasonably requested by the managing underwriter(s), if any;

(vi) if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the “Plan of Distribution” of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as reasonably practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

(vii) if not then rated, cause the Transfer Restricted Securities covered by such Registration Statement to be rated with the appropriate rating agencies, if so requested by the Holders of a majority in aggregate principal amount of Securities covered thereby or the underwriter(s), if any;

(viii) furnish to each Initial Purchaser, each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of such Registration Statement, as first filed with the Commission, and of each amendment thereto, including financial statements and schedules, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference);

(ix) deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and

any amendment or supplement thereto as such Persons reasonably may request; the Company and the Guarantors hereby consent to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto;

(x) in the case of a Shelf Registration Statement, enter into such agreements (including an underwriting agreement), and make such representations and warranties, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement, all to such extent as may be reasonably requested by any Initial Purchaser or by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Registration Statement contemplated by this Agreement; and, whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Company and the Guarantors shall:

(A) furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance and scope as they may request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the date of the effectiveness of the Shelf Registration Statement:

(1) a certificate, dated the date of effectiveness of the Shelf Registration Statement, signed by (y) the President or any Vice President and (z) a principal financial or accounting officer of each of the Company and the Guarantors, confirming, as of the date thereof, the matters similar to those set forth in paragraphs (i), (ii) and (iii) of Section 5(f) of the Purchase Agreement as adjusted to reflect the Company and the Guarantors as of the date thereof and such other matters as such parties may reasonably request;

(2) an opinion, dated the date of effectiveness of the Shelf Registration Statement of counsel for the Company and the Guarantors, covering such matters as such parties may reasonably request, and in any event including a customary statement substantially to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors, representatives of the independent public accountants and independent reserve engineers for the Company and the Guarantors, representatives of the underwriter(s), if any, and counsel to the underwriter(s), if any, in connection with the preparation of such Shelf Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel’s attention that caused such counsel to believe that the Shelf Registration

Statement, at the time such Shelf Registration Statement or any post-effective amendment thereto became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or that the Prospectus contained in such Shelf Registration Statement as of its date, contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data or reserves data included in any Shelf Registration Statement contemplated by this Agreement or the related Prospectus;

(3) a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company’s independent accountants, in the customary form and covering matters of the type customarily requested to be covered in comfort letters to underwriters in connection with primary underwritten offerings; and

(4) a process review confirmation letter, dated as of the date of effectiveness of the Shelf Registration Statement, from Ryder Scott Company, LP, in the customary form and covering matters of the type customarily included in such letters to underwriters in connection with primary underwritten offerings;

(B) set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and

(C) deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with Section 6(c)(x)(A) hereof and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company or the Guarantors pursuant to this Section 6(c)(x), if any.

(xi) prior to any public offering of Transfer Restricted Securities pursuant to a Shelf Registration Statement, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the securities or blue sky laws of such jurisdictions as the selling Holders or underwriter(s) may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Shelf Registration Statement; provided, however , that neither the Company nor any Guarantor shall be required to register or qualify as a

foreign corporation where it is not then so qualified or to take any action that would subject it to the service of process in suits or to taxation in any jurisdiction where it is not then so subject;

(xii) shall issue, in accordance with the procedures of the Depository Trust Company or upon the written request of any Holder of Initial Securities covered by the Shelf Registration Statement, Exchange Securities having an aggregate principal amount equal to the aggregate principal amount of Initial Securities surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities to be registered in the name of such Holder or in the name of the purchasers of such Securities identified in accordance with the procedures of the Depository Trust Company or in writing by the Holder, as the case may be; in return, the Initial Securities held by such Holder shall be surrendered to the Company for cancellation;

(xiii) cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Transfer Restricted Securities made by such Holders or underwriter(s);

(xiv) use its commercially reasonable efforts to cause the Transfer Restricted Securities covered by such Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in Section 6(c)(xi) hereof;

(xv) if any fact or event contemplated by Section 6(c)(iii)(D) hereof shall exist or have occurred, prepare a supplement or post-effective amendment to such Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading in the light of the circumstances under which they were made;

(xvi) provide a CUSIP number for all Securities not later than the effective date of such Registration Statement covering such Securities and provide the Trustee under the Indenture with printed certificates for such Securities which are in a form eligible for deposit with the Depository Trust Company and take all other action necessary to ensure that all such Securities are eligible for deposit with the Depository Trust Company;

(xvii) cooperate and assist in any filings required to be made with the FINRA and in the performance of any due diligence investigation by any underwriter (including any “qualified independent underwriter”) that is required to be retained in accordance with the rules and regulations of the FINRA;

(xviii) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of such Registration Statement;

(xix) cause the Indenture to be qualified under the Trust Indenture Act not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Securities to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute and use its commercially reasonable efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; and

(xx) provide promptly to each Holder upon request each document filed with the Commission pursuant to the requirements of Section 13 and Section 15 of the Exchange Act.

In connection with a Shelf Registration Statement, each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Shelf Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof, or until it is advised in writing (the “Advice”) by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of such Shelf Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof to and including the date when each selling Holder covered by such Shelf Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof or shall have received the Advice; provided, however, that no such extension shall be taken into account in determining whether Additional Interest is due pursuant to Section 5 hereof or the amount of such Additional Interest, it being agreed that the Company’s option to suspend use of a Shelf Registration Statement for more than 60 consecutive days pursuant to this paragraph shall be treated as a Registration Default for purposes of Section 5 hereof.

SECTION 7. Registration Expenses .

(a) All expenses incident to the Company’s and the Guarantors’ performance of or compliance with this Agreement will be borne by the Company and the Guarantors, jointly and severally, regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with the FINRA (and, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel that may be required by the rules and regulations of the FINRA)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws; (iii) all expenses of printing (including printing certificates for the Exchange Securities to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company, the Guarantors and, subject to Section 7(b) hereof, reasonable fees and disbursements of counsel for the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Exchange Securities on a securities exchange or automated quotation system pursuant to the requirements thereof; and (vi) all fees and disbursements of independent certified public accountants of the Company and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance).

The Company and the Guarantors will, in any event, bear their internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Guarantors.

(b) In connection with any Shelf Registration Statement required by this Agreement, the Company and the Guarantors, jointly and severally, will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Simpson Thacher & Bartlett LLP or such other counsel as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Shelf Registration Statement is being prepared.

SECTION 8. Indemnification .

(a) The Company and the Guarantors, jointly and severally, agree to indemnify and hold harmless (i) each Holder and (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any Holder (any of the Persons referred to in this clause (ii) being hereinafter referred to as a “controlling person”) and (iii) the respective officers, directors, partners, employees, representatives and agents of any Holder or any controlling person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an “Indemnified Holder”), to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, judgments, actions and expenses (including, without limitation, and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing, settling, compromising, paying or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including the reasonable fees and expenses of counsel to any Indemnified Holder), joint or several, directly or indirectly

caused by, related to, based upon, arising out of or in connection with (1) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment or supplement thereto), or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (2) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto), or any omission or alleged omission to state therein a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages, liabilities or expenses are caused by an untrue statement or omission or alleged untrue statement or omission that is made in reliance upon and in conformity with information relating to any of the Holders furnished in writing to the Company by any of the Holders expressly for use therein. This indemnity agreement shall be in addition to any liability which the Company or the Guarantors may otherwise have.

In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Company or the Guarantors, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Company and the Guarantors in writing; provided, however, that the failure to give such notice shall not relieve the Company or the Guarantors of their respective obligations pursuant to this Agreement. Such Indemnified Holder shall have the right to employ its own counsel in any such action and the fees and expenses of such counsel shall be paid, as incurred, by the Company and the Guarantors (regardless of whether it is ultimately determined that an Indemnified Holder is not entitled to indemnification hereunder). The Company and the Guarantors shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holders, which firm shall be designated by the Holders. The Company and the Guarantors shall be liable for any settlement of any such action or proceeding effected with the Company’s and the Guarantors’ prior written consent, which consent shall not be withheld unreasonably, and the Company and the Guarantors agree to indemnify and hold harmless any Indemnified Holder from and against any loss, claim, damage, liability or expense by reason of any settlement of any action effected with the written consent of the Company and the Guarantors. The Company and the Guarantors shall not, without the prior written consent of each Indemnified Holder, settle or compromise or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Holder is a party thereto), unless such settlement, compromise, consent or termination (i) includes an unconditional release of each Indemnified Holder from all liability arising out of such action, claim, litigation or proceeding and (ii) does not include any statements as to or any findings of fault, culpability or failure to act by or on behalf of any Indemnified Holder.

(b) Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors and their respective directors and officers who sign a Registration Statement, and any Person controlling (within the meaning of

Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company or the Guarantors, and the respective officers, directors, partners, employees, representatives and agents of each such Person, to the same extent as the foregoing indemnity from the Company and the Guarantors to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such Holder furnished in writing by such Holder expressly for use in any Registration Statement. In case any action or proceeding shall be brought against the Company, the Guarantors or their respective directors or officers or any such controlling person in respect of which indemnity may be sought against a Holder of Transfer Restricted Securities, such Holder shall have the rights and duties given the Company and the Guarantors, and the Company, the Guarantors, their respective directors and officers and such controlling person shall have the rights and duties given to each Holder by the preceding paragraph.

(c) If the indemnification provided for in this Section 8 is unavailable to an indemnified party under Section 8(a) or (b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities, judgments, actions or expenses referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors, on the one hand, and the Holders, on the other hand, from the Initial Placement (which in the case of the Company and the Guarantors shall be deemed to be equal to the total gross proceeds to the Company and the Guarantors from the Initial Placement), the amount of Additional Interest which did not become payable as a result of the filing of the Registration Statement resulting in such losses, claims, damages, liabilities, judgments actions or expenses, and such Registration Statement, or if such allocation is not permitted by applicable law, the relative fault of the Company and the Guarantors, on the one hand, and of the Holders, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantors on the one hand and of the Indemnified Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantors, on the one hand, or by the Indemnified Holders, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 8(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

The Company, the Guarantors and each Holder of Transfer Restricted Securities agree that it would not be just and equitable if contribution pursuant to this Section 8(c) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth

above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, none of the Holders (and their related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discount received by such Holder with respect to the Initial Securities exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 8(c) are several in proportion to the respective principal amount of Initial Securities held by each of the Holders hereunder and not joint.

SECTION 9. Rule 144A. The Company and the Guarantors hereby agree with each Holder, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A under the Securities Act.

SECTION 10. Participation in Underwritten Registrations. No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder’s Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.

SECTION 11. Selection of Underwriters. The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker(s) and managing underwriter(s) that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, however , that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company.

SECTION 12. Miscellaneous.

(a) Remedies. The Company and the Guarantors hereby agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by them of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate.

(b) No Inconsistent Agreements. The Company and the Guarantors will not, on or after the date of this Agreement, enter into any agreement with respect to their securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Neither the Company nor any Guarantor has entered into any agreement

granting any registration rights with respect to its securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company’s or any Guarantors’ securities under any agreement in effect on the date hereof.

(c) Adjustments Affecting the Securities. The Company and the Guarantors will not take any action, or permit any change within their control to occur, with respect to the Securities that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer.

(d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has (i) in the case of Section 5 hereof and this Section 12(d)(i), obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities (excluding any Transfer Restricted Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to an Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of each such Initial Purchaser with respect to which such amendment, qualification, supplement, waiver, consent or departure is to be effective.

(e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery:

(i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and

(ii) if to the Company or the Guarantors:

California Resources Corporation
10889 Wilshire Blvd.

Los Angeles, California 90025

Facsimile: (310) 443-6192

Attention: Michael P. Preston

with a copy to:

Vinson & Elkins LLP

1001 Fannin Street, Suite 2500

Houston, Texas 77002-6760

Facsimile: (713) 615-5234
Attention: Sarah Knight Morgan, Esq.

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.

(f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without limitation, and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however , that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder.

(g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW RULES THEREOF.

(j) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

(k) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

		CALIFORNIA RESOURCES CORPORATION


		By:	/s/ Marshall D. Smith
		Name:	Marshall D. Smith
		Title:	Senior Executive Vice President and Chief Financial Officer



CALIFORNIA HEAVY OIL, INC.		CRC MARKETING, INC.

By:	/s/ Marshall D. Smith	By:	/s/ R. Michael Viayra, Jr.
Name:	Marshall D. Smith	Name:	R. Michael Viayra, Jr.
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Assistant Secretary


CRC SERVICES, LLC		ELK HILLS POWER LLC

By:	/s/ Marshall D. Smith	By:	/s/ Linda S. Peterson
Name:	Marshall D. Smith	Name:	Linda S. Peterson
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Vice President and Secretary


CALIFORNIA RESOURCES ELK HILLS, LLC		OXY LONG BEACH, INC.

By:	/s/ Marshall D. Smith	By:	/s/ Marshall D. Smith
Name:	Marshall D. Smith	Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Senior Executive Vice President and Chief Financial Officer


OXY TIDELANDS, INC.		OXY WILMINGTON, LLC

By:	/s/ Marshall D. Smith	By:	/s/ Marshall D. Smith
Name:	Marshall D. Smith	Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Senior Executive Vice President and Chief Financial Officer

SOCAL HOLDING, LLC		SOUTHERN SAN JOAQUIN PRODUCTION, INC.

By:	/s/ Marshall D. Smith	By:	/s/ Marshall D. Smith
Name:	Marshall D. Smith	Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Senior Executive Vice President and Chief Financial Officer



THUMS LONG BEACH COMPANY		TIDELANDS OIL PRODUCTION COMPANY

By:	/s/ Marshall D. Smith	By: OXY TIDELANDS, INC., its managing partner
Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	By:	/s/ Marshall D. Smith
		Name:	Marshall D. Smith
		Title:	Senior Executive Vice President and Chief Financial Officer


VINTAGE PETROLEUM, INC.		CALIFORNIA RESOURCES PRODUCTION CORPORATION

By:	/s/ Marshall D. Smith	By:	/s/ Marshall D. Smith
Name:	Marshall D. Smith	Name:	Marshall D. Smith
Title:	Senior Executive Vice President and Chief Financial Officer	Title:	Senior Executive Vice President and Chief Financial Officer

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
	Acting on behalf of itself and as the Representative
	of the several Initial Purchasers


By:	Merrill Lynch, Pierce, Fenner & Smith
	Incorporated


By:	/s/ J. Lex Maultsby
	Name: J. Lex Maultsby
	Title: Managing Director

Exhibit 10.25

Execution Version

CREDIT AGREEMENT
DATED AS OF SEPTEMBER 24, 2014

AMONG

CALIFORNIA RESOURCES CORPORATION,
AS THE BORROWER,

THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,

JPMORGAN CHASE BANK, N.A.,
AS ADMINISTRATIVE AGENT, SWINGLINE LENDER
AND A LETTER OF CREDIT ISSUER,

BANK OF AMERICA, N.A.,
AS SYNDICATION AGENT, SWINGLINE LENDER
AND A LETTER OF CREDIT ISSUER,

AND

CITIBANK, N.A.

AND

WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS DOCUMENTATION AGENTS

J.P. MORGAN SECURITIES LLC,

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,

CITIGROUP GLOBAL MARKETS INC.,

WELLS FARGO SECURITIES, LLC,

GOLDMAN, SACHS & CO.,

HSBC BANK USA, NA,

MORGAN STANLEY SENIOR FUNDING, INC.,

THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., AND

U.S. BANK NATIONAL ASSOCIATION
AS JOINT LEAD ARRANGERS AND JOINT BOOKRUNNERS

Table of Contents

			Page

ARTICLE I DEFINITIONS			1

	1.1	Defined Terms	1
	1.2	Other Interpretive Provisions	39
	1.3	Accounting Terms	40
	1.4	Rounding	40
	1.5	References to Agreements, Laws, Etc.	40
	1.6	Times of Day	41
	1.7	Timing of Payment or Performance	41
	1.8	Currency Equivalents Generally	41
	1.9	Classification of Loans and Borrowings	41

ARTICLE II Amount and Terms of Credit			41

	2.1	Commitments	41
	2.2	Minimum Amount of Each Borrowing; Maximum Number of Borrowings	43
	2.3	Notice of Borrowing	43
	2.4	Disbursement of Funds	44
	2.5	Repayment of Loans; Evidence of Debt	45
	2.6	Conversions and Continuations	46
	2.7	Pro Rata Borrowings	47
	2.8	Interest	47
	2.9	Interest Periods	48
	2.10	Increased Costs, Illegality, Etc.	49
	2.11	Compensation	50
	2.12	Change of Lending Office	51
	2.13	Notice of Certain Costs	51
	2.14	Borrowing Base	51
	2.15	Defaulting Lenders	55
	2.16	Increase of Commitments	58

ARTICLE III Letters of Credit			59

	3.1	Letters of Credit	59
	3.2	Letter of Credit Requests	60
	3.3	Letter of Credit Participations	61
	3.4	Agreement to Repay Letter of Credit Drawings	63
	3.5	Increased Costs	64
	3.6	New or Successor Letter of Credit Issuer	64
	3.7	Role of Letter of Credit Issuer	65
	3.8	Cash Collateral	66
	3.9	Applicability of ISP and UCP	66
	3.10	Conflict with Issuer Documents	66
	3.11	Letters of Credit Issued for Restricted Subsidiaries	66

ARTICLE IV Fees; Commitments			67

	4.1	Fees	67
	4.2	Voluntary Reduction of Commitments	67
	4.3	Mandatory Termination or Reduction of Commitments	68

ARTICLE V Payments			68

	5.1	Voluntary Prepayments	68
	5.2	Mandatory Prepayments	69
	5.3	Method and Place of Payment	71
	5.4	Net Payments	71
	5.5	Computations of Interest and Fees	74
	5.6	Limit on Rate of Interest	75

ARTICLE VI Conditions Precedent to Effectiveness			75

	6.1	Executed Credit Agreement	75
	6.2	Secretary’s Certificate of the Borrower	75
	6.3	Good Standing Certificate of the Borrower	76

ARTICLE VII Conditions Precedent to Initial Borrowing			76

	7.1	Certain Credit Documents	76
	7.2	Legal Opinions	76
	7.3	Closing Certificates	76
	7.4	Authorization of Proceedings of Each Credit Party; Organizational Documents	76
	7.5	Fees	76
	7.6	Patriot Act	77
	7.7	Historical Financial Statements	77
	7.8	Insurance	77
	7.9	Solvency Certificate	77
	7.10	Uniform Commercial Code Searches	77
	7.11	Material Indebtedness	77

ARTICLE VIII Conditions Precedent to All Credit Events			77

	8.1	No Default; Representations and Warranties	78
	8.2	Notice of Borrowing	78

ARTICLE IX Representations, Warranties and Agreements			78

	9.1	Corporate Status	78
	9.2	Corporate Power and Authority; Enforceability	78
	9.3	No Violation	79
	9.4	Litigation	79
	9.5	Margin Regulations	79
	9.6	Governmental Approvals	79
	9.7	Investment Company Act	79
	9.8	True and Complete Disclosure	79
	9.9	Financial Condition; Financial Statements	80
	9.10	Tax Matters	80
	9.11	Compliance with ERISA	80
	9.12	Subsidiaries	81
	9.13	Environmental Laws	81
	9.14	Properties	82
	9.15	Solvency	82
	9.16	Insurance	82
	9.17	Hedge Agreements	82
	9.18	Patriot Act	82
	9.19	Liens Under the Security Documents	83
	9.20	No Default	83
	9.21	Direct Benefit	83
	9.22	Anti-Corruption Laws and Sanctions	83

	9.23	Pari Passu or Priority Status	83

ARTICLE X Affirmative Covenants			84

	10.1	Information Covenants	84
	10.2	Books, Records and Inspections	86
	10.3	Maintenance of Insurance	87
	10.4	Payment of Taxes	87
	10.5	Consolidated Corporate Franchises	87
	10.6	Compliance with Statutes, Regulations, Etc.	88
	10.7	ERISA	88
	10.8	Maintenance of Properties	89
	10.9	[Reserved]	89
	10.10	Additional Guarantors, Grantors and Collateral	89
	10.11	Use of Proceeds	90
	10.12	Further Assurances	90
	10.13	Reserve Reports	91
	10.14	Commodity Exchange Act Keepwell Provisions	92

ARTICLE XI Negative Covenants			92

	11.1	Limitation on Indebtedness	92
	11.2	Limitation on Liens	96
	11.3	Limitation on Fundamental Changes	98
	11.4	Limitation on Sale of Assets	100
	11.5	Limitation on Investments	103
	11.6	Limitation on Restricted Payments	106
	11.7	Limitations on Debt Payments and Amendments	107
	11.8	Negative Pledge Agreements	108
	11.9	Limitation on Subsidiary Distributions	109
	11.10	Hedge Agreements	110
	11.11	Financial Performance Covenants	112
	11.12	Transactions with Affiliates	112
	11.13	Change in Business	113
	11.14	Use of Proceeds	114

ARTICLE XII Events of Default			114

	12.1	Payments	114
	12.2	Representations, Etc.	114
	12.3	Covenants	114
	12.4	Default Under Other Agreements	114
	12.5	Bankruptcy, Etc.	114
	12.6	ERISA	115
	12.7	Guarantee	115
	12.8	Security Documents	115
	12.9	Judgments	115
	12.10	Change of Control	116

ARTICLE XIII The Administrative Agent			117

	13.1	Appointment	117
	13.2	Delegation of Duties	117
	13.3	Exculpatory Provisions	117
	13.4	Reliance	118
	13.5	Notice of Default	118

iii

	13.6	Non-Reliance on Administrative Agent and Other Lenders	118
	13.7	No Other Duties, Etc.	119
	13.8	Indemnification	119
	13.9	Agent in Its Individual Capacity	120
	13.10	Successor Agent	120
	13.11	Withholding Tax	121
	13.12	Security Documents and Guarantee	121
	13.13	Right to Realize on Collateral and Enforce Guarantee	121
	13.14	Administrative Agent May File Proofs of Claim	122

ARTICLE XIV Miscellaneous			122

	14.1	Amendments, Waivers and Releases	122
	14.2	Notices	124
	14.3	No Waiver; Cumulative Remedies	124
	14.4	Survival of Representations and Warranties	124
	14.5	Payment of Expenses; Indemnification	124
	14.6	Successors and Assigns; Participations and Assignments	126
	14.7	Replacements of Lenders under Certain Circumstances	130
	14.8	Adjustments; Set-off	131
	14.9	Counterparts	132
	14.10	Severability	132
	14.11	Integration	132
	14.12	GOVERNING LAW	132
	14.13	Submission to Jurisdiction; Waivers	132
	14.14	Acknowledgments	133
	14.15	WAIVERS OF JURY TRIAL	134
	14.16	Confidentiality	134
	14.17	Release of Collateral and Guarantee Obligations	135
	14.18	Borrowing Base Election	136
	14.19	USA PATRIOT Act	136
	14.20	Payments Set Aside	136
	14.21	Reinstatement	136
	14.22	Disposition of Proceeds	137
	14.23	Collateral Matters; Hedge Agreements	137

Schedules and Exhibits

Schedule 1.1(a)		Revolving Commitments
Schedule 1.1(b)		Term Loan Commitments
Schedule 1.1(c)		Swingline Commitments
Schedule 1.1(d)		Excluded Stock
Schedule 1.1(e)		Excluded Subsidiaries
Schedule 1.1(f)		Subsidiary Guarantors
Schedule 9.4		Litigation
Schedule 9.12		Subsidiaries
Schedule 11.1		Funding Date Indebtedness
Schedule 11.2		Funding Date Liens
Schedule 11.4		Scheduled Dispositions
Schedule 11.5		Funding Date Investments
Schedule 11.8		Funding Date Negative Pledge Agreements
Schedule 11.12		Funding Date Affiliate Transactions
Schedule 14.2		Notice Addresses

Exhibit A		Form of Notice of Borrowing
Exhibit B		Form of Letter of Credit Request
Exhibit C		Form of Guarantee
Exhibit D		Form of Security Agreement
Exhibit E		Form of Pledge Agreement
Exhibit F		Form of Mortgage/Deed of Trust (California)
Exhibit G		Form of Credit Party Closing Certificate
Exhibit H		Form of Assignment and Acceptance
Exhibit I		Form of Promissory Note

CREDIT AGREEMENT , dated as of September 24, 2014, is among CALIFORNIA RESOURCES CORPORATION, a Delaware corporation (the “ Borrower ”), the banks, financial institutions and other lending institutions from time to time parties as lenders hereto (each a “ Lender ” and, collectively, the “ Lenders ”), JPMORGAN CHASE BANK, N.A., as Administrative Agent and a Swingline Lender and each Letter of Credit Issuer from time to time party hereto.

WHEREAS, the Borrower has requested that the Lenders extend credit to it from time to time subject to the terms of this Agreement; and

WHEREAS, the Lenders, the Swingline Lenders and the Letter of Credit Issuers are willing to make available to the Borrower such credit upon the terms and subject to the conditions set forth herein;

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows:

ARTICLE I
DEFINITIONS

1.1 Defined Terms .

(a) Terms defined in the preamble have the meaning ascribed to them in the preamble.

(b) As used herein, the following terms shall have the meanings specified in this Section 1.1 unless the context otherwise requires (it being understood that defined terms in this Agreement shall include in the singular number the plural and in the plural the singular):

“ ABR ” shall mean for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Effective Rate plus ½ of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate” and (c) the LIBOR Rate for a one-month Interest Period on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.0%; provided that, for the avoidance of doubt, for purposes of calculating the LIBOR Rate pursuant to clause (c) above, the LIBOR Rate for any day shall be based on the rate per annum determined by the Administrative Agent at approximately 11:00 a.m. (London time) on such day by reference to the rate appearing on the Reuters Screen LIBOR01 Page (or any successor page or any successor service, or any substitute page or substitute for such service, providing rate quotations comparable to the Reuters Screen LIBOR01 Page, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) for a period equal to one-month and such rate shall in no event be less than zero for the purposes of this Agreement. The “prime rate” is a rate set by the Administrative Agent based upon various factors, including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the ABR due to a change in such rate announced by the Administrative Agent, in the Federal Funds Effective Rate or in the one-month LIBOR Rate shall take effect at the opening of business on the day specified in the public announcement of such change.

“ ABR Loan ” shall mean each Loan bearing interest based on the ABR.

“ Acceptable Security Interest ” shall mean a first priority, perfected Mortgage; provided that Liens which are permitted by the terms of Section 11.2 may exist and have whatever priority such Liens have at such time under applicable law; provided further that with respect to (a) any production sharing contract

or similar instrument for the Borrower’s “THUMS” and “Tidelands” assets and the Property covered thereby and (b) any other production sharing contract or similar instrument constituting Proved Reserves on which a Lien cannot be granted without the consent of a third party or on which a Lien is contractually or statutorily prohibited, then in each case, the grant of a first priority, perfected Lien (provided that Liens which are permitted by the terms of Section 11.2 may exist and have whatever priority such Liens have at such time under applicable law) in the Stock of the Subsidiary party to such contract shall be deemed an “Acceptable Security Interest”.

“ Additional Lender ” shall mean an Additional Revolving Lender or an Additional Term Loan Lender.

“ Additional Revolving Lender ” shall have the meaning provided in Section 2.16(a) .

“ Additional Term Loan Lender ” shall have the meaning provided in Section 2.16(b) .

“ Adjusted Total Revolving Commitment ” shall mean, at any time, the Total Revolving Commitment less the aggregate amount of Revolving Commitments of all Defaulting Lenders.

“ Administrative Agent ” shall mean JPMorgan Chase Bank, N.A., as the administrative agent for the Lenders under this Agreement and the other Credit Documents, or any successor administrative agent appointed in accordance with the provisions of Section 13.10 .

“ Administrative Agent’s Office ” shall mean the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 14.2 , or such other address or account as the Administrative Agent may from time to time notify in writing to the Borrower and the Lenders.

“ Administrative Questionnaire ” shall mean, for each Lender, an administrative questionnaire in a form approved by the Administrative Agent.

“ Affiliate ” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. “Controlling” (“controlling”) and “controlled” shall have meanings correlative thereto.

“ Agreement ” shall mean this Credit Agreement, as amended, restated, supplemented or otherwise modified from time to time.

“ Anti-Corruption Laws ” shall mean all laws, rules, and regulations of any jurisdiction applicable to the Borrower or its Subsidiaries from time to time concerning or relating to bribery or corruption.

“ Applicable Equity Amount ” shall mean, at any time (the “ Applicable Equity Amount Reference Time ”), an amount equal to, without duplication,

(a) the amount of any proceeds of an equity issuance received by the Borrower during the period from and including the Business Day immediately following the Funding Date, through and including the Applicable Equity Amount Reference Time, but excluding all proceeds from the issuance of Disqualified Stock; minus

(b) the sum, without duplication, of:

(i) the aggregate amount of any Investments made by the Borrower or any Restricted Subsidiary pursuant to Section 11.5(b)(viii) after the Funding Date, and prior to the Applicable Equity Amount Reference Time;

(ii) the aggregate amount of any Restricted Payments made by the Borrower pursuant to Section 11.6(a) after the Funding Date, and prior to the Applicable Equity Amount Reference Time; and

(iii) the aggregate amount of prepayments, repurchases, redemptions and defeasances made by the Borrower or any Restricted Subsidiary pursuant to Section 11.7(c)(ii) after the Funding Date and prior to the Applicable Equity Amount Reference Time.

Concurrently with the consummation of any transaction effected pursuant to Section 11.5(b)(viii) or Section 11.7(c) using all or any portion of the Applicable Equity Amount, the Borrower shall provide to the Administrative Agent a certificate of an Authorized Officer of the Borrower setting forth in reasonable detail the Applicable Equity Amount as of the end of the most recent fiscal year for which financial statements have been provided pursuant to Section 10.1 .

“ Applicable Margin ” shall mean, for any day, with respect to any ABR Loan or LIBOR Loan, as the case may be, the rate per annum set forth in the grid below based upon the Leverage Ratio in effect on such day:

Leverage Ratio Grid

Leverage Ratio	> 3.00x		< 3.00x and > 2.00x		< 2.00x and > 1.00x		< 1.00x
LIBOR Loans	2.25	%	2.00	%	1.75	%	1.50	%
ABR Loans	1.25	%	1.00	%	0.75	%	0.50	%
Commitment Fee Rate	0.50	%	0.50	%	0.375	%	0.30	%

Each change in the Commitment Fee Rate or Applicable Margin shall apply during the period commencing on the last day of each fiscal quarter of the Borrower after the date of such change and ending on the last day of the succeeding fiscal quarter of the Borrower after the date of such change.

If any financial statements required to be delivered under Section 10.1 are not delivered within the time periods specified in Section 10.1 , then the Applicable Margin and Commitment Fee Rate previously in effect shall continue to apply until such financial statements are delivered; provided that upon delivery of such financial statements, if timely delivery of such financial statements would have led to the application of a higher Applicable Margin or a higher Commitment Fee Rate for any Applicable Period than the Applicable Margin or Commitment Fee Rate, as applicable, actually applied during such time, then the Borrower shall immediately pay to the Administrative Agent the net accrued additional interest and expense (determined after taking into account any corresponding reduction in the Applicable Margin or Commitment Fee Rate in any other period), if any, owing as a result of such increased Applicable Margin or Commitment Fee Rate.

“ Applicable Period ” shall have the meaning provided in Section 2.8(g) .

“ Approved Fund ” shall mean any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“ Approved Petroleum Engineers ” shall mean (a) Netherland, Sewell & Associates, Inc., (b) Cawley, Gillespie & Associates, Inc., (c) W. D. Van Gonten & Co. Petroleum Engineering, (d) Ryder Scott Company, L.P., (e) DeGolyer and MacNaughton, and (f) at the Borrower’s option, any other independent petroleum engineers selected by the Borrower and reasonably acceptable to the Administrative Agent.

“ Asset Coverage Ratio ” shall mean as of the last day of each fiscal quarter of the Borrower, the ratio of the PV-9 of the Credit Parties’ Oil and Gas Properties reflected in the most recently delivered Reserve Report to Consolidated Total Debt as of the last day of such fiscal quarter.

“ Assignment and Acceptance ” shall mean an assignment and acceptance substantially in the form of Exhibit H or such other form as may be approved by the Administrative Agent.

“ Authorized Officer ” shall mean as to any Person, the President, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Treasurer, the Assistant or Vice Treasurer, the Vice President-Finance, the General Counsel, any Senior Vice President, any Executive Vice President, and any manager, managing member or general partner, in each case, of such Person, and any other senior officer designated as such in writing to the Administrative Agent by such Person. Any document delivered hereunder that is signed by an Authorized Officer shall be conclusively presumed to have been authorized by all necessary corporate, limited liability company, partnership and/or other action on the part of the Borrower or any other Credit Party and such Authorized Officer shall be conclusively presumed to have acted on behalf of such Person.

“ Auto-Extension Letter of Credit ” shall have the meaning provided in Section 3.2(b) .

“ Available Revolving Commitment ” shall mean, at any time, (a) the Revolving Loan Limit at such time minus (b) the Total Revolving Exposure at such time.

“ Bank Price Deck ” shall mean the Administrative Agent’s forward curve for each of oil, natural gas and other Hydrocarbons, as applicable, furnished to the Borrower by the Administrative Agent from time to time in accordance with the terms of this Agreement.

“ Bankruptcy Code ” shall have the meaning provided in Section 12.5 .

“ Benefited Lender ” shall have the meaning provided in Section 14.8 .

“ Board ” shall mean the Board of Governors of the Federal Reserve System of the United States (or any successor).

“ Board of Directors ” shall mean, as to any Person, the board of directors or other governing body of such Person, or if such Person is owned or managed by a single entity, the board of directors or other governing body of such entity.

“ Borrower ” shall have the meaning provided in the introductory paragraph hereto.

“ Borrowing ” shall mean the incurrence of one Type of Loan on a given date (or resulting from conversions on a given date) having, in the case of LIBOR Loans, the same Interest Period ( provided that

ABR Loans incurred pursuant to Section 2.10(b) shall be considered part of any related Borrowing of LIBOR Loans).

“ Borrowing Base ” shall mean, at any time, an amount equal to the amount determined in accordance with Section 2.14 , as the same may be adjusted from time to time pursuant to the provisions thereof.

“ Borrowing Base Deficiency ” occurs if, at any time during a Borrowing Base Trigger Period, the aggregate Total Exposure exceeds the Borrowing Base then in effect. The amount of the Borrowing Base Deficiency is the amount by which Total Exposure exceeds the Borrowing Base then in effect.

“ Borrowing Base Properties ” shall mean the Oil and Gas Properties of the Credit Parties included in the most recently delivered Reserve Report delivered pursuant to Section 10.13 .

“ Borrowing Base Required Lenders ” shall mean, at any date, (a) Non-Defaulting Lenders having or holding at least 80% of the unused Adjusted Total Revolving Commitment at such date and the Total Revolving Exposure (excluding the Revolving Exposure of Defaulting Lenders) in the aggregate at such date or (b) if the Total Revolving Commitment has been terminated, Non-Defaulting Lenders having or holding at least 80% of the outstanding principal amount of the Revolving Loans, Swingline Exposure and Letter of Credit Exposure (excluding the Revolving Exposure of Defaulting Lenders) in the aggregate at such date.

“ Borrowing Base Trigger Date ” shall have the meaning provided in Section 10.10(a) .

“ Borrowing Base Trigger Event ” shall mean the public announcement by Moody’s or S&P that its Credit Rating is B1 or lower from (or is unrated by) Moody’s or B+ or lower (or is unrated by) from S&P; provided , however , that if one of the Credit Ratings is B1 or B+, as applicable (but not lower than B1 or B+), and the other Credit Rating is BB or Ba2 or higher, as applicable, a Borrowing Base Trigger Event shall not have occurred.

“ Borrowing Base Trigger Period ” shall mean (a) the first business day following a Borrowing Base Trigger Event until the first business day on which the Borrower’s Credit Rating is Ba3 or higher from Moody’s and is BB- or higher from S&P or (b) the period commencing with the date on which the Borrower elects under Section 14.18 to have the Facility governed by a Borrowing Base and ending on any date on which the Borrower has elected to cease to have the Facility governed by a Borrowing Base, provided that on such date, no Borrowing Base Trigger Event is in effect.

“ Business Day ” shall mean any day excluding Saturday, Sunday and any other day on which banking institutions in New York City or Los Angeles, California are authorized by law or other governmental actions to close, and, if such day relates to (a) any interest rate settings as to a LIBOR Loan, (b) any fundings, disbursements, settlements and payments in respect of any such LIBOR Loan, or (c) any other dealings pursuant to this Agreement in respect of any such LIBOR Loan, such day shall be a day on which dealings in deposits in Dollars are conducted by and between banks in the London interbank eurodollar market.

“ Capital Expenditures ” shall mean, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including in all events all amounts expended or capitalized under Capital Leases) by the Borrower and the Restricted Subsidiaries during such period that, in conformity with GAAP, are or are required to be included as capital expenditures on a consolidated statement of cash flows of the Borrower and its Restricted Subsidiaries.

“ Capital Lease ” shall mean, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is, or is required to be, accounted for as a capital lease on the balance sheet of that Person.

“ Capitalized Lease Obligations ” shall mean, as applied to any Person, all obligations under Capital Leases of such Person or any of its Subsidiaries, in each case taken at the amount thereof accounted for as liabilities in accordance with GAAP.

“ Cash Collateralize ” shall have the meaning provided in Section 3.8(c) (and Cash Collateral means cash that has been Cash Collateralized).

“ Cash Management Agreement ” shall mean any agreement entered into from time to time by the Borrower or any of the Borrower’s Restricted Subsidiaries in connection with cash management services for collections, other Cash Management Services and for operating, payroll and trust accounts of such Person, including automatic clearing house services, controlled disbursement services, electronic funds transfer services, lockbox services, stop payment services and wire transfer services.

“ Cash Management Bank ” shall mean any Person that either (a) at the time it provides Cash Management Services, (b) on the Funding Date or (c) at any time after it has provided any Cash Management Services, is a Lender, the Administrative Agent or an Affiliate of a Lender or the Administrative Agent.

“ Cash Management Obligations ” shall mean obligations owed by the Borrower or any Restricted Subsidiary to any Cash Management Bank in connection with, or in respect of, any Cash Management Services.

“ Cash Management Services ” shall mean (a) commercial credit cards, merchant card services, purchase or debit cards, including non-card e-payables services, (b) treasury management services (including controlled disbursement, overdraft, automated clearing house fund transfer services, return items and interstate depository network services) and (c) any other demand deposit or operating account relationships or other cash management services, including any Cash Management Agreement.

“ Casualty Event ” shall mean, with respect to any Collateral, (a) any damage to, destruction of, or other casualty or loss involving, any property or asset or (b) any seizure, condemnation, confiscation or taking under the power of eminent domain of, or any requisition of title or use of, or relating to, or any similar event in respect of, any property or asset.

“ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.

“ CFC ” shall mean a “controlled foreign corporation” within the meaning of Section 957 of the Code.

“ Change in Law ” shall mean the occurrence after the date of this Agreement of any of the following: (a) the adoption of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the interpretation, implementation or application thereof by any Governmental Authority or (c) compliance by any Lender or the Letter of Credit Issuer (or, for purposes of clauses (a)(ii) or (c) of Section 2.10 , by any lending office of such Lender or by such Lender’s or the Letter of Credit Issuer’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform

and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall be deemed to be a “Change in “Law”, regardless of the date enacted, adopted or issued.

“ Change of Control ” shall mean and be deemed to have occurred if:

(a) any Person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person, entity or “group” and their respective Subsidiaries and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), shall at any time have acquired direct or indirect beneficial ownership (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of voting power of the outstanding Voting Stock of the Borrower having more than 35% of the ordinary voting power for the election of directors of the Borrower; or

(b) occupation of a majority of the seats (other than vacant seats) on the Board of Directors of the Borrower by persons who were neither (1) nominated by the Board of Directors of the Borrower nor (2) appointed by directors so nominated; or

“ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“ Collateral ” shall have the meaning provided for such term in each of the Security Documents; provided that with respect to any Mortgages, “Collateral”, as defined herein, shall include “Mortgaged Property” as defined therein.

“ Collateral Requirements ” shall mean, during a Borrowing Base Trigger Period, the collateral requirements set forth in Section 10.10 and in any other Security Document including without limitation:

(a) a pledge by the Credit Parties of (i) 100% of the stock of each Restricted Subsidiary that is a Domestic Subsidiary directly owned thereby and (ii) 66-2/3% of the stock of each Restricted Subsidiary that is a Foreign Subsidiary directly owned thereby; and

(b) with respect to substantially all other assets of the Credit Parties other than Excluded Property, first priority, perfected liens and security interests on such assets of the Credit Parties; provided that, (i) with respect to the Borrower’s Oil and Gas Properties, the Credit Parties shall be required to deliver and maintain an Acceptable Security Interest on not less than 80% of the PV-9 of the Proved Reserves evaluated in the Reserve Report most recently delivered to the Administrative Agent and (ii) with respect to all other assets, the Credit Parties shall not be required to take any action to perfect a lien on any such assets securing the Facilities unless such perfection may be accomplished by (A) the filing of a UCC-1 financing statement in the obligor’s jurisdiction of formation, (B) delivery of certificates representing any pledged equity consisting of certificated securities, in each case, with appropriate endorsements or transfer powers, or (C) granting the Administrative Agent control (within the meaning of the Uniform Commercial Code) over any pledged equity consisting of uncertificated securities; provided further that such assets may be subject to Liens permitted under Section 11.2 ; and provided further that no intention to subordinate the first priority Lien of the Administrative Agent and the Secured Parties pursuant to the Security Documents is to be hereby implied or expressed by the permitted existence of such Permitted Liens.

“ Commitment ” shall mean, with respect to each Lender, its Revolving Commitment and/or its Term Loan Commitment, as the context may require.

“ Commitment Fee ” shall have the meaning provided in Section 4.1(a) .

“ Commitment Fee Rate ” shall mean, for any day, with respect to the Available Revolving Commitment on any day, the applicable rate per annum set forth next to the row heading “Commitment Fee Rate” in the definition of “Applicable Margin”.

“ Commodity Exchange Act ” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute, and any regulations promulgated thereunder.

“ Confidential Information ” shall have the meaning provided in Section 14.16 .

“ Consolidated EBITDAX ” shall mean, for any period, for the Borrower and its Restricted Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period plus (a) the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Charges for such period, (ii) an amount equal to the provision for federal, state, and local income and franchise taxes payable or to become payable by the Borrower and its Restricted Subsidiaries for such period, (iii) depletion, depreciation, amortization and exploration expense for such period (including all drilling, completion, geological and geophysical costs), (iv) losses from asset Dispositions (excluding Hydrocarbons Disposed of in the ordinary course of business), (v) all other non-cash items reducing such Consolidated Net Income for such period, and (vi) extraordinary or non-recurring losses for such period, and minus (b) the following to the extent included in calculating such Consolidated Net Income: (i) federal, state and local income tax credits of the Borrower and its Restricted Subsidiaries for such period (ii) gains from asset Dispositions (excluding Hydrocarbons Disposed of in the ordinary course of business), (iii) all other non-cash items increasing Consolidated Net Income for such period, and (iv) extraordinary or non-recurring gains for such period; provided that, with respect to the determination of the Borrower’s compliance with the covenant set forth in Section 11.11(a) for any period, Consolidated EBITDAX shall be adjusted to give effect, on a pro forma basis, to any Qualified Acquisition or Qualified Disposition made during such period, as if such acquisition or Disposition had occurred on the first day of such period.

“ Consolidated Interest Charges ” shall mean, for any period, for the Borrower and its Restricted Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses of the Borrower and its Restricted Subsidiaries for such period in connection with borrowed money (including capitalized interest for such period) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, and (b) the portion of rent expense of the Borrower and its Restricted Subsidiaries with respect to such period under capital leases that is treated as interest in accordance with GAAP.

“ Consolidated Net Income ” shall mean, for any period, for the Borrower and its Restricted Subsidiaries on a consolidated basis, the net income of the Borrower and its Restricted Subsidiaries (excluding extraordinary gains and extraordinary losses and the net income of any Person (other than the Borrower or a Restricted Subsidiary) in which the Borrower and its Restricted Subsidiaries own any Stock or Stock Equivalents for that period, except to the extent of the amount of dividends and distributions actually received by the Borrower or a Restricted Subsidiary), provided that the calculation of Consolidated Net Income shall exclude any non-cash charges or losses and any non-cash income or gains, in each case, required to be included in net income of the Borrower and its Subsidiaries as a result of the application of FASB Accounting Standards Codifications 718, 815, 410 and 360, but shall

expressly include any cash charges or payments that have been incurred as a result of the termination of any Hedge Agreement.

“ Consolidated Total Assets ” shall mean, as of any date of determination, the amount that would, in conformity with GAAP, be set forth opposite the caption “total assets” (or any like caption) on a consolidated balance sheet of the Borrower and the Restricted Subsidiaries at such date.

“ Consolidated Total Debt ” shall mean, as of any date of determination, (a) all Indebtedness of the types described in clauses (a) and (b) (other than intercompany Indebtedness owing to the Borrower or any Restricted Subsidiary), clause (d) (but, in the case of clause (d) , only to the extent of any unreimbursed drawings under any letter of credit that has not been cash collateralized) and clauses (e) through (i) (but, in the case of clause (i) only to the extent of Guarantee Obligations with respect to Indebtedness otherwise included in this definition) of the definition thereof, in each case actually owing by the Borrower and the Restricted Subsidiaries on such date and to the extent appearing on the balance sheet of the Borrower determined on a consolidated basis in accordance with GAAP minus (b) the aggregate cash and Permitted Investments included in the cash and cash equivalents accounts listed on the consolidated balance sheet of the Borrower and the Restricted Subsidiaries at such date (it being understood that such amount shall exclude in any event any cash or cash equivalents identified on such balance sheet as “restricted” (it being understood that (i) cash or cash equivalents subject to a control agreement in favor of any Person other than the Administrative Agent or any Lender shall be deemed “restricted”, and (ii) cash or cash equivalents restricted in favor of the Administrative Agent or any Lender (excluding cash that is Cash Collateralizing outstanding L/C Obligations under Section 3.8 ) shall be deemed not “restricted”).

“ Contractual Requirement ” shall have the meaning provided in Section 9.3 .

“ Credit Documents ” shall mean this Agreement, the Guarantee, each Letter of Credit, any promissory notes issued by the Borrower under this Agreement and during any Borrowing Base Trigger Period, the Security Documents.

“ Credit Event ” shall mean and include the making (but not the conversion or continuation) of a Loan and the issuance of a Letter of Credit.

“ Credit Party ” shall mean each of the Borrower and the Guarantors.

“ Credit Rating ” shall mean the corporate credit rating of the Borrower issued by S&P or the corporate family rating of the Borrower issued by Moody’s, as applicable.

“ Default ” shall mean any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

“ Default Rate ” shall have the meaning provided in Section 2.8(c) .

“ Defaulting Lender ” shall mean any Lender whose acts or failure to act, whether directly or indirectly, cause it to meet any part of the definition of “Lender Default”.

“ Disposition ” shall have the meaning provided in Section 11.4(a) . “ Dispose ” shall have a correlative meaning.

“ Disqualified Stock ” shall mean, with respect to any Person, any Stock or Stock Equivalents of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it

is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely for Stock or Stock Equivalents that is not Disqualified Stock), other than as a result of a change of control or asset sale, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than as a result of a change of control or asset sale to the extent the terms of such Stock or Stock Equivalents provide that such Stock or Stock Equivalents shall not be required to be repurchased or redeemed until the Maturity Date has occurred or such repurchase or redemption is otherwise permitted by this Agreement (including as a result of a waiver hereunder)), in whole or in part, in each case prior to the date that is 91 days after the Maturity Date hereunder; provided that, if such Stock or Stock Equivalents are issued to any plan for the benefit of employees of the Borrower or its Subsidiaries or by any such plan to such employees, such Stock or Stock Equivalents shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations; provided , further , that any Stock or Stock Equivalents held by any future, present or former employee, director, manager or consultant of the Borrower, any of its Subsidiaries or any of its direct or indirect parent companies or any other entity in which the Borrower or a Restricted Subsidiary has an Investment and is designated in good faith as an “affiliate” by the board of directors or managers of the Borrower, in each case pursuant to any equity holders’ agreement, management equity plan or stock incentive plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries.

“ Disregarded Entity ” shall mean any Domestic Subsidiary that is disregarded for U.S. federal income tax purposes.

“ Documentation Agents ” shall mean Citibank, N.A. and Wells Fargo Bank, National Association, as documentation agents for the Lenders under this Agreement and the other Credit Documents.

“ Dollars ” and “ $ ” shall mean dollars in lawful currency of the United States of America.

“ Domestic Subsidiary ” shall mean each Subsidiary of the Borrower that is organized under the laws of the United States or any state thereof, or the District of Columbia.

“ Drawing ” shall have the meaning provided in Section 3.4(b) .

“ Effective Date ” shall mean the date on which this Agreement shall become effective in accordance with ARTICLE VI .

“ Engineering Reports ” shall have the meaning provided in Section 2.14(c)(i) .

“ Environmental Claims ” shall mean any and all actions, suits, orders, decrees, demands, demand letters, claims, liens, notices of noncompliance, violation or potential responsibility or investigation (other than internal reports prepared by or on behalf of the Borrower or any of the Subsidiaries (a) in the ordinary course of such Person’s business or (b) as required in connection with a financing transaction or an acquisition or disposition of real estate) or proceedings arising under or based upon any applicable Environmental Law or any permit issued, or any approval given, under any such Environmental Law (hereinafter, “ Claims ”), including, without limitation, (i) any and all Claims by governmental or regulatory authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief relating to the presence, release or threatened release of Hazardous Materials or arising from alleged injury or threat of injury to health or safety (to the extent relating to human exposure to Hazardous Materials), or the

environment including, without limitation, ambient air, surface water, groundwater, land surface and subsurface strata and natural resources such as wetlands.

“ Environmental Law ” shall mean any applicable Federal, state, or local statute, law (including, without limitation, common law), rule, regulation, ordinance, or code of any Governmental Authority now or hereafter in effect and in each case as amended, and any binding judicial or administrative interpretation thereof, including any binding judicial or administrative order, consent decree or judgment, relating to the protection of the environment, including, without limitation, ambient air, surface water, groundwater, land surface and subsurface strata and natural resources such as wetlands, or human health or workplace safety (to the extent relating to human exposure to Hazardous Materials), or the release or threatened release of Hazardous Materials.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Section references to ERISA are to ERISA as in effect on the Funding Date and any subsequent provisions of ERISA amendatory thereof, supplemental thereto or substituted therefor.

“ ERISA Affiliate ” shall mean each person (as defined in Section 3(9) of ERISA) that together with the Borrower would be deemed to be a “single employer” within the meaning of Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

“ Event of Default ” shall have the meaning provided in Article XII .

“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ Exchange Rate ” shall mean on any day with respect to any currency (other than Dollars), the rate at which such currency may be exchanged into any other currency (including Dollars), as set forth at approximately 11:00 a.m. (London time) on such day on the Reuters World Currency Page for such currency. In the event that such rate does not appear on any Reuters World Currency Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed by the Administrative Agent and the Borrower, or, in the absence of such agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 11:00 a.m., local time, on such date for the purchase of the relevant currency for delivery two Business Days later.

“ Excluded Hedge Obligation ” shall mean, with respect to any Credit Party, any Swap Obligation if, and to the extent that, all or a portion of the liability of such Credit Party with respect to, or the grant by such Credit Party of a security interest to secure, such Swap Obligation (or any Guarantee thereof or other agreement or undertaking agreeing to guarantee, repay, indemnify or otherwise be liable therefor) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) (a) by virtue of such Credit Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the guarantee obligation or other liability of such Credit Party or the grant of such security interest becomes or would become effective with respect to such Swap Obligation or (b) in the case of a Swap Obligation subject to a clearing requirement pursuant to section 2(h) of the Commodity Exchange Act (or any successor provision thereto), because such Credit Party is a “financial entity,” as defined in section 2(h)(7)(C)(i) of the Commodity Exchange Act (or any successor provision thereto), at the time the guarantee obligation or other liability of such Credit Party becomes or would become effective with respect to such related Swap

Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee obligation or other liability or security interest is or becomes illegal.

“ Excluded Hedges ” shall mean Hedge Agreements that (i) are basis differential only swaps for volumes of crude oil and natural gas included under other Hedge Agreements permitted by Section 11.10(a) or (ii) are a hedge of volumes of crude oil or natural gas by means of a put or a price “floor” for which there exists no mark-to-market exposure to the Borrower.

“ Excluded Property ” shall mean (a) all Excluded Stock, (b) any property to the extent the grant or maintenance of a Lien on such property is (i) prohibited by applicable law, (ii) could reasonably be expected to result in material adverse tax consequences to the Borrower or any Subsidiary of the Borrower, (iii) requires a consent not obtained of any Governmental Authority pursuant to applicable law or (iv) is prohibited by, or constitutes a breach or default under or results in the termination of or requires any consent not obtained under, any contract, license, agreement, instrument or other document evidencing or giving rise to such property, except to the extent that such term in such contract, license, agreement, instrument or other document or similar agreement providing for such prohibition, breach, default or termination or requiring such consent is ineffective under applicable law (including without limitation, pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the New York UCC), (c) motor vehicles and other assets subject to certificates of title, (d) trust accounts, payroll accounts, zero balance accounts and escrow accounts, in each case for so long as they remain such type of account, (e) all real property not constituting Oil and Gas Properties, and (f) any property as to which the Administrative Agent and the Borrowers agree in writing that the costs of obtaining a security interest in, or Lien on, such property, or perfection thereof, are excessive in relation to the value to the Secured Parties of the security interest afforded thereby.

“ Excluded Stock ” shall mean (a) any Stock or Stock Equivalents with respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by notice to the Borrower), the cost or other consequences of pledging such Stock or Stock Equivalents in favor of the Secured Parties under the Security Documents shall be excessive in view of the benefits to be obtained by the Secured Parties therefrom, (b) solely in the case of any pledge of Stock or Stock Equivalents of any Foreign Corporate Subsidiary or FSHCO to secure the Obligations, any Stock or Stock Equivalents that is Voting Stock of such Foreign Corporate Subsidiary or FSHCO in excess of 66% of the outstanding Stock and Stock Equivalents of such class and, solely in the case of a pledge of Stock or Stock Equivalents of any Disregarded Entity substantially all of whose assets consist of Stock and Stock Equivalents of Foreign Corporate Subsidiaries to secure the Obligations, any Stock or Stock Equivalents of such Disregarded Entity in excess of 66% of the outstanding Stock and Stock Equivalents of such entity (such percentages to be adjusted upon any change of law as may be required to avoid adverse U.S. federal income tax consequences to the Borrower or any Subsidiary), (c) any Stock or Stock Equivalents to the extent the pledge thereof would be prohibited by any Requirement of Law, (d) in the case of (i) any Stock or Stock Equivalents of any Subsidiary to the extent the pledge of such Stock or Stock Equivalents is prohibited by Contractual Requirements or (ii) any Stock or Stock Equivalents of any Subsidiary that is not wholly owned by the Borrower and its Restricted Subsidiaries at the time such Subsidiary becomes a Subsidiary, any Stock or Stock Equivalents of each such Subsidiary described in clause (i) or (ii) to the extent (A) that a pledge thereof to secure the Obligations is prohibited by any applicable Contractual Requirement (other than customary non-assignment provisions which are ineffective under the Uniform Commercial Code or other applicable Requirements of Law), (B) any Contractual Requirement prohibits such a pledge without the consent of any other party; provided that this clause (B) shall not apply if (1) such other party is a Credit Party or a wholly owned Restricted Subsidiary or (2) consent has been obtained to consummate such pledge (it being understood that the foregoing shall not be deemed to obligate the Borrower or any Subsidiary to obtain any such consent)) and for so long as such Contractual Requirement or replacement

or renewal thereof is in effect, or (C) a pledge thereof to secure the Obligations would give any other party (other than a Credit Party or a wholly owned Restricted Subsidiary) to any Contractual Requirement governing such Stock or Stock Equivalents the right to terminate its obligations thereunder (other than customary non-assignment provisions that are ineffective under the Uniform Commercial Code or other applicable Requirement of Law), (e) the Stock or Stock Equivalents of any Immaterial Subsidiary and any Unrestricted Subsidiary, (f) the Stock or Stock Equivalents of any Subsidiary of a Foreign Corporate Subsidiary, (g) any Stock or Stock Equivalents of any Subsidiary to the extent that the pledge of such Stock or Stock Equivalents would result in material adverse tax consequences to the Borrower or any Subsidiary as reasonably determined by the Borrower and (h) any Stock or Stock Equivalents set forth on Schedule 1.1(d) which have been identified on or prior to the Funding Date in writing to the Administrative Agent by an Authorized Officer of the Borrower and agreed to by the Administrative Agent.

“ Excluded Subsidiary ” shall mean (a) each Domestic Subsidiary listed on Schedule 1.1(e) and each future Domestic Subsidiary, in each case, for so long as any such Subsidiary does not constitute a Material Subsidiary, (b) each Domestic Subsidiary that is not a wholly owned Subsidiary on any date such Subsidiary would otherwise be required to become a Guarantor pursuant to the requirements of Section 10.10 (for so long as such Subsidiary remains a non-wholly owned Restricted Subsidiary), (c) any Disregarded Entity substantially all the assets of which consist of Stock and Stock Equivalents of Foreign Corporate Subsidiaries, (d) each Domestic Subsidiary that is prohibited by any applicable Contractual Requirement or Requirement of Law from guaranteeing or granting Liens to secure the Obligations at the time such Subsidiary becomes a Restricted Subsidiary (and for so long as such restriction or any replacement or renewal thereof is in effect) or that would require consent, approval, license or authorization of a Governmental Authority to guarantee or grant Liens to secure the Obligations at the time such Subsidiary becomes a Restricted Subsidiary (unless such consent, approval, license or authorization has been received), (e) each Domestic Subsidiary that is a Subsidiary of a Foreign Corporate Subsidiary, (f) each other Domestic Subsidiary acquired pursuant to a Permitted Acquisition financed with secured Indebtedness incurred pursuant to Section 11.1(i) and permitted by the proviso to subclause (C) of Section 11.1(i) and each Restricted Subsidiary thereof that guarantees such Indebtedness to the extent and so long as the financing documentation relating to such Permitted Acquisition to which such Restricted Subsidiary is a party prohibits such Restricted Subsidiary from guaranteeing or granting a Lien on any of its assets to secure the Obligations, (g) any other Domestic Subsidiary with respect to which, (x) in the reasonable judgment of the Administrative Agent and the Borrower, the cost or other consequences of providing a Guarantee of the Obligations shall be excessive in view of the benefits to be obtained by the Lenders therefrom or (y) providing such a Guarantee would result in material adverse tax consequences as reasonably determined by the Borrower, and (h) each Unrestricted Subsidiary.

“ Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Credit Party hereunder or under any other Credit Document, (i) Taxes imposed on or measured by its overall net income or branch profits (however denominated, and including (for the avoidance of doubt) any backup withholding in respect thereof under Section 3406 of the Code or any similar provision of state, local or foreign law), and franchise (and similar) Taxes imposed on it (in lieu of net income Taxes), in each case by a jurisdiction (including any political subdivision thereof) as a result of such recipient being organized in, having its principal office in, or in the case of any Lender, having its applicable lending office in, such jurisdiction, or as a result of any other present or former connection with such jurisdiction (other than any such connection arising solely from this Agreement or any other Credit Documents or any transactions contemplated thereunder), (ii) except in the case of a Lender that is an assignee pursuant to a request by the Borrower under Section 14.7 , in the case of a Non-U.S. Lender, any United States federal withholding Tax imposed on any payment by or on account of any obligation of any Credit Party hereunder or under any other Credit Document that (A) is required to be imposed on amounts payable to such Non-U.S.

Lender pursuant to laws in force at the time such Non-U.S. Lender becomes a party hereto (or designates a new lending office), except to the extent that such Non-U.S. Lender (or its assignor, if any) was entitled, immediately prior to the designation of a new lending office (or assignment), to receive additional amounts or indemnification payments from any Credit Party with respect to such withholding Tax pursuant to Section 5.4 or (B) is attributable to such Non-U.S. Lender’s failure to comply with Section 5.4(e) or (iii) any United States federal withholding Tax imposed under FATCA.

“ Facility ” shall mean each of the Term Loan Facility and the Revolving Facility (and collectively, the “ Facilities ”).

“ Fair Market Value ” shall mean, with respect to any asset or group of assets on any date of determination, the value of the consideration obtainable in a Disposition of such asset at such date of determination assuming a Disposition by a willing seller to a willing purchaser dealing at arm’s length and arranged in an orderly manner over a reasonable period of time having regard to the nature and characteristics of such asset, as reasonably determined by the Borrower.

“ Fair Value ” shall mean the amount at which the assets (both tangible and intangible), in their entirety, of the Borrower and its Subsidiaries taken as a whole would change hands between a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.

“ FATCA ” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations thereunder or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to such intergovernmental agreement.

“ Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the per annum rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published on the next succeeding Business Day by the Federal Reserve Bank of New York or, if such rate is not so published for any date that is a Business Day, the Federal Funds Effective Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by it.

“ Financial Performance Covenants ” shall mean the covenants of the Borrower set forth in Section 11.11 .

“ First Scheduled Redetermination Date ” shall mean the first May 1st occurring more than six (6) months after the Borrowing Base Trigger Event.

“ Foreign Corporate Subsidiary ” shall mean a Foreign Subsidiary that is treated as a corporation for U.S. federal income tax purposes.

“ Foreign Plan ” shall mean any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by the Borrower or any of its Subsidiaries with respect to employees employed outside the United States.

“ Foreign Subsidiary ” shall mean each Subsidiary of the Borrower that is not a Domestic Subsidiary.

“ Fronting Fee ” shall have the meaning provided in Section 4.1(c) .

“ FSHCO ” shall mean any direct or indirect Subsidiary that has no material assets other than the Stock of one or more direct or indirect Foreign Corporate Subsidiaries.

“ Fund ” shall mean any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course.

“ Funding Date ” shall mean the date on which the conditions set forth in Article VII and Sections 8.1 and 8.2 are satisfied (or waived in accordance with Section 14.1 ).

“ GAAP ” shall mean United States generally accepted accounting principles, as in effect from time to time.

“ Governmental Authority ” shall mean any nation, sovereign or government, any state, province, territory or other political subdivision thereof, and any entity or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including a central bank or stock exchange.

“ Granting Lender ” shall have the meaning provided in Section 14.6(g) .

“ Guarantee ” shall mean the Guarantee made by any Guarantor in favor of the Administrative Agent for the benefit of the Secured Parties, substantially in the form of Exhibit C .

“ Guarantee Obligations ” shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent, (a) to purchase any such Indebtedness or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such Indebtedness of the ability of the primary obligor to make payment of such Indebtedness or (d) otherwise to assure or hold harmless the owner of such Indebtedness against loss in respect thereof; provided , however , that the term “Guarantee Obligations” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Funding Date or entered into in connection with any acquisition or Disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee Obligation shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.

“ Guarantors ” shall mean (i) each Material Subsidiary listed on Schedule 1.1(f) on the Funding Date that is a party to the Guarantee, (ii) on or after the Funding Date, other wholly-owned (directly or indirectly) Domestic Subsidiaries of the Borrower that are Restricted Subsidiaries of the Borrower and that are parties to the Guarantee such that the Total Assets of the non-Guarantor wholly-owned (directly or indirectly) Domestic Subsidiaries of the Borrower that are Restricted Subsidiaries of the Borrower (when combined with the assets of such Subsidiary’s Subsidiaries, after eliminating intercompany obligations) at the last day of the Test Period for which Section 10.1 Financials have been delivered are

equal to or less than 20% of the Consolidated Total Assets of the Borrower and the Restricted Subsidiaries at such date and (iii) each other Domestic Subsidiary (other than an Excluded Subsidiary) that becomes a party to the Guarantee after the Funding Date pursuant to Section 10.10 or otherwise.

“ Hazardous Materials ” shall mean (a) any petroleum or petroleum products, radioactive materials, friable asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, and radon gas, (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous waste”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, or “pollutants”, or words of similar import, under any applicable Environmental Law and (c) any other chemical, material or substance, which is prohibited, limited or regulated by any applicable Environmental Law.

“ Hedge Agreements ” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, fixed-price physical delivery contracts, whether or not exchange traded, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement or any other master agreement (any such master agreement, together with any related schedules, a “ Master Agreement ”), including any such obligations or liabilities under any Master Agreement. Notwithstanding the foregoing, agreements or obligations entered into in the ordinary course of business to physically buy or sell any commodity produced from the Borrower’s and its Subsidiaries’ Oil and Gas Properties or electricity generation facilities under an agreement that has a tenor under 90 days shall not be considered Hedge Agreements.

“ Hedge Bank ” shall mean (a) any Person (other than the Borrower or any of its Subsidiaries) that (x) at the time it enters into a Hedge Agreement is a Lender, the Administrative Agent or an Affiliate of a Lender or the Administrative Agent or (y) at any time after it enters into a Hedge Agreement, it becomes a Lender, the Administrative Agent or an Affiliate of a Lender or the Administrative Agent or (b) with respect to any Hedge Agreement that is in effect on the Funding Date, any Person (other than the Borrower or any of its Subsidiaries) that is a Lender, the Administrative Agent or an Affiliate of a Lender or the Administrative Agent on the Funding Date.

“ Hedge PV ” shall mean, with respect to any commodity Hedge Agreement, the present value, discounted at 9% per annum, of the future receipts expected to be paid to the Borrower or the Restricted Subsidiaries under such Hedge Agreement netted against the most recent Bank Price Deck provided to the Borrower by the Administrative Agent pursuant to Section 2.14(j) ; provided , however , that the “Hedge PV” shall never be less than $0.00.

“ Hedge Obligations ” shall mean, with respect to any Person, the obligations of such Person under Hedge Agreements.

“ Historical Financial Statements ” shall mean (a) the audited combined balance sheets of the Borrower and its consolidated Subsidiaries as of December 31, 2012 and December 31, 2013, and the related audited combined statements of income and comprehensive income, statements of net investment and statements of cash flows for each of the fiscal years in the two-year period ended December 31, 2013

and (b) the unaudited combined balance sheet of the Borrower and its consolidated Subsidiaries as of June 30, 2014, and the related unaudited combined statements of income and comprehensive income and statements of cash flows for the six-month period ended June 30, 2014.

“ Hydrocarbon Interests ” shall mean all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature.

“ Hydrocarbons ” shall mean oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom.

“ Identified Contingent Liabilities ” shall mean the maximum estimated amount of liabilities reasonably likely to result from pending litigation, asserted claims and assessments, guaranties, uninsured risks and other contingent liabilities of the Borrower and its Subsidiaries taken as a whole after giving effect to the Transactions (including all fees and expenses related thereto but exclusive of such contingent liabilities to the extent reflected in Stated Liabilities), as identified and explained in terms of their nature and estimated magnitude by Authorized Officers of the Borrower.

“ Immaterial Subsidiary ” shall mean any Subsidiary that is not a Material Subsidiary.

“ Increasing Lender ” shall mean an Increasing Revolving Lender or an Increasing Term Loan Lender.

“ Increasing Revolving Lender ” shall have the meaning provided in Section 2.16(a) .

“ Increasing Term Loan Lender ” shall have the meaning provided in Section 2.16(b) .

“ Incremental Agreement ” shall have the meaning provided in Section 2.16(d) .

“ Incremental Increase ” shall mean a Revolving Incremental Increase or a Term Loan Incremental Increase.

“ Indebtedness ” of any Person shall mean (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (c) the deferred purchase price of assets or services that in accordance with GAAP would be included as a liability on the balance sheet of such Person (other than (i) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP and (ii) obligations resulting under firm transportation contracts or take or pay contracts entered into in the ordinary course of business), (d) the face amount of all letters of credit issued for the account of such Person and, without duplication, all drafts drawn thereunder, (e) all Indebtedness (excluding prepaid interest thereon) of any other Person secured by any Lien on any property owned by such Person, whether or not such Indebtedness has been assumed by such Person, (f) the principal component of all Capitalized Lease Obligations of such Person, (g) obligations to deliver commodities, goods or services, including Hydrocarbons, in consideration of one or more advance payments, other than obligations relating to net oil, natural gas liquids or natural gas balancing arrangements arising in the ordinary course of business, (h) the undischarged balance of any Production Payment created by such Person or for the creation of which such Person directly or indirectly received payment, and (i) without duplication, all Guarantee Obligations of such Person; provided that Indebtedness shall not include (i) trade and other ordinary course payables and accrued expenses arising in the ordinary course of business, (ii) deferred or prepaid revenue, (iii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy

warranty or other unperformed obligations of the respective seller, (iv) in the case of the Borrower and its Restricted Subsidiaries, all intercompany Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business, (v) any obligation in respect of a farm-in agreement, joint development agreement, joint operating agreement or similar arrangement whereby such Person agrees to pay all or a share of the drilling, completion or other expenses of an exploratory or development well (which agreement may be subject to a maximum payment obligation, after which expenses are shared in accordance with the working or participation interest therein or in accordance with the agreement of the parties) or perform the drilling, completion or other operation on such well in exchange for an ownership interest in an oil or gas property, (vi) any obligations in respect of any Hedge Agreement that is permitted under this Agreement, (vii) prepayments for gas or crude oil production not in excess of $20,000,000 in the aggregate at any time outstanding, (viii) obligations to deliver commodities or pay royalties or other payments in connection with Royalty Trust Transactions and obligations arising from the sale of net profits interests, working interests, overriding royalty interests or similar real property interest.

“ Indemnified Liabilities ” shall have the meaning provided in Section 14.5 .

“ Indemnified Taxes ” shall mean all Taxes imposed on or with respect to or measured by, any payment by or on account of any obligation of any Credit Party hereunder or under any other Credit Document other than (a) Excluded Taxes, (b) Other Taxes and (c) any interest, penalties or expenses caused by the Administrative Agent’s or Lender’s gross negligence or willful misconduct.

“ Industry Investment ” shall mean Investments and expenditures made in the ordinary course of, and of a nature that is or shall have become customary in, the oil and gas business as a means of actively engaging therein through agreements, transactions, interests or arrangements that permit one to share risks or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives customarily achieved through the conduct of oil and gas business jointly with third parties, including: (1) ownership interests in oil and gas properties or gathering, transportation, processing, electricity and power generation, or related systems; and (2) Investments and expenditures in the form of or pursuant to operating agreements, processing agreements, farm-in agreements, farm-out agreements, development agreements, area of mutual interest agreements, unitization agreements, pooling arrangements, joint bidding agreements, service contracts, joint venture agreements, partnership agreements (whether general or limited), and other similar agreements (including for limited liability companies) with third parties.

“ Interest Expense Ratio ” shall mean, as of the last day of each fiscal quarter of the Borrower, the ratio of (a) Consolidated EBITDAX for the Test Period ending on the last day of such fiscal quarter to (b) Consolidated Interest Charges for the Test Period ending on the last day of such fiscal quarter.

“ Interest Period ” shall mean, with respect to any Loan, the interest period applicable thereto, as determined pursuant to Section 2.9 .

“ Interim Redetermination ” shall have the meaning provided in Section 2.14(b) .

“ Interim Redetermination Date ” shall mean the date on which a Borrowing Base that has been redetermined pursuant to an Interim Redetermination becomes effective as provided in Section 2.14 .

“ Interpolated Rate ” shall mean, at any time, for any Interest Period, the rate per annum (rounded to the same number of decimal places as the LIBOR Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBOR Screen Rate for the longest period for which the LIBOR Screen Rate is available for Dollars) that is shorter than the Impacted Interest

Period; and (b) the LIBOR Screen Rate for the shortest period (for which that Screen Rate is available for Dollars) that exceeds the Impacted Interest Period, in each case, at such time.

“ Investment ” shall mean, for any Person: (a) the acquisition (whether for cash, property, services or securities or otherwise) of Stock, Stock Equivalents, bonds, notes, debentures, partnership or other ownership interests or other securities of any other Person (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale), (b) the making of any deposit with, or advance, loan or other extension of credit to, assumption of Indebtedness of, or capital contribution to, or purchase or other acquisition of an equity participation in, any other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person) (including any partnership or joint venture), (c) the entering into of any guarantee of, or other contingent obligation with respect to, Indebtedness or (d) the purchase or other acquisition (in one transaction or a series of transactions) of (x) all or substantially all of the property and assets or business of another Person or (y) assets constituting a business unit, line of business or division of such Person; provided that, in the event that any Investment is made by the Borrower or any Restricted Subsidiary in any Person through substantially concurrent interim transfers of any amount through one or more other Restricted Subsidiaries, then such other substantially concurrent interim transfers shall be disregarded for purposes of Section 11.5 .

“ Investment Grade Period ” shall mean any period other than a Borrowing Base Trigger Period.

“ ISP ” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).

“ Issuer Documents ” shall mean, with respect to any Letter of Credit, the Letter of Credit Request, and any other document, agreement and instrument entered into by the Letter of Credit Issuer and the Borrower (or any Restricted Subsidiary) or in favor of the Letter of Credit Issuer and relating to such Letter of Credit.

“ Joint Bookrunners ” shall mean J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Goldman, Sachs & Co., HSBC Bank USA, NA, Morgan Stanley Senior Funding, Inc., The Bank of Tokyo-Mitsubishi UFJ, Ltd., and U.S. Bank National Association each in its capacity as joint bookrunner in respect of the Facility.

“ Joint Lead Arrangers ” shall mean J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., Wells Fargo Securities, LLC, Goldman, Sachs & Co., HSBC Bank USA, NA, Morgan Stanley Senior Funding, Inc., The Bank of Tokyo-Mitsubishi UFJ, Ltd., and U.S. Bank National Association each in its capacity as joint lead arranger in respect of the Facility.

“ L/C Borrowing ” shall mean an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing. All L/C Borrowings shall be denominated in Dollars.

“ L/C Maturity Date ” shall mean the date that is five Business Days prior to the Maturity Date.

“ L/C Obligations ” shall mean, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unpaid Drawings, including all L/C Borrowings. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule

3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“ L/C Participant ” shall have the meaning provided in Section 3.3(a) .

“ L/C Participation ” shall have the meaning provided in Section 3.3(a) .

“ Lender ” shall have the meaning provided in the preamble to this Agreement. Unless the context otherwise requires, the term “Lenders” includes the Swingline Lenders.

“ Lender Default ” shall mean (a) the refusal or failure of any Lender to make available its portion of any incurrence of Loans or participations in Letters of Credit or Swingline Loans, which refusal or failure is not cured within one Business Day after the date of such refusal or failure, unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied; (b) the failure of any Lender to pay over to the Administrative Agent, any Letter of Credit Issuer, any Swingline Lender or any other Lender any other amount required to be paid by it hereunder within two Business Day of the date when due, unless the subject of a good faith dispute; (c) a Lender has notified the Borrower or the Administrative Agent in writing that it does not intend or expect to comply with any of its funding obligations or has made a public statement to that effect with respect to its funding obligations under the Facility (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied); (d) the failure, within three Business Days after a written request by the Administrative Agent or the Borrower, by a Lender to confirm in writing to the Administrative Agent and the Borrower that it will comply with its obligations under the Facility (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (d) upon receipt of such written confirmation by the Administrative Agent and the Borrower) or (e) a Distressed Person has admitted in writing that it is insolvent or such Distressed Person becomes subject to a Lender-Related Distress Event.

“ Lender-Related Distress Event ” shall mean, with respect to any Lender, that such Lender or any Person that directly or indirectly controls such Lender (each, a “ Distressed Person ”), as the case may be, is or becomes subject to a voluntary or involuntary case with respect to such Distressed Person under any debt relief law, or a custodian, conservator, receiver or similar official is appointed for such Distressed Person or any substantial part of such Distressed Person’s assets, or such Distressed Person or any Person that directly or indirectly controls such Distressed Person is subject to a forced liquidation, or such Distressed Person makes a general assignment for the benefit of creditors or is otherwise adjudicated as, or determined by any Governmental Authority having regulatory authority over such Distressed Person or its assets to be, insolvent or bankrupt; provided that a Lender-Related Distress Event shall not be deemed to have occurred solely by virtue of (i) the ownership or acquisition of any equity interests in any Lender or any Person that directly or indirectly controls such Lender by a Governmental Authority or an instrumentality thereof or (ii) an Undisclosed Administration pursuant to the laws of the Netherlands.

“ Letter of Credit ” shall have the meaning provided in Section 3.1 .

“ Letter of Credit Commitment ” shall mean $400,000,000, as the same may be reduced from time to time pursuant to Section 3.1 , provided that no Letter of Credit Issuer shall be obligated to issue Letters of Credit in an aggregate face amount in excess of $100,000,000 outstanding at any time.

“ Letter of Credit Exposure ” shall mean, with respect to any Lender, at any time, the sum of (a) the principal amount of any Unpaid Drawings in respect of which such Lender has made (or is required to have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(a) at such time and (b) such Lender’s Revolving Commitment Percentage of the Letters of Credit Outstanding at such time (excluding the portion thereof consisting of Unpaid Drawings in respect of which the Lenders have made (or are required to have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(a) ) minus the amount of cash or deposit account balances held by the Administrative Agent to Cash Collateralize outstanding Letters of Credit and Unpaid Drawings under Section 3.8 .

“ Letter of Credit Fee ” shall have the meaning provided in Section 4.1(b) .

“ Letter of Credit Issuer ” shall mean (a) JPMorgan Chase Bank, N.A., (b) Bank of America, N.A., Citibank, N.A. and Wells Fargo Bank, National Association, or, in each case, any of their respective Affiliates or any replacement or successor appointed pursuant to Section 3.6 . References herein and in the other Credit Documents to the Letter of Credit Issuer shall be deemed to refer to the Letter of Credit Issuer in respect of the applicable Letter of Credit or to all Letter of Credit Issuers, as the context requires.

“ Letter of Credit Request ” shall have the meaning provided in Section 3.2(a) .

“ Letters of Credit Outstanding ” shall mean, at any time, the sum of, without duplication, (a) the aggregate Stated Amount of all outstanding Letters of Credit and (b) the aggregate principal amount of all Unpaid Drawings in respect of all Letters of Credit.

“ Leverage Ratio ” shall mean, as of the last day of each fiscal quarter of the Borrower, the ratio of (a) Consolidated Total Debt as of the last day of such fiscal quarter to (b) Consolidated EBITDAX for the Test Period ending on the last day of such fiscal quarter.

“ LIBOR Loan ” shall mean any Loan bearing interest at a rate determined by reference to the LIBOR Rate (other than an ABR Loan bearing interest by reference to the LIBOR Rate by virtue of clause (c) of the definition of ABR).

“ LIBOR Rate ” shall mean, for any Interest Period for each LIBOR Loan, the London interbank offered rate as administered by Intercontinental Exchange Benchmark Administration Ltd. (or any other Person that takes over the administration of such rate for Dollars) for a period equal in length to such Interest Period as displayed on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion; in each case the “ LIBOR Screen Rate ”) at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period; provided that, if the LIBOR Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement and provided, further, if the LIBOR Screen Rate shall not be available at such time for such Interest Period (an “Impacted Interest Period”) with respect to Dollars then the LIBOR Rate shall be the Interpolated Rate, provided, that, if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“ Lien ” shall mean any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including (a) the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement or a financing lease,

consignment or bailment for security purposes or (b) Production Payments and the like payable out of Oil and Gas Properties; provided that in no event shall an operating lease be deemed to be a Lien.

“ Liquidity ” shall mean, as of any date of determination, the sum of (a) the Available Revolving Commitment on such date and (b) the aggregate amount of cash and cash equivalents included in the cash and cash equivalents accounts listed on the consolidated balance sheet of the Borrower and the Restricted Subsidiaries at such date (it being understood that such amount shall exclude in any event any cash or cash equivalents identified on such balance sheet as “restricted” (it being understood that cash or cash equivalents subject to a control agreement in favor of any Person other than the Administrative Agent or any Lender shall be deemed “restricted”, and cash or cash equivalents restricted in favor of the Administrative Agent or any Lender shall be deemed not “restricted”)), less the amount, if any, of the Borrowing Base Deficiency existing on such date of determination.

“ Loan ” shall mean any extension of credit by a Lender to the Borrower or a Swingline Loan made by any Lender hereunder.

“ Majority Lenders ” shall mean, at any date, (a) Non-Defaulting Lenders having or holding more than 50% of the unused Adjusted Total Revolving Commitment at such date, the Total Revolving Exposure and the Total Term Loan Exposure (excluding the Revolving Exposure and Term Loan Exposure of Defaulting Lenders) in the aggregate at such date or (b) if the Total Revolving Commitment has been terminated or for the purposes of acceleration pursuant to Article XII , Non-Defaulting Lenders having or holding more than 50% of the Loans, Swingline Exposure and Letter of Credit Exposure (excluding the Revolving Exposure and Term Loan Exposure of Defaulting Lenders) in the aggregate at such date.

“ Majority Revolving Lenders ” shall mean, at any date, (a) Non-Defaulting Lenders having or holding more than 50% of the unused Adjusted Total Revolving Commitment at such date and the Total Revolving Exposure (excluding the Revolving Exposure of Defaulting Lenders) in the aggregate at such date or (b) if the Total Revolving Commitment has been terminated or for the purposes of acceleration pursuant to Article XII , Non-Defaulting Lenders having or holding more than 50% of the Revolving Loans, Swingline Exposure and Letter of Credit Exposure (excluding the Revolving Exposure of Defaulting Lenders) in the aggregate at such date.

“ Majority Term Loan Lenders ” shall mean, at any date, Non-Defaulting Lenders having or holding more than 50% of the Total Term Loan Exposure (excluding the Term Loan Exposure of Defaulting Lenders) at such date.

“ Mandatory Borrowing ” shall have the meaning provided in Section 2.1(c) .

“ Material Adverse Effect ” shall mean a circumstance or condition affecting the business, assets, operations, properties or financial condition of the Borrower and the Subsidiaries on a consolidated basis, that would, individually or in the aggregate, materially adversely affect (a) the ability of the Borrower and the other Credit Parties, taken as a whole, to perform their payment obligations under this Agreement or any of the other Credit Documents or (b) the rights and remedies of the Administrative Agent and the Lenders under this Agreement or under any of the other Credit Documents.

“ Material Subsidiary ” shall mean, at any date of determination, each wholly-owned (directly or indirectly) Domestic Subsidiary of the Borrower that is a Restricted Subsidiary of the Borrower whose Total Assets (when combined with the assets of such Subsidiary’s Subsidiaries, after eliminating intercompany obligations) at the last day of the Test Period for which Section 10.1 Financials have been

delivered were equal to or greater than 10% of the Consolidated Total Assets of the Borrower and the Restricted Subsidiaries at such date, determined in accordance with GAAP.

“ Maturity Date ” shall mean the fifth anniversary of the Funding Date.

“ Maximum Aggregate Amount ” shall mean $4,000,000,000.

“ Moody’s ” shall mean Moody’s Investors Service, Inc. or any successor by merger or consolidation to its business.

“ Mortgage ” shall mean a mortgage or a deed of trust, deed to secure debt, trust deed, assignment of as-extracted collateral, fixture filing or other security document entered into by the owner of a Mortgaged Property and the Administrative Agent for the benefit of the Secured Parties in respect of that Mortgaged Property, substantially in the form of Exhibit F (with such changes thereto as may be necessary to account for local law matters) or otherwise in such form as agreed between the Borrower and the Administrative Agent.

“ Mortgaged Property ” shall mean the real property and improvements thereto with respect to which a Mortgage is required to be granted pursuant to Section 10.10 ; provided that, notwithstanding any provision in any Mortgage to the contrary, in no event shall any Building (as defined in the applicable Flood Insurance Regulation) or Manufactured (Mobile) Home (as defined in the applicable Flood Insurance Regulation) located on the Mortgaged Properties (as defined in the applicable Mortgage) within an area having special flood hazards and in which flood insurance is available under the National Flood Insurance Act of 1968 be included in the definition of “Mortgaged Property” or “Mortgaged Properties” and no such Building or Manufactured (Mobile) Home shall be encumbered by any Mortgage. As used herein, “Flood Insurance Regulations” shall mean (i) the National Flood Insurance Act of 1968 as now or hereafter in effect or any successor statute thereto, (ii) the Flood Disaster Protection Act of 1973 as now or hereafter in effect or any successor statue thereto, (iii) the National Flood Insurance Reform Act of 1994 (amending 42 USC 4001, et seq.), as the same may be amended or recodified from time to time, and (iv) the Flood Insurance Reform Act of 2004 and any regulations promulgated thereunder.

“ Multiemployer Plan ” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA that is subject to Title IV of ERISA and is or was within any of the last preceding six years contributed to by the Borrower or an ERISA Affiliate.

“ New Borrowing Base Notice ” shall have the meaning provided in Section 2.14(d) .

“ Non-Consenting B/B Lender ” shall have the meaning provided in Section 2.14(i) .

“ Non-Consenting Lender ” shall have the meaning provided in Section 14.7(b) .

“ Non-Defaulting Lender ” shall mean and include each Lender other than a Defaulting Lender.

“ Non-Extension Notice Date ” shall have the meaning provided in Section 3.2(b) .

“ Non-U.S. Lender ” shall mean any Lender that is not a “United States person” as defined by Section 7701(a)(30) of the Code.

“ Notice of Borrowing ” shall mean a request of the Borrower in accordance with the terms of Section 2.3(a) and substantially in the form of Exhibit A or such other form as shall be approved by the Administrative Agent (acting reasonably).

“ Notice of Conversion or Continuation ” shall have the meaning provided in Section 2.6(a) .

“ Obligations ” shall mean all advances to, and debts, liabilities, obligations, covenants and duties of, any Credit Party arising under any Credit Document or otherwise with respect to any Loan or Letter of Credit or under any Secured Cash Management Agreement or Secured Hedge Agreement, in each case, entered into with the Borrower or any of its Restricted Subsidiaries, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof in any proceeding under any bankruptcy or insolvency law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the generality of the foregoing, the Obligations of the Credit Parties under the Credit Documents (and any of their Restricted Subsidiaries to the extent they have obligations under the Credit Documents) include the obligation (including Guarantee Obligations) to pay principal, interest, charges, expenses, fees, attorney costs, indemnities and other amounts payable by any Credit Party under any Credit Document. Notwithstanding the foregoing, (a) the obligations of the Borrower or any Restricted Subsidiary under any Secured Hedge Agreement and under any Secured Cash Management Agreement shall be secured and guaranteed pursuant to the Security Documents and the Guarantee only to the extent that, and for so long as, the other Obligations are so secured and guaranteed, (b) any release of Collateral or Guarantors effected in the manner permitted by this Agreement and the other Credit Documents shall not require the consent of the holders of Hedge Obligations under Secured Hedge Agreements or of the holders of Cash Management Obligations under Secured Cash Management Agreements and (c) solely with respect to any Credit Party that is not an “eligible contract participant” under the Commodity Exchange Act, Excluded Hedge Obligations of such Credit Party shall in any event be excluded from “Obligations” owing by such Credit Party.

“ Oil and Gas Properties ” shall mean (a) Hydrocarbon Interests, (b) the properties now or hereafter pooled or unitized with Hydrocarbon Interests, (c) all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests, (d) all operating agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests, (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests, (f) all tenements, hereditaments, appurtenances and properties in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all properties, rights, titles, interests and estates described or referred to above, including any and all property, real or personal, now owned or hereafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or property (excluding drilling rigs, automotive equipment, rental equipment or other personal property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, gas processing plants and pipeline systems, power and cogeneration facilities (other than for the purposes of any Borrowing Base provisions hereunder) and any related infrastructure to any thereof, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.

“ OPC ” shall mean Occidental Petroleum Corporation, a Delaware corporation.

“ OPC Related Transactions ” shall mean each of:

(a) the Separation and Distribution Agreement between OPC and the Borrower dated on or about the Spinoff Date,

(b) the Transition Services Agreement between OPC and the Borrower, dated on or about the Spinoff Date,

(d) the Employee Matters Agreement between OPC and the Borrower dated on or about the Spinoff Date,

(e) the Area of Mutual Interest Agreement between OPC and the Borrower dated on or about the Spinoff Date,

(f) the Confidentiality and Trade Secret Protection Agreement between OPC and the Borrower, dated on or about the Spinoff Date,

(g) the Intellectual Property License Agreement between OPC and the Borrower dated on or about the Spinoff Date, and

(h) the Stockholder’s Registration Rights Agreement between OPC and the Borrower dated on or about the Spinoff Date.

“ Other Taxes ” shall mean any and all present or future stamp, registration, documentary, intangible, recording, filing or any other excise, property or similar taxes (including interest, fines, penalties, additions to tax and related, reasonable, out-of-pocket expenses with regard thereto) arising from any payment made hereunder or made under any other Credit Document or from the execution or delivery of, registration or enforcement of, consummation or administration of, or otherwise with respect to, this Agreement or any other Credit Document; provided that such term shall not include any of the foregoing Taxes (i) that result from an assignment, grant of a participation pursuant to Section 14.6(c) or transfer or assignment to or designation of a new lending office or other office for receiving payments under any Credit Document (“ Assignment Taxes ”) to the extent such Assignment Taxes are imposed as a result of a connection between the assignor/participating Lender and/or the assignee/Participant and the taxing jurisdiction (other than a connection arising solely from any Credit Documents or any transactions contemplated thereunder), except to the extent that any such action described in this proviso is requested or required by the Borrower, or (ii) Excluded Taxes.

“ Overnight Rate ” shall mean, for any day, the greater of (a) the Federal Funds Effective Rate and (b) an overnight rate determined by the Administrative Agent or the Letter of Credit Issuer, as the case may be, in accordance with banking industry rules on interbank compensation.

“ Participant ” shall have the meaning provided in Section 14.6(c)(i) .

“ Participant Register ” shall have the meaning provided in Section 14.6(c)(ii) .

“ Patriot Act ” shall have the meaning provided in Section 14.19 .

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.

“ Permitted Acquisition ” shall mean the acquisition, by merger or otherwise, by the Borrower or any of the Restricted Subsidiaries of assets (including any assets constituting a business unit, line of business or division) or Stock or Stock Equivalents, so long as (a) such acquisition and all transactions related thereto shall be consummated in all material respects in accordance with Requirements of Law; (b) if such acquisition involves the acquisition of Stock or Stock Equivalents of a Person that upon such acquisition would become a Subsidiary, such acquisition shall result in the issuer of such Stock becoming a Restricted Subsidiary and, to the extent required by Section 10.10 , a Guarantor; (c) such acquisition shall result in the Administrative Agent, for the benefit of the Secured Parties, being granted a security interest in any Stock or any assets so acquired to the extent required by Section 10.10 ; (d) after giving effect to such acquisition, no Default or Event of Default shall have occurred and be continuing; (e) after giving effect to such acquisition, the Borrower and its Subsidiaries shall be in compliance with Section 11.13 ; and (f) the Borrower shall be in compliance, on a pro forma basis after giving effect to such acquisition (including any Indebtedness assumed or permitted to exist pursuant to Section 11.1(i) , and any related pro forma adjustment), with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such acquisition had occurred on the first day of such Test Period.

“ Permitted Additional Debt ” shall mean unsecured senior, senior subordinated or subordinated Indebtedness issued by the Borrower or a Guarantor, (a) the terms of which do not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the 91 st day after the Maturity Date (other than customary offers to purchase upon a change of control, asset sale or casualty or condemnation event and customary acceleration rights after an event of default), (b) the covenants, events of default, guarantees and other terms of which (other than interest rate, fees, funding discounts and redemption or prepayment premiums determined by the Borrower to be “market” rates, fees, discounts and premiums at the time of issuance or incurrence of any such Indebtedness), taken as a whole, are determined by the Borrower to be “market” terms on the date of issuance or incurrence and in any event are not more restrictive on the Borrower and its Restricted Subsidiaries than the terms of this Agreement (as in effect at the time of such issuance or incurrence) and do not require the maintenance or achievement of any financial performance standards other than as a condition to taking specified actions; provided that a certificate of an Authorized Officer of the Borrower delivered to the Administrative Agent at least five Business Days prior to the incurrence or issuance of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirements shall be conclusive evidence that such terms and conditions satisfy the foregoing requirements (c) if such Indebtedness is senior subordinated or subordinated Indebtedness, the terms of such Indebtedness provide for customary subordination of such Indebtedness to the Obligations and (d) no Subsidiary of the Borrower (other than a Guarantor) is an obligor under such Indebtedness.

“ Permitted Investments ” shall mean:

(a) securities issued or unconditionally guaranteed by the United States government or any agency or instrumentality thereof, in each case having maturities and/or reset dates of not more than 24 months from the date of acquisition thereof;

(b) securities issued by any state, territory or commonwealth of the United States of America or any political subdivision of any such state, territory or commonwealth or any public instrumentality thereof or any political subdivision of any such state, territory or commonwealth or any public

instrumentality thereof having maturities of not more than 24 months from the date of acquisition thereof and, at the time of acquisition, having an investment grade rating generally obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then from another nationally recognized rating service);

(c) commercial paper maturing no more than 12 months after the date of creation thereof and, at the time of acquisition, having a rating of at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);

(d) time deposits with, or domestic and LIBOR certificates of deposit or bankers’ acceptances maturing no more than two years after the date of acquisition thereof issued by any Lender or any other bank having combined capital and surplus of not less than $500,000,000 in the case of domestic banks and $100,000,000 (or the Dollar equivalent thereof) in the case of foreign banks;

(e) repurchase agreements with a term of not more than 90 days for underlying securities of the type described in clauses (a) , (b) and (d) above entered into with any bank meeting the qualifications specified in clause (d) above or securities dealers of recognized national standing;

(f) marketable short-term money market and similar funds (i) either having assets in excess of $500,000,000 or (ii) having a rating of at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);

(g) shares of investment companies that are registered under the Investment Company Act of 1940 and substantially all the investments of which are one or more of the types of securities described in clauses (a) through (f) above;

(h) investments in an aggregate amount not to exceed $100,000,000 in corporate debt securities having a rating of either A from S&P or A2 from Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service); and

(i) in the case of Investments by any Restricted Foreign Subsidiary or Investments made in a country outside the United States of America, other customarily utilized high-quality Investments in the country where such Restricted Foreign Subsidiary is located or in which such Investment is made.

“ Permitted Liens ” shall mean:

(a) Liens for taxes, assessments or governmental charges or claims not yet overdue for a period of more than 30 days or that are being contested in good faith and by appropriate proceedings for which appropriate reserves have been established to the extent required by and in accordance with GAAP, or for property taxes on property that the Borrower or one of its Subsidiaries has determined to abandon if the sole recourse for such tax, assessment, charge or claim is to such property;

(b) Liens in respect of property or assets of the Borrower or any of the Restricted Subsidiaries imposed by law, such as landlords’, vendors’, operators’, suppliers’, carriers’, warehousemen’s, repairmen’s, construction contractors’, workers’ materialmen’s and mechanics’ Liens and other similar Liens arising in the ordinary course of business or incident to the exploration, development, operation or maintenance of Oil and Gas Properties, in each case so long as such Liens arise

in the ordinary course of business and do not individually or in the aggregate have a Material Adverse Effect;

(d) Liens incurred, or pledges or deposits made in connection with workers’ compensation, unemployment insurance and other types of social security, old age pension, public liability obligations or similar legislation and deposits securing liabilities to insurance carriers under insurance or self-insurance arrangements in respect of such obligations, or to secure the performance of tenders, statutory and regulatory obligations, plugging and abandonment obligations, surety, stay, customs and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (including letters of credit issued in lieu of such bonds or to support the issuance thereof) incurred in the ordinary course of business or otherwise constituting Investments permitted by Section 11.5 ;

(e) ground leases, subleases, licenses or sublicenses in respect of real property on which facilities owned or leased by the Borrower or any of its Restricted Subsidiaries are located;

(f) easements, rights-of-way, licenses, restrictions (including zoning restrictions), title defects, exceptions, reservations, deficiencies or irregularities in title, encroachments, protrusions, servitudes, rights, eminent domain or condemnation rights, permits, conditions and covenants and other similar charges or encumbrances (including in any rights of way or other property of the Borrower or its Restricted Subsidiaries for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil or other minerals or timber, and other like purposes, or for joint or common use of real estate, rights of way, facilities and equipment) not interfering in any material respect with the business of the Borrower and its Restricted Subsidiaries, taken as a whole and, to the extent reasonably agreed by the Administrative Agent, any exception on the title reports issued in connection with any Borrowing Base Property;

(g) any interest or title of a lessor, sublessor, licensor or sublicensor or secured by a lessor’s, sublessor’s, licensor’s or sublicensor’s interest under any lease, sublease, license or sublicense permitted by this Agreement;

(h) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(i) Liens on goods or inventory the purchase, shipment or storage price of which is financed by a documentary letter of credit or bankers’ acceptance issued for the account of the Borrower or any of its Restricted Subsidiaries; provided that such Lien secures only the obligations of the Borrower or such Restricted Subsidiaries in respect of such letter of credit or bankers’ acceptance to the extent permitted under Section 11.1 ;

(j) leases, licenses, subleases or sublicenses granted to others not interfering in any material respect with the business of the Borrower and its Restricted Subsidiaries, taken as a whole;

(k) Liens arising from precautionary Uniform Commercial Code financing statement or similar filings made in respect of operating leases entered into by the Borrower or any of its Restricted Subsidiaries;

(l) Liens created in the ordinary course of business in favor of banks and other financial institutions over credit balances of any bank accounts of the Borrower and the Restricted Subsidiaries held at such banks or financial institutions, as the case may be, to facilitate the operation of cash pooling and/or interest set-off arrangements in respect of such bank accounts in the ordinary course of business;

(m) Liens which arise in the ordinary course of business under operating agreements (including preferential purchase rights, consents to assignment and other restrains on alienation), joint operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements, farm-in agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty and royalty agreements, reversionary interests, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements that are usual and customary in the oil and gas business and are for claims which are not delinquent or that are being contested in good faith and by appropriate proceedings for which appropriate reserves have been established to the extent required by and in accordance with GAAP; provided that any such Lien referred to in this clause does not in the aggregate have a Material Adverse Effect;

(n) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrower and its Restricted Subsidiaries, taken as a whole; and

(o) Liens arising under statutory provisions of applicable law with respect to production purchased from others.

The parties acknowledge and agree that no intention to subordinate the priority afforded the Liens granted in favor of the Administrative Agent, for the benefit of the Secured Parties, under the Security Documents is to be hereby implied or expressed by the permitted existence of such Permitted Liens.

“ Permitted Refinancing Indebtedness ” shall mean, with respect to any Indebtedness (the “ Refinanced Indebtedness ”), any Indebtedness issued or incurred in exchange for, or the net proceeds of which are used to modify, extend, refinance, renew, replace or refund (collectively to “ Refinance ” or a “ Refinancing ” or “ Refinanced ”), such Refinanced Indebtedness (or previous refinancing thereof constituting Permitted Refinancing Indebtedness); provided that (A) the principal amount (or accreted value, if applicable) of any such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Refinanced Indebtedness outstanding immediately prior to such Refinancing except by an amount equal to the unpaid accrued interest and premium thereon plus other amounts paid and fees and expenses incurred in connection with such Refinancing plus an amount equal to any existing commitment unutilized and letters of credit undrawn thereunder, (B) if the Indebtedness being Refinanced is Indebtedness permitted by Section 11.1(h) or 11.1(i) , the direct and contingent obligors with respect to such Permitted Refinancing Indebtedness are not changed (except that a Credit Party may be added as an additional obligor), (C) other than with respect to a Refinancing in respect of Indebtedness permitted pursuant to Section 11.1(g) , such Permitted Refinancing Indebtedness shall have a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Refinanced Indebtedness, and (D) if the Indebtedness being Refinanced is Indebtedness permitted by Section 11.1(h) or 11.1(i) ), terms and conditions of any such Permitted Refinancing Indebtedness, taken as a whole, are not materially less favorable to the Lenders than the terms and conditions of the Refinanced Indebtedness being Refinanced (including, if applicable, as to collateral priority and subordination, but excluding as to interest rates, fees, floors, funding discounts and redemption or prepayment premiums); provided that a certificate of an Authorized Officer of the Borrower delivered to the Administrative Agent at least five Business Days prior to the incurrence or issuance of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in

good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement.

“ Person ” shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any Governmental Authority.

“ Petroleum Industry Standards ” shall mean the Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any generally recognized successor) as in effect at the time in question.

“ Plan ” shall mean any single-employer plan, as defined in Section 4001 of ERISA and subject to Title IV of ERISA, that is or was within any of the preceding six years maintained or contributed to (or to which there is or was an obligation to contribute or to make payments to) by the Borrower or an ERISA Affiliate.

“ Pledge Agreement ” shall mean the Pledge Agreement entered into by the Borrower, the other pledgors party thereto and the Administrative Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit E .

“ Present Fair Salable Value ” shall mean the amount that could be obtained by an independent willing seller from an independent willing buyer if the assets (both tangible and intangible) of the Borrower and its Subsidiaries taken as a whole are sold on a going concern basis with reasonable promptness in an arm’s-length transaction under present conditions for the sale of comparable business enterprises insofar as such conditions can be reasonably evaluated.

“ Production Payment ” shall mean a production payment obligation (whether volumetric or dollar denominated) of the Borrower or any of its Restricted Subsidiaries which is payable from a specified share of proceeds received from production from specified Oil and Gas Properties, together with all undertakings and obligations in connection therewith.

“ Projected Volume ” shall mean the forecasted production of oil and natural gas reserves of the Borrower and its Restricted Subsidiaries, as determined as of the last day of each fiscal quarter, by the Borrower based on the Borrower’s internal engineering reports.

“ Proposed Borrowing Base ” shall have the meaning provided in Section 2.14(c)(i) .

“ Proposed Borrowing Base Notice ” shall have the meaning provided in Section 2.14(c)(ii) .

“ Proved Developed Producing Reserves ” shall mean Proved Reserves that, in accordance with Petroleum Industry Standards, are classified as “Developed Producing Reserves.”

“ Proved Developed Reserves ” shall mean Proved Reserves that, in accordance with Petroleum Industry Standards, are classified as one of the following: (a) “Developed Producing Reserves” or (b) “Developed Non-Producing Reserves”; and Proved Developed Reserves in the aggregate comprise Proved Reserves that are “Developed Producing Reserves” and “Developed Non-Producing Reserves”.

“ Proved Non-Producing Reserves ” shall mean Proved Reserves that, in accordance with Petroleum Industry Standards, are classified as “Developed Non-Producing Reserves”.

“ Proved Reserves ” shall mean oil and gas reserves that, in accordance with Petroleum Industry Standards, are classified as both “Proved Reserves” and one of the following: (a) “Developed Producing

Reserves”, (b) “Developed Non-Producing Reserves” or (c) “Undeveloped Reserves”; and “Proved Reserves” in the aggregate comprise Proved Reserves that are “Developed Producing Reserves”, “Developed Non-Producing Reserves” and “Undeveloped Reserves”.

“ Proved Undeveloped Reserves ” shall mean Proved Reserves that, in accordance with Petroleum Industry Standards, are classified as “Undeveloped Reserves”.

“ PV-9 ” shall mean, with respect to any Proved Reserves expected to be produced from any Borrowing Base Properties, the net present value, discounted at 9% per annum, of the future net revenues expected to accrue to the Credit Parties’ collective interests in such reserves during the remaining expected economic lives of such reserves, calculated using the Strip Price or the Bank Price Deck (provided to the Borrower by the Administrative Agent pursuant to Section 2.14(j) ), at the Borrower’s election. The PV-9 attributable to Proved Non-Producing Reserves and Proved Undeveloped Reserves (in the aggregate) shall not exceed 35% of aggregate PV-9. The PV-9 shall be adjusted to give effect to the Hedge Agreements (or term physical sales contracts) permitted by this Agreement as in effect on the date of such determination.

“ Qualified Acquisition ” shall mean an acquisition or a series of related acquisitions in which the consideration paid by the Credit Parties is equal to or greater than $50,000,000.

“ Qualified Disposition ” shall mean a Disposition or a series of related Dispositions in which the consideration received by the Credit Parties is equal to or greater than $50,000,000.

“ Redetermination Date ” shall mean, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing Base related thereto becomes effective pursuant to Section 2.14(d) .

“ Refinance ” shall have the meaning provided in the definition of “Permitted Refinancing Indebtedness.”

“ Register ” shall have the meaning provided in Section 14.6(b)(iv) .

“ Regulation T ” shall mean Regulation T of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.

“ Regulation U ” shall mean Regulation U of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.

“ Regulation X ” shall mean Regulation X of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.

“ Reimbursement Date ” shall have the meaning provided in Section 3.4(a) .

“ Related Parties ” shall mean, with respect to any specified Person, such Person’s Affiliates and the directors, officers, employees, agents and members of such Person or such Person’s Affiliates and any Person that possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.

“ Reportable Event ” shall mean an event described in Section 4043 of ERISA and the regulations thereunder, other than any event as to which the 30-day notice period has been waived.

“ Required Revolving Lenders ” shall mean, at any date, (a) Non-Defaulting Lenders having or holding at least 66-2/3% of the unused Adjusted Total Revolving Commitment at such date and the Total Revolving Exposure (excluding the Revolving Exposure of Defaulting Lenders) in the aggregate at such date or (b) if the Total Revolving Commitment has been terminated, Non-Defaulting Lenders having or holding at least 66-2/3% of the outstanding principal amount of the Revolving Loans, Swingline Exposure and Letter of Credit Exposure (excluding the Revolving Exposure of Defaulting Lenders) in the aggregate at such date.

“ Requirement of Law ” shall mean, as to any Person, any law, treaty, rule, regulation statute, order, ordinance, decree, judgment, consent decree, writ, injunction, settlement agreement or governmental requirement enacted, promulgated or imposed or entered into or agreed by any Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject.

“ Reserve Report ” shall mean any report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of each December 31 st (or another date in the event of certain Interim Redeterminations) the Proved Reserves and the Proved Developed Reserves attributable to the Borrowing Base Properties of the Borrower and the Credit Parties, together with a projection of the rate of production and future net income, taxes, operating expenses and Capital Expenditures with respect thereto as of such date, based upon either the most recent Bank Price Deck provided to the Borrower by the Administrative Agent pursuant to Section 2.14(j) , or Strip Price, as applicable; provided that in connection with any Interim Redeterminations of the Borrowing Base pursuant to the last sentence of Section 2.14(b) , (i.e., as a result of the Borrower having acquired Oil and Gas Properties with Proved Reserves that are to be Borrowing Base Properties having a PV-9 (calculated at the time of acquisition) in excess of 10% of the Borrowing Base in effect immediately prior to such acquisition), the Borrower shall be required, for purposes of updating the Reserve Report, to set forth only such additional Proved Reserves and related information as are the subject of such acquisition.

“ Restricted Foreign Subsidiary ” shall mean a Foreign Subsidiary that is a Restricted Subsidiary.

“ Restricted Payments ” shall have the meaning provided in Section 11.6 .

“ Restricted Subsidiary ” shall mean any Subsidiary of the Borrower other than an Unrestricted Subsidiary.

“ Revolving Borrowing ” shall mean a Borrowing of Revolving Loans.

“ Revolving Commitment ” shall mean, (a) with respect to each Lender that is a Lender on the Effective Date, the amount set forth opposite such Lender’s name on Schedule 1.1(a) as such Lender’s “Revolving Commitment” and (b) in the case of any Lender that becomes a Lender after the Effective Date, the amount specified as such Lender’s “ Revolving Commitment ” in the Assignment and Acceptance pursuant to which such Lender assumed a portion of the Total Revolving Commitment, in each case as the same may be changed from time to time pursuant to terms of this Agreement. The aggregate amount of the Revolving Commitments as of the Funding Date is $2,000,000,000.

“ Revolving Commitment Percentage ” shall mean, at any time, for each Lender, the percentage obtained by dividing (a) such Lender’s Revolving Commitment at such time by (b) the amount of the Total Revolving Commitment at such time; provided that at any time when the Total Revolving Commitment shall have been terminated, each Lender’s Revolving Commitment Percentage shall be the percentage obtained by dividing (i) such Lender’s Revolving Exposure at such time by (ii) the Total Revolving Exposure at such time.

“ Revolving Exposure ” shall mean, with respect to any Lender at any time, the sum of (a) the aggregate principal amount of the Revolving Loans of such Lender then outstanding, (b) such Lender’s Letter of Credit Exposure at such time and (c) such Lender’s Revolving Commitment Percentage of the aggregate principal amount of all outstanding Swingline Loans at such time.

“ Revolving Facility ” shall mean the Revolving Commitments, the Revolving Loans, the Swingline Loans and Letters of Credit issued thereunder.

“ Revolving Incremental Increase ” shall have the meaning provided in Section 2.16(a) .

“ Revolving Lender ” shall mean a Lender with a Revolving Commitment or Revolving Exposure.

“ Revolving Loan ” shall mean a Loan made pursuant to Section 2.1(a) (i).

“ Revolving Loan Limit ” shall mean (a) at any time during a Borrowing Base Trigger Period (other than as set forth in clause (b) ), the lesser of (i) the Total Revolving Commitments at such time and (ii) the Borrowing Base at such time (including as it may be reduced pursuant to Section 2.14(h) minus the aggregate Total Term Loan Exposure and (b) at any time during (1) an Investment Grade Period and (2) a Borrowing Base Trigger Period prior to the effectiveness of the Borrowing Base pursuant to Section 2.14(a) or (l) the Total Revolving Commitments at such time.

“ Royalty Trust ” shall mean a statutory trust, business trust, limited liability company, partnership or other form of legal entity to which the Borrower or one or more of its Subsidiaries grants or conveys any term or perpetual overriding royalty interests, net profits interests or other similar interests in Oil and Gas Properties in exchange for units of beneficial interest or ownership interests in such trust or other entity, or for cash.

“ Royalty Trust Transaction ” shall mean (a) the grant, conveyance or other disposition by the Borrower or a Subsidiary, to a Royalty Trust, of interests in Oil and Gas Properties as described in the definition of “Royalty Trust,” (b) the obligations of the Borrower or a Subsidiary to drill and develop oil and gas wells burdened by such granted or conveyed interests and (c) the conveyances or other agreements transferring the interests to the Royalty Trust and any other agreements between the Borrower or a Subsidiary and such Royalty Trust or the trustee of such Royalty Trust, and the transactions under such agreements, providing for any one or more of: (i) the operation of the oil and gas wells burdened by such interests, (ii) administrative services for the Royalty Trust, (iii) registration rights of the Borrower and Subsidiaries and (iv) transactions incidental to the foregoing.

“ S&P ” shall mean Standard & Poor’s Ratings Services or any successor by merger or consolidation to its business.

“ Sanctioned Country ” shall mean, at any time, a country or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, including, but not limited to, Cuba, Iran, North Korea, Sudan and Syria).

“ Sanctioned Person ” shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons.

“ Sanctions ” shall mean economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

“ Scheduled Dispositions ” shall have the meaning provided in Section 11.4(a)(ix) .

“ Scheduled Redetermination ” shall have the meaning provided in Section 2.14(b) .

“ Scheduled Redetermination Date ” shall mean the date on which a Borrowing Base that has been redetermined pursuant to a Scheduled Redetermination becomes effective as provided in Section 2.14 .

“ SEC ” shall mean the Securities and Exchange Commission or any successor thereto.

“ Section 10.1 Financials ” shall mean the financial statements delivered, or required to be delivered, pursuant to Section 10.1(a) or (b) , together with the accompanying Authorized Officer’s certificate delivered, or required to be delivered, pursuant to Section 10.1(c) .

“ Secured Cash Management Agreement ” shall mean any agreement related to Cash Management Services by and between the Borrower or any of its Restricted Subsidiaries and any Cash Management Bank.

“ Secured Hedge Agreement ” shall mean any Hedge Agreement by and between the Borrower or any of its Restricted Subsidiaries and any Hedge Bank.

“ Secured Parties ” shall mean, collectively, the Administrative Agent, the Letter of Credit Issuer, each Lender, each Hedge Bank that is party to any Secured Hedge Agreement, each Cash Management Bank that is a party to any Secured Cash Management Agreement and each sub-agent pursuant to Article XIII appointed by the Administrative Agent with respect to matters relating to the Credit Documents.

“ Security Agreement ” shall mean the Security Agreement entered into by the Borrower, the other grantors party thereto and the Administrative Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit D .

“ Security Documents ” shall mean, during any Borrowing Base Trigger Period, collectively, (a) the Security Agreement, (b) the Pledge Agreement, (c) the Mortgages, and (d) each other security agreement or other instrument or document executed and delivered pursuant to Section 10.10 or 10.12 or pursuant to any other such Security Documents or otherwise to secure or perfect the security interest in any or all of the Obligations.

“ Senior Notes ” shall mean collectively, (a) the Borrower’s $1,000,000,000 5.00% Senior Notes due 2020; (b) the Borrower’s $1,750,000,000 5.50% Senior Notes due 2021; and (c) the Borrower’s $2,250,000,000 6.00% Senior Notes due 2024.

“ Senior Notes Documents ” shall mean that certain Indenture pursuant to which the Senior Notes are issued among the Borrower, the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee, as the same may be amended, modified or supplemented from time to time in accordance with the terms of Section 11.7.

“ Solvent ” shall mean, with respect to any Person, that as of the Funding Date, (a) the Fair Value of the assets of such Person exceeds its Stated Liabilities and Identified Contingent Liabilities; (b) the Present Fair Salable Value of the assets of such Person exceeds its Stated Liabilities and Identified Contingent Liabilities; (c) for the period from the Funding Date through the Maturity Date, such Person after consummation of the Transactions is a going concern and has sufficient capital to ensure that it will continue to be a going concern for such period, in light of the nature of the particular business or businesses conducted or to be conducted, and based on the needs and anticipated needs for capital of the business conducted or anticipated to be conducted by such Person as reflected in projected financial statements and in light of anticipated credit capacity; and (d) for the period from the Funding Date through the Maturity Date, such Person will have sufficient assets and cash flow to pay its Stated Liabilities and Identified Contingent Liabilities as those liabilities mature or (in the case of contingent liabilities) otherwise become payable, in light of the business conducted or anticipated to be conducted by such Person as reflected in projected financial statements and in light of anticipated credit capacity.

“ Specified Subsidiary ” shall mean, at any date of determination any Restricted Subsidiary (a) whose Total Assets at the last day of the Test Period ending on the last day of the most recent fiscal period for which Section 10.1 Financials have been delivered were equal to or greater than 15% of the Consolidated Total Assets of the Borrower and the Restricted Subsidiaries at such date, or (b) whose revenues during such Test Period were equal to or greater than 15% of the consolidated revenues of the Borrower and the Restricted Subsidiaries for such period, in each case determined in accordance with GAAP.

“ Spinoff Date ” shall mean the date on which the Spinoff Transaction occurs.

“ Spinoff Transaction ” shall mean (a) the transfer by OPC and/or one or more of its affiliates of certain of its assets to the Borrower and/or one or more of its subsidiaries to be used by them in connection with their oil and gas business (including marketing and other related activities and services) in the State of California and (b) the distribution by OPC and/or one or more of its affiliates of more than 80.0% of Borrower’s Stock to the existing shareholders of OPC.

“ Spinoff Transaction Deadline ” shall mean the day that is five (5) Business Days after the Funding Date.

“ SPV ” shall have the meaning provided in Section 14.6(g) .

“ Stated Amount ” of any Letter of Credit shall mean the maximum amount from time to time available to be drawn thereunder, determined without regard to whether any conditions to drawing could then be met.

“ Stated Liabilities ” shall mean the recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of the Borrower and its Subsidiaries taken as a whole, as of the Funding Date after giving effect to the consummation of the Transactions, determined in accordance with GAAP consistently applied.

“ Stock ” shall mean any and all shares of capital stock or shares in the capital, as the case may be (whether denominated as common stock or preferred stock or ordinary shares or preferred shares, as the case may be), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or non-voting.

“ Stock Equivalents ” shall mean all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable.

“ Strip Price ” shall mean (x) for purposes of determining the value of Oil and Gas Properties constituting Proved Reserves, the price estimated by the Borrower in a Reserve Report prepared by the Borrower’s petroleum engineers applying the ICE(Brent)/NYMEX (as applicable) published forward prices adjusted for relevant basis differentials (before any state or federal or other income tax) and (y) for purposes of determining the value of basis differential commodity Hedge Agreements, as estimated by the Borrower applying, if available, the relevant ICE(Brent)/NYMEX (as applicable) published forward basis differential or, if such ICE(Brent)/NYMEX (as applicable) forward basis differential is unavailable, in good faith based on historical basis differentials, but accounting for reasonably expected future conditions (before any state or federal or other income tax). For any months beyond the term included in published ICE(Brent)/NYMEX (as applicable) forward pricing, the Strip Price used will be equal to the last published contract escalated at 1.5% per annum.

“ Subsidiary ” of any Person shall mean and include (a) any corporation more than 50% of whose Stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time Stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (b) any limited liability company, partnership, association, joint venture or other entity of which such Person directly or indirectly through Subsidiaries has more than a 50% Stock at the time. Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the Borrower. A Royalty Trust shall not constitute a “Subsidiary” of the Borrower or its Subsidiaries.

“ Subsidiary Guarantor ” shall mean each Subsidiary that is a Guarantor.

“ Successor Borrower ” shall have the meaning provided in Section 11.3(a) .

“ Swap Obligation ” shall mean, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

“ Swingline Commitment ” shall mean, the obligation of the Swingline Lenders to make Swingline Loans pursuant to Section 2.1 in an aggregate principal amount at any one time outstanding not to exceed $200,000,000, provided that no Swingline Lender shall be obligated to make Swingline Loans in a principal amount in excess of the amount set forth opposite such Swingline Lender’s name in Schedule 1.1(c) .

“ Swingline Exposure ” shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Lender at any time shall equal its Revolving Commitment Percentage of the aggregate Swingline Exposure at such time.

“ Swingline Lender ” shall mean (a) JPMorgan Chase Bank, N.A. and (b) Bank of America, N.A., in their capacities as Lenders of Swingline Loans hereunder. References herein and in the other Credit Documents to the Swingline Lender shall be deemed to refer to the Swingline Lender in respect of the applicable Swingline Loan or to all the Swingline Lenders, as the context requires.

“ Swingline Loan ” shall have the meaning provided in Section 2.1(b) .

“ Swingline Maturity Date ” shall mean, with respect to any Swingline Loan, the date that is five Business Days prior to the Maturity Date.

“ Syndication Agent ” shall mean Bank of America, N.A., as syndication agent for the Lenders under this Agreement and the other Credit Documents.

“ Taxes ” shall mean any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings or other similar charges imposed by any Governmental Authority whether computed on a separate, consolidated, unitary, combined or other basis and any interest, fines, penalties or additions to tax with respect to the foregoing.

“ Term Loan ” shall mean a Loan made pursuant to Section 2.1(a)(ii) .

“ Term Loan Borrowing ” shall mean a Borrowing of Term Loans.

“ Term Loan Commitment ” shall mean, (a) with respect to each Lender that is a Lender on the Effective Date, the amount set forth opposite such Lender’s name on Schedule 1.1(b) as such Lender’s “Term Loan Commitment” and (b) in the case of any Lender that becomes a Lender after the Effective Date, the amount specified as such Lender’s “ Term Loan Commitment ” in the Assignment and Acceptance pursuant to which such Lender assumed a portion of the Total Term Loan Commitment, in each case as the same may be changed from time to time pursuant to terms of this Agreement. The aggregate amount of the Term Loan Commitments as of the Funding Date is $1,000,000,000.

“ Term Loan Commitment Percentage ” shall mean, at any time, for each Lender, the percentage obtained by dividing (a) such Lender’s Term Loan Commitment at such time by (b) the amount of the Total Term Loan Commitment at such time; provided that at any time when the Total Term Loan Commitment shall have been terminated, each Lender’s Term Loan Commitment Percentage shall be the percentage obtained by dividing (i) such Lender’s Term Loan Exposure at such time by (ii) the Total Term Loan Exposure at such time.

“ Term Loan Exposure ” shall mean, with respect to any Lender at any time, the outstanding principal amount of such Lender’s Term Loans.

“ Term Loan Facility ” shall mean the Term Loan Commitments and the Term Loans made thereunder.

“ Term Loan Incremental Increase ” shall have the meaning provided in Section 2.16(b) .

“ Term Loan Lender ” shall mean a Lender with a Term Loan Commitment or Term Loan Exposure.

“ Termination Date ” shall mean the earlier to occur of (a) the Maturity Date and (b) the date on which the Total Revolving Commitment shall have terminated.

“ Test Period ” shall mean, for any determination under this Agreement, the four consecutive fiscal quarters of the Borrower then last ended and for which Section 10.1 Financials have been delivered to the Administrative Agent.

“ Total Assets ” shall mean, as of any date of determination with respect to any Person, the amount that would, in conformity with GAAP, be set forth opposite the caption “total assets” (or any like caption) on a balance sheet of such Person at such date.

“ Total Commitment ” shall mean, as of any date of determination (a) the sum of the Adjusted Total Revolving Commitment, the Total Revolving Exposure and the Total Term Loan Exposure at such date or (b) if the Total Revolving Commitment has been terminated or for the purposes of acceleration pursuant to Article XII , the sum of the outstanding Loans, the Swingline Exposure and Letter of Credit Exposure.

“ Total Exposure ” shall mean, as of any date of determination the sum of the Total Revolving Exposure and the Total Term Loan Exposure at such date.

“ Total Revolving Commitment ” shall mean the sum of the Revolving Commitments of the Lenders.

“ Total Revolving Exposure ” shall mean the sum of the Revolving Exposures of the Lenders.

“ Total Term Loan Commitment ” shall mean the sum of the Term Loan Commitments of the Lenders.

“ Total Term Loan Exposure ” shall mean the sum of the Term Loan Exposures of the Lenders.

“ Transaction Expenses ” shall mean any fees or expenses incurred or paid by the Borrower or any of its Subsidiaries or any of their Affiliates in connection with the Transactions, the Spinoff Transaction, this Agreement and the other Credit Documents and the transactions contemplated hereby and thereby.

“ Transactions ” shall mean, collectively, the execution, delivery and performance of this Agreement and the other Credit Documents, the borrowing of Loans, the use of the proceeds thereof, the issuance of Letters of Credit hereunder, the payment of Transaction Expenses on the Funding Date and the other transactions contemplated by this Agreement and the Credit Documents.

“ Transferee ” shall have the meaning provided in Section 14.6(e) .

“ Type ” shall mean, as to any Loan, its nature as an ABR Loan or a LIBOR Loan.

“ Undisclosed Administration ” shall mean in relation to a Lender the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.

“ Unfunded Current Liability ” of any Plan shall mean the amount, if any, by which the Accumulated Benefit Obligation (as defined under FASB Accounting Standards Codification 715 (“ ASC 715 ”)) under the Plan as of the close of its most recent plan year, determined in accordance with ASC 715 as in effect on the Funding Date, exceeds the Fair Market Value of the assets allocable thereto.

“ Uniform Commercial Code ” shall mean the Uniform Commercial Code of the State of New York or of any other state the laws of which are required to be applied in connection with the perfection of security interests in any Collateral.

“ Unpaid Drawing ” shall have the meaning provided in Section 3.4(a) .

“ Unrestricted Subsidiary ” shall mean (a) any Subsidiary of the Borrower that is formed or acquired after the Funding Date; provided that at such time (or promptly thereafter) the Borrower

designates such Subsidiary an Unrestricted Subsidiary in a written notice to the Administrative Agent, (b) any Restricted Subsidiary subsequently designated as an Unrestricted Subsidiary by the Borrower in a written notice to the Administrative Agent; provided that in the case of (a) and (b), (i) such designation shall be deemed to be an Investment on the date of such designation, (ii) in the case of clause (b) , such designation shall be deemed to be a Disposition of the assets owned by such Restricted Subsidiary and of assets owned by Subsidiaries of such Restricted Subsidiary on the date of such designation for the purposes of Section 11.4(a)(ii) and (iii) no Default or Event of Default would result from such designation after giving pro forma effect thereto and (c) each Subsidiary of an Unrestricted Subsidiary. No Subsidiary may be designated as an Unrestricted Subsidiary if, after such designation, it would be a “restricted subsidiary” for the purpose of any Permitted Additional Debt or any Permitted Refinancing Indebtedness in respect of any of the foregoing. The Borrower may, by written notice to the Administrative Agent, re-designate any Unrestricted Subsidiary as a Restricted Subsidiary, and thereafter, such Subsidiary shall no longer constitute an Unrestricted Subsidiary, but only if (A) to the extent such Subsidiary has outstanding Indebtedness on the date of such designation, immediately after giving effect to such designation, the Borrower shall be in compliance, on a pro forma basis after giving effect to the incurrence of such Indebtedness, with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such re-designation had occurred on the first day of such Test Period (and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating satisfaction of such test) and (B) no Default or Event of Default would result from such re-designation.

“ U.S. Lender ” shall have the meaning provided in Section 5.4(h) .

“ Voting Stock ” shall mean, with respect to any Person, such Person’s Stock or Stock Equivalents having the right to vote for the election of directors of such Person under ordinary circumstances.

“ Weighted Average Life to Maturity ” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing : (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.

1.2 Other Interpretive Provisions . With reference to this Agreement and each other Credit Document, unless otherwise specified herein or in such other Credit Document:

(a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b) The words “herein”, “hereto”, “hereof” and “hereunder” and words of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provision thereof.

(d) The term “including” is by way of example and not limitation.

(e) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.

(f) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including”.

(g) Section headings herein and in the other Credit Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Credit Document.

(h) Any reference to any Person shall be constructed to include such Person’s successors or assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all of the functions thereof.

(i) Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

(j) The word “will” shall be construed to have the same meaning as the word “shall”.

(k) The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

1.3 Accounting Terms . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, applied in a consistent manner; provided , however , that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Funding Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that all Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.

1.4 Rounding . Any financial ratios required to be maintained or complied with by the Borrower pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

1.5 References to Agreements, Laws, Etc . Unless otherwise expressly provided herein, (a) references to organizational documents, agreements (including the Credit Documents) and other Contractual Requirements shall be deemed to include all subsequent amendments, restatements, amendment and restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, amendment and restatements, extensions, supplements and

other modifications are permitted by any Credit Document and (b) references to any Requirement of Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Requirement of Law.

1.6 Times of Day . Unless otherwise specified, all references herein to times of day shall be references to New York City (daylight or standard, as applicable).

1.7 Timing of Payment or Performance . When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in Section 2.9 ) or performance shall extend to the immediately succeeding Business Day.

1.8 Currency Equivalents Generally .

(a) For purposes of any determination under Article X , Article XI (other than Section 11.11 ) or Article XII or any determination under any other provision of this Agreement requiring the use of a current exchange rate, all amounts incurred, outstanding or proposed to be incurred or outstanding in currencies other than Dollars shall be translated into Dollars at the Exchange Rate then in effect on the date of such determination; provided , however , that (x) for purposes of determining compliance with Article XI with respect to the amount of any Indebtedness, Investment, Disposition, Restricted Payment or payment under Section 11.7 in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness or Investment is incurred or Disposition, Restricted Payment or payment under Section 11.7 is made, (y) for purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, if such Indebtedness is incurred to Refinance other Indebtedness denominated in a foreign currency, and such Refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such Refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinanced Indebtedness does not exceed the principal amount of such Indebtedness being Refinanced and (z) for the avoidance of doubt, the foregoing provisions of this Section 1.8 shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness or Investment may be incurred or Disposition, Restricted Payment or payment under Section 11.7 may be made at any time under such Sections. For purposes of Section 11.11 , amounts in currencies other than Dollars shall be translated into Dollars at the applicable exchange rates used in preparing the most recently delivered financial statements pursuant to Section 10.1(a) or (b) .

(b) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify with the Borrower’s consent (such consent not to be unreasonably withheld) to appropriately reflect a change in currency of any country and any relevant market conventions or practices relating to such change in currency.

1.9 Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a “ LIBOR Loan ”).

ARTICLE II
AMOUNT AND TERMS OF CREDIT

2.1 Commitments .

(a) (i) Subject to and upon the terms and conditions herein set forth, each Revolving Lender severally, but not jointly, agrees to make Revolving Loans denominated in Dollars to the

Borrower, which Revolving Loans (A) shall be made at any time and from time to time on and after the Funding Date and prior to the Termination Date, (B) may, at the option of the Borrower, be incurred and maintained as, and/or converted into, ABR Loans or LIBOR Loans; provided that all Revolving Loans made by each of the Revolving Lenders pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of Revolving Loans of the same Type, (C) may be repaid and reborrowed in accordance with the provisions hereof, (D) shall not, for any Revolving Lender at any time, after giving effect thereto and to the application of the proceeds thereof, result in such Lender’s Revolving Exposure at such time exceeding such Lender’s Revolving Commitment Percentage at such time of the Revolving Loan Limit and (E) shall not, after giving effect thereto and to the application of the proceeds thereof, result in the Total Revolving Exposure exceeding the Revolving Loan Limit at such time.

(ii) Subject to and upon the terms and conditions herein set forth, each Term Loan Lender severally, but not jointly, agrees to make a Term Loan denominated in Dollars to the Borrower, which Term Loan (A) shall be made (I) on the Funding Date and (II) on the date of any Term Loan Incremental Increase (or such date thereafter as specified in the applicable Incremental Agreement), (B) may, at the option of the Borrower, be incurred and maintained as, and/or converted into, ABR Loans or LIBOR Loans; provided that all Term Loans made by each of the Term Loan Lenders pursuant to the same Borrowing shall, unless otherwise specifically provided herein, consist entirely of Term Loan Loans of the same Type, (C) shall not, for any Term Loan Lender at any time, after giving effect thereto and to the application of the proceeds thereof, result in such Lender’s Term Loan Exposure at such time exceeding such Lender’s Term Loan Commitment Percentage at such time of the Term Loan Commitments and (D) shall not, after giving effect thereto and to the application of the proceeds thereof, result the Total Term Loan Exposure at such time exceeding the Total Term Loan Commitments. The Term Loan Commitments of the Term Loan Lenders to make Term Loans shall expire (1) on the Funding Date, with respect to the Term Loan Commitments outstanding on the Funding Date and (2) on the date specified in the applicable Incremental Agreement, with respect to any Term Loan Incremental Increase. Any portion of the Term Loans that is repaid may not be reborrowed.

(iii) Each Lender may at its option make any LIBOR Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan, provided that (1) any exercise of such option shall not affect the obligation of the Borrower to repay such Loan and (2) in exercising such option, such Lender shall use its reasonable efforts to minimize any increased costs to the Borrower resulting therefrom (which obligation of the Lender shall not require it to take, or refrain from taking, actions that it determines would result in increased costs for which it will not be compensated hereunder or that it determines would be otherwise disadvantageous to it and in the event of such request for costs for which compensation is provided under this Agreement, the provisions of Section 2.10 shall apply).

(b) Subject to and upon the terms and conditions herein set forth, each Swingline Lender severally agrees, at any time and from time to time on and after the Funding Date and prior to the Swingline Maturity Date, to make a loan or loans (each a “ Swingline Loan ” and, collectively, the “ Swingline Loans ”) to the Borrower in Dollars, which Swingline Loans (i) shall be ABR Loans, (ii) shall have the benefit of the provisions of Section 2.1(c) , (iii) shall not exceed at any time outstanding the Swingline Commitment, (iv) shall not, after giving effect thereto and to the application of the proceeds thereof, result at any time in the aggregate amount of the Lenders’ Total Exposure at such time exceeding the Total Commitment then in effect and (v) may be repaid and reborrowed in accordance with the provisions hereof; provided that the sum of (x) the Swingline Exposure of such Swingline Lender, (y) the aggregate principal amount of outstanding Revolving Loans made by such Swingline Lender (in its capacity as a Revolving Lender) and (z) the Letter of Credit Exposure of such Swingline Lender (in its capacity as a Revolving Lender) shall not exceed its Revolving Commitment then in effect. Each outstanding Swingline Loan shall be repaid in full on the earlier of (a) 15 Business Days after such

Swingline Loan is initially borrowed and (b) the Swingline Maturity Date. No Swingline Lender shall make any Swingline Loan after receiving a written notice from the Borrower, the Administrative Agent or any Lender stating that an Event of Default exists and is continuing until such time as the Swingline Lenders shall have received written notice of (i) rescission of all such notices from the party or parties originally delivering such notice or (ii) the waiver of such Event of Default in accordance with the provisions of Section 14.1 .

(c) On any Business Day, any Swingline Lender may, in its sole discretion, give notice to each Revolving Lender that all then-outstanding Swingline Loans shall be funded with a Borrowing of Revolving Loans, in which case Revolving Loans constituting ABR Loans (each such Borrowing, a “ Mandatory Borrowing ”) shall be made on the immediately succeeding Business Day by each Revolving Lender pro rata based on each Lender’s Revolving Commitment Percentage, and the proceeds thereof shall be applied directly to the Swingline Lenders to repay the Swingline Lenders for such outstanding Swingline Loans. Each Revolving Lender hereby irrevocably agrees to make such Revolving Loans upon one Business Day notice pursuant to each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the date specified to it in writing by the Swingline Lender notwithstanding (i) that the amount of the Mandatory Borrowing may not comply with the minimum amount for each Borrowing specified in Section 2.2 , (ii) whether any conditions specified in Article VIII are then satisfied, (iii) whether a Default or an Event of Default has occurred and is continuing, (iv) the date of such Mandatory Borrowing or (v) any reduction in the Total Revolving Commitment after any such Swingline Loans were made. In the event that, in the sole judgment of any Swingline Lender, any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including as a result of the commencement of a proceeding under the Bankruptcy Code in respect of the Borrower), each Revolving Lender hereby agrees that it shall forthwith purchase from such Swingline Lender (without recourse or warranty) such participation of the outstanding Swingline Loans as shall be necessary to cause the Revolving Lenders to share in such Swingline Loans ratably based upon their respective Revolving Commitment Percentages, provided that all principal and interest payable on such Swingline Loans shall be for the account of such Swingline Lender until the date the respective participation is purchased and, to the extent attributable to the purchased participation, shall be payable to such Revolving Lender purchasing same from and after such date of purchase.

2.2 Minimum Amount of Each Borrowing; Maximum Number of Borrowings . The aggregate principal amount of each Borrowing and Swingline Loans shall be in a minimum amount of at least $1,000,000 and in a multiple of $100,000 in excess thereof (except for any Borrowing in an aggregate amount that is equal to the entire unused balance of aggregate Revolving Commitments) and Revolving Loans to reimburse the Letter of Credit Issuer with respect to any Unpaid Drawing shall be made in the amounts required by Sections 3.3 or 3.4 , as applicable). More than one Borrowing may be incurred on any date; provided , that at no time shall there be outstanding more than ten Borrowings of LIBOR Loans under this Agreement.

2.3 Notice of Borrowing .

(a) Whenever the Borrower desires to incur Loans (other than Mandatory Borrowings or borrowings to repay Unpaid Drawings), the Borrower shall give the Administrative Agent at the Administrative Agent’s Office, (i) prior to 1:00 p.m. (New York City time) at least three Business Days’ prior written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Loans if such Loans are to be initially LIBOR Loans (or prior to 1:00 p.m. (New York City time) two Business Days’ prior written notice in the case of a Borrowing of Loans to be made on the Funding Date initially as LIBOR Loans) and (ii) written notice (or telephonic notice promptly confirmed in writing) prior to 1:00 p.m. (New York City time) on the date of each Borrowing of Loans that are to be ABR Loans. Such notice (together with each notice of a Borrowing of Swingline Loans pursuant to Section

2.3(b) , a “ Notice of Borrowing ”) shall specify (A) the aggregate principal amount of the Loans to be made pursuant to such Borrowing and whether such Borrowing is a Revolving Borrowing or a Term Loan Borrowing, (B) the date of the Borrowing (which shall be a Business Day), (C) whether the respective Borrowing shall consist of ABR Loans and/or LIBOR Loans and, if LIBOR Loans, the Interest Period to be initially applicable thereto (if no Interest Period is selected, the Borrower shall be deemed to have selected an Interest Period of one month’s duration) and (D) during a Borrowing Base Trigger Period, the amount of the then-effective Borrowing Base, the current Total Revolving Exposure and Total Term Loan Exposure (without regard to the requested Borrowing) of all Lenders and the pro forma Total Revolving Exposure and Total Term Loan Exposure (giving effect to the requested Borrowing) of all Lenders. The Administrative Agent shall promptly give each Revolving Lender or Term Loan lender, as applicable, written notice (or telephonic notice promptly confirmed in writing) of each proposed Revolving Borrowing or Term Loan Borrowing, as applicable, of such Lender’s Revolving Commitment Percentage or Term Loan Commitment Percentage, as applicable, thereof and of the other matters covered by the related Notice of Borrowing.

(b) Whenever the Borrower desires to incur Swingline Loans hereunder, it shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of each Borrowing of Swingline Loans prior to 3:00 p.m. (New York City time) on the date of such Borrowing. Each such notice shall specify (i) the aggregate principal amount of the Swingline Loans to be made pursuant to such Borrowing and (ii) the date of Borrowing (which shall be a Business Day). The Administrative Agent shall promptly give the Swingline Lender written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing of Swingline Loans and of the other matters covered by the related Notice of Borrowing.

(c) Mandatory Borrowings shall be made upon the notice specified in Section 2.1(c) , with the Borrower irrevocably agreeing, by its incurrence of any Swingline Loan, to the making of Mandatory Borrowings as set forth in such Section.

(d) Borrowings to reimburse Unpaid Drawings shall be made upon the notice specified in Section 3.4(a) .

(e) Without in any way limiting the obligation of the Borrower to confirm in writing any notice it may give hereunder by telephone, the Administrative Agent may act prior to receipt of written confirmation without liability upon the basis of such telephonic notice believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower.

2.4 Disbursement of Funds .

(a) No later than 1:00 p.m. (New York City time) on the date specified in each Notice of Borrowing (including Mandatory Borrowings), each Lender will make available its pro rata portion of each Borrowing requested to be made on such date in the manner provided below; provided that on the Funding Date, such funds shall be made available by 10:00 a.m. (New York City time) or such earlier time as may be agreed among the Lenders, the Borrower and the Administrative Agent for the purpose of consummating the Transactions; provided further that all Swingline Loans shall be made available in the full amount thereof by the Swingline Lenders no later than 3:30 p.m. (New York City time) on the date requested.

(b) Each Lender shall make available all amounts it is to fund to the Borrower under any Borrowing in immediately available funds to the Administrative Agent at the Administrative Agent’s Office in Dollars, and the Administrative Agent will (except in the case of Mandatory Borrowings and Borrowings to repay Unpaid Drawings) make available to the Borrower, by depositing or wiring to an

account as designated by the Borrower in the Notice of Borrowing to the Administrative Agent the aggregate of the amounts so made available in Dollars. Unless the Administrative Agent shall have been notified by any Lender prior to the date of any such Borrowing that such Lender does not intend to make available to the Administrative Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made available such amount to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor the Administrative Agent shall promptly notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent in Dollars. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if paid by such Lender, the Overnight Rate or (ii) if paid by the Borrower, the then-applicable rate of interest or fees, calculated in accordance with Section 2.8 , for the respective Loans.

(c) Nothing in this Section 2.4 shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights that the Borrower may have against any Lender as a result of any default by such Lender hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to fulfill its commitments hereunder).

2.5 Repayment of Loans; Evidence of Debt .

(a) The Borrower hereby promises to pay to the Administrative Agent, for the benefit of the applicable Revolving Lenders, (i) on the earlier of (a) 15 Business Days after such Swingline Loan is initially borrowed and (b) the Swingline Maturity Date, the then outstanding Swingline Loans, and (ii) on the Maturity Date, the then outstanding principal amount of all Revolving Loans.

(b) The Borrower hereby promises to pay to the Administrative Agent, for the account of the Term Loan Lenders, in equal quarterly installments, which shall be due and payable on last Business Day of each March, June, September and December, commencing March 31, 2016, an amount of 2.5% of aggregate principal amount of the Term Loans outstanding on the Funding Date (as adjusted from time to time pursuant to Section 5.1 and Section 5.2 ), with the outstanding principal balance of the Term Loans due and payable on the Maturity Date.

(c) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to the appropriate lending office of such Lender resulting from each Loan made by such lending office from time to time, including the amounts of principal and interest payable and paid to such lending office from time to time under this Agreement.

(d) The Administrative Agent, on behalf of the Borrower, shall maintain the Register pursuant to Section 14.6(b) , and a subaccount for each Lender, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each Loan made hereunder, the Type of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender or the Swingline Lenders hereunder and (iii)

the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

(e) The entries made in the Register and accounts and subaccounts maintained pursuant to clauses (b) and (c) of this Section 2.5 shall, to the extent permitted by applicable Requirements of Law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided , however , that the failure of any Lender or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement

(f) Any Lender may request that Loans made by it be evidenced by a promissory note substantially in the form of Exhibit I hereto. In such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by such Lender, to such Lender and its registered assigns). Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 14.6 ) be represented by one or more promissory notes in such form payable to the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

2.6 Conversions and Continuations .

(a) Subject to the penultimate sentence of this clause (a) , (i) the Borrower shall have the option on any Business Day to convert all or a portion equal to at least $1,000,000 (and in multiples of $100,000 in excess thereof) of the outstanding principal amount of Loans of one Type into a Borrowing or Borrowings of another Type and (ii) the Borrower shall have the option on any Business Day to continue the outstanding principal amount of any LIBOR Loans as LIBOR Loans for an additional Interest Period; provided that (A) no partial conversion of LIBOR Loans shall reduce the outstanding principal amount of LIBOR Loans made pursuant to a single Borrowing to less than $1,000,000, (B) ABR Loans may not be converted into LIBOR Loans if an Event of Default is in existence on the date of the conversion and the Administrative Agent has or the Majority Revolving Lenders, with respect to a Revolving Borrowing and the Majority Term Loan Lenders, with respect to a Term Loan Borrowing, have determined in its or their sole discretion not to permit such conversion, (C) LIBOR Loans may not be continued as LIBOR Loans for an additional Interest Period if an Event of Default is in existence on the date of the proposed continuation and the Administrative Agent has or the Majority Revolving Lenders, with respect to a Revolving Borrowing, and the Majority Term Loan Lenders, with respect to a Term Loan Borrowing, have determined in its or their sole discretion not to permit such continuation, and (D) Borrowings resulting from conversions pursuant to this Section 2.6 shall be limited in number as provided in Section 2.2 . Each such conversion or continuation shall be effected by the Borrower by giving the Administrative Agent at the Administrative Agent’s Office prior to 1:00 p.m. (New York City time) at least (1) three Business Days’, in the case of a continuation of or conversion to LIBOR Loans or (2) the date of conversion, in the case of a conversion into ABR Loans, prior written notice (or telephonic notice promptly confirmed in writing) (each, a “ Notice of Conversion or Continuation ”) specifying the Loans to be so converted or continued, the Type of Loans to be converted into or continued and, if such Loans are to be converted into or continued as LIBOR Loans, the Interest Period to be initially applicable thereto (if no Interest Period is selected, the Borrower shall be deemed to have selected an Interest Period of one month’s duration). The Administrative Agent shall give each applicable Lender notice as promptly as practicable of any such proposed conversion or continuation affecting any of its Loans.

(b) If any Event of Default is in existence at the time of any proposed continuation of any LIBOR Loans and the Administrative Agent has or the Majority Revolving Lenders, with respect to a Revolving Borrowing, or the Majority Term Loan Lenders, with respect to a Term Loan Borrowing, have

determined in its or their sole discretion not to permit such continuation, such LIBOR Loans shall be automatically converted on the last day of the current Interest Period into ABR Loans. If upon the expiration of any Interest Period in respect of LIBOR Loans, the Borrower has failed to elect a new Interest Period to be applicable thereto as provided in clause (a) above, the Borrower shall be deemed to have elected to convert such Borrowing of LIBOR Loans into a Borrowing of ABR Loans, effective as of the expiration date of such current Interest Period.

(c) Notwithstanding anything to the contrary herein, the Borrower may deliver a Notice of Conversion or Continuation pursuant to which the Borrower elects to irrevocably continue the outstanding principal amount of any Revolving Loans subject to an interest rate Hedge Agreement as LIBOR Loans for each Interest Period until the expiration of the term of such applicable Hedge Agreement; provided that any Notice of Conversion or Continuation delivered pursuant to this Section 2.6(c) shall include a schedule attaching the relevant interest rate Hedge Agreement or related trade confirmation.

2.7 Pro Rata Borrowings . Each Borrowing of Revolving Loans under this Agreement shall be made by the Revolving Lenders pro rata on the basis of their then applicable Revolving Commitment Percentages. The Borrowing of Term Loans under this Agreement shall be made by the Term Loan Lenders pro rata on the basis of their then applicable Term Loan Commitment Percentages. It is understood that (a) no Lender shall be responsible for any default by any other Lender in its obligation to make Loans hereunder and that each Lender severally but not jointly shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its commitments hereunder and (b) failure by a Lender to perform any of its obligations under any of the Credit Documents shall not release any Person from performance of its obligation under any Credit Document.

2.8 Interest .

(a) The unpaid principal amount of each ABR Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin plus the ABR, in each case, in effect from time to time.

(b) The unpaid principal amount of each LIBOR Loan shall bear interest from the date of the Borrowing thereof until maturity thereof (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin plus the relevant LIBOR Rate, in each case, in effect from time to time.

(c) If all or a portion of (i) the principal amount of any Loan or (ii) any interest payable thereon shall not be paid when due (whether at stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum that is (the “ Default Rate ”) (A) in the case of overdue principal, the rate that would otherwise be applicable thereto plus 2% or (B) in the case of any overdue interest, to the extent permitted by applicable Requirements of Law, the rate described in Section 2.8(a) plus 2% from the date of such non-payment to the date on which such amount is paid in full (after as well as before judgment).

(d) Interest on each Loan shall accrue from and including the date of any Borrowing to but excluding the date of any repayment thereof and shall be payable in Dollars; provided that any Loan that is repaid on the same date on which it is made shall bear interest for one day. Except as provided below, interest shall be payable (i) in respect of each ABR Loan, quarterly in arrears on the last Business Day of each March, June, September and December, (ii) in respect of each LIBOR Loan, on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three

months, on each date occurring at three-month intervals after the first day of such Interest Period, (iii) in respect of each Loan, (A) on any prepayment (on the amount prepaid), (B) at maturity (whether by acceleration or otherwise) and (C) after such maturity, on demand.

(e) All computations of interest hereunder shall be made in accordance with Section 5.5 .

(f) The Administrative Agent, upon determining the interest rate for any Borrowing of LIBOR Loans, shall promptly notify the Borrower and the relevant Lenders thereof. Each such determination shall, absent clearly demonstrable error, be final and conclusive and binding on all parties hereto.

(g) In the event that any financial statements delivered pursuant to this Agreement, are revised or restated after delivery thereof (regardless of whether this Agreement or the Commitments are in effect when such revision or restatement is made, but in no event shall any claim be made under this Section 2.8(g) after two (2) years after the termination of this Agreement and the payment of all amounts then due hereunder) and such revision or restatement would have led to the application of a higher Applicable Margin or a higher Commitment Fee for any period or periods (each an “ Applicable Period ”) than the Applicable Margin or Commitment Fee, as applicable, actually applied for such relevant Applicable Period, then (i) the Borrower shall immediately deliver to the Administrative Agent a correct form of such financial statements described in Section 10.1(a) and Section 10.1(b) , as applicable, (ii) such higher Applicable Margin or Commitment Fee shall be applied to such relevant Applicable Period, and (iii) the Borrower shall immediately pay to the Administrative Agent the net accrued additional interest and expense (determined after taking into account any corresponding reduction in the Applicable Margin or Commitment Fee in any other period), if any, owing as a result of such increased Applicable Margin or Commitment Fee for such Applicable Period(s).

2.9 Interest Periods . At the time the Borrower gives a Notice of Borrowing or Notice of Conversion or Continuation in respect of the making of, or conversion into or continuation as, a Borrowing of LIBOR Loans in accordance with Section 2.6(a) , the Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of the Interest Period applicable to such Borrowing, which Interest Period shall, at the option of the Borrower be a one, two, three or six or (if available to all the Lenders making such LIBOR Loans as determined by such Lenders in good faith based on prevailing market conditions) a 12-month period or any shorter period requested by the Borrower; provided that, notwithstanding the foregoing, the initial Interest Period beginning on the Funding Date may be for a period less than one month if agreed upon by the Borrower, the Administrative Agent and each of the Lenders.

Notwithstanding anything to the contrary contained above:

(a) the initial Interest Period for any Borrowing of LIBOR Loans shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of ABR Loans) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires;

(b) if any Interest Period relating to a Borrowing of LIBOR Loans begins on the last Business Day of a calendar month or begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period;

(c) if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period in respect of a LIBOR Loan would otherwise expire on a day that is not a Business Day, but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; and

(d) the Borrower shall not be entitled to elect any Interest Period in respect of any LIBOR Loan if such Interest Period would extend beyond the Maturity Date.

2.10 Increased Costs, Illegality, Etc .

(a) In the event that (x) in the case of clause (i) below, the Majority Revolving Lenders or Majority Term Loan Lenders, as applicable, or (y) in the case of clauses (ii) and (iii) below, any Lender, shall have reasonably determined (which determination shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto):

(i) on any date for determining the LIBOR Rate for any Interest Period that (A) deposits in the principal amounts of the Loans comprising such LIBOR Revolving Borrowing or LIBOR Term Loan Borrowing, as applicable, are not generally available in the relevant market, (B) by reason of any changes arising on or after the Funding Date affecting the interbank LIBOR market, adequate and fair means do not exist for ascertaining the applicable interest rate on the basis provided for in the definition of LIBOR Rate, or (C) the LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Revolving Lenders or Term Loan Lenders, as applicable, of making or maintaining their Revolving Loans or Term Loans, as applicable, included in such Borrowing for such Interest Period; or

(ii) that, due to a Change in Law occurring at any time or after the Funding Date, which Change in Law shall (A) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender, (B) subject any Lender to any Tax with respect to any Credit Document or any LIBOR Loan made by it (other than (i) Taxes indemnifiable under Section 5.4 , or (ii) Excluded Taxes), or (C) impose on any Lender or the London interbank market any other condition, cost or expense affecting this Agreement or LIBOR Loans made by such Lender, which results in the cost to such Lender of making, converting into, continuing or maintaining LIBOR Loans or participating in Letters of Credit (in each case hereunder) increasing by an amount which such Lender reasonably deems material or the amounts received or receivable by such Lender hereunder with respect to the foregoing shall be reduced; or

(iii) at any time, that the making or continuance of any LIBOR Loan has become unlawful as a result of compliance by such Lender in good faith with any Requirement of Law (or would conflict with any such Requirement of Law not having the force of law even though the failure to comply therewith would not be unlawful);

then, and in any such event, such Lenders (or the Administrative Agent, in the case of clause (i) above) shall within a reasonable time thereafter give notice (if by telephone, confirmed in writing) to the Borrower and to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders, or, in the case of clause (i) the Revolving Lenders or Term Loan Lenders, as applicable). Thereafter (x) in the case of clause (i) above, LIBOR Loans shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Revolving Lenders or the Term Loan Lenders, as applicable, that the circumstances giving rise to such notice by the Administrative Agent no longer exist (which notice the Administrative Agent agrees to give at such time

when such circumstances no longer exist), and any Notice of Borrowing or Notice of Conversion given by the Borrower with respect to LIBOR Loans that have not yet been incurred shall be deemed rescinded by the Borrower, (y) in the case of clause (ii) above, the Borrower shall pay to such Lender, promptly (but no later than fifteen days) after receipt of written demand therefor such additional amounts as shall be required to compensate such Lender for such increased costs or reductions in amounts receivable hereunder (it being agreed that a written notice as to the additional amounts owed to such Lender, showing in reasonable detail the basis for the calculation thereof, submitted to the Borrower by such Lender shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto) and (z) in the case of clause (iii) above, the Borrower shall take one of the actions specified in Section 2.10(b) as promptly as possible and, in any event, within the time period required by applicable Requirements of Law.

(b) At any time that any LIBOR Loan is affected by the circumstances described in Section 2.10(a)(ii) or (iii) , the Borrower may (and in the case of a LIBOR Loan affected pursuant to Section 2.10(a)(iii) shall) either (i) if the affected LIBOR Loan is then being made pursuant to a Borrowing, cancel such Borrowing by giving the Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date that the Borrower was notified by a Lender pursuant to Section 2.10(a)(ii) or (iii) or (ii) if the affected LIBOR Loan is then outstanding, upon at least three Business Days’ notice to the Administrative Agent, require the affected Lender to convert each such LIBOR Loan into an ABR Loan; provided that if more than one Lender is affected at any time, then all affected Lenders must be treated in the same manner pursuant to this Section 2.10(b) .

(c) If, after the Funding Date, any Change in Law relating to capital adequacy or liquidity requirements of any Lender or compliance by any Lender or its parent with any Change in Law relating to capital adequacy or liquidity requirements occurring after the Funding Date, has or would have the effect of reducing the rate of return on such Lender’s or its parent’s capital or assets as a consequence of such Lender’s commitments or obligations hereunder to a level below that which such Lender or its parent could have achieved but for such Change in Law (taking into consideration such Lender’s or its parent’s policies with respect to capital adequacy or liquidity requirements), then from time to time, promptly (but in any event no later than fifteen days) after written demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its parent for such reduction, it being understood and agreed, however, that a Lender shall not be entitled to such compensation as a result of such Lender’s compliance with, or pursuant to any request or directive to comply with, any applicable Requirement of Law as in effect on the Funding Date (except as otherwise set forth in the definition of Change in Law). Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this Section 2.10(c) , will give prompt written notice thereof to the Borrower, which notice shall set forth in reasonable detail the basis of the calculation of such additional amounts, although the failure to give any such notice shall not, subject to Section 2.13 , release or diminish the Borrower’s obligations to pay additional amounts pursuant to this Section 2.10(c) upon receipt of such notice.

2.11 Compensation . If (a) any payment of principal of any LIBOR Loan is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such LIBOR Loan as a result of a payment or conversion pursuant to Sections 2.5 , 2.6 , 2.10 , 5.1 , 5.2 or 14.7 , as a result of acceleration of the maturity of the Loans pursuant to Article XII or for any other reason, (b) any Borrowing of LIBOR Loans is not made on the date specified in a Notice of Borrowing, (c) any ABR Loan is not converted into a LIBOR Loan on the date specified in a Notice of Conversion or Continuation, (d) any LIBOR Loan is not continued as a LIBOR Loan on the date specified in a Notice of Conversion or Continuation or (e) any prepayment of principal of any LIBOR Loan is not made as a result of a withdrawn notice of prepayment pursuant to Section 5.1 or 5.2 , the Borrower shall after the Borrower’s receipt of a written request by such Lender (which request shall set forth in reasonable detail

the basis for requesting such amount and shall be conclusive and binding in the absence of manifest error), pay to the Administrative Agent (within fifteen days after such request) for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that such Lender may reasonably incur as a result of such payment, failure to convert, failure to continue or failure to prepay, including any loss, cost or expense (excluding loss of anticipated profits) actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such LIBOR Loan.

2.12 Change of Lending Office . Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.10(a)(ii) , 2.10(a)(iii) , 2.10(c) , 3.5 or 5.4 with respect to such Lender, it will, if requested by the Borrower use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event; provided that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such Section. Nothing in this Section 2.12 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Section 2.10 , 3.5 or 5.4 .

2.13 Notice of Certain Costs . Notwithstanding anything in this Agreement to the contrary, to the extent any notice required by Section 2.10 , 2.11 , 3.5 or 5.4 is given by any Lender more than 180 days after such Lender has knowledge (or should have had knowledge) of the occurrence of the event giving rise to the additional cost, reduction in amounts, loss, tax or other additional amounts described in such Sections, such Lender shall not be entitled to compensation under Section 2.10 , 2.11 , 3.5 or 5.4 , as the case may be, for any such amounts incurred or accruing prior to the 181 st day prior to the giving of such notice to the Borrower; provided that if the circumstance giving rise to such claim is retroactive, then such 180-day period referred to above shall be extended to include the period of retroactive effect thereof.

2.14 Borrowing Base .

(a) Borrowing Base . During a Borrowing Base Trigger Period, the Facilities shall be subject to a Borrowing Base. The Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.14(e) , (f) and (g) .

(b) Scheduled and Interim Redeterminations . During a Borrowing Base Trigger Period, the Borrowing Base shall be redetermined annually in accordance with this Section 2.14 (a “ Scheduled Redetermination ”), and, subject to Section 2.14(d) , such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Administrative Agent, the Letter of Credit Issuers and the Lenders on May 1 st of each year (or pursuant to Section 2.14(d) below, such date thereafter as is reasonably practicable), commencing with the First Scheduled Redetermination Date. In addition, the Borrower may at any time (including prior to the First Scheduled Redetermination Date), by notifying the Administrative Agent thereof, not more than once between Scheduled Redeterminations, and the Administrative Agent, following the First Scheduled Redetermination Date, may, at the direction of the Required Revolving Lenders, by notifying the Borrower thereof, not more than once between Scheduled Redeterminations, in each case elect to cause the Borrowing Base to be redetermined between Scheduled Redeterminations (an “ Interim Redetermination ”) in accordance with this Section 2.14 . In addition to, and not including and/or limited by the Interim Redeterminations allowed above, the Borrower may, by notifying the Administrative Agent thereof, at any time between Scheduled Redeterminations, request additional Interim Redeterminations of the Borrowing Base in the event it acquires Oil and Gas Properties with Proved Reserves which are to be Borrowing Base Properties having a PV-9 (calculated at the time of acquisition) in excess of 10% of the Borrowing Base in effect immediately prior to such acquisition.

(i) Each Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows: Upon receipt by the Administrative Agent of (A) the Reserve Report, and (B) such other reports, data and supplemental information, including the information provided pursuant to Section 10.13(b) , as may, from time to time, be reasonably requested by, or provided by the Borrower to, the Administrative Agent on behalf of the Required Revolving Lenders (the Reserve Report and such other reports, data and supplemental information being the “ Engineering Reports ”), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall in good faith propose a new Borrowing Base (the “ Proposed Borrowing Base ”) based upon such information and such other information (including the status of title information with respect to the Borrowing Base Properties as described in the Engineering Reports and the existence of any Hedge Agreements, term physical sales contracts or any other Indebtedness) as the Administrative Agent deems appropriate in good faith in accordance with its usual and customary oil and gas lending criteria as they exist at the particular time (provided that notwithstanding such criteria, Proved Non-Producing Reserves and Proved Undeveloped Reserves (in the aggregate) may have an aggregate value in the Borrowing Base of up to 35% of the Borrowing Base).

(ii) The Administrative Agent shall notify the Borrower and the Lenders of the Proposed Borrowing Base (the “ Proposed Borrowing Base Notice ”):

(A) in the case of a Scheduled Redetermination (1) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 10.13(a) and (b) in a timely manner, then on or before April 15 th of such year following the date of delivery or (2) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 10.13(a) and (b) in a timely manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrower and has had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with Section 2.14(c)(i) ; and

(B) in the case of an Interim Redetermination, promptly, and in any event, within 15 days after the Administrative Agent has received the required Engineering Reports.

(iii) Any Proposed Borrowing Base that would increase the Borrowing Base then in effect must be approved or deemed to have been approved by the Borrowing Base Required Lenders in each such Revolving Lender’s sole discretion and in good faith, consistent with each such Revolving Lender’s usual and customary oil and gas lending criteria as they exist at the particular time as provided in this Section 2.14(c)(iii) and any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect must be approved or be deemed to have been approved by Revolving Lenders constituting at least the Required Revolving Lenders in each such Revolving Lender’s sole discretion and in good faith, consistent with each such Lender’s usual and customary oil and gas lending criteria as they exist at the particular time as provided in this Section 2.14(c)(iii) . Upon receipt of the Proposed Borrowing Base Notice, each Revolving Lender shall have 15 days to agree with the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. If at the end of such 15-day period, any Revolving Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be an approval of the Proposed Borrowing Base. If, at the end of such 15-day period, the Borrowing Base Required Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Required Revolving Lenders, in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved or deemed to have approved, as aforesaid, then the

Proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified in Section 2.14(d) . If, however, at the end of such 15-day period, the Borrowing Base Required Lenders or the Required Revolving Lenders, as applicable, have not approved or deemed to have approved, as aforesaid, then the Administrative Agent shall promptly thereafter poll the Lenders to ascertain the highest Borrowing Base then acceptable to the Borrowing Base Required Lenders (in the case of any increase to the Borrowing Base) or a number of Revolving Lenders sufficient to constitute the Required Revolving Lenders (in any other case) and such amount shall become the new Borrowing Base, effective on the date specified in Section 2.14(d) . It is expressly understood that the Administrative Agent and Revolving Lenders have no obligation to designate the Borrowing Base at any particular amount, except in the good faith exercise of their discretion, whether in relation to the Total Revolving Commitment, the Maximum Aggregate Amount or otherwise.

(d) Effectiveness of a Redetermined Borrowing Base . After a redetermined Borrowing Base is approved or is deemed to have been approved by the Borrowing Base Required Lenders or the Required Revolving Lenders, as applicable, pursuant to Section 2.14(c)(iii) , the Administrative Agent shall promptly thereafter notify the Borrower and the Revolving Lenders of the amount of the redetermined Borrowing Base (the “ New Borrowing Base Notice ”), and such amount, subject to Section 2.14(h), shall become the new Borrowing Base, effective and applicable to the Borrower, the Administrative Agent, the Letter of Credit Issuers and the Revolving Lenders:

(i) in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 10.13(a) and (b) in a timely and complete manner, on the May 1 st following such notice, or (B) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Sections 10.13(a) and (b) in a timely and complete manner, then on the Business Day next succeeding delivery of such New Borrowing Base Notice; and

(ii) in the case of an Interim Redetermination, on the Business Day next succeeding delivery of such New Borrowing Base Notice.

Subject to Section 2.14(h) , such amount shall then become the Borrowing Base until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base under Section 2.14(e) , (f) and (g) . Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is received by the Borrower.

(e) Reduction of Borrowing Base Upon Asset Dispositions or Termination of Hedge Positions . If (i) (1) the Borrower or one of the other Credit Parties Disposes of Oil and Gas Properties or Disposes of any Stock or Stock Equivalents in any Restricted Subsidiary owning Oil and Gas Properties, and such Disposition involves Borrowing Base Properties included in the most recently delivered Reserve Report, or (2) the Borrower or any Restricted Subsidiary shall unwind, terminate or create any off-setting positions in respect of any commodity hedge positions (whether evidenced by a floor, put or Hedge Agreement) upon which (i) the Revolving Lenders relied in determining the Borrowing Base, and (ii) the sum of (1) in the case of clause (i)(1) the aggregate PV-9 (calculated at the time of such Disposition) of all such Borrowing Base Properties Disposed of since the later of (A) the last Scheduled Redetermination Date and (B) the last adjustment of the Borrowing Base made pursuant to this Section 2.14(e) , and (2) in the case of clause (i)(2) , the Hedge PV (as calculated at the time of any such unwind, termination or creation of off-setting positions) of such unwound, terminated and/or offsetting positions (after taking into account any other Hedge Agreement, executed contemporaneously with the taking of such actions) during such period, collectively, exceeds 10% of the then-effective Borrowing Base, then, after the Administrative Agent has received the notice required to be delivered by the Borrower pursuant to

Section 11.4(a)(ii) or (xii) no later than one Business Day after the date of consummation of any such Disposition, unwind, termination or off-set, as the case may be, the Required Revolving Lenders shall have the right to adjust the Borrowing Base in an amount equal to the sum of the Borrowing Base value (as determined by the Administrative Agent and approved by Required Revolving Lenders), if any, attributable to such Disposed of Borrowing Base Properties plus the Borrowing Base value (as determined by the Administrative Agent and approved by Required Revolving Lenders), if any, attributable to such unwound, terminated or off-setting hedge positions in the calculation of the then-effective Borrowing Base and, if the Required Revolving Lenders in fact make any such adjustment, the Administrative Agent shall promptly notify the Borrower in writing of the Borrowing Base value, if any, attributable to such Disposed of Borrowing Base Properties in the calculation of the then-effective Borrowing Base and upon receipt of such notice, the Borrowing Base shall be simultaneously reduced by such amount.

(f) Reduction of Borrowing Base Upon Issuance of Certain Indebtedness . Upon the issuance of any Permitted Additional Debt in accordance with Section 11.1(w) (other than Indebtedness constituting Permitted Refinancing Indebtedness up to the original principal amount of the refinanced Indebtedness), the Borrowing Base then in effect shall be reduced by an amount equal to the product of 0.25 multiplied by the stated principal amount of such Indebtedness (without regard to any initial issue discount), and the Borrowing Base as so reduced shall become the new Borrowing Base immediately upon the date of such issuance, effective and applicable to the Borrower, the Administrative Agent, the Letter of Credit Issuers and the Revolving Lenders on such date until the next redetermination or modification thereof hereunder.

(g) Reduction of Borrowing Base Upon Title Defects . If the Borrower is unable to cure any material title defect requested by the Required Revolving Lenders to be cured within 90 days for any Borrowing Base Properties or the Borrower does not comply with the requirements to provide acceptable title information pursuant to Section 10.13(c) , such failure shall not constitute a Default or Event of Default hereunder; provided the Required Revolving Lenders shall have the right to adjust the Borrowing Base in an amount equal to the sum of the Borrowing Base value, if any, attributable to such Borrowing Base Properties.

(h) Borrower’s Right to Elect Reduced Borrowing Base . Within three Business Days of its receipt of a New Borrowing Base Notice, the Borrower may provide written notice to the Administrative Agent and the Revolving Lenders that specifies for the period from the effective date of the New Borrowing Base Notice until the next succeeding Scheduled Redetermination Date, the Borrowing Base will be a lesser amount than the amount set forth in such New Borrowing Base Notice, whereupon such specified lesser amount will become the new Borrowing Base. The Borrower’s notice under this Section 2.14(h) shall be irrevocable, but without prejudice to its rights to initiate Interim Redeterminations.

(i) Increases with Approval of Borrowing Base Required Lenders . Notwithstanding anything in this Agreement to the contrary, in the event that the Borrowing Base Required Lenders approve a Proposed Borrowing Base that increases the then-effective Borrowing Base, but one or more Revolving Lenders do not approve such Proposed Borrowing Base (any such Revolving Lender, a “ Non-Consenting B/B Lender ”), the Borrowing Base shall nevertheless be increased to the Proposed Borrowing Base, but such Non-Consenting B/B Lender’s obligation to lend or purchase or fund any participation in any Letter of Credit or Swingline Loan under such Proposed Borrowing Base shall not be greater than such Non-Consenting B/B Lender’s obligation to lend or purchase or fund any participation in any Letter of Credit or Swingline Loan under the Borrowing Base in effect immediately prior to such Proposed Borrowing Base becoming effective (without its subsequent approval of such increase, which may be provided at any time). If the Administrative Agent and Borrower shall have identified one or more

mutually agreeable Persons to whom such Non-Consenting B/B Lender may assign the portion of its Revolving Commitment that corresponds to the increase in such Non-Consenting B/B Lender’s obligation to lend under the Proposed Borrowing Base, then (subject to the requirements of Section 14.7(b) being satisfied and without limiting any rights of the Borrower under Section 14.7(b) ) such Non-Consenting B/B Lender shall, for purposes of facilitating an assignment of such portion of its Revolving Commitment, consent to such increase in the Borrowing Base and corresponding increase to its obligation to lend under such Borrowing Base and execute an Assignment and Acceptance to give effect to an assignment of such portion of its Revolving Commitment on the day when the increased Borrowing Base is effective under Section 2.14(d) (or such later date acceptable to Borrower, such Non-Consenting B/B Lender and Administrative Agent).

(j) Administrative Agent Data . The Administrative Agent hereby agrees to provide an updated Bank Price Deck to the Borrower (i) promptly, and in any event within three (3) Business Days, after the Administrative Agent’s request for an Interim Redetermination and (ii) promptly, and in any event within three (3) Business Days, upon any request of the Borrower. In addition, the Administrative Agent and the Revolving Lenders agree, upon request, to meet with the Borrower to discuss their evaluation of the reservoir engineering of the Oil and Gas Properties included in the Reserve Report and their respective methodologies for valuing such properties and the other factors considered in calculating the Borrowing Base.

(k) Revolving Facility Termination . If the Revolving Facility has terminated and a Borrowing Base Trigger Period is continuing, the Borrowing Base will be equal to the amount of (i) 65% of the PV-9 of the Proved Developed Producing Reserves described in the most recent Reserve Report delivered to the Administrative Agent, based on the Strip Price, plus (ii) 35% of the PV-9 of Proved Non-Producing Reserves described in such Reserve Report, based on the Strip Price, plus (iii) 25% of the PV-9 of Proved Undeveloped Reserves described in such Reserve Report, based on the Strip Price, plus or minus (iv) 65% of the PV-9 of the future receipts expected to be paid to or by the Borrower and its restricted subsidiaries under commodity Hedge Agreements or term physical sales contracts (other than basis differential commodity swap agreements), netted against the Strip Price, plus or minus (v) 65% of the PV-9 of the future receipts expected to be paid to or by the Borrower and its Restricted Subsidiaries under basis differential commodity Hedge Agreements, in each case for the Borrower and its Restricted Subsidiaries.

(l) Investment Grade Period . Notwithstanding anything in this Agreement to the contrary, during any Investment Grade Period, the provisions of Section 2.14(a) to (k) of and Section 4.3(c) will be deemed to be inapplicable and shall be disregarded for all purposes. Upon the end of any Investment Grade Period, the Borrowing Base will be determined using the mechanics set forth in Section 2.14(c) for Interim Redeterminations using the Engineering Reports delivered to the Administrative Agent pursuant to Section 10.13(b) and shall become effective pursuant to Section 2.14(d)(ii) . In addition, the Borrower shall (i) deliver to the Administrative Agent as soon as possible, but in any event no later than five (5) days after the first day of any Borrowing Base Trigger Period, the Reserve Report used to support the data and information relating to Hydrocarbon reserves included in the last annual report on Form 10-K (or any successor or comparable form) immediately prior to the Borrowing Base Trigger Event and (ii) comply with the provisions of Section 10.10(a) . For the avoidance of doubt, the Available Revolving Commitment will remain unaffected by the Borrowing Base until such determination.

2.15 Defaulting Lenders . Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a) Commitment Fees shall cease to accrue on the unfunded portion of the Revolving Commitment of such Defaulting Lender pursuant to Section 4.1(a) ;

(b) The Commitment, the Revolving Exposure and the Term Loan Exposure of such Defaulting Lender shall not be included in determining whether all Lenders, the Majority Revolving Lenders, the Majority Term Loan Lenders, the Required Revolving Lenders or Borrowing Base Required Lenders have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 14.1 ); provided that (i) any waiver, amendment or modification requiring the consent of all Lenders pursuant to Section 14.1 (other than Section 14.1(b)(x) or requiring the consent of each affected Lender pursuant to Section 14.1(b)(i) or (ix) or, shall require the consent of such Defaulting Lender (which for the avoidance of doubt would include any change to the Maturity Date applicable to such Defaulting Lender, decreasing or forgiving any principal or interest due to such Defaulting Lender, any decrease of any interest rate applicable to Loans made by such Defaulting Lender (other than the waiving of post-default interest rates) and any increase in such Defaulting Lender’s Commitment) and (ii) any redetermination, whether an increase, decrease or affirmation, of the Borrowing Base shall occur without the participation of a Defaulting Lender;

(c) If any Swingline Exposure or Letter of Credit Exposure exists at the time a Revolving Lender becomes a Defaulting Lender, then (i) all or any part of such Swingline Exposure and Letter of Credit Exposure of such Defaulting Lender will, subject to the limitation in the first proviso below, automatically be reallocated (effective on the day such Revolving Lender becomes a Defaulting Lender) among the Non-Defaulting Lenders pro rata in accordance with their respective Revolving Commitment Percentages; provided that (A) each Non-Defaulting Lender’s Revolving Exposure may not in any event exceed the Revolving Commitment Percentage of the Revolving Loan Limit of such Non-Defaulting Lender as in effect at the time of such reallocation and (B) neither such reallocation nor any payment by a Non-Defaulting Lender pursuant thereto will constitute a waiver or release of any claim the Borrower, the Administrative Agent, the Letter of Credit Issuers or any other Revolving Lender may have against such Defaulting Lender or cause such Defaulting Lender to be a Non-Defaulting Lender, (ii) to the extent that all or any portion (the “ unreallocated portion ”) of the Defaulting Lender’s Swingline Exposure or Letter of Credit Exposure cannot, or can only partially, be so reallocated to Non-Defaulting Lenders, whether by reason of the first proviso in Section 2.15(c)(i) or otherwise, the Borrower shall within two Business Days following notice by the Administrative Agent or the applicable Letter of Credit Issuer (x) first , prepay such Swingline Exposure and (y) second , Cash Collateralize for the benefit of the applicable Letter of Credit Issuer’ only the Borrower’s obligations corresponding to such Defaulting Lender’s Letter of Credit Exposure (after giving effect to any partial reallocation pursuant to clause (i) above), in accordance with the procedures set forth in Section 3.8 for so long as such Letter of Credit Exposure is outstanding, (iii) if the Borrower Cash Collateralizes any portion of such Defaulting Lender’s Letter of Credit Exposure pursuant to Section 2.15(c) , the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure during the period such Defaulting Lender’s Letter of Credit Exposure is Cash Collateralized, (iv) if the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to Section 2.15(c) , then the Letter of Credit Fees payable for the account of the Revolving Lenders pursuant to Section 4.1(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Revolving Commitment Percentages and the Borrower shall not be required to pay any Swingline or Letter of Credit Fees to the Defaulting Lender pursuant to Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure during the period that such Defaulting Lender’s Letter of Credit Exposure is reallocated, or (v) if any Defaulting Lender’s Letter of Credit Exposure is neither Cash Collateralized nor reallocated pursuant to this Section 2.15(c) , then, without prejudice to any rights or remedies of the Letter of Credit Issuer or any Revolving Lender hereunder, all Letter of Credit Fees payable under Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure shall be payable to the Letter of Credit Issuer until such Letter of Credit Exposure is Cash Collateralized and/or reallocated;

(d) So long as any Revolving Lender is a Defaulting Lender, no Swingline Lender shall be required to fund any Swingline Loan and no Letter of Credit Issuer will be required to issue any new Letter of Credit or amend any outstanding Letter of Credit to increase the Stated Amount thereof, alter the drawing terms thereunder or extend the expiry date thereof, unless the Letter of Credit Issuer is reasonably satisfied that any exposure that would result from the exposure to such Defaulting Lender is eliminated or fully covered by the Commitments of the Non-Defaulting Lenders or by Cash Collateralization or a combination thereof in accordance with clause (c) above or otherwise in a manner reasonably satisfactory to the Letter of Credit Issuer, and participating interests in any such newly issued or increased Letter of Credit or newly made Swingline Loan shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.15(c) (and Defaulting Lenders shall not participate therein); and

(e) If the Borrower, the Administrative Agent, the Swingline Lenders and each Letter of Credit Issuer agree in writing in their discretion that a Revolving Lender that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon, as of the effective date specified in such notice and subject to any conditions set forth therein, such Revolving Lender will cease to be a Defaulting Lender and will be a Non-Defaulting Lender and any applicable Cash Collateral shall be promptly returned to the Borrower and any Letter of Credit Exposure of such Revolving Lender reallocated pursuant to Section 2.15(c) shall be reallocated back to such Revolving Lender; provided that, except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.

(f) Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article XII or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 14.8 ), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first , to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second , to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to each Letter of Credit Issuer and the Swingline Lenders hereunder; third , as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fourth , if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; fifth , to the payment of any amounts owing to the Lenders, the Letter of Credit Issuers or the Swingline Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender, such Letter of Credit Issuer or the Swingline Lenders against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; sixth , so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and seventh , to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans or Unpaid Drawings, such payment shall be applied solely to pay the relevant Loans of, and Unpaid Drawings owed to, the relevant non-Defaulting Lenders on a pro rata basis prior to being applied in the manner set forth in this Section 2.15(f) . Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to Section 3.8 shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

2.16 Increase of Commitments .

(a) Subject to the conditions set forth in Section 2.16(c) , the Borrower may, from time to time (including in connection with any redetermination of the Borrowing Base), increase the existing Total Revolving Commitment then in effect (any such increase a “ Revolving Incremental Increase ”) by increasing the Revolving Commitment of a Lender (an “ Increasing Revolving Lender ”) or by causing a Person that at such time is not a Lender to become a Lender (an “ Additional Revolving Lender ”).

(b) Subject to the conditions set forth in Section 2.16(c) , the Borrower may, from time to time increase the existing Total Term Loan Commitment then in effect (any such increase a “ Term Loan Incremental Increase ”) by increasing the Term Loan Commitment of a Lender (an “ Increasing Term Loan Lender ”) or by causing a Person that at such time is not a Lender to become a Lender (an “ Additional Term Loan Lender ”).

(i) no Incremental Increase shall be less than $25,000,000 (and increments of $1,000,000 above that minimum) unless the Administrative Agent otherwise consents, and no Incremental Increase shall be permitted if after the funding thereof the Total Commitment would exceed the Maximum Aggregate Amount;

(ii) no Event of Default shall have occurred and be continuing after giving effect to an Incremental Increase;

(iii) no Lender’s Commitment may be increased without the consent of such Lender;

(iv) the Administrative Agent, the Swingline Lenders and the Letter of Credit Issuer must consent to any Revolving Incremental Increase and the addition of any Additional Revolving Lender, in each case, such consent not to be unreasonably withheld or delayed;

(v) the maturity date of any Incremental Increase shall be the same as the Maturity Date; and

(vi) any Incremental Increase shall be on the exact same terms and pursuant to the exact same documentation (including, without limitation, the Applicable Margin) applicable to this Agreement (other than with respect to any arrangement, structuring, upfront or other fees or discounts payable in connection with such Incremental Increase).

(d) Each Increasing Lender or Additional Lender shall execute and deliver to the Borrower, the Administrative Agent, and in the case of a Revolving Incremental Increase, the Swingline Lender and the Letter of Credit Issuer customary documentation (any such documentation, an “ Incremental Agreement ”) implementing any Incremental Increase. Upon receipt by the Administrative Agent of one or more executed Incremental Agreements increasing the Commitments of Lenders and/or adding Commitments from Additional Lenders as provided in this Section 2.16 , (i) the Total Revolving Commitment or the Total Term Loan Commitment, as the case may be, shall be increased automatically on the effective date set forth in such Incremental Agreements by the aggregate amount indicated in such Incremental Agreements without further action by the Borrower, the Administrative Agent, the Swingline Lender and the Letter of Credit Issuer or any Lender, (ii) Schedule 1.1(a) or Schedule 1.1(b) , as applicable, and the Register shall each be amended to add such Additional Lender’s Commitment or to

reflect the increase in the Commitment of an Increasing Lender, and the Revolving Commitment Percentages or Term Loan Commitment Percentages, as applicable, of the Lenders shall be adjusted accordingly to reflect the Incremental Increase of each Additional Lender and/or each Increasing Lender, (iii) the Administrative Agent shall distribute to the Borrower, the Administrative Agent, the Swingline Lender, the Letter of Credit Issuer and each Lender the revised Schedule 1.1(a) or Schedule 1.1(b) , as applicable, (iv) any such Additional Lender shall be deemed to be a party in all respects to this Agreement and any other Credit Documents to which the Lenders are a party, and (v) upon the effective date set forth in such Incremental Agreement, any such Lender party to the Incremental Agreement shall purchase a pro rata portion of the outstanding Loans (including, in the case of a Revolving Incremental Increase, participations in L/C Obligations or Swingline Loans) of each of the current Lenders such that each Lender (including any Additional Lender, if applicable) shall hold its respective Revolving Commitment Percentage or Term Loan Commitment Percentage, as applicable, of the outstanding Loans (and, in the case of a Revolving Incremental Increase, participation interests in participations in L/C Obligations or Swingline Loans) as reflected in the revised Schedule 1.1(a) or Schedule 1.1(b) , as applicable, required by this Section 2.16 .

ARTICLE III
LETTERS OF CREDIT

3.1 Letters of Credit .

(a) Subject to and upon the terms and conditions herein set forth, at any time and from time to time on and after the Funding Date and prior to the L/C Maturity Date, the Letter of Credit Issuer agrees, in reliance upon the agreements of the Lenders set forth in this Article III , to issue upon the request of the Borrower and for the direct or indirect benefit of the Borrower and the Restricted Subsidiaries, a letter of credit or letters of credit (the “ Letters of Credit ” and each, a “ Letter of Credit ”) in such form and with such Issuer Documents as may be approved by the Letter of Credit Issuer in its reasonable discretion; provided that the Borrower shall be a co-applicant of, and jointly and severally liable with respect to, each Letter of Credit issued for the account of a Restricted Subsidiary.

(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letters of Credit Outstanding at such time, would exceed the Letter of Credit Commitment then in effect, (ii) no Letter of Credit shall be issued the Stated Amount of which would cause the Total Revolving Exposure at such time to exceed the Revolving Loan Limit then in effect, (iii) each Letter of Credit shall have an expiration date occurring no later than one year after the date of issuance or such longer period of time as may be agreed by the applicable Letter of Credit Issuer, unless otherwise agreed upon by the Administrative Agent and the Letter of Credit Issuer or as provided under Section 3.2(b) ; provided that any Letter of Credit may provide for automatic renewal thereof for additional periods of up to 12 months or such longer period of time as may be agreed by the applicable Letter of Credit Issuer, subject to the provisions of Section 3.2(b) ; provided , further , that in no event shall such expiration date occur later than the L/C Maturity Date unless arrangements which are reasonably satisfactory to the Letter of Credit Issuer to Cash Collateralize (or backstop) such Letter of Credit have been made ( provided , however , that no Lenders shall be obligated to fund participations in respect of any Letter of Credit after the Maturity Date), (iv) each Letter of Credit shall be denominated in Dollars, (v) no Letter of Credit shall be issued if it would be illegal under any applicable Requirement of Law for the beneficiary of the Letter of Credit to have a Letter of Credit issued in its favor and (vi) no Letter of Credit shall be issued by a Letter of Credit Issuer after it has received a written notice from any Credit Party or the Administrative Agent or the Majority Revolving Lenders stating that a Default or Event of Default has occurred and is continuing until such time as the Letter of Credit Issuer shall have received a written notice (A) of rescission of such notice from the party or parties originally delivering such notice, (B) of

the waiver of such Default or Event of Default in accordance with the provisions of Section 14.1 or (C) that such Default or Event of Default is no longer continuing.

(c) Upon at least one Business Day’s prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent and the Letter of Credit Issuer (which notice the Administrative Agent shall promptly transmit to each of the applicable Lenders), the Borrower shall have the right, on any day, permanently to terminate or reduce the Letter of Credit Commitment in whole or in part; provided that, after giving effect to such termination or reduction, the Letters of Credit Outstanding shall not exceed the Letter of Credit Commitment.

3.2 Letter of Credit Requests .

(a) Whenever the Borrower desires that a Letter of Credit be issued for its account, the Borrower shall give the Administrative Agent and the Letter of Credit Issuer a Letter of Credit Request by no later than 1:00 p.m. (New York City time) at least two (or such lesser number as may be agreed upon by the Administrative Agent and the Letter of Credit Issuer) Business Days prior to the proposed date of issuance. Each notice shall be executed by the Borrower and shall be in the form of Exhibit B or such other form (including by electronic or fax transmission) as reasonably agreed between the Borrower, the Administrative Agent and the Letter of Credit Issuer (each a “ Letter of Credit Request ”). No Letter of Credit Issuer shall issue any Letters of Credit unless such Letter of Credit Issuer shall have received notice from the Administrative Agent that the conditions to such issuance have been met, which notice shall be deemed given (i) if the Letter of Credit Issuer has not received notice from the Administrative Agent that the conditions to such issuance have been met within two Business Days after the date of the applicable Letter of Credit Request or (ii) if the aggregate amount of Letters of Credit Outstanding issued by such Letter of Credit Issuer then outstanding does not exceed the amount theretofore agreed to by the Borrower, the Administrative Agent and such Letter of Credit Issuer, and the Administrative Agent has not otherwise notified such Letter of Credit Issuer that it may no longer rely on this clause (i) .

(b) If the Borrower so requests in any applicable Letter of Credit Request, the Letter of Credit Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “ Auto-Extension Letter of Credit ”); provided that any such Auto-Extension Letter of Credit must permit the Letter of Credit Issuer to prevent any such extension at least once in each 12-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “ Non-Extension Notice Date ”) in each such 12-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Letter of Credit Issuer, the Borrower shall not be required to make a specific request to the Letter of Credit Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Lenders shall be deemed to have authorized (but may not require) the Letter of Credit Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Maturity Date; provided , however , that the Letter of Credit Issuer shall not permit any such extension if (i) the Letter of Credit Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (b) of Section 3.1 or otherwise), or (ii) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (A) from the Administrative Agent that the Majority Revolving Lenders have elected not to permit such extension or (B) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Article VIII are not then satisfied, and in each such case directing the Letter of Credit Issuer not to permit such extension.

(c) Each Letter of Credit Issuer (other than the Administrative Agent or any of its Affiliates) shall, at least once each week, provide the Administrative Agent with a list of all Letters of Credit issued by it that are outstanding at such time; provided that, upon written request from the Administrative Agent, such Letter of Credit Issuer shall thereafter notify the Administrative Agent in writing on each Business Day of all Letters of Credit issued on the prior Business Day by such Letter of Credit Issuer.

(d) The making of each Letter of Credit Request shall be deemed to be a representation and warranty by the Borrower that the Letter of Credit may be issued in accordance with, and will not violate the requirements of, Section 3.1(b) .

3.3 Letter of Credit Participations .

(a) Immediately upon the issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of Credit Issuer shall be deemed to have sold and transferred to each Revolving Lender (each such Revolving Lender, in its capacity under this Section 3.3 , an “ L/C Participant ”), and each such L/C Participant shall be deemed irrevocably and unconditionally to have purchased and received from the Letter of Credit Issuer, without recourse or warranty, an undivided interest and participation (each an “ L/C Participation ”), to the extent of such L/C Participant’s Revolving Commitment Percentage, in each Letter of Credit, each substitute therefor, each drawing made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto.

(b) In determining whether to pay under any Letter of Credit, the relevant Letter of Credit Issuer shall have no obligation relative to the L/C Participants other than to confirm that (i) any documents required to be delivered under such Letter of Credit have been delivered, (ii) the Letter of Credit Issuer has examined the documents with reasonable care and (iii) the documents appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the relevant Letter of Credit Issuer under or in connection with any Letter of Credit issued by it, if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for the Letter of Credit Issuer any resulting liability.

(c) In the event that the Letter of Credit Issuer makes any payment under any Letter of Credit issued by it and the Borrower shall not have repaid such amount in full to the respective Letter of Credit Issuer pursuant to Section 3.4(a) , or if any reimbursement payment is required to be refunded to the Borrower, the Letter of Credit Issuer shall promptly notify the Administrative Agent and each L/C Participant of such failure, and each such L/C Participant shall promptly and unconditionally pay to the Administrative Agent for the account of the Letter of Credit Issuer, the amount of such L/C Participant’s Revolving Commitment Percentage of such unreimbursed payment in Dollars and in immediately available funds; provided , however , that no L/C Participant shall be obligated to pay to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Commitment Percentage of such unreimbursed amount arising from any wrongful payment made by the Letter of Credit Issuer under any such Letter of Credit as a result of acts or omissions constituting willful misconduct or gross negligence on the part of the Letter of Credit Issuer (as determined in a final and non-appealable judgment by a court of competent jurisdiction). Each L/C Participant shall make available to the Administrative Agent for the account of the Letter of Credit Issuer such L/C Participant’s Revolving Commitment Percentage of the amount of such payment no later than 1:00 p.m. (New York City time) on the first Business Day after the date notified by the Letter of Credit Issuer in immediately available funds. If and to the extent such L/C Participant shall not have so made its Revolving Commitment Percentage of the amount of such payment available to the Administrative Agent for the account of the Letter of Credit Issuer, such L/C Participant agrees to pay to the Administrative Agent for the account of the Letter of Credit Issuer, forthwith on

demand, such amount, together with interest thereon for each day from such date until the date such amount is paid to the Administrative Agent for the account of the Letter of Credit Issuer at a rate per annum equal to the Overnight Rate from time to time then in effect, plus any administrative, processing or similar fees customarily charged by the Letter of Credit Issuer in connection with the foregoing. The failure of any L/C Participant to make available to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Commitment Percentage of any payment under any Letter of Credit shall not relieve any other L/C Participant of its obligation hereunder to make available to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Commitment Percentage of any payment under such Letter of Credit on the date required, as specified above, but no L/C Participant shall be responsible for the failure of any other L/C Participant to make available to the Administrative Agent such other L/C Participant’s Revolving Commitment Percentage of any such payment.

(d) Whenever the Letter of Credit Issuer receives a payment in respect of an unpaid reimbursement obligation as to which the Administrative Agent has received for the account of the Letter of Credit Issuer any payments from the L/C Participants pursuant to clause (c) above, the Letter of Credit Issuer shall pay to the Administrative Agent and the Administrative Agent shall promptly pay to each L/C Participant that has paid its Revolving Commitment Percentage of such reimbursement obligation, in Dollars and in immediately available funds, an amount equal to such L/C Participant’s share (based upon the proportionate aggregate amount originally funded by such L/C Participant to the aggregate amount funded by all L/C Participants) of the principal amount so paid in respect of such reimbursement obligation and interest thereon accruing after the purchase of the respective L/C Participations at the Overnight Rate.

(e) The obligations of the L/C Participants to make payments to the Administrative Agent for the account of a Letter of Credit Issuer with respect to Letters of Credit shall be irrevocable and not subject to counterclaim, set-off or other defense or any other qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including under any of the following circumstances:

(i) any lack of validity or enforceability of this Agreement or any of the other Credit Documents;

(ii) the existence of any claim, set-off, defense or other right that the Borrower may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, the Letter of Credit Issuer, any Lender or other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower and the beneficiary named in any such Letter of Credit);

(iii) any draft, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;

(iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents; or

(v) the occurrence of any Default or Event of Default;

provided , however , that no L/C Participant shall be obligated to pay to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Commitment Percentage of any unreimbursed amount arising from any wrongful payment made by the Letter of Credit Issuer under a Letter of Credit as a result

of acts or omissions constituting willful misconduct, bad faith or gross negligence on the part of the Letter of Credit Issuer (as determined in a final and non-appealable judgment by a court of competent jurisdiction).

3.4 Agreement to Repay Letter of Credit Drawings .

(a) The Borrower hereby agrees to reimburse the Letter of Credit Issuer by making payment in Dollars to the Administrative Agent for the account of the Letter of Credit Issuer in immediately available funds, for any payment or disbursement made by the Letter of Credit Issuer under any Letter of Credit issued by it (each such amount so paid until reimbursed, an “ Unpaid Drawing ”) (i) within one Business Day of the date of such payment or disbursement if the Letter of Credit Issuer provides notice to the Borrower of such payment or disbursement prior to 11:00 a.m. (New York City time) on such next succeeding Business Day (from the date of such payment or disbursement or (ii) if such notice is received after such time, on the next Business Day following the date of receipt of such notice (such required date for reimbursement under clause (i) or (ii) , as applicable, on such Business Day (the “ Reimbursement Date ”)), with interest on the amount so paid or disbursed by such Letter of Credit Issuer, from and including the date of such payment or disbursement to but excluding the Reimbursement Date, at the per annum rate for each day equal to the rate described in Section 2.8(a) ; provided that, notwithstanding anything contained in this Agreement to the contrary, with respect to any Letter of Credit, (i) unless the Borrower shall have notified the Administrative Agent and the Letter of Credit Issuer prior to 11:00 a.m. (New York City time) on the Reimbursement Date that the Borrower intends to reimburse the Letter of Credit Issuer for the amount of such drawing with funds other than the proceeds of Loans, the Borrower shall be deemed to have given a Notice of Borrowing requesting that the Lenders make Loans (which shall be ABR Loans) on the Reimbursement Date in an amount equal to the amount at such drawing, and (ii) the Administrative Agent shall promptly notify each Letter of Credit Participant of such drawing and the amount of its Loan to be made in respect thereof, and each Letter of Credit Participant shall be irrevocably obligated to make a Revolving Loan to the Borrower in the manner deemed to have been requested in the amount of its Revolving Commitment Percentage of the applicable Unpaid Drawing by 12:00 noon (New York City time) on such Reimbursement Date by making the amount of such Revolving Loan available to the Administrative Agent. Such Revolving Loans made in respect of such Unpaid Drawing on such Reimbursement Date shall be made without regard to the limits of Section 2.2 and without regard to the satisfaction of the conditions set forth in Article VIII . The Administrative Agent shall use the proceeds of such Revolving Loans solely for purpose of reimbursing the Letter of Credit Issuer for the related Unpaid Drawing. In the event that the Borrower fails to Cash Collateralize any Letter of Credit that is outstanding on the Maturity Date, the full amount of the Letters of Credit Outstanding in respect of such Letter of Credit shall be deemed to be an Unpaid Drawing subject to the provisions of this Section 3.4 except that the Letter of Credit Issuer shall hold the proceeds received from the Revolving Lenders as contemplated above as Cash Collateral for such Letter of Credit to reimburse any Drawing under such Letter of Credit and shall use such proceeds first , to reimburse itself for any Drawings made in respect of such Letter of Credit following the L/C Maturity Date, second , to the extent such Letter of Credit expires or is returned undrawn while any such Cash Collateral remains, to the repayment of obligations in respect of any Revolving Loans that have not paid at such time and third , to the Borrower or as otherwise directed by a court of competent jurisdiction. Nothing in this Section 3.4(a) shall affect the Borrower’s obligation to repay all outstanding Loans when due in accordance with the terms of this Agreement.

(b) The obligations of the Borrower under this Section 3.4 to reimburse the Letter of Credit Issuer with respect to Unpaid Drawings (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment that the Borrower or any other Person may have or have had against the Letter of Credit Issuer, the Administrative Agent or any Lender (including in its capacity as an L/C Participant),

including any defense based upon the failure of any drawing under a Letter of Credit (each a “ Drawing ”) to conform to the terms of the Letter of Credit or any non-application or misapplication by the beneficiary of the proceeds of such Drawing; provided that the Borrower shall not be obligated to reimburse the Letter of Credit Issuer for any wrongful payment made by the Letter of Credit Issuer under the Letter of Credit issued by it as a result of acts or omissions constituting willful misconduct, bad faith or gross negligence on the part of the Letter of Credit Issuer (as determined in a final and non-appealable judgment by a court of competent jurisdiction).

3.5 Increased Costs . If, after the Funding Date, the adoption of any Change in Law shall either (a) impose, modify or make applicable any reserve, deposit, capital adequacy, liquidity or similar requirement against letters of credit issued by the Letter of Credit Issuer, or any L/C Participant’s L/C Participation therein, or (b) impose on the Letter of Credit Issuer or any L/C Participant any other conditions, costs or expenses affecting its obligations under this Agreement in respect of Letters of Credit or L/C Participations therein or any Letter of Credit or such L/C Participant’s L/C Participation therein, and the result of any of the foregoing is to increase the cost to the Letter of Credit Issuer or such L/C Participant of issuing, maintaining or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by the Letter of Credit Issuer or such L/C Participant hereunder (other than (i) Taxes indemnifiable under Section 5.4 , or (ii) Excluded Taxes) in respect of Letters of Credit or L/C Participations therein, then, promptly (and in any event no later than 15 days) after receipt of written demand to the Borrower by the Letter of Credit Issuer or such L/C Participant, as the case may be (a copy of which notice shall be sent by the Letter of Credit Issuer or such L/C Participant to the Administrative Agent), the Borrower shall pay to the Letter of Credit Issuer or such L/C Participant such additional amount or amounts as will compensate the Letter of Credit Issuer or such L/C Participant for such increased cost or reduction, it being understood and agreed, however, that the Letter of Credit Issuer or an L/C Participant shall not be entitled to such compensation as a result of such Person’s compliance with, or pursuant to any request or directive to comply with, any such Requirement of Law as in effect on the Funding Date (except as otherwise set forth in the definition of Change in Law). A certificate submitted to the Borrower by the relevant Letter of Credit Issuer or an L/C Participant, as the case may be (a copy of which certificate shall be sent by the Letter of Credit Issuer or such L/C Participant to the Administrative Agent), setting forth in reasonable detail the basis for the determination of such additional amount or amounts necessary to compensate the Letter of Credit Issuer or such L/C Participant as aforesaid shall be conclusive and binding on the Borrower absent clearly demonstrable error.

3.6 New or Successor Letter of Credit Issuer .

(a) The Letter of Credit Issuer may resign as a Letter of Credit Issuer upon 30 days’ prior written notice to the Administrative Agent, the Revolving Lenders and the Borrower. The Borrower may replace the Letter of Credit Issuer for any reason upon written notice to the Letter of Credit Issuer and the Administrative Agent and may add Letter of Credit Issuers at any time upon notice to the Administrative Agent. If the Letter of Credit Issuer shall resign or be replaced, or if the Borrower shall decide to add a new Letter of Credit Issuer under this Agreement, then the Borrower may appoint from among the Revolving Lenders a successor issuer of Letters of Credit or a new Letter of Credit Issuer, as the case may be, or, with the consent of the Administrative Agent (such consent not to be unreasonably withheld) and such new Letter of Credit Issuer, another successor or new issuer of Letters of Credit, whereupon such successor issuer shall succeed to the rights, powers and duties of the replaced or resigning Letter of Credit Issuer under this Agreement and the other Credit Documents, or such new issuer of Letters of Credit shall be granted the rights, powers and duties of a Letter of Credit Issuer hereunder, and the term “Letter of Credit Issuer” shall mean such successor or such new issuer of Letters of Credit effective upon such appointment. The acceptance of any appointment as a Letter of Credit Issuer hereunder whether as a successor issuer or new issuer of Letters of Credit in accordance with this Agreement, shall be evidenced by an agreement entered into by such new or successor issuer of Letters of

Credit, in a form reasonably satisfactory to the Borrower and the Administrative Agent and, from and after the effective date of such agreement, such new or successor issuer of Letters of Credit shall become a “Letter of Credit Issuer” hereunder. After the resignation or replacement of a Letter of Credit Issuer hereunder, the resigning or replaced Letter of Credit Issuer shall remain a party hereto and shall continue to have all the rights and obligations of a Letter of Credit Issuer under this Agreement and the other Credit Documents with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit. In connection with any resignation or replacement pursuant to this clause (a) (but, in case of any such resignation, only to the extent that a successor issuer of Letters of Credit shall have been appointed), either (i) the Borrower, the resigning or replaced Letter of Credit Issuer and the successor issuer of Letters of Credit shall arrange to have any outstanding Letters of Credit issued by the resigning or replaced Letter of Credit Issuer replaced with Letters of Credit issued by the successor issuer of Letters of Credit or (ii) the Borrower shall cause the successor issuer of Letters of Credit, if such successor issuer is reasonably satisfactory to the replaced or resigning Letter of Credit Issuer, to issue “back-stop” Letters of Credit naming the resigning or replaced Letter of Credit Issuer as beneficiary for each outstanding Letter of Credit issued by the resigning or replaced Letter of Credit Issuer, which new Letters of Credit shall have a Stated Amount equal to the Letters of Credit being back-stopped and the sole requirement for drawing on such new Letters of Credit shall be a drawing on the corresponding back-stopped Letters of Credit. After any resigning or replaced Letter of Credit Issuer’s resignation or replacement as Letter of Credit Issuer, the provisions of this Agreement relating to a Letter of Credit Issuer shall inure to its benefit as to any actions taken or omitted to be taken by it (A) while it was a Letter of Credit Issuer under this Agreement or (B) at any time with respect to Letters of Credit issued by such Letter of Credit Issuer.

(b) To the extent that there are, at the time of any resignation or replacement as set forth in clause (a) above, any outstanding Letters of Credit, nothing herein shall be deemed to impact or impair any rights and obligations of any of the parties hereto with respect to such outstanding Letters of Credit (including any obligations related to the payment of fees or the reimbursement or funding of amounts drawn), except that the Borrower, the resigning or replaced Letter of Credit Issuer and the successor issuer of Letters of Credit shall have the obligations regarding outstanding Letters of Credit described in clause (a) above.

3.7 Role of Letter of Credit Issuer . Each Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the Letter of Credit Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the Letter of Credit Issuer, the Administrative Agent, any of their respective affiliates nor any correspondent, participant or assignee of the Letter of Credit Issuer shall be liable to any Revolving Lender for (a) any action taken or omitted in connection herewith at the request or with the approval of the Majority Revolving Lenders, (b) any action taken or omitted in the absence of gross negligence or willful misconduct or (c) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the Letter of Credit Issuer, the Administrative Agent, any of their respective affiliates nor any correspondent, participant or assignee of the Letter of Credit Issuer shall be liable or responsible for any of the matters described in Section 3.3(e) ; provided that anything in such Section to the contrary notwithstanding, the Borrower may have a claim against the Letter of Credit Issuer, and the Letter of Credit Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to special, indirect, consequential, exemplary or punitive, damages suffered by the Borrower which the Borrower proves were caused by the Letter of

Credit Issuer’s willful misconduct or gross negligence (as determined in a final and non-appealable judgment by a court of competent jurisdiction) or the Letter of Credit Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the Letter of Credit Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the Letter of Credit Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.

3.8 Cash Collateral .

(a) Upon the request of the Majority Revolving Lenders if, as of the L/C Maturity Date, there are any Letters of Credit Outstanding, the Borrower shall immediately Cash Collateralize the then Letters of Credit Outstanding.

(b) If any Event of Default shall occur and be continuing, the Majority Revolving Lenders may require that the L/C Obligations be Cash Collateralized; provided that, upon the occurrence of an Event of Default referred to in Section 12.5 with respect to the Borrower, the Borrower shall immediately Cash Collateralize the Letters of Credit then outstanding and no notice or request by or consent from the Majority Revolving Lenders shall be required.

(c) For purposes of this Agreement, “ Cash Collateralize ” shall mean to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Letter of Credit Issuer and the Revolving Lenders, as collateral for the L/C Obligations, cash or deposit account balances in an amount equal to the amount of the Letters of Credit Outstanding required to be Cash Collateralized pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the Letter of Credit Issuer (which documents are hereby consented to by the Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the Letter of Credit Issuer and the L/C Participants, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Such Cash Collateral shall be maintained in blocked, interest bearing deposit accounts established by and in the name of the Borrower, but under the “control” (as defined in Section 9-104 of the Uniform Commercial Code) of the Administrative Agent.

3.9 Applicability of ISP and UCP . Unless otherwise expressly agreed by the Letter of Credit Issuer and the Borrower when a Letter of Credit is issued, (a) the rules of the ISP shall apply to each standby Letter of Credit and (b) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance, shall apply to each commercial Letter of Credit.

3.10 Conflict with Issuer Documents . In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.

3.11 Letters of Credit Issued for Restricted Subsidiaries . Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Restricted Subsidiary, the Borrower shall be obligated to reimburse the Letter of Credit Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Restricted Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Restricted Subsidiaries.

ARTICLE IV
FEES; COMMITMENTS

4.1 Fees .

(a) The Borrower agrees to pay to the Administrative Agent in Dollars, for the account of each Revolving Lender (in each case pro rata according to the respective Revolving Commitment Percentages of the Revolving Lenders), a commitment fee (the “ Commitment Fee ”) for each day from the Funding Date until but excluding the Termination Date. Each Commitment Fee shall be payable by the Borrower (i) quarterly in arrears on the last Business Day of each March, June, September and December (for the three-month period (or portion thereof) ended on such day for which no payment has been received) and (ii) on the Termination Date (for the period ended on such date for which no payment has been received pursuant to clause (i) above), and shall be computed for each day during such period at a rate per annum equal to the Commitment Fee Rate in effect on such day on the Available Revolving Commitment (assuming for this purpose that any Swingline Exposure does not reduce the Available Revolving Commitment) in effect on such day.

(b) The Borrower agrees to pay to the Administrative Agent in Dollars for the account of the Revolving Lenders pro rata on the basis of their respective Letter of Credit Exposure, a fee in respect of each Letter of Credit (the “ Letter of Credit Fee ”), for the period from the date of issuance of such Letter of Credit until the termination or expiration date of such Letter of Credit computed at the per annum rate for each day equal to the Applicable Margin for LIBOR Loans on the average daily Stated Amount of such Letter of Credit. Such Letter of Credit Fees shall be due and payable (i) quarterly in arrears on the last Business Day of each March, June, September and December and (ii) on the Termination Date (for the period for which no payment has been received pursuant to clause (i) above).

(c) The Borrower agrees to pay to each Letter of Credit Issuer a fee in respect of each Letter of Credit issued by it (the “ Fronting Fee ”), for the period from the date of issuance of such Letter of Credit to the termination or expiration date of such Letter of Credit, computed at the rate for each day equal to 0.125% per annum (or such other amount a may be agreed in a separate writing between the Borrower and any Letter of Credit Issuer) on the average daily Stated Amount of such Letter of Credit (or at such other rate per annum as agreed in writing between the Borrower and the Letter of Credit Issuer). Such Fronting Fees shall be due and payable by the Borrower (i) quarterly in arrears on the last Business Day of each March, June, September and December and (ii) on the Termination Date (for the period for which no payment has been received pursuant to clause (i) above).

(d) The Borrower agrees to pay directly to the Letter of Credit Issuer upon each issuance of, drawing under, and/or amendment of, a Letter of Credit issued by it such amount as the Letter of Credit Issuer and the Borrower shall have agreed upon for issuances of, drawings under or amendments of, letters of credit issued by it.

(e) The Borrower agrees to pay to the Administrative Agent the administrative agent fees in the amounts and on the dates as set forth in writing from time to time between the Administrative Agent and the Borrower.

4.2 Voluntary Reduction of Commitments .

(a) Upon at least two Business Days’ prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent at the Administrative Agent’s Office (which notice the Administrative Agent shall promptly transmit to each of the Revolving Lenders), the Borrower shall have the right, without premium or penalty, on any day, to permanently terminate or reduce the

Revolving Commitments, as determined by the Borrower, in whole or in part; provided that (i) any such termination or reduction shall apply ratably to reduce each Revolving Lender’s Revolving Commitment, (b) any partial reduction pursuant to this Section 4.2 shall be in the amount of at least $500,000 and in an integral multiple of $100,000 in excess thereof and (c) after giving effect to such termination or reduction and to any prepayments of Revolving Loans or cancellation or Cash Collateralization of Letters of Credit made on the date thereof in accordance with this Agreement, the Total Revolving Exposure shall not exceed the Revolving Loan Limit.

(b) The Borrower may terminate the unused amount of the Commitment of a Defaulting Lender upon not less than two (2) Business Days’ prior notice to the Administrative Agent (which will promptly notify the Lenders thereof), and in such event the provisions of Section 2.15(f) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts), provided that such termination will not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, any Letter of Credit Issuer, the Swingline Lender or any Lender may have against such Defaulting Lender.

4.3 Mandatory Termination or Reduction of Commitments .

(a) The Total Revolving Commitment shall terminate at 5:00 p.m. (New York City time) on the Termination Date.

(b) The Swingline Commitment shall terminate at 5:00 p.m. (New York City time) on the earlier of (x) the Swingline Maturity Date and (y) the Termination Date.

(c) If any reduction in the Borrowing Base would result in the Borrowing Base being less than the Total Revolving Commitments, the Total Revolving Commitments shall be automatically and permanently (but subject to Section 2.16 ) reduced, without premium or penalty, contemporaneously with such reduction in the Borrowing Base so that the Total Revolving Commitment equals the Borrowing Base as reduced; provided that any such reduction shall apply ratably to reduce each Revolving Lender’s Revolving Commitment. Concurrently with, and effective on, the Redetermination Date applicable to such Borrowing Base reduction, (i) Schedule 1.1(a) and the Register shall each be amended to reflect the decrease in the Total Revolving Commitment and the Commitment of each Lender and (ii) the Administrative Agent shall promptly distribute to the Borrower, the Administrative Agent, the Swingline Lender, the Letter of Credit Issuer and each Revolving Lender the revised Schedule 1.1(a) .

(d) Notwithstanding anything to the contrary in this Agreement, if the Spinoff Transaction is not consummated by the Spinoff Transaction Deadline, the Total Revolving Commitments shall be automatically and permanently terminated on the Business Day immediately following the Spinoff Transaction Deadline.

ARTICLE V
PAYMENTS

5.1 Voluntary Prepayments . The Borrower shall have the right to prepay Loans and Swingline Loans, in each case, without premium or penalty, in whole or in part from time to time on the following terms and conditions:

(a) the Borrower shall give the Administrative Agent at the Administrative Agent’s Office written notice (or telephonic notice promptly confirmed in writing) of its intent to make such prepayment, the amount of such prepayment and (in the case of LIBOR Loans) the specific Borrowing(s)

being prepaid, which notice shall be given by the Borrower no later than 1:00 p.m. (New York City time) (i) in the case of LIBOR Loans, three Business Days prior to and (ii) in the case of ABR Loans on the date of such prepayment and shall promptly be transmitted by the Administrative Agent to each of the Lenders;

(b) each partial prepayment of (i) LIBOR Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in excess thereof, and (ii) any ABR Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in excess thereof; provided that no partial prepayment of LIBOR Loans made pursuant to a single Borrowing shall reduce the outstanding LIBOR Loans made pursuant to such Borrowing to an amount less than $1,000,000 for such LIBOR Loans; and

(c) any prepayment of LIBOR Loans pursuant to this Section 5.1 on any day other than the last day of an Interest Period applicable thereto shall be subject to compliance by the Borrower with the applicable provisions of Section 2.11 .

Each such notice shall specify the date and amount of such prepayment and the Type of Loans to be prepaid. At the Borrower’s election in connection with any prepayment pursuant to this Section 5.1 , such prepayment shall not be applied to any Loans of a Defaulting Lender.

5.2 Mandatory Prepayments .

(a) Repayment following Excess Revolving Exposure . If, at any time, including as a result of giving effect to any termination or reduction of the Revolving Commitments pursuant to Section 4.2(a) , the Total Revolving Exposure exceeds the Revolving Loan Limit (and if terminated or reduced, as terminated or reduced), then the Borrower shall on the same Business Day (i) prepay the Swingline Loans and, after all Swingline Loans have been paid in full, the remaining Revolving Loans on the date such excess (and in the case of a termination or reduction, such termination or reduction) has occurred in an aggregate principal amount equal to such excess and (ii) if any excess remains after prepaying all of the Revolving Loans and Swingline Loans as a result of any Letter of Credit Exposure, pay to the Administrative Agent on behalf of the Letter of Credit Issuer and the L/C Participants an amount in cash equal to such excess to be held as Cash Collateral as provided in Section 3.8 .

(b) Repayment of Loans Following Redetermination or Adjustment of Borrowing Base .

(i) During a Borrowing Base Trigger Period, upon any redetermination of the Borrowing Base in accordance with Sections 2.14(b), 2.14(g) or 2.14(h), if the Total Exposure exceeds the redetermined Borrowing Base, then the Borrower shall, within 10 Business Days after its receipt of a New Borrowing Base Notice indicating such Borrowing Base Deficiency, inform the Administrative Agent of the Borrower’s election to: (A) within 30 days following such election prepay the Loans in an aggregate principal amount equal to such excess, (B) prepay Loans in six equal monthly installments, commencing on the 30 th day following its receipt of such New Borrowing Base Notice with each payment being equal to 1/6 th of the aggregate principal amount of such excess, (C) within 30 days following such election, provide additional Collateral in the form of additional Oil and Gas Properties not evaluated in the most recently delivered Reserve Report or other Collateral reasonably acceptable to the Administrative Agent having a Borrowing Base value (as proposed by the Administrative Agent and approved by the Required Revolving Lenders) sufficient, after giving effect to any other actions taken pursuant to this Section 5.2(b)(i) to eliminate any such excess or (D) undertake a combination of clauses (A) , (B) and (C) ; provided that (1) if because of Letter of Credit Exposure, a Borrowing Base Deficiency remains after prepaying all of the Revolving Loans, the Borrower shall Cash Collateralize such Letters of Credit in an amount equal to such remaining Borrowing Base Deficiency as provided in Section 3.8 and

(2) with respect to each prepayment of Term Loans required under this Section 5.2(b)(i) , such prepayment shall be made if, and to the extent that, any excess remains after the Borrower prepays the Revolving Loans and Cash Collateralizes the Letters of Credit to the extent required under this Section 5.2(b)(i) ; provided further , that all payments required to be made pursuant to this Section 5.2(b)(i) must be made on or prior to the Termination Date.

(ii) During a Borrowing Base Trigger Period, upon any adjustment to the Borrowing Base pursuant to Sections 2.14(e) or 2.14(f) , if the Total Exposure exceeds the Borrowing Base, as adjusted, then the Borrower shall (A) prepay the Loans not later than one (1) Business Day after the Borrower receives the net proceeds from (1) the Disposition of Borrowing Base Properties, (2) the Disposition of Stock or Stock Equivalents in any Restricted Subsidiary owning Borrowing Base Properties, (3) the unwind, termination or off-set of any hedge position included in the Borrowing Base or (4) the issuance of such Senior Notes, as applicable, in an amount sufficient to eliminate such Borrowing Base Deficiency, as applicable, (B) if any excess remains after prepaying all of the Loans as a result of any Letter of Credit Exposure, Cash Collateralize such excess as provided in Section 3.8; provided that with respect to each prepayment of Term Loans required under this Section 5.2(b)(ii) , such prepayment shall be made if, and to the extent that, any excess remains after the Borrower prepays the Revolving Loans and Cash Collateralizes the Letters of Credit to the extent required under this Section 5.2(b)(ii) ; provided further that all payments required to be made pursuant to this clause must be made on or prior to the Termination Date.

(c) Repayment of Loans on the Spinoff Transaction Deadline . If the Spinoff Transaction is not consummated by the Spinoff Transaction Deadline, then the Borrower shall, on the next Business Day, (i) prepay the Swingline Loans and, after all Swingline Loans have been paid in full, the remaining Loans on the Spinoff Transaction Deadline and (ii) if any excess remains after prepaying all of the Loans as a result of any Letter of Credit Exposure, pay to the Administrative Agent on behalf of the Letter of Credit Issuer and the L/C Participants an amount in cash equal to such excess to be held as Cash Collateral as provided in Section 3.8 .

(d) Application to Loans . With respect to each prepayment of Loans elected under Section 5.1 , the Borrower may designate (i) the Types of Loans that are to be prepaid and the specific Borrowing(s) being repaid and (ii) the Loans to be prepaid (including whether such prepayment shall be applied to the Revolving Loans or the Term Loans).

provided that (A) each prepayment of any Revolving Loans made pursuant to a Borrowing shall be applied pro rata among such Revolving Loans and each prepayment of any Term Loans made pursuant to a Borrowing shall be applied in forward order of maturity among such Term Loans and (B) notwithstanding the provisions of the preceding clause (A) , no prepayment of Loans shall be applied to the Loans of any Defaulting Lender unless otherwise agreed in writing by the Borrower. In the absence of a designation by the Borrower under Section 5.2(d)(i) , the Administrative Agent shall, subject to the above, make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.11 .

(e) LIBOR Interest Periods . In lieu of making any payment pursuant to this Section 5.2 in respect of any LIBOR Loan, other than on the last day of the Interest Period therefor so long as no Event of Default shall have occurred and be continuing, the Borrower at its option may deposit, on behalf of the Borrower, with the Administrative Agent an amount equal to the amount of the LIBOR Loan to be prepaid and such LIBOR Loan shall be repaid on the last day of the Interest Period therefor in the required amount. Such deposit shall be held by the Administrative Agent in a corporate time deposit account established on terms reasonably satisfactory to the Administrative Agent, earning interest at the then customary rate for accounts of such type. Such deposit shall constitute Cash Collateral for the

LIBOR Loans to be so prepaid; provided that the Borrower may at any time direct that such deposit be applied to make the applicable payment required pursuant to this Section 5.2 .

5.3 Method and Place of Payment .

(a) Except as otherwise specifically provided herein, all payments under this Agreement shall be made by the Borrower without set-off, counterclaim or deduction of any kind, to the Administrative Agent for the ratable account of the Lenders entitled thereto or the Letter of Credit Issuer or the Swingline Lender entitled thereto, as the case may be, not later than 2:00 p.m. (New York City time), in each case, on the date when due and shall be made in immediately available funds at the Administrative Agent’s Office or at such other office as the Administrative Agent shall specify for such purpose by notice to the Borrower; it being understood that written or facsimile notice by the Borrower to the Administrative Agent to make a payment from the funds in the Borrower’s account at the Administrative Agent’s Office shall constitute the making of such payment to the extent of such funds held in such account. All repayments or prepayments of any Loans (whether of principal, interest or otherwise) hereunder and all other payments under each Credit Document shall be made in Dollars. The Administrative Agent will thereafter cause to be distributed on the same day (if payment was actually received by the Administrative Agent prior to 2:00 p.m. (New York City time) or, otherwise, on the next Business Day in the sole discretion of the Administrative Agent) like funds relating to the payment of principal or interest or fees ratably to the Lenders or the Letter of Credit Issuer, as applicable, entitled thereto.

(b) For purposes of computing interest or fees, any payments under this Agreement that are made later than 2:00 p.m. (New York City time) shall be deemed to have been made on the next succeeding Business Day in the sole discretion of the Administrative Agent. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension.

5.4 Net Payments .

(a) Any and all payments made by or on behalf of the Borrower or any Guarantor under this Agreement or any other Credit Document shall be made free and clear of, and without deduction or withholding for or on account of, any Indemnified Taxes or Other Taxes; provided that if the Borrower or any Guarantor or the Administrative Agent shall be required by applicable Requirements of Law to deduct or withhold any Taxes from such payments, then (i) the Borrower or such Guarantor or the Administrative Agent shall make such deductions or withholdings as are reasonably determined by the Borrower, such Guarantor or the Administrative Agent to be required by any applicable Requirement of Law, (ii) the Borrower, such Guarantor or the Administrative Agent, as applicable, shall timely pay the full amount deducted or withheld to the relevant Governmental Authority within the time allowed and in accordance with applicable Requirements of Law, and (iii) to the extent withholding or deduction is required to be made on account of Indemnified Taxes or Other Taxes, the sum payable by the Borrower or such Guarantor shall be increased as necessary so that after making all required deductions and withholdings (including deductions or withholdings applicable to additional sums payable under this Section 5.4 ) the Administrative Agent, any Letter of Credit Issuer or any Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions or withholdings been made. Whenever any Indemnified Taxes or Other Taxes are payable by the Borrower or such Guarantor, as promptly as possible thereafter, the Borrower or Guarantor shall send to the Administrative Agent for its own account or for the account of such Letter of Credit Issuer or Lender, as the case may be, a certified copy of an official receipt (or other evidence acceptable to such Letter of Credit Issuer or Lender, acting reasonably) received by the Borrower or such Guarantor showing payment thereof. After any payment of

Taxes by any Credit Party or the Administrative Agent to a Governmental Authority as provided in this Section 5.4 , the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, a copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.

(b) The Borrower shall timely pay and shall indemnify and hold harmless the Administrative Agent and each Lender with regard to any Other Taxes (whether or not such Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority).

(c) The Borrower shall indemnify and hold harmless the Administrative Agent and each Lender within 15 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes imposed on the Administrative Agent or such Lender, as the case may be (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 5.4 ), and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by a Lender or the Administrative Agent (as applicable) on its own behalf or on behalf of a Lender shall be conclusive absent manifest error.

(d) Each Lender shall deliver to the Borrower and the Administrative Agent, at such time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law and such other reasonably requested information as will permit the Borrower or the Administrative Agent, as the case may be, to determine (A) whether or not any payments made hereunder or under any other Credit Document are subject to Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of any payments to be made to such Lender by any Credit Party pursuant to any Credit Document or otherwise to establish such Lender’s status for withholding tax purposes in the applicable jurisdiction. In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than the documentation set forth in Section 5.4(e) , (h) and (i) ) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

(e) Without limiting the generality of the foregoing, each Non-U.S. Lender with respect to any Loan made to the Borrower shall, to the extent it is legally entitled to do so:

(i) deliver to the Borrower and the Administrative Agent, prior to the date on which the first payment to the Non-U.S. Lender is due hereunder, two copies of (A) in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, United States Internal Revenue Service Form W-8BEN-E (or any applicable successor form) (together with a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Code, is not a 10% shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower, is not a CFC related to the Borrower (within the meaning of Section 864(d)(4) of the Code) and the interest payments in question are not

effectively connected with the United States trade or business conducted by such Lender), (B) Internal Revenue Service Form W-8BEN-E or Form W-8ECI (or any applicable successor form), in each case properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S. Federal withholding tax on payments by the Borrower under this Agreement, (C) Internal Revenue Service Form W-8IMY (or any applicable successor form) and all necessary attachments (including the forms described in clauses (A) and (B) above, as required) or (D) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made; and

(ii) deliver to the Borrower and the Administrative Agent two further copies of any such form or certification (or any applicable successor form) on or before the date that any such form or certification expires or becomes obsolete or invalid, after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower, and from time to time thereafter if reasonably requested by the Borrower and the Administrative Agent;

unless in any such case any Change in Law has occurred prior to the date on which any such delivery would otherwise be required that renders any such form inapplicable or would prevent such Non-U.S. Lender from duly completing and delivering any such form with respect to it and such Non-U.S. Lender promptly so advises the Borrower and the Administrative Agent. Each Person that shall become a Participant pursuant to Section 14.6 or a Lender pursuant to Section 14.6 shall, upon the effectiveness of the related transfer, be required to provide all the forms and statements required pursuant to this Section 5.4(e) ; provided that in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased.

(f) If any Lender or the Administrative Agent, as applicable, determines, in its sole discretion, that it had received and retained a refund of an Indemnified Tax or Other Tax for which a payment has been made by the Borrower or any Guarantor pursuant to this Agreement or any other Credit Document, which refund in the good faith judgment of such Lender or the Administrative Agent, as the case may be, is attributable to such payment made by the Borrower or any Guarantor, then such Lender or the Administrative Agent, as the case may be, shall reimburse the Borrower or such Guarantor for such amount (net of all out-of-pocket expenses of such Lender or the Administrative Agent, as the case may be, and without interest other than any interest received thereon from the relevant Governmental Authority with respect to such refund) as such Lender or the Administrative Agent, as the case may be, determines in its sole discretion to be the proportion of the refund as will leave it, after such reimbursement, in no better or worse position (taking into account expenses or any taxes imposed on the refund) than it would have been in if the payment had not been required; provided that the Borrower or such Guarantor, upon the request of such Lender or the Administrative Agent, agrees to repay the amount paid over to the Borrower or such Guarantor (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Lender or the Administrative Agent in the event such Lender or the Administrative Agent is required to repay such refund to such Governmental Authority. In such event, such Lender or the Administrative Agent, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the relevant Governmental Authority ( provided that such Lender or the Administrative Agent may delete any information therein that it deems confidential). Each Lender and the Administrative Agent shall claim any refund that it determines is available to it, unless it concludes in its sole discretion that it would be adversely affected by making such a claim. No Lender nor the Administrative Agent shall be obliged to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Credit Party in connection with this clause (f) or any other provision of this Section 5.4 .

(g) If the Borrower determines that a reasonable basis exists for contesting a Tax, each Lender or the Administrative Agent, as the case may be, shall use reasonable efforts to cooperate with the Borrower as the Borrower may reasonably request in challenging such Tax. The Borrower shall indemnify and hold each Lender and the Administrative Agent harmless against any out-of-pocket expenses incurred by such Person in connection with any request made by the Borrower pursuant to this Section 5.4(g) . Nothing in this Section 5.4(g) shall obligate any Lender or the Administrative Agent to take any action that such Person, in its sole judgment, determines may result in a material detriment to such Person.

(h) The Administrative Agent and each Lender that is a United States person under Section 7701(a)(30) of the Code (each, a “ U.S. Lender ”) shall deliver to the Borrower and the Administrative Agent two Internal Revenue Service Forms W-9 (or substitute or successor form), properly completed and duly executed, certifying that such Person is exempt from United States federal backup withholding (i) on or prior to the Funding Date (or on or prior to the date it becomes a party to this Agreement), (ii) on or before the date that such form expires or becomes obsolete or invalid, (iii) after the occurrence of a change in Person’s circumstances requiring a change in the most recent form previously delivered by it to the Borrower and the Administrative Agent, and (iv) from time to time thereafter if reasonably requested by the Borrower or the Administrative Agent.

(i) If a payment made to any Lender or the Administrative Agent under this Agreement or any other Credit Document would be subject to U.S. federal withholding tax imposed by FATCA if such Person were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Person shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA, to determine that such Person has or has not complied with such Person’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this Section 5.4(i) , “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

(j) For the avoidance of doubt, for purposes of this Section 5.4 , the term “Lender” includes any Letter of Credit Issuer and any Swingline Lender

(k) The agreements in this Section 5.4 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

5.5 Computations of Interest and Fees .

(a) Except as provided in the next succeeding sentence, Interest on LIBOR Loans and ABR Loans shall be calculated on the basis of a 360-day year for the actual days elapsed. Interest on ABR Loans in respect of which the rate of interest is calculated on the basis of the Administrative Agent’s prime rate and interest on overdue interest shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed.

(b) Fees and the average daily Stated Amount of Letters of Credit shall be calculated on the basis of a 360-day year for the actual days elapsed.

5.6 Limit on Rate of Interest .

(a) No Payment Shall Exceed Lawful Rate . Notwithstanding any other term of this Agreement, the Borrower shall not be obligated to pay any interest or other amounts under or in connection with this Agreement or otherwise in respect to any of the Obligations in excess of the amount or rate permitted under or consistent with any applicable law, rule or regulation.

(b) Payment at Highest Lawful Rate . If the Borrower is not obliged to make a payment that it would otherwise be required to make, as a result of Section 5.6(a) , the Borrower shall make such payment to the maximum extent permitted by or consistent with applicable laws, rules and regulations.

(c) Adjustment if Any Payment Exceeds Lawful Rate . If any provision of this Agreement or any of the other Credit Documents would obligate the Borrower or any other Credit Party to make any payment of interest or other amount payable to any Lender in an amount or calculated at a rate that would be prohibited by any applicable Requirement of Law, then notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by applicable Requirements of Law, such adjustment to be effected, to the extent necessary, by reducing the amount or rate of interest required to be paid by the Borrower to the affected Lender under Section 2.8 .

(d) Rebate of Excess Interest . Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if any Lender shall have received from the Borrower an amount in excess of the maximum permitted by any applicable Requirement of Law, then the Borrower shall be entitled, by notice in writing to the Administrative Agent to obtain reimbursement from that Lender in an amount equal to such excess, and pending such reimbursement, such amount shall be deemed to be an amount payable by that Lender to the Borrower.

ARTICLE VI
CONDITIONS PRECEDENT TO EFFECTIVENESS

This Agreement shall be effective upon the satisfaction of the following conditions precedent:

6.1 Executed Credit Agreement . The Administrative Agent shall have received (including by facsimile or other electronic means) this Agreement, executed and delivered by a duly Authorized Officer of the Borrower, the Administrative Agent, each Lender (including the Swingline Lenders) and each Letter of Credit Issuer; provided that none of the Schedules shall be required to be attached to this Agreement on the Effective Date other than Schedule 1.1(a) , Schedule 1.1(b) , Schedule 1.1(c) , Schedule 11.8 and Schedule 14.2 .

6.2 Secretary’s Certificate of the Borrower . The Administrative Agent shall have received, in form and substance reasonably satisfactory to the Administrative Agent, certificates of the secretary or an assistant secretary of the Borrower containing specimen signatures of the Persons authorized to execute Credit Documents to which the Borrower is a party or any other documents provided for herein or therein, together with (a) a copy of the resolutions, in form and substance reasonably satisfactory to the Administrative Agent, of the board of directors Borrower (or a duly authorized committee thereof) authorizing (i) the execution, delivery and performance of this Agreement (and any agreements relating thereto) to which it is a party and (ii) the extensions of credit contemplated hereunder and (b) true and complete copies of each of the organizational documents of the Borrower as of the Effective Date.

6.3 Good Standing Certificate of the Borrower . The Administrative Agent shall have received a certificate of good standing (or the equivalent) from the appropriate governing agency of the Borrower’s jurisdiction of organization.

The Administrative Agent (or at the Administrative Agent’s direction, its counsel) shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding.

ARTICLE VII
CONDITIONS PRECEDENT TO INITIAL BORROWING

The obligation of each Revolving Lender to advance the initial Revolving Loans hereunder, of each Term Loan Lender to advance Term Loans hereunder, of the Swingline Lenders to advance the initial Swingline Loan and of the Letter of Credit Issuer to issue its initial Letter of Credit hereunder, is subject to satisfaction (or waiver in accordance with Section 14.1 ) of the following conditions precedent:

7.1 Certain Credit Documents . The Administrative Agent shall have received:

(a) the Guarantee, executed and delivered by a duly Authorized Officer of each Person that is a Guarantor as of the Funding Date and the Guarantee shall be in full force and effect as of the Funding Date;

(b) a promissory note executed by the Borrower in favor of each Lender that has requested a promissory note; and

(c) the Schedules to this Agreement not attached hereto on the Effective Date in form and substance reasonably satisfactory to the Administrative Agent and the Lenders.

7.2 Legal Opinions . The Administrative Agent shall have received the executed legal opinion of Vinson & Elkins LLP, counsel to the Borrower in form and substance reasonably satisfactory to the Administrative Agent. The Borrower, the other Credit Parties and the Administrative Agent hereby instruct such counsel to deliver such legal opinion.

7.3 Closing Certificates . The Administrative Agent shall have received a certificate of the Credit Parties, dated the Funding Date, substantially in the form of Exhibit G , with appropriate insertions, executed by the President or any Vice President and the Secretary or any Assistant Secretary of each Credit Party, and attaching the documents referred to in Section 7.4 .

7.4 Authorization of Proceedings of Each Credit Party; Organizational Documents . The Administrative Agent shall have received (a) a copy of the resolutions, in form and substance reasonably satisfactory to the Administrative Agent, of the board of directors or managers of each Credit Party (or a duly authorized committee thereof) authorizing (i) the execution, delivery and performance of the Credit Documents (and any agreements relating thereto) to which it is a party and (ii) in the case of the Borrower, the extensions of credit contemplated hereunder and (b) true and complete copies of each of the organizational documents of each Person that is a Credit Party as of the Funding Date.

7.5 Fees . All fees required to be paid on the Funding Date pursuant to any fee letter previously agreed in writing between the Administrative Agent, the Joint Lead Arrangers, the Joint Bookrunners and the Borrower and reasonable out-of-pocket expenses required to be paid on the Funding Date pursuant to any commitment letter in respect of the Commitments as agreed in writing between the Administrative Agent, the Joint Lead Arrangers, the Joint Bookrunners and the Borrower, to the extent invoiced at least three Business Days prior to the Funding Date (except as otherwise reasonably agreed by

the Borrower), shall, upon the initial Borrowings hereunder, have been, or will be substantially simultaneously, paid.

7.6 Patriot Act . The Administrative Agent and the Joint Bookrunners shall have received all documentation and other information about the Borrower and the Guarantors as shall have been reasonably requested in writing by the Administrative Agent or the Joint Bookrunners at least seven calendar days prior to the Funding Date and as is mutually agreed to be required by U.S. regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the PATRIOT Act.

7.7 Historical Financial Statements . The Joint Lead Arrangers shall have received true, correct and complete copies of the Historical Financial Statements.

7.8 Insurance . The Administrative Agent shall have received copies of insurance certificates evidencing the insurance required to be maintained by the Borrower and its Subsidiaries pursuant to Section 10.3 .

7.9 Solvency Certificate . A solvency certificate from the chief financial officer or controller (or other financial officer) of the Borrower, dated as of the Funding Date, setting forth the conclusion that (after giving effect to the consummation of the Transactions), the Borrower, on a consolidated basis with its Restricted Subsidiaries, is Solvent.

7.10 Uniform Commercial Code Searches . Appropriate Uniform Commercial Code search results in respect of the Credit Parties, as may be reasonably requested by the Administrative Agent, from Delaware and any other relevant jurisdiction, reflecting no prior Liens encumbering the properties of any Credit Party, other than those which shall be released prior to or contemporaneously with the Funding Date and Permitted Liens.

7.11 Material Indebtedness . After giving effect to the initial Borrowing and any repayments of Indebtedness made substantially concurrently with the initial Borrowing, neither the Borrower nor any of its Restricted Subsidiaries shall have any material Indebtedness for borrowed money other than Indebtedness arising under the Credit Documents and up to $5,500,000,000 of senior unsecured notes with maturities outside the Maturity Date with any existing Indebtedness for borrowed money other than the foregoing having been paid in full, any commitments associated with such Indebtedness terminated and all liens and security interests securing such Indebtedness released.

The Administrative Agent (or at the Administrative Agent’s direction, its counsel) shall notify the Borrower and the Lenders of the Funding Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans, the Swingline Lenders to make Swingline Loans and of the Letter of Credit Issuer to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 14.1 ) at or prior to 2:00 p.m., New York City time, on January 31, 2015 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

ARTICLE VIII
CONDITIONS PRECEDENT TO ALL CREDIT EVENTS

The agreement of each Lender to make any Loan requested to be made by it on any date (excluding Mandatory Borrowings and Loans required to be made by the Lenders in respect of Unpaid Drawings pursuant to Sections 3.3 and 3.4 ), and the obligation of the Letter of Credit Issuer to issue Letters of Credit on any date, is subject to the satisfaction of the following conditions precedent:

8.1 No Default; Representations and Warranties . At the time of each Credit Event and also after giving effect thereto (a) no Default or Event of Default shall have occurred and be continuing and (b) all representations and warranties made by any Credit Party contained herein or in the other Credit Documents shall be, to the knowledge of an Authorized Officer of the Borrower and its Restricted Subsidiaries, true and correct in all material respects (unless such representations and warranties are already qualified by materiality, Material Adverse Effect or a similar qualification, in which case they are true and correct in all respects) with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (unless such representations and warranties are already qualified by materiality, Material Adverse Effect or a similar qualification, in which case they are true and correct in all respects) as of such earlier date).

8.2 Notice of Borrowing .

(a) Prior to the making of each Loan (other than any Loan made pursuant to Section 3.4(a) ) and each Swingline Loan, the Administrative Agent shall have received a Notice of Borrowing (whether in writing or by telephone) meeting the requirements of Section 2.3(a) .

(b) Prior to the issuance of each Letter of Credit, the Administrative Agent and the Letter of Credit Issuer shall have received a Letter of Credit Request meeting the requirements of Section 3.2(a) .

The acceptance of the benefits of each Credit Event shall constitute a representation and warranty by each Credit Party to each of the Lenders that all the applicable conditions specified in Article VIII above have been satisfied as of that time.

ARTICLE IX
REPRESENTATIONS, WARRANTIES AND AGREEMENTS

In order to induce the Lenders to enter into this Agreement, to make the Loans and issue or participate in Letters of Credit as provided for herein, the Borrower makes, on the Funding Date and on each other date as required or otherwise set forth in this Agreement, the following representations and warranties to, and agreements with, the Lenders, all of which shall survive the execution and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit:

9.1 Corporate Status . Each of the Borrower and each Restricted Subsidiary (a) is a duly organized and validly existing corporation or other entity in good standing under the laws of the jurisdiction of its organization, (b) has the corporate or other organizational power and authority to own its property and assets and to transact the business in which it is engaged, (c) has duly qualified and is authorized to do business and is in good standing in all jurisdictions where it is required to be so qualified, and (d) is in compliance with all Requirements of Law, except in each case referred to in clauses (b) , (c) and (d) , where the failure to be so qualified would not reasonably be expected to result in a Material Adverse Effect.

9.2 Corporate Power and Authority; Enforceability . Each Credit Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is a party and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which it is a party. Each Credit Party has duly executed and delivered each Credit Document to which it is a party and each such Credit Document constitutes the legal, valid and binding obligation of such Credit Party

enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).

9.3 No Violation . None of the execution, delivery or performance by any Credit Party of the Credit Documents to which it is a party or the compliance with the terms and provisions thereof will (a) contravene any material applicable provision of any material Requirement of Law, (b) result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Credit Party or any of the Restricted Subsidiaries (other than Liens created under the Credit Documents) pursuant to the terms of any indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other instrument to which such Credit Party or any of the Restricted Subsidiaries is a party or by which it or any of its property or assets is bound (any such term, covenant, condition or provision, a “ Contractual Requirement ”) except to the extent such breach, default or Lien that would not reasonably be expected to result in a Material Adverse Effect or (c) violate any provision of the certificate of incorporation, by-laws or other organizational documents of such Credit Party or any of the Restricted Subsidiaries.

9.4 Litigation . Except as set forth on Schedule 9.4 , as of the Funding Date, (a) there are no actions, suits or proceedings pending or, to the knowledge of an Authorized Officer of the Borrower, threatened with respect to the Borrower or any of its Restricted Subsidiaries and (b) the Borrower has not received any written notice of Environmental Claims from a Governmental Authority, that, in each case, would reasonably be expected to result in a Material Adverse Effect.

9.5 Margin Regulations . Neither the making of any Loan hereunder nor the use of the proceeds thereof will violate the provisions of Regulation T, Regulation U or Regulation X of the Board. The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying margin stock.

9.6 Governmental Approvals . The execution, delivery and performance of each Credit Document do not require any consent or approval of, registration or filing with, or other action by, any Governmental Authority, except for (a) such as have been obtained or made and are in full force and effect, (b) filings and recordings in respect of the Liens created pursuant to the Security Documents and (c) such consents, approvals, registrations, filings or actions the failure of which to obtain or make would not reasonably be expected to have a Material Adverse Effect.

9.7 Investment Company Act . No Credit Party is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

9.8 True and Complete Disclosure .

(a) None of the written factual information and written data (taken as a whole) furnished by or on behalf of the Borrower, any of the Subsidiaries or any of their respective authorized representatives to the Administrative Agent, any Joint Lead Arranger, any Joint Bookrunner and/or any Lender on or before the Funding Date (including all such information and data contained in the Credit Documents) for purposes of or in connection with this Agreement or any transaction contemplated herein contained any untrue statement of any material fact or omitted to state any material fact necessary to make such information and data (taken as a whole) not materially misleading at such time (after giving effect to all supplements so furnished prior to such time, including all information set forth in the Form 10-12B of the Borrower as filed with the SEC from time to time) in light of the circumstances under which such information or data was furnished; it being understood and agreed that for purposes of this

Section 9.8(a) , such factual information and data shall not include pro forma financial information, projections or estimates (including financial estimates, forecasts and other forward-looking information) and information of a general economic or general industry nature.

(b) The projections (including financial estimates, forecasts and other forward-looking information) contained in the information and data referred to in Section 9.8(a) were based on good faith estimates and assumptions believed by the Borrower to be reasonable at the time made; it being recognized by the Administrative Agent and the Lenders that such projections are as to future events and are not to be viewed as facts, the projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and the Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.

9.9 Financial Condition; Financial Statements .

(a) On the Funding Date, the Historical Financial Statements present fairly in all material respects the combined consolidated financial position of the Borrower and the combined consolidated Subsidiaries at the dates of such information and for the period covered thereby and have been prepared in accordance with GAAP consistently applied except to the extent provided in the notes thereto, if any, subject, in the case of the unaudited financial information, to changes resulting from audit, normal year end audit adjustments and to the absence of footnotes.

(b) On the Funding Date, neither the Borrower nor any Restricted Subsidiary has any material Indebtedness (including Disqualified Stock) other than the Senior Notes, any material guarantee obligations, contingent liabilities other than liabilities created under the OPC Related Transactions, off balance sheet liabilities, partnership liabilities for taxes or unusual forward or long-term commitments that, in each case, are not reflected or provided for in the Historical Financial Statements, except as would not reasonably be expected to have a Material Adverse Effect.

(c) Since the date of the financial statements most recently delivered pursuant to Section 10.1(a) , and only with respect to the Funding Date, since December 31, 2013, to the actual knowledge of any Authorized Officer of the Borrower, there has been no Material Adverse Effect.

9.10 Tax Matters . Except where the failure of which would not be reasonably expected to have a Material Adverse Effect, (a) each of the Borrower and the Subsidiaries has filed all federal income tax returns and all other tax returns, domestic and foreign, required to be filed by it and has paid all material taxes payable by it that have become due, other than those (i) not yet delinquent or (ii) being contested in good faith by appropriate proceedings and as to which adequate reserves have been provided to the extent required by and in accordance with GAAP and (b) to the extent then due and payable, the Borrower and each of the Subsidiaries have paid, or have provided adequate reserves (in the good faith judgment of management of the Borrower or such Subsidiary) in accordance with GAAP for the payment of, all federal, state, provincial and foreign taxes applicable for the current fiscal year to the Funding Date.

9.11 Compliance with ERISA .

(a) Each Plan is in compliance with ERISA, the Code and any applicable Requirement of Law; no Reportable Event has occurred (or is reasonably likely to occur) with respect to any Plan; each Plan has satisfied the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, and there has been no determination that any

such Plan is, or is expected to be, in “at risk” status (within the meaning of Section 4010(d)(2) of ERISA); none of the Borrower or any ERISA Affiliate has incurred (or is reasonably likely to incur) any liability to or on account of a Plan or a Multiemployer Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code or has been notified in writing that it will incur any liability under any of the foregoing Sections with respect to any Plan or Multiemployer Plan; no proceedings have been instituted to terminate or to reorganize any Plan or to appoint a trustee to administer any Plan, and no written notice of any such proceedings has been given to the Borrower or any ERISA Affiliate; no Multiemployer Plan is insolvent or in reorganization, and no written notice of any such insolvency or reorganization has been given to the Borrower or any ERISA Affiliate; and no lien imposed under the Code or ERISA on the assets of the Borrower or any ERISA Affiliate exists (or is reasonably likely to exist) nor has the Borrower or any ERISA Affiliate been notified in writing that such a lien will be imposed on the assets of the Borrower or any ERISA Affiliate on account of any Plan or a Multiemployer Plan, except to the extent that a breach of any of the representations, warranties or agreements in this Section 9.11(a) would not result, individually or in the aggregate, in an amount of liability that would be reasonably likely to have a Material Adverse Effect. No Plan has an Unfunded Current Liability that would, individually or when taken together with any other liabilities referenced in this Section 9.11(a) , be reasonably likely to have a Material Adverse Effect. With respect to Multiemployer Plans, the representations and warranties in this Section 9.11(a) , other than any made with respect to liability under Section 4201 or 4204 of ERISA, are made to the knowledge of the Borrower.

(b) All Foreign Plans are in compliance with, and have been established, administered and operated in accordance with, the terms of such Foreign Plans and applicable law, except for any failure to so comply, establish, administer or operate the Foreign Plans as would not reasonably be expected to have a Material Adverse Effect. All contributions or other payments which are due with respect to each Foreign Plan have been made in full and there are no funding deficiencies thereunder, except to the extent any such events would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

9.12 Subsidiaries . Schedule 9.12 lists each Subsidiary of the Borrower (and the direct and indirect ownership interest of the Borrower therein), in each case existing on the Funding Date (after giving effect to the Transactions). Each Guarantor, Material Subsidiary and Unrestricted Subsidiary as of the Funding Date has been so designated on Schedule 9.12 .

9.13 Environmental Laws .

(a) On the Funding Date, except as would not reasonably be expected to have a Material Adverse Effect as of the Funding Date: (i) the Borrower and each of the Subsidiaries and all Oil and Gas Properties are in compliance with all applicable Environmental Laws; (ii) neither the Borrower nor any Subsidiary has received written notice of any Environmental Claim or any other liability under any applicable Environmental Law; (iii) neither the Borrower nor any Subsidiary is conducting any investigation, removal, remedial or other corrective action pursuant to any applicable Environmental Law at any location; and (iv) there has been no release or, to the knowledge of any Authorized Officer of the Borrower, threatened release of any Hazardous Materials at, on or under any Oil and Gas Properties currently owned or leased by the Borrower or any of its Subsidiaries.

(b) On the Funding Date, except as would not reasonably be expected to have a Material Adverse Effect as of the Funding Date, neither the Borrower nor any of the Subsidiaries has treated, stored, transported, released or disposed or arranged for disposal or transport for disposal of Hazardous Materials at, on, under or from any currently or formerly owned or leased Oil and Gas

Properties or facility in a manner that would reasonably be expected to give rise to liability of the Borrower or any Subsidiary under any applicable Environmental Law.

9.14 Properties .

(a) Each Credit Party has good and defensible title to its material Oil and Gas Properties and good title to its material personal properties (in each case, subject to any Permitted Liens which are permitted to attach thereto) and owns such Oil and Gas Properties, in each case, free and clear of all Liens other than Liens permitted by Section 11.2 . With respect to any Reserve Report delivered after a Borrowing Base Trigger Event, after giving full effect to the Liens permitted by Section 11.2 , the Borrower or the Restricted Subsidiary specified as the owner owns the working interests and net revenue interests attributable to the Hydrocarbon Interests as reflected in the most recently delivered Reserve Report, and the ownership of such properties shall not in any material respect obligate the Borrower or such Restricted Subsidiary to bear the costs and expenses relating to the maintenance, development and operations of each such property in an amount in excess of the working interest of each property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in the Borrower’s or such Restricted Subsidiary’s net revenue interest in such property.

(b) All material leases and agreements necessary for the conduct of the business of the Borrower and the Restricted Subsidiaries are valid and subsisting, in full force and effect, except to the extent that any such failure to be valid or subsisting would not reasonably be expected to have a Material Adverse Effect.

(c) The rights and properties presently owned, leased or licensed by the Credit Parties including all easements and rights of way, include all rights and properties necessary to permit the Credit Parties to conduct their respective businesses as currently conducted, except to the extent any failure to have any such rights or properties would not reasonably be expected to have a Material Adverse Effect.

(d) All of the properties of the Borrower and the Restricted Subsidiaries that are reasonably necessary for the operation of their businesses are in good working condition and are maintained in accordance with prudent business standards, except to the extent any failure to satisfy the foregoing would reasonably be expected to have a Material Adverse Effect.

9.15 Solvency . The Borrower, on a consolidated basis with its Restricted Subsidiaries, is Solvent.

9.16 Insurance . The properties of the Borrower and the Restricted Subsidiaries are insured in the manner contemplated by Section 10.3 .

9.17 Hedge Agreements . As of the Funding Date, the Hedge Agreements of the Credit Parties are in compliance with Section 11.10 .

9.18 Patriot Act . On the Funding Date, each Credit Party is in compliance in all material respects with the material provisions of the Patriot Act, and the Borrower has provided to the Administrative Agent and the Lenders all information related to the Credit Parties (including but not limited to names, addresses and tax identification numbers (if applicable)) reasonably requested in writing by the Administrative Agent and the Lenders and mutually agreed to be required by the Patriot Act to be obtained by the Administrative Agent or any Lender.

9.19 Liens Under the Security Documents . During a Borrowing Base Trigger Period, upon the execution and delivery of the Security Documents in accordance herewith, and where appropriate the filing and recordation thereof with the appropriate filing or recording officers in each of the necessary jurisdictions, the Liens granted and to be granted by any Credit Party to the Administrative Agent, will constitute validly created, perfected and first priority Liens, provided that Liens permitted under Section 11.2 may exist on such assets and; provided further that no intention to subordinate the first priority Lien of the Administrative Agent and the Secured Parties pursuant to the Security Documents is to be hereby implied or expressed by the permitted existence of such Permitted Liens.

9.20 No Default . On the Funding Date, no Credit Party is in default under or with respect to any Contractual Requirement that would, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Credit Document. Each of the Borrower and each Restricted Subsidiary is in compliance in all material respects with the Requirements of Law applicable to it or to its properties, except in such instances in which (a) such Requirement of Law is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.

9.21 Direct Benefit . The initial Borrowing hereunder and all additional Borrowings are for the direct benefit of the Borrower and its Restricted Subsidiaries. The Borrower and its Restricted Subsidiaries shall engage as an integrated group in the business of oil and gas exploration, production and related activities and other legal business purposes, and any benefits to the Borrower and its Restricted Subsidiaries is a benefit to all of them, both directly or indirectly, inasmuch as the successful operation and condition of the Borrower and its Restricted Subsidiaries is partially dependent upon the continued successful performance of the functions of the integrated group as a whole.

9.22 Anti-Corruption Laws and Sanctions . The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and its directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of the Authorized Officers of the Borrower, its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects and are not knowingly engaged in any activity that would reasonably be expected to result in the Borrower being designated as a Sanctioned Person. None of (a) the Borrower, any of its Subsidiaries or to the knowledge of the Authorized Officers of the Borrower or such Subsidiary any of their respective directors, officers or employees, or (b) to the knowledge of the Authorized Officers of the Borrower any agent of the Borrower or any of its Subsidiaries that will act in any capacity in connection with or benefit from the Facilities, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other Transactions will violate Anti-Corruption Laws or applicable Sanctions.

9.23 Pari Passu or Priority Status . Neither the Borrower nor any other Credit Party has taken any action which would cause the claims of unsecured creditors of the Borrower or of any other Credit Party, as the case may be (other than claims of such creditors to the extent that they are statutorily preferred or Permitted Liens), to have priority over the claims of the Administrative Agent and the Secured Parties against the Borrower and such other Credit Party under this Agreement or the other Credit Documents.

ARTICLE X
AFFIRMATIVE COVENANTS

The Borrower hereby covenants and agrees that on the Funding Date and thereafter, until the Total Commitment and each Letter of Credit have terminated (unless such Letters of Credit have been collateralized on terms and conditions reasonably satisfactory to the Letter of Credit Issuer following the termination of the Total Commitment) and the Loans, the Swingline Loans and Unpaid Drawings, together with interest, fees and all other Obligations incurred hereunder (other than Hedge Obligations under Secured Hedge Agreements, Cash Management Obligations under Secured Cash Management Agreements or contingent indemnification obligations not then due and payable), are paid in full:

10.1 Information Covenants . The Borrower will furnish to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice):

(a) Annual Financial Statements . As soon as available and in any event within five (5) Business Days after the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) (or, if such financial statements are not required to be filed with the SEC, on or before the date that is 90 days after the end of each such fiscal year), the audited consolidated balance sheets of the Borrower and the Subsidiaries and, if different, the Borrower and the Restricted Subsidiaries, in each case as at the end of such fiscal year, and the related consolidated statements of operations, shareholders’ equity and cash flows for such fiscal year, setting forth comparative consolidated figures for the preceding fiscal years (or, in lieu of such audited financial statements of the Borrower and the Restricted Subsidiaries, a detailed reconciliation, reflecting such financial information for the Borrower and the Restricted Subsidiaries, on the one hand, and the Borrower and the Subsidiaries, on the other hand), all in reasonable detail and prepared in accordance with GAAP, and, except with respect to such reconciliation, certified by independent certified public accountants of recognized national standing whose opinion shall not be materially qualified with a “going concern” or like qualification or exception (other than with respect to, or resulting from, (x) the occurrence of the Maturity Date within one year from the date such opinion is delivered or (y) any potential inability to satisfy the Financial Performance Covenants on a future date or in a future period), together in any event with a certificate of such accounting firm stating that in the course of either (i) its regular audit of the business of the Borrower and its consolidated Subsidiaries, which audit was conducted in accordance with generally accepted auditing standards or (ii) performing certain other procedures permitted by professional standards, such accounting firm has obtained no knowledge of any Event of Default relating to the Financial Performance Covenants that has occurred and is continuing or, if in the opinion of such accounting firm such an Event of Default has occurred and is continuing, a statement as to the nature thereof.

(b) Quarterly Financial Statements . As soon as available and in any event within five (5) Business Days after the date on which such financial statements are required to be filed with the SEC (after giving effect to any permitted extensions) with respect to each of the first three quarterly accounting periods in each fiscal year of the Borrower (or, if such financial statements are not required to be filed with the SEC, on or before the date that is 60 days after the end of each such quarterly accounting period), the consolidated balance sheets of the Borrower and the Subsidiaries and, if different, the Borrower and the Restricted Subsidiaries, in each case as at the end of such quarterly period and the related consolidated statements of operations, shareholders’ equity and cash flows for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period, and setting forth comparative consolidated figures for the related periods in the prior fiscal year or, in the case of such consolidated balance sheet, for the last day of the prior fiscal year (or, in lieu of such unaudited financial statements of the Borrower and the Restricted Subsidiaries, a detailed reconciliation reflecting such financial information for the Borrower and the Restricted Subsidiaries, on

the one hand, and the Borrower and the Subsidiaries, on the other hand), all of which shall be certified by an Authorized Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows, of the Borrower and its consolidated Subsidiaries in accordance with GAAP, subject to changes resulting from audit and normal year-end audit adjustments and the absence of footnotes.

(c) Officer’s Certificates . At the time of the delivery of the financial statements provided for in Section 10.1(a) and (b) , a certificate of an Authorized Officer of the Borrower to the effect that no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, which certificate shall set forth (i) the calculations required to establish whether the Borrower and its Restricted Subsidiaries were in compliance with the Financial Performance Covenants as at the end of such fiscal year or period, as the case may be and (ii) a specification of any change in the identity of the Restricted Subsidiaries, Material Subsidiaries, Guarantors and Unrestricted Subsidiaries as at the end of such fiscal year or period, as the case may be, from the Restricted Subsidiaries, Material Subsidiaries, Guarantors and Unrestricted Subsidiaries, respectively, provided to the Lenders on the Funding Date or the most recent fiscal year or period, as the case may be.

(d) Notice of Default; Litigation . Promptly after an Authorized Officer of the Borrower obtains actual knowledge thereof, notice of (i) the occurrence of any event that constitutes a Default or Event of Default, which notice shall specify the nature thereof, the period of existence thereof and what action the Borrower proposes to take with respect thereto and (ii) any litigation or governmental proceeding pending against the Borrower or any of the Subsidiaries for which it would reasonably be expected that an adverse determination is probable, and that such determination would result in a Material Adverse Effect.

(e) Environmental Matters . Promptly after an Authorized Officer of the Borrower obtains written notice of any Governmental Authority of any one or more of the following environmental matters, unless such environmental matters would not, individually, or when aggregated with all other such matters, be reasonably expected to result in a Material Adverse Effect, notice of:

(i) any pending or threatened Environmental Claim against any Credit Party or any Oil and Gas Properties;

(ii) any condition or occurrence on any Oil and Gas Properties that (A) would reasonably be expected to result in noncompliance by any Credit Party with any applicable Environmental Law or (B) would reasonably be anticipated to form the basis of an Environmental Claim against any Credit Party or any Oil and Gas Properties;

(iii) any condition or occurrence on any Oil and Gas Properties that would reasonably be anticipated to cause such Oil and Gas Properties to be subject to any restrictions on the ownership, occupancy, use or transferability of such Oil and Gas Properties under any Environmental Law; and

(iv) the conduct of any investigation, or any removal, remedial or other corrective action in response to the actual or alleged presence, release or threatened release of any Hazardous Material on, at, under or from any Oil and Gas Properties.

All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the response thereto.

(f) Other Information . (i) Promptly upon filing thereof, copies of any filings (including on Form 10-K, 10-Q or 8-K) or registration statements with, and reports to, the SEC or any analogous Governmental Authority in any relevant jurisdiction by the Borrower or any of the Subsidiaries (other than amendments to any registration statement (to the extent such registration statement, in the form it becomes effective, is delivered to the Administrative Agent), exhibits to any registration statement and, if applicable, any registration statements on Form S-8), (ii) copies of all financial statements, proxy statements, notices and reports that the Borrower or any of the Subsidiaries shall send to the holders of any publicly issued debt of the Borrower and/or any of the Subsidiaries, in each case in their capacity as such holders, lenders or agents (in each case to the extent not theretofore delivered to the Administrative Agent pursuant to this Agreement) and (iii) with reasonable promptness, but subject to the limitations set forth in the last sentences of Section 10.2(a) and Section 14.6 , such other information (financial or otherwise) as the Administrative Agent on its own behalf or on behalf of any Lender (acting through the Administrative Agent) may reasonably request in writing from time to time.

Documents required to be delivered pursuant to Sections 10.1(a) and (b) and Section 10.1(f) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 14.2 , (ii) on which such documents are transmitted by electronic mail to the Administrative Agent or (iii) on which such documents are filed of record with the SEC; provided that the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents (except that no such notice shall be required to the extent such documents are filed on record with the SEC). Notwithstanding anything contained herein, in every instance the Borrower shall be required to provide paper copies of the certificates required by Section 10.1(c) to the Administrative Agent. Each Lender shall be solely responsible for timely accessing posted documents or requesting delivery of such documents from the Administrative Agent and maintaining its copies of such documents.

10.2 Books, Records and Inspections .

(a) The Borrower will, and will cause each Restricted Subsidiary to, permit officers and designated representatives of the Administrative Agent or the Majority Lenders (as accompanied by the Administrative Agent) to visit and inspect any of the properties or assets of the Borrower or such Subsidiary in whomsoever’s possession to the extent that it is within such party’s control to permit such inspection (and shall use commercially reasonable efforts to cause such inspection to be permitted to the extent that it is not within such party’s control to permit such inspection), and to examine the books and records of the Borrower and any such Subsidiary and discuss the affairs, finances and accounts of the Borrower and of any such Subsidiary with, and be advised as to the same by, its and their officers and independent accountants, upon reasonable advance notice to the Borrower, all at such reasonable times and intervals during normal business hours and to such reasonable extent as the Administrative Agent or the Majority Lenders may desire (and subject, in the case of any such meetings or advice from such independent accountants, to such accountants’ customary policies and procedures); provided that, excluding any such visits and inspections during the continuation of an Event of Default (i) only the Administrative Agent on behalf of the Majority Lenders may exercise rights of the Administrative Agent and the Lenders under this Section 10.2 , and (ii) only one such visit shall be at the Borrower’s expense; provided , further , that when an Event of Default exists, the Administrative Agent (or any of its representatives or independent contractors) or any representative of the Majority Lenders may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice. The Administrative Agent and the Majority Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants. Notwithstanding anything to the contrary in Section 10.1(f)(iii) or this Section 10.2 , neither the Borrower

nor any Restricted Subsidiary will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by any Requirement of Law or any binding agreement or (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product.

(b) The Borrower will, and will cause each of the Restricted Subsidiaries to, maintain proper books of record and account, in which entries that are full, true and correct in all material respects and are in conformity with GAAP consistently applied shall be made of all material financial transactions and matters involving the assets and business of the Borrower or such Restricted Subsidiary, as the case may be.

10.3 Maintenance of Insurance . The Borrower will, and will cause each Restricted Subsidiary to, at all times maintain in full force and effect, pursuant to self-insurance arrangements or with insurance companies that the Borrower believes (in the good faith judgment of the management of the Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Borrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Borrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size and nature of its business; and will furnish to the Administrative Agent, upon written request from the Administrative Agent, information presented in reasonable detail as to the insurance so carried; provided that prior to the Spinoff Date, all such insurance may be carried, at the Borrower’s option, by OPC for the benefit of the Borrower and the Restricted Subsidiaries. During any Borrowing Base Trigger Period (and only during any Borrowing Base Trigger Period), the Secured Parties shall be the additional insureds on any such liability insurance as their interests may appear and, if casualty insurance is obtained, the Administrative Agent shall be the additional loss payee under any such casualty insurance; provided that, so long as no Event of Default has occurred and is then continuing, the Secured Parties will provide any proceeds of such casualty insurance to the Borrower to the extent that the Borrower undertakes to apply such proceeds to the reconstruction, replacement or repair of the property insured thereby. During any Borrowing Base Trigger Period (and only during any Borrowing Base Trigger Period), all policies of insurance required by the terms of this Agreement or any Security Document shall provide that each insurer shall endeavor to give at least 30 days’ prior written notice to the Administrative Agent of any cancellation of such insurance (or at least 10 days’ prior written notice in the case of cancellation of such insurance due to non-payment of premiums).

10.4 Payment of Taxes . The Borrower will pay and discharge, and will cause each of the Subsidiaries to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which material penalties attach thereto, and all lawful material claims in respect of any Taxes imposed, assessed or levied that, if unpaid, would reasonably be expected to become a material Lien upon any properties of the Borrower or any of the Restricted Subsidiaries; provided that neither the Borrower nor any of the Subsidiaries shall be required to pay or discharge any such tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings if it has maintained adequate reserves (in the good faith judgment of management of the Borrower) with respect thereto to the extent required by, and in accordance with, GAAP or the failure to pay or discharge would not reasonably be expected to result in a Material Adverse Effect.

10.5 Consolidated Corporate Franchises . The Borrower will do, and will cause each Restricted Subsidiary to do, or cause to be done, all things necessary to preserve and keep in full force

and effect its existence, corporate rights and authority, except to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided , however , that the Borrower and its Restricted Subsidiaries may consummate any transaction permitted under Section 11.3 , 11.4 or 11.5 .

10.6 Compliance with Statutes, Regulations, Etc . The Borrower will, and will cause each Restricted Subsidiary to, comply with all Requirements of Law applicable to it or its property, including all governmental approvals or authorizations required to conduct its business, and to maintain all such governmental approvals or authorizations in full force and effect, in each case except where the failure to do so would not reasonably be expected to have a Material Adverse Effect. The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.

10.7 ERISA .

(a) Promptly after the Borrower or any ERISA Affiliate knows or has reason to know of the occurrence of any of the following events that, individually or in the aggregate (including in the aggregate such events previously disclosed or exempt from disclosure hereunder, to the extent the liability therefor remains outstanding), would be reasonably likely to have a Material Adverse Effect, the Borrower will deliver to the Administrative Agent a certificate of an Authorized Officer or any other senior officer of the Borrower setting forth details as to such occurrence and the action, if any, that the Borrower or such ERISA Affiliate is required or proposes to take, together with any notices (required, proposed or otherwise) given to or filed with or by the Borrower, such ERISA Affiliate, the PBGC, a Plan participant (other than notices relating to an individual participant’s benefits) or the Plan administrator with respect thereto: that a Reportable Event has occurred; that an application is to be made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code with respect to a Plan; that a Plan having an Unfunded Current Liability has been or is to be terminated, or a Multiemployer Plan is to be reorganized, partitioned or declared insolvent, under Title IV of ERISA (including the giving of written notice thereof); that a Plan has an Unfunded Current Liability that has or will result in a lien under ERISA or the Code; that a proceeding has been instituted against the Borrower or an ERISA Affiliate pursuant to Section 515 of ERISA to collect a delinquent contribution to a Multiemployer Plan; that the PBGC has notified the Borrower or any ERISA Affiliate of its intention to appoint a trustee to administer any Plan; that the Borrower or any ERISA Affiliate has failed to make a required installment or other payment pursuant to Section 412 of the Code with respect to a Plan; or that the Borrower or any ERISA Affiliate has incurred or will incur (or has been notified in writing that it will incur) any liability (including any contingent or secondary liability) to or on account of a Plan or a Multiemployer Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code.

(b) Promptly following any request therefor, the Borrower will deliver to the Administrative Agent copies of (i) any documents described in Section 101(k) of ERISA that the Borrower and any of its Subsidiaries or any ERISA Affiliate may request with respect to any Multiemployer Plan and (ii) any notices described in Section 101(l) of ERISA that the Borrower and any of its Subsidiaries or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Borrower, any of its Subsidiaries or any ERISA Affiliate has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, the Borrower, the applicable Subsidiary(ies) or the ERISA Affiliate(s) shall promptly, following a request from the Administrative Agent, make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof.

10.8 Maintenance of Properties . The Borrower will, and will cause each of the Restricted Subsidiaries to, except in each case where the failure to so comply would not reasonably be expected to result in a Material Adverse Effect:

(a) operate its Oil and Gas Properties and other material properties or cause such Oil and Gas Properties and other material properties to be operated in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable Contractual Requirements and all applicable Requirements of Law, including applicable proration requirements and applicable Environmental Laws, and all applicable Requirements of Law of every other Governmental Authority from time to time constituted to regulate the development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom;

(b) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of its material Oil and Gas Properties and other material properties, including all equipment, machinery and facilities; and

(c) to the extent a Credit Party is not the operator of any property, the Borrower shall use reasonable efforts to cause the operator to comply with this Section 10.8 .

10.9 [Reserved] .

10.10 Additional Guarantors, Grantors and Collateral .

(a) Subject to any applicable limitations set forth in the Security Documents or the Pledge Agreement, upon the occurrence and during the continuation of a Borrowing Base Trigger Period, as soon as practicable using commercially reasonable efforts (and executing and delivering each Security Document as it may become available), but in any event within sixty (60) days (or such longer period as the Administrative Agent shall agree) of the first day of such Borrowing Base Trigger Period (the “ Borrowing Base Trigger Date ”), the Borrower will execute and cause its Material Subsidiaries to execute: (i) the Pledge Agreement, (ii) the Security Agreement and (iii) any Mortgages such that after giving effect thereto the Borrower will meet the Collateral Requirements.

(b) Subject to any applicable limitations set forth in the Guarantee or the Security Documents, the Borrower will cause (i) any direct or indirect Material Subsidiary (other than any Excluded Subsidiary) formed or otherwise purchased or acquired after the Funding Date (including pursuant to a Permitted Acquisition), (ii) each Domestic Subsidiary that would be included in clause (ii) of the definition of “Guarantors” other than for the fact that such Subsidiary is not then a party to the Guarantee and (iii) any direct or indirect Domestic Subsidiary of the Borrower that ceases to be an Excluded Subsidiary, in each case within 60 days from the date of such formation, acquisition or cessation, as applicable (or such longer period as the Administrative Agent may agree in its reasonable discretion) to execute a supplement to each of the Guarantee, and during a Borrowing Base Trigger Period, the Security Agreement and the Pledge Agreement, in each case, in order to become a Guarantor under the Guarantee, a grantor under the Security Agreement and a pledgor under the Pledge Agreement.

(c) During a Borrowing Base Trigger Period, subject to any applicable limitations set forth in the Pledge Agreement, the Borrower will pledge, and, if applicable, will cause each other Subsidiary Guarantor (or Person required to become a Subsidiary Guarantor pursuant to Section 10.10(b) ) to pledge, to the Administrative Agent, for the benefit of the Secured Parties all of the Stock (other than any Excluded Stock) of each Subsidiary owned by the Borrower or any Subsidiary Guarantor (or Person required to become a Guarantor pursuant to Section 10.10(b) ).

(d) During a Borrowing Base Trigger Period, subject to any applicable limitations set forth in the Guarantee or the Security Documents, the Borrower will deliver to the Administrative Agent for filing, registration or recording all documents and instruments, including Uniform Commercial Code or other applicable personal property and financing statements, reasonably requested by the Administrative Agent to be filed, registered or recorded to create or continue, as applicable, the Liens intended to be created by any Security Document and perfect such Liens to the extent required by, and with the priority required by, such Security Document to the Administrative Agent and none of the Collateral shall be subject to any other pledges, security interests or mortgages, except for Liens permitted under Section 11.2 . Notwithstanding the foregoing, Borrower will not be required to take any action to perfect a Lien on any of its or the Subsidiaries’ personal property unless perfection may be accomplished by (A) the filing of a Uniform Commercial Code financing statement in Borrower’s or a Subsidiary’s respective jurisdiction of formation or in the case of as-extracted collateral and goods that are or are to become fixtures or collateral in connection with a Mortgage, the filing of a financing statement filed as a fixture filing or as a financing statement covering such property in the county in which such collateral or fixtures are located, (B) delivery of certificates representing pledged Stock or Stock Equivalents consisting of certificated securities together with appropriate endorsements or transfer powers and (C) granting the Administrative Agent “control” (within the meaning of the relevant Uniform Commercial Code) over any pledged Stock or Stock Equivalents consisting of uncertificated securities.

10.11 Use of Proceeds .

(a) The Borrower will use the proceeds of the Loans (i) to pay Transaction Expenses, (ii) to make Restricted Payments permitted to be made hereunder, (iii) to finance the acquisition, development and exploration of Oil and Gas Properties, (iv) to redeem, defease, prepay or repay Indebtedness permitted to be incurred hereunder, including any fees, premiums and expenses associated therewith and (v) for working capital, capital expenditures and other general corporate purposes of the Borrower and its Subsidiaries.

(b) The Borrower will use Letters of Credit for general corporate purposes and to support deposits required under purchase agreements pursuant to which the Borrower or its Subsidiaries may acquire Oil and Gas Properties and other assets.

(c) The Borrower shall not request any Borrowing or Letter of Credit, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use the proceeds of any Borrowing or Letter of Credit (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

10.12 Further Assurances . During a Borrowing Base Trigger Period:

(a) Subject to the applicable limitations set forth in Section 10.10 and the Security Documents, the Borrower will, and will cause each other Credit Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture, filings, assignments of as-extracted collateral, mortgages, deeds of trust and other documents) that may be required under any applicable Requirements of Law, or that the Administrative Agent or the Majority Lenders may reasonably request, in order to grant, preserve, protect and perfect the validity and priority of the security interests created or intended to

be created by the applicable Security Documents, all at the expense of the Borrower and the Restricted Subsidiaries.

(b) Notwithstanding anything herein to the contrary, if the Administrative Agent and the Borrower reasonably determine in writing that the cost of creating or perfecting any Lien on any property is excessive in relation to the benefits afforded to the Lenders thereby, then such property may be excluded from the Collateral for all purposes of the Credit Documents.

10.13 Reserve Reports .

(a) If the Borrower’s Credit Rating is not at least Ba2 from Moody’s and BB from S&P, on or before April 1 st of each year, the Borrower shall furnish to the Administrative Agent a Reserve Report evaluating, as of the immediately preceding December 31 st , the Proved Reserves of the Borrower and the Credit Parties located within the geographic boundaries of the United States of America (or the Outer Continental Shelf adjacent to the United States of America) that the Borrower desires to have included in any calculation of the Borrowing Base. Each Reserve Report will, at the Borrower’s option, be either (i) prepared by an independent petroleum engineering firm reasonably acceptable to the Administrative Agent or (ii) prepared by or under the supervision of the Borrower’s chief engineer and audited or subject to a process review by an independent petroleum engineering firm reasonably acceptable to the Administrative Agent. To the extent the Borrower elects to have such Reserve Report prepared internally and audited or made subject to a process review by an independent petroleum engineer, such audit or process review shall be acceptable so long as the aggregate of the oil and gas volumes audited or reviewed in such Reserve Report (1) equals or exceeds 20% of the aggregate volumes evaluated in such Reserve Report and (2) when aggregated with all of the other oil and gas volumes audited or reviewed by an independent petroleum engineer over the prior five years, equals or exceeds 80% of the aggregate volumes evaluated in such Reserve Report.

(b) Upon a Borrowing Base Trigger Event or in the event of an Interim Redetermination, the Borrower shall furnish to the Administrative Agent a Reserve Report prepared by one or more Approved Petroleum Engineers or by or under the supervision of the chief engineer of the Borrower or by the Borrower. For any Interim Redetermination pursuant to Section 2.14(b) or any determination of the Borrowing Base upon a Borrowing Base Trigger Event pursuant to Section 2.14(l) , the Borrower shall provide such Reserve Report as soon as possible, but in any event (i) no later than ninety (90) days following the receipt of a request for an Interim Redetermination with respect to a request on or prior to December 31, 2015 and (ii) no later than sixty (60) days following the receipt of a request for an Interim Redetermination with respect to a request after December 31, 2015, in each case with an “as of” date as of the most recent month ending prior to the request.

(c) During a Borrowing Base Trigger Period, on or before the date of delivery to the Administrative Agent of each Reserve Report required by Section 10.13(a), the Borrower will use commercially reasonable efforts to deliver, if requested by the Administrative Agent, title information consistent with usual and customary standards for the geographic regions in which the Borrowing Base Properties are located, taking into account the size, scope and number of leases and wells of the Borrower and its Restricted Subsidiaries, provided that with respect to any Oil and Gas Properties for which title information reasonably acceptable to the Administrative Agent was provided prior to the Funding Date, the Borrower shall be under no obligation to provide additional title information during a Borrowing Base Trigger Period. Notwithstanding anything in this Agreement to the contrary, the sole remedy of the Administrative Agent and the Lenders with respect to the Borrower’s failure to comply with this Section 10.13(c) shall be the remedy set forth in Section 2.14(g) .

10.14 Commodity Exchange Act Keepwell Provisions . The Borrower hereby guarantees the payment and performance of all Obligations of each Credit Party (other than Borrower) and absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each Credit Party (other than the Borrower) in order for such Credit Party to honor its obligations under the Guarantee including obligations with respect to Hedge Agreements ( provided , however , that the Borrower shall only be liable under this Section 10.14 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 10.14 , or otherwise under this Agreement or any Credit Document, as it relates to such other Credit Parties, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of the Borrower under this Section 10.14 shall remain in full force and effect until all Obligations are paid in full to the Lenders, the Administrative Agent and all other Secured Parties, and all of the Commitments are terminated. The Borrower intends that this Section 10.14 constitute, and this Section 10.14 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

ARTICLE XI
NEGATIVE COVENANTS

11.1 Limitation on Indebtedness . The Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness other than the following:

(a) Indebtedness arising under the Credit Documents;

(b) Indebtedness (including Guarantee Obligations thereunder) in respect of the Senior Notes and any fees, underwriting discounts, premiums and other costs and expenses incurred in connection with the foregoing and any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

(c) Intercompany loans and advances made by the Borrower to any Restricted Subsidiary or made by any Restricted Subsidiary to the Borrower or its Restricted Subsidiaries so long as such Indebtedness is evidenced by an intercompany note and subject to subordination terms acceptable to the Administrative Agent, to the extent permitted by Requirements of Law and not giving rise to material adverse tax consequences;

(d) Indebtedness in respect of any bankers’ acceptance, bank guarantees, letter of credit, warehouse receipt or similar facilities entered into in the ordinary course of business (including in respect of workers compensation claims, health, disability or other employee benefits or property,

casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims);

(e) subject to compliance with Section 11.5 , Guarantee Obligations incurred by (i) Restricted Subsidiaries in respect of Indebtedness of the Borrower or other Restricted Subsidiaries that is permitted to be incurred under this Agreement (except that a Restricted Subsidiary that is not a Credit Party may not, by virtue of this Section 11.1(e) guarantee Indebtedness that such Restricted Subsidiary could not otherwise incur under this Section 11.1 ) and (ii) the Borrower in respect of Indebtedness of Restricted Subsidiaries that is permitted to be incurred under this Agreement; provided that (A) if the Indebtedness being guaranteed under this Section 11.1(e) is subordinated to the Obligations, such Guarantee Obligations shall be subordinated to the Guarantee of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness and (B) no guarantee by any Restricted Subsidiary of any Permitted Additional Debt (or Indebtedness under clause (b) above) shall be permitted unless such Restricted Subsidiary shall have also provided a guarantee of the Obligations substantially on the terms set forth in the Guarantee;

(f) Guarantee Obligations (i) incurred in the ordinary course of business in respect of obligations of (or to) suppliers, customers, franchisees, lessors, licensees or sublicensees or (ii) otherwise constituting Investments permitted by Sections 11.5(b)(iv) , (viii) , (xv) , (xvi) and (xvii) ;

(g) (i) Indebtedness (including Indebtedness arising under Capital Leases) incurred within 270 days of, or assumed in connection with, the acquisition, construction, lease, repair, replacement, expansion or improvement of fixed or capital assets to finance the acquisition, construction, lease, repair, replacement expansion, or improvement of such fixed or capital assets; (ii) Indebtedness arising under Capital Leases, other than (A) Capital Leases in effect on the Funding Date and (B) Capital Leases entered into pursuant to subclause (i) above ( provided that, in the case of each of the foregoing subclauses (i) and (ii) , the Borrower shall be in compliance on a pro forma basis after giving effect to the incurrence of such Indebtedness with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such incurrence had occurred on the first day of such Test Period); and (iii) any Permitted Refinancing Indebtedness issued or incurred to Refinance any such Indebtedness;

(h) Indebtedness outstanding on the Funding Date listed on Schedule 11.1 and any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

(i) (i) Indebtedness of a Person or Indebtedness attaching to the assets of a Person that, in either case, becomes a Restricted Subsidiary (or is a Restricted Subsidiary that survives a merger with such Person or any of its Subsidiaries) or Indebtedness attaching to the assets that are acquired by the Borrower or any Restricted Subsidiary, in each case after the Funding Date as the result of a Permitted Acquisition; provided that:

(A) such Indebtedness existed at the time such Person became a Restricted Subsidiary or at the time such assets were acquired and, in each case, was not created in anticipation thereof,

(B) such Indebtedness is not guaranteed in any respect by the Borrower or any Restricted Subsidiary (other than any such Person that so becomes a Restricted Subsidiary or is the survivor of a merger with such Person or any of its Subsidiaries),

(C) (1) the Stock of such Person is pledged to the Administrative Agent to the extent required under Section 10.10(c) and (2) such Person executes a supplement to

each of the Guarantee, the Security Agreement and the Pledge Agreement, in each case to the extent required under Section 10.10 ; provided that the assets covered by such pledges and security interests may, to the extent permitted by Section 11.2 , equally and ratably secure such Indebtedness assumed with the Secured Parties subject to intercreditor arrangements in form and substance reasonably satisfactory to the Administrative Agent; provided , further , that the requirements of this clause (C) shall not apply to any Indebtedness of the type that could have been incurred under Section 11.1(g) , and

(D) after giving effect to the assumption of any such Indebtedness, to such acquisition and to any related pro forma adjustment, the Borrower shall be in compliance on a pro forma basis with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such assumption and acquisition had occurred on the first day of such Test Period;

(ii) any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness;

(j) (i) Indebtedness incurred to finance a Permitted Acquisition; provided that:

(A) (1) the Stock of the Person acquired is pledged to the Administrative Agent to the extent required under Section 10.10(c) and (2) such Person executes a supplement to each of the Guarantee, the Security Agreement and the Pledge Agreement and delivers any other Security Documents, in each case, to the extent required under Section 10.10 ;

(B) after giving effect to the incurrence of any such Indebtedness, to such acquisition and to any related pro forma adjustment, the Borrower shall be in compliance on a pro forma basis with the Financial Performance Covenants, as such covenant are recomputed as at the last day of the most recently ended Test Period as if such incurrence and acquisition had occurred on the first day of such Test Period;

(C) the maturity of such Indebtedness is not earlier than, and no mandatory repayment or redemption (other than customary change of control or asset sale offers or upon any event of default) is required prior to, 91 days after the Maturity Date (determined at the time of issuance or incurrence); and

(D) such Indebtedness is not guaranteed in any respect by the Borrower or any Subsidiary Guarantor except to the extent permitted under Section 11.5 ;

(ii) any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness;

(k) Indebtedness consisting of secured financings by a Foreign Subsidiary in which no Credit Party’s assets are used to secure such Indebtedness;

(l) Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations not in connection with money borrowed, in each case provided in the ordinary course of business or consistent with past practice, including those incurred to secure health, safety and environmental obligations in the ordinary course of business or consistent with past practice;

(m) Cash Management Obligations, Cash Management Services and other Indebtedness in respect of netting services, automatic clearing house arrangements, employees’ credit or purchase cards, overdraft protections and similar arrangements in each case incurred in the ordinary course of business;

(n) Indebtedness incurred in the ordinary course of business in respect of obligations of the Borrower or any Restricted Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services;

(o) Indebtedness arising from agreements of the Borrower or any Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations (including earn-outs), in each case entered into in connection with the Spinoff Transaction and the OPC Related Transactions, Permitted Acquisitions, other Investments and the Disposition of any business, assets or Stock permitted hereunder;

(p) Indebtedness of the Borrower or any Restricted Subsidiary consisting of (i) obligations to pay insurance premiums or (ii) obligations contained in firm transportation or supply agreements or other take or pay contracts, in each case arising in the ordinary course of business;

(q) Indebtedness representing deferred compensation to employees, consultants or independent contractors of the Borrower (or, to the extent such work is done for the Borrower or its Subsidiaries, any direct or indirect parent thereof) and the Restricted Subsidiaries incurred in the ordinary course of business;

(r) Indebtedness consisting of promissory notes issued by the Borrower or any Guarantor to current or former officers, managers, consultants, directors and employees (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) to finance the purchase or redemption of Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof) permitted by Section 11.6 ;

(s) Indebtedness consisting of obligations of the Borrower and the Restricted Subsidiaries under deferred compensation or other similar arrangements incurred by such Person in connection with the Transactions, Permitted Acquisitions or any other Investment permitted hereunder;

(t) Indebtedness associated with bonds or surety obligations required by Requirements of Law or by Governmental Authorities in connection with the operation of Oil and Gas Properties in the ordinary course of business;

(u) Indebtedness consisting of the undischarged balance of any Production Payment, subject to adjustment of the Borrowing Base as set forth in Section 2.14(e) to the extent required under Section 11.4(a)(ii) ;

(v) Indebtedness of any Restricted Subsidiary that is not a Guarantor provided that the aggregate principal amount of Indebtedness outstanding at any time pursuant to this clause (v) shall not at the time of incurrence thereof and after giving pro forma effect thereto and the use of proceeds thereof, exceed 15% of Consolidated Total Assets (measured as of the date such Indebtedness is incurred based upon the financial statements most recently available prior to such date);

(w) during (i) an Investment Grade Period, other Indebtedness and (ii) during a Borrowing Base Trigger Period, Indebtedness in respect of Permitted Additional Debt; provided , in each case, that after giving effect to the incurrence of any such Indebtedness, the Borrower shall be in

compliance on a pro forma basis with the Financial Performance Covenants as each such covenant is recomputed as of the last day of the most recently ended Test Period as if such incurrence had occurred on the first day of such Test Period and any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;

(x) during a Borrowing Base Trigger Period, other Indebtedness so long as the aggregate principal amount of such Indebtedness at the time of the incurrence thereof and after giving pro forma effect thereto and the use of proceeds thereof, does not exceed the greater of $200,000,000 and 1.50% of Consolidated Total Assets (measured, in each case, as of the date such Indebtedness is incurred based upon the financial statements most recently available prior to such date); and

(y) all premiums (if any), interest (including post-petition interest), fees, expenses, charges, and additional or contingent interest on obligations described in clauses (a) through (x) above.

11.2 Limitation on Liens . The Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any property or assets of any kind (real or personal, tangible or intangible) of the Borrower or any Restricted Subsidiary, whether now owned or hereafter acquired, except:

(a) Liens arising under the Credit Documents to secure the Obligations (including Liens contemplated by Section 3.8 );

(b) Permitted Liens;

(c) Liens (including liens arising under Capital Leases to secure Capital Lease Obligations) securing Indebtedness permitted pursuant to Section 11.1(g) ; provided that such Liens attach concurrently with or within 270 days after the acquisition, lease, repair, replacement, construction, expansion or improvement (as applicable) being financed with such Indebtedness, (ii) other than the property financed by such Indebtedness, such Liens do not at any time encumber any property, except for replacements thereof and accessions and additions to such property and the proceeds and the products thereof and customary security deposits and (iii) with respect to Capital Leases, such Liens do not at any time extend to or cover any assets (except for accessions and additions to such assets, replacements and products thereof and customary security deposits) other than the assets subject to such Capital Leases; provided that individual financings of equipment provided by one lender may be cross collateralized to other financings of equipment provided by such lender;

(d) Liens existing on the Funding Date; provided that any Lien securing Indebtedness in excess of (i) $5,000,000 individually or (ii) $10,000,000 in the aggregate (when taken together with all other Liens securing obligations outstanding in reliance on this clause (d) that are not listed on Schedule 11.2 ) shall only be permitted to the extent such Lien is listed on Schedule 11.2 ;

(e) (i) the modification, replacement, extension or renewal of any Lien permitted by clauses (a) , (b) , (c) , (d) , (f) , (i) , (s) and (w) of this Section 11.2 upon or in the same assets theretofore subject to such Lien or upon or in after-acquired property that is (A) affixed or incorporated into the property covered by such Lien, (B) in the case of Liens permitted by clauses (f) and (s) , subject to a Lien securing Indebtedness permitted under Section 11.1 , the terms of which Indebtedness require or include a pledge of after-acquired property (it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (C) the proceeds and products thereof or (ii) during a Borrowing Base Trigger Period, Liens securing Indebtedness incurred in replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor except to the extent otherwise permitted hereunder) of secured

Indebtedness, to the extent the replacement, extension or renewal of the Indebtedness secured thereby is permitted by Section 11.1 ;

(f) during a Borrowing Base Trigger Period, Liens existing on the assets of any Person that becomes a Subsidiary, or existing on assets acquired, pursuant to a Permitted Acquisition to the extent the Liens on such assets secure Indebtedness permitted by Section 11.1(i) ; provided that such Liens attach at all times only to the same assets that such Liens (or upon or in after-acquired property that is (i) affixed or incorporated into the property covered by such Lien, (ii) after-acquired property subject to a Lien securing Indebtedness permitted under Section 11.1(i) , the terms of which Indebtedness require or include a pledge of after-acquired property (it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (iii) the proceeds and products thereof) attached to, and secure only, the same Indebtedness or obligations (or any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness permitted by Section 11.1 ) that such Liens secured, immediately prior to such Permitted Acquisition;

(g) during a Borrowing Base Trigger Period, Liens placed upon the Stock and Stock Equivalents of any Person that becomes a Restricted Subsidiary pursuant to a Permitted Acquisition, or the assets of such a Restricted Subsidiary, in each case, to secure Indebtedness incurred pursuant to Section 11.1(j) ; provided that such Liens attach at all times only to the Stock and Stock Equivalents or assets so acquired;

(h) Liens securing Indebtedness or other obligations (i) of the Borrower or a Restricted Subsidiary in favor of a Credit Party and (ii) of any Restricted Subsidiary that is not a Credit Party in favor of any Restricted Subsidiary that is not a Credit Party;

(i) Liens (i) of a collecting bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection, (ii) attaching to commodity trading accounts or other commodity brokerage accounts incurred in the ordinary course of business and (iii) in favor of a banking institution arising as a matter of law encumbering deposits (including the right of set-off);

(j) Liens (i) on cash advances in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 11.5 to be applied against the purchase price for such Investment, and (ii) consisting of an agreement to Dispose of any property in a transaction permitted under Section 11.4 , in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;

(k) Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods entered into by the Borrower or any of the Restricted Subsidiaries in the ordinary course of business permitted by this Agreement;

(l) Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 11.5 ;

(m) Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to brokerage accounts incurred in the ordinary course of business and approved by the Borrower’s board of directors;

(n) Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance or incurrence of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any Restricted Subsidiary to permit

satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and the Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any Restricted Subsidiary in the ordinary course of business;

(o) Liens solely on any cash earnest money deposits made by the Borrower or any of the Restricted Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

(p) Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;

(q) Liens in respect of Production Payments, subject to adjustment of the Borrowing Base as set forth in Section 2.14(e) to the extent required under Section 11.4(a)(ii) ;

(r) the prior right of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;

(s) agreements to subordinate any interest of the Borrower or any Restricted Subsidiary in any accounts receivable or other proceeds arising from inventory consigned by the Borrower or any Restricted Subsidiary pursuant to an agreement entered into in the ordinary course of business;

(t) Liens on Stock in a joint venture that does not constitute a Restricted Subsidiary securing obligations of such joint venture so long as the assets of such joint venture do not constitute Collateral;

(u) Liens securing any Indebtedness permitted by Section 11.1(k) ;

(v) Liens arising pursuant to Section 107(l) of CERCLA, or other Environmental Law, unless such Lien (i) by action of the lienholder, or by operation of law, takes priority over any Liens arising under the Credit Documents on the property upon which it is a Lien, and (ii) relates to a liability of the Borrower or any Restricted Subsidiary that is reasonably likely to exceed $30,000,000;

(w) during a Borrowing Base Trigger Period, Liens on any property of the Borrower or any Restricted Subsidiary, other than property or assets securing the Obligations or any Borrowing Base Properties, to secure Indebtedness and obligations of the Borrower or such Restricted Subsidiary under Hedge Agreements permitted under Section 11.10 with counterparties other than a Hedge Bank;

(x) Liens arising from judgments or decrees in circumstances not constituting an Event of Default under Section 12.9 ; and

(y) additional Liens so long as the aggregate principal amount of the obligations secured thereby at the time of the incurrence thereof and after giving pro forma effect thereto and the use of proceeds thereof, does not exceed (i) during an Investment Grade Period, 15% of Consolidated Total Assets and (ii) during a Borrowing Base Trigger Period, and only with respect to Liens on property not constituting Borrowing Base Properties, the greater of $200,000,000 and 1.50% of Consolidated Total Assets (measured, in each case, as of the date such Lien or the obligations secured is incurred based upon the financial statements most recently available prior to such date).

11.3 Limitation on Fundamental Changes . Except as permitted by Sections 11.4 or 11.5 , the Borrower will not, and will not permit any of the Restricted Subsidiaries to, enter into any merger,

consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all its business units, assets or other properties, except that:

(a) any Subsidiary of the Borrower or any other Person may be merged, amalgamated or consolidated with or into the Borrower; provided that (i) the Borrower shall be the continuing or surviving Person or, in the case of a merger, amalgamation or consolidation with or into the Borrower, the Person formed by or surviving any such merger, amalgamation or consolidation (if other than the Borrower) shall be an entity organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof (the Borrower or such Person, as the case may be, being herein referred to as the “ Successor Borrower ”), (ii) the Successor Borrower (if other than the Borrower) shall expressly assume all the obligations of the Borrower under this Agreement and the other Credit Documents pursuant to a supplement hereto or thereto in form reasonably satisfactory to the Administrative Agent, (iii) no Borrowing Base Deficiency, Default or Event of Default has occurred and is continuing at the date of such merger, amalgamation or consolidation or would result from such consummation of such merger, amalgamation or consolidation, and (iv) if such merger, amalgamation or consolidation involves the Borrower and a Person that, prior to the consummation of such merger, amalgamation or consolidation, is not a Subsidiary of the Borrower (A) the Successor Borrower shall be in compliance, on a pro forma basis after giving effect to such merger, amalgamation or consolidation, with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period under such Section as if such merger, amalgamation or consolidation had occurred on the first day of such Test Period, (B) each Guarantor, unless it is the other party to such merger, amalgamation or consolidation or unless the Successor Borrower is the Borrower, shall have by a supplement to the Guarantee confirmed that its Guarantee shall apply to the Successor Borrower’s obligations under this Agreement, (C) each Subsidiary grantor and each Subsidiary pledgor, unless it is the other party to such merger, amalgamation or consolidation or unless the Successor Borrower is the Borrower, shall have by a supplement to the Credit Documents confirmed that its obligations thereunder shall apply to the Successor Borrower’s obligations under this Agreement, (D) each mortgagor of a Mortgaged Property, unless it is the other party to such merger or consolidation or unless the Successor Borrower is the Borrower, shall have by an amendment to or restatement of the applicable Mortgage confirmed that its obligations thereunder shall apply to the Successor Borrower’s obligations under this Agreement, (E) the Borrower shall have delivered to the Administrative Agent an officer’s certificate stating that such merger, amalgamation or consolidation and any supplements to the Credit Documents preserve the enforceability of the Guarantee and the perfection and priority of the Liens under the Security Documents, (F) if reasonably requested by the Administrative Agent, an opinion of counsel shall be required to be provided to the effect that such merger, amalgamation or consolidation does not violate this Agreement or any other Credit Document; provided , further , that if the foregoing are satisfied, the Successor Borrower (if other than the Borrower) will succeed to, and be substituted for, the Borrower under this Agreement and (G) such merger, amalgamation or consolidation shall comply with all the conditions set forth in the definition of the term “Permitted Acquisition” or is otherwise permitted under Section 11.5 ;

(b) any Subsidiary of the Borrower or any other Person (other than the Borrower) may be merged, amalgamated or consolidated with or into any one or more Subsidiaries of the Borrower; provided that (i) in the case of any merger, amalgamation or consolidation involving one or more Restricted Subsidiaries, (A) a Restricted Subsidiary shall be the continuing or surviving Person or (B) the Borrower shall take all steps necessary to cause the Person formed by or surviving any such merger, amalgamation or consolidation (if other than a Restricted Subsidiary) to become a Restricted Subsidiary, (ii) in the case of any merger, amalgamation or consolidation involving one or more Guarantors, a Guarantor shall be the continuing or surviving Person or the Person formed by or surviving any such merger, amalgamation or consolidation (if other than a Guarantor) shall execute a supplement to the Guarantee, the Security Agreement, the Pledge Agreement and any applicable Mortgage, each in form

and substance reasonably satisfactory to the Administrative Agent in order for the surviving Person to become a Guarantor and pledgor, mortgagor and grantor of Collateral for the benefit of the Secured Parties, (iii) no Borrowing Base Deficiency, Default or Event of Default has occurred and is continuing on the date of such merger, amalgamation or consolidation or would result from the consummation of such merger, amalgamation or consolidation and (iv) if such merger, amalgamation or consolidation involves a Subsidiary and a Person that, prior to the consummation of such merger, amalgamation or consolidation, is not a Restricted Subsidiary of the Borrower, (A) the Borrower shall be in compliance, on a pro forma basis after giving effect to such merger, amalgamation or consolidation, with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period under such Section as if such merger, amalgamation or consolidation had occurred on the first day of such Test Period, (B) the Borrower shall have delivered to the Administrative Agent an officer’s certificate stating that such merger, amalgamation or consolidation and such supplements to any Credit Document preserve the enforceability of the Guarantee and the perfection and priority of the Liens under the Security Agreement and (C) such merger, amalgamation or consolidation shall comply with all the conditions set forth in the definition of the term “Permitted Acquisition” or is otherwise permitted under Section 11.5 ;

(c) any Restricted Subsidiary that is not a Guarantor may (i) merge, amalgamate or consolidate with or into any other Restricted Subsidiary and (ii) Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower, a Guarantor or any other Restricted Subsidiary of the Borrower;

(d) any Subsidiary Guarantor may (i) merge, amalgamate or consolidate with or into any other Subsidiary Guarantor, (ii) merge, amalgamate or consolidate with or into any other Subsidiary which is not a Guarantor or Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to any other Subsidiary that is not a Guarantor; provided that if such Subsidiary Guarantor is not the surviving entity, such merger, amalgamation or consolidation shall be deemed to be, and any such Disposition shall be, an “Investment” and subject to the limitations set forth in Section 11.5 and (iii) Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other Guarantor;

(e) any Restricted Subsidiary may liquidate or dissolve if (i) the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders and (ii) to the extent such Restricted Subsidiary is a Credit Party, any assets or business of such Restricted Subsidiary not otherwise Disposed of or transferred in accordance with Section 11.4 or 11.5 , in the case of any such business, discontinued, shall be transferred to, or otherwise owned or conducted by, a Credit Party after giving effect to such liquidation or dissolution; and

(f) to the extent that no Borrowing Base Deficiency, Default or Event of Default would result from the consummation of such Disposition, the Borrower and the Restricted Subsidiaries may consummate a merger, dissolution, liquidation, consolidation or Disposition, the purpose of which is to effect a Disposition permitted pursuant to Section 11.4 .

11.4 Limitation on Sale of Assets .

(a) During a Borrowing Base Trigger Period, the Borrower will not, and will not permit any of the Restricted Subsidiaries to, (x) convey, sell, lease, sell and leaseback, assign, farm-out, transfer or otherwise dispose (each of the foregoing a “ Disposition ”) of any of its property, business or assets (including receivables and leasehold interests), whether now owned or hereafter acquired or (y) sell

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to any Person (other than the Borrower or a Guarantor) any shares owned by it of any Restricted Subsidiary’s Stock and Stock Equivalents, except that:

(i) the Borrower and the Restricted Subsidiaries may Dispose of (i) inventory and other goods held for sale, including Hydrocarbons, obsolete, worn out, used or surplus equipment, vehicles and other assets (other than accounts receivable) in the ordinary course of business (including equipment that is no longer necessary for the business of the Borrower or its Restricted Subsidiaries or is replaced by equipment of at least comparable value and use), (ii) Permitted Investments, and (iii) assets for the purposes of community and public outreach, including, without limitation, charitable contributions and similar gifts, funding of or participation in trade, business and technical associations, and political contributions made in accordance with applicable Requirements of Law, to the extent such assets are not material to the ability of the Borrower and its Restricted Subsidiaries, taken as a whole, to conduct its business in the ordinary course;

(ii) the Borrower and the Restricted Subsidiaries may Dispose of any Oil and Gas Properties or any interest therein or the Stock or Stock Equivalents of any Restricted Subsidiary owning Oil and Gas Properties (and including, but without limitation, Dispositions pursuant to the OPC Related Transactions, Dispositions in respect of Production Payments, Royalty Trusts, sale leaseback transactions and in connection with net profits interests, operating agreements, farm-ins, joint exploration and development agreements and other agreements customary in the oil and gas industry for the purpose of developing such Oil and Gas Properties); provided that such Disposition is for Fair Market Value; provided , further , that if such Disposition of Oil and Gas Properties or of any Stock or Stock Equivalents of any Restricted Subsidiary owning Oil and Gas Properties involves Borrowing Base Properties included in the most recently delivered Reserve Report and the aggregate PV-9 (calculated at the time of such Disposition) of all such Borrowing Base Properties Disposed, when aggregated with the Hedge PV (as calculated at the time of any such termination or creation of off-setting positions) of terminated and/or offsetting positions (after taking into account any other Hedge Agreement, executed contemporaneously with the taking of such actions), since the later of (i) the last Scheduled Redetermination Date and (ii) the last adjustment of the Borrowing Base made pursuant to Section 2.14(e) exceeds 10% of the then-effective Borrowing Base, then no later than two Business Days’ after the date of consummation of any such Disposition, the Borrower shall provide notice to the Administrative Agent of such Disposition and the Borrowing Base Properties so Disposed and the Borrowing Base shall be adjusted in accordance with the provisions of Section 2.14(e) ; provided , further , that to the extent that the Borrower is notified by the Administrative Agent that a Borrowing Base Deficiency could result from an adjustment to the Borrowing Base resulting from such Disposition, after the consummation of such Disposition(s), the Borrower shall have received net cash proceeds, or shall have cash on hand, sufficient to eliminate any such potential Borrowing Base Deficiency;

(iii) the Borrower and the Restricted Subsidiaries may Dispose of property or assets to the Borrower or to a Restricted Subsidiary; provided that if the transferor of such property is a Credit Party (i) the transferee thereof must either be a Credit Party or (ii) such transaction is permitted under Section 11.5 ;

(iv) the Borrower and any Restricted Subsidiary may effect any transaction permitted by Section 11.3 , 11.5 or 11.6 ;

(v) the Borrower and the Restricted Subsidiaries may lease, sublease, license or sublicense (on a non-exclusive basis with respect to any intellectual property) real, personal or intellectual property in the ordinary course of business;

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(vi) Dispositions constituting like-kind exchanges (including reverse like-kind exchanges) of Borrowing Base Properties to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are applied to the purchase price of such replacement property, in each case under Section 1031 of the Code or otherwise, and (iii) after giving effect to such Disposition, the difference between (x) the Borrowing Base in effect immediately prior to such Disposition minus (y) the PV-9 (calculated at the time of such Disposition) of the Borrowing Base Properties Disposed of since the later of (i) the last Scheduled Redetermination Date and (ii) the last adjustment of the Borrowing Base made pursuant to Section 2.14(e) exceeds the Revolving Loan Limit in effect immediately prior to such Disposition;

(vii) Dispositions of Hydrocarbon Interests to which no Proved Reserves are attributable and farm-outs of undeveloped acreage to which no Proved Reserves are attributable and assignments in connection with such farm-outs;

(viii) Dispositions of Investments in joint ventures (regardless of the form of legal entity) to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements to the extent the same would be permitted under Section 11.5(b)(viii) ;

(ix) Dispositions listed on Schedule 11.4 (“Scheduled Dispositions”);

(x) transfers of property subject to a (i) Casualty Event or in connection with any condemnation proceeding with respect to Collateral upon receipt of the net cash proceeds of such Casualty Event or condemnation proceeding or (ii) in connection with any Casualty Event or any condemnation proceeding, in each case with respect to property that does not constitute Collateral;

(xi) Dispositions of accounts receivable (i) in connection with the collection or compromise thereof or (ii) to the extent the proceeds thereof are used to prepay any Loans then outstanding;

(xii) the unwinding, terminating and/or offsetting of any Hedge Agreement (subject to the terms of Section 2.14(e) ); provided , that if the Hedge PV of the unwound, terminated and/or offsetting positions (as calculated at the time of any such unwind, termination or creation of off-setting positions, after taking into account any other Hedge Agreement, executed contemporaneously with the taking of such actions) when aggregated with the aggregate PV-9 of all Borrowing Base Properties Disposed (calculated at the time of such Disposition) included in the most recently delivered Reserve Report, since the later of (i) the last Scheduled Redetermination Date and (ii) the last adjustment of the Borrowing Base made pursuant to Section 2.14(e) , exceeds 10% of the then-effective Borrowing Base, then no later than two Business Days’ after the date of consummation of any unwinding, terminating and/or offsetting of any Hedge Agreement, the Borrower shall provide notice to the Administrative Agent of such unwinding, terminating and/or offsetting of any Hedge Agreement and the Borrowing Base shall be adjusted in accordance with the provisions of Section 2.14(e) ; provided , further , that to the extent that the Borrower is notified by the Administrative Agent that a Borrowing Base Deficiency could result from an adjustment to the Borrowing Base resulting from such unwinding, terminating and/or offsetting of any Hedge Agreement, after the consummation of such unwinding, terminating and/or offsetting of any Hedge Agreement, the Borrower shall have received net cash proceeds, or shall have cash on hand, sufficient to eliminate any such potential Borrowing Base Deficiency;

(xiii) Dispositions of Oil and Gas Properties and other assets not included in the Borrowing Base; and

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(xiv) Disposition of any asset between or among the Borrower and/or its Restricted Subsidiaries as a substantially concurrent interim Disposition in connection with a Disposition otherwise permitted pursuant to clauses (i) through (xiii) above.

(b) On any date during an Investment Grade Period, the Borrower will not, and will not permit any of the Restricted Subsidiaries to, make any Disposition, unless after giving pro forma effect to such Disposition (i) no Default or Event of Default has occurred and is continuing or would result therefrom and (ii) the Borrower shall be in compliance with the Financial Performance Covenants on a pro forma basis after giving effect to such Disposition, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such Disposition had occurred on the first day of such Test Period.

11.5 Limitation on Investments .

(a) During an Investment Grade Period:

(i) the Borrower will not, and will not permit any of its Restricted Subsidiaries to, make or hold Investments in Unrestricted Subsidiaries, except that the Borrower or any Restricted Subsidiary may make and hold an Investment in any Unrestricted Subsidiary (in each case valued at the Fair Market Value (determined by the Borrower acting in good faith) of such Investment at the time each such Investment is made) so long as after giving pro forma effect to such Investment (i) no Default or Event of Default has occurred and is continuing or would result therefrom and (ii) the Borrower shall be in compliance with the Financial Performance Covenants on a pro forma basis after giving effect to such Investment, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such Investment had occurred on the first day of such Test Period;

(ii) neither the Borrower nor any Restricted Subsidiary may guarantee or otherwise become liable in respect of any Indebtedness or other obligations of, grant any Lien on any of its property to secure any Indebtedness of or other obligation of, or provide any other form of credit support to, any Unrestricted Subsidiary; and

(iii) no Unrestricted Subsidiary may, directly or indirectly, make any Investment in the Borrower or any Restricted Subsidiary.

(b) During a Borrowing Base Trigger Period, the Borrower will not, and will not permit any of the Restricted Subsidiaries, to make any Investment except:

(i) extensions of trade credit and purchases of assets and services (including purchases of inventory, supplies and materials) in the ordinary course of business;

(ii) Investments in assets that constituted Permitted Investments at the time such Investments were made;

(iii) loans and advances to officers, directors, employees and consultants of the Borrower (or any direct or indirect parent thereof) or any of its Restricted Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes (including employee payroll advances), (ii) in connection with such Person’s purchase of Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof; provided that, to the extent such loans and advances are made in cash, the amount of such loans and advances used to acquire such Stock or Stock Equivalents shall be contributed to the Borrower in cash) and (iii) for

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purposes not described in the foregoing subclauses (i) and (ii) ; provided that the aggregate principal amount outstanding pursuant to subclause (iii) shall not exceed $20,000,000;

(iv) (A) Investments existing on, or made pursuant to legally binding written commitments in existence on, the Funding Date as set forth on Schedule 11.5 , (B) Investments existing on the Funding Date of the Borrower or any Subsidiary in any other Subsidiary and (C) any extensions, renewals or reinvestments thereof, so long as the amount of any Investment made pursuant to this clause (iv) is not increased at any time above the amount of such Investment set forth on Schedule 11.5 ;

(v) Investments received in connection with the bankruptcy or reorganization of suppliers or customers and in settlement of delinquent obligations of, and other disputes with, customers arising in the ordinary course of business or upon foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment;

(vi) Investments to the extent that payment for such Investments is made with Stock or Stock Equivalents (other than Disqualified Stock not otherwise permitted by Section 11.1 ) of the Borrower (or any direct or indirect parent thereof);

(vii) Investments made after the Funding Date in Unrestricted Subsidiaries in each case valued at the Fair Market Value (determined by the Borrower acting in good faith) of such Investment at the time each such Investment is made, in an aggregate amount that, at the time each such Investment is made, would not exceed 10% of the then-effective Borrowing Base; provided that no Event of Default shall then exist and, to the extent such Investment is made in the form of a transfer of assets other than cash or Permitted Investments, the Borrower shall be in compliance with the Financial Performance Covenants on a pro forma basis after giving effect to such Investment, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such Investment had occurred on the first day of such Test Period;

(viii) Investments (including but not limited to (A) Permitted Acquisitions and (B) Investments in respect of Royalty Trusts and master limited partnerships), in each case valued at the Fair Market Value (determined by the Borrower acting in good faith) of such Investment at the time each such Investment is made, in an aggregate amount pursuant to this Section 11.5(b)(viii) that, at the time each such Investment is made, would not exceed the sum of (a) the greater of (1) $125,000,000 and (2) 1.25% of Consolidated Total Assets (measured as of the date such Investment is made based upon the financial statements most recently available prior to such date) plus (b) the Applicable Equity Amount at such time plus (c) to the extent not otherwise included in the determination of the Applicable Equity Amount, an amount equal to any repayments, interest, returns, profits, distributions, income and similar amounts actually received in cash in respect of any such Investment (which amount shall not exceed the amount of such Investment valued at the Fair Market Value of such Investment at the time such Investment was made); provided that the foregoing limits shall not apply during the period in which, and Investments may be made pursuant to this Section 11.5(b)(viii) without limit at any such time during which, after giving pro forma effect to the making of any such Investment, (1) no Event of Default shall have occurred and be continuing and (2) Liquidity is not less than 10% of the then-effective Revolving Loan Limit (on a pro forma basis after giving effect to such Investment); provided , further , that intercompany current liabilities incurred in the ordinary course of business and consistent with past practices, in connection with the cash management operations of the Borrower and the Subsidiaries shall not be included in calculating any limitations in this paragraph at any time;

(ix) Investments constituting non-cash proceeds of Dispositions of assets to the extent such Disposition is permitted by Section 11.4 ;

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(x) Investments made to repurchase or retire Stock or Stock Equivalents of the Borrower or any direct or indirect parent thereof owned by any employee or any stock ownership plan or key employee stock ownership plan of the Borrower (or any direct or indirect parent thereof);

(xi) loans and advances to any direct or indirect parent of the Borrower in lieu of, and not in excess of the amount of, Restricted Payments to the extent permitted to be made to such parent in accordance with Section 11.6 ;

(xii) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;

(xiii) Investments in the ordinary course of business consisting of endorsements for collection or deposit and customary trade arrangements with customers consistent with past practices;

(xiv) advances of payroll payments to employees, consultants or independent contractors or other advances of salaries or compensation to employees, consultants or independent contractors, in each case in the ordinary course of business;

(xv) guarantee obligations of the Borrower or any Restricted Subsidiary of leases (other than Capital Leases) or of other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business;

(xvi) Investments held by a Person acquired (including by way of merger or consolidation) after the Funding Date otherwise in accordance with this Section 11.5 to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;

(xvii) Investments in Industry Investments and in interests in additional Oil and Gas Properties and gas gathering systems related thereto or Investments related to farm-out, farm-in, joint operating, joint venture, joint development or other area of mutual interest agreements, other similar industry investments, gathering systems, pipelines or other similar oil and gas exploration and production business arrangements whether through direct ownership or ownership through a joint venture or similar arrangement;

(xviii) Investments in Hedge Agreements permitted by Section 11.1 and Section 11.10 ;

(xix) Investments consisting of Indebtedness, fundamental changes, Dispositions and Restricted Payments permitted under Sections 11.1 , 11.3 , 11.4 and 11.6 (other than 11.6(c) );

(xx) Investments by the Borrower or any Restricted Subsidiary in any Restricted Subsidiary; and

(xxi) Investments consisting of licensing of intellectual property pursuant to joint marketing arrangements with other Persons in the ordinary course of business.

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11.6 Limitation on Restricted Payments . The Borrower will not pay any dividends (other than Restricted Payments payable solely in its Stock that is not Disqualified Stock) or return any capital to its equity holders or make any other distribution, payment or delivery of property or cash to its equity holders as such, or redeem, retire, purchase or otherwise acquire, directly or indirectly, for consideration, any shares of any class of its Stock or Stock Equivalents or the Stock or Stock Equivalents of any direct or indirect parent now or hereafter outstanding, or set aside any funds for any of the foregoing purposes, or permit any of the Restricted Subsidiaries to purchase or otherwise acquire for consideration (other than in connection with an Investment permitted by Section 11.5 ) any Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof), now or hereafter outstanding (all of the foregoing, “ Restricted Payments ”); except that:

(a) the Borrower may redeem in whole or in part any of its Stock or Stock Equivalents in exchange for another class of its Stock or Stock Equivalents or with proceeds from substantially concurrent equity contributions or issuances of new Stock or Stock Equivalents; provided that such new Stock or Stock Equivalents contain terms and provisions at least as advantageous to the Lenders in all material respects to their interests as those contained in the Stock or Stock Equivalents redeemed thereby, and the Borrower may pay Restricted Payments payable solely in the Stock and Stock Equivalents (other than Disqualified Stock not otherwise permitted by Section 11.1 ) of the Borrower;

(b) the Borrower may (i) redeem, acquire, retire or repurchase shares of its Stock or Stock Equivalents held by any present or former officer, manager, consultant, director or employee (or their respective Affiliates, estates, spouses, former spouses, successors, executors, administrators, heirs, legatees, distributees or immediate family members) of the Borrower and its Subsidiaries, upon the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any equity option or equity appreciation rights plan, any management, director and/or employee equity ownership, benefit or incentive plan or agreement, equity subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement; provided that, non-discretionary repurchases, acquisitions, retirements or redemptions pursuant to the terms of any equity option or equity appreciation rights plan, any management, director and/or employee equity ownership, benefit or incentive plan or agreement, equity subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement, the aggregate amount of all cash paid in respect of all such shares of Stock or Stock Equivalents so redeemed, acquired, retired or repurchased in any calendar year does not exceed the $50,000,000; and (ii) pay Restricted Payments in an amount equal to withholding or similar Taxes payable or expected to be payable by any present or former employee, director, manager or consultant (or their respective Affiliates, estates or immediate family members) and any repurchases of Stock or Stock Equivalents in consideration of such payments including deemed repurchases in connection with the exercise of stock options so long as the amount of such payments does not exceed $25,000,000 in the aggregate;

(d) to the extent constituting Restricted Payments, the Borrower may enter into and consummate transactions expressly permitted by any provision of Section 11.3 ;

(e) the Borrower may repurchase Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof) upon exercise of stock options or warrants if such Stock or Stock Equivalents represents all or a portion of the exercise price of such options or warrants;

(f) the Borrower or any of the Restricted Subsidiaries may (i) pay cash in lieu of fractional shares in connection with any dividend, split or combination thereof or any Permitted

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Acquisition and (ii) so long as, after giving pro forma effect thereto, (A) no Default or Event of Default shall have occurred and be continuing and (B) if such payment is made while a Borrowing Base Trigger Period is in effect, no Borrowing Base Deficiency exists, honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Indebtedness in accordance with its terms;

(g) the Borrower may pay any Restricted Payment within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Agreement;

(h) during any Borrowing Base Trigger Period, if, after giving pro forma effect thereto, (i) no Event of Default shall have occurred and be continuing, and (ii) Available Revolving Commitment is not less than 10% of the then effective Revolving Loan Limit (on a pro forma basis after giving effect to such Restricted Payment), the Borrower may make, declare and pay additional Restricted Payments without limit in cash or otherwise to the holders of its Stock and Stock Equivalents; provided , that, in the case of any Restricted Payment in the form of assets other than cash, no such Restricted Payment shall be made if a Borrowing Base Deficiency would result from an adjustment to the Borrowing Base resulting from such Restricted Payment (unless the Borrower shall have cash on hand sufficient to eliminate any such potential Borrowing Base Deficiency);

(i) during any Investment Grade Period, if no Event of Default shall have occurred and be continuing or would result therefrom and after giving effect to the making of any such Restricted Payment, the Borrower shall be in compliance on a pro forma basis with the Financial Performance Covenants as such covenants are re-computed as of the last day of the most recently ended Test Period as if such Restricted Payment had been paid on the first day of such Test Period, then the Borrower may declare and pay Restricted Payments in cash or other property;

(j) the Borrower may pay any Restricted Payment to OPC or its subsidiaries (i) in connection with the Spinoff Transaction in an aggregate amount not to exceed $6,500,000,000 and (ii) pursuant to the OPC Related Transactions; and

(k) the Borrower may make payments described in Sections 11.12(a) , (d) , (e) , (f) and (i) (subject to the conditions set out therein).

11.7 Limitations on Debt Payments and Amendments .

(a) The Borrower will not, and will not permit any Restricted Subsidiary to, optionally prepay, repurchase or redeem or otherwise defease the Senior Notes or any Permitted Additional Debt comprised of senior subordinated or subordinated Indebtedness (it being understood that payments of regularly scheduled cash interest in respect of, and payment of principal on the scheduled maturity date of, the Senior Notes or such Permitted Additional Debt shall be permitted); provided , however , that the Borrower or any Subsidiary may optionally prepay, repurchase, redeem or defease the Senior Notes or any such Permitted Additional Debt (A) with the proceeds of any Permitted Refinancing Indebtedness, (B) by converting or exchanging the Senior Notes or any such Permitted Additional Debt to Stock (other than Disqualified Stock) of the Borrower or any of its direct or indirect parent or (C) so long as, after giving pro forma effect thereto, (1) no Event of Default has occurred and is continuing and (2) (A) during a Borrowing Base Trigger Period, the Available Revolving Commitment is not less than 10% of the then effective Revolving Loan Limit (on a pro forma basis after giving effect to such prepayment, repurchase, redemption or defeasance) and (B) during an Investment Grade Period, the Borrower shall be in compliance on a pro forma basis with the Financial Performance Covenants as such covenants are re-computed as of the last day of the most recently ended Test Period as if such prepayment, repurchase,

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redemption or defeasance had been effected on the first day of such Test Period after giving effect to such prepayment, repurchase, redemption or defeasance);

(b) The Borrower will not amend or modify the Senior Notes Documents or the documentation governing any senior subordinated or subordinated Permitted Additional Debt or the terms applicable thereto to the extent that (i) any such amendment or modification, taken as a whole, would be adverse to the Lenders in any material respect or (ii) the provisions of the Senior Notes Documents or the documentation governing any senior subordinated or subordinated Permitted Additional Debt, as so amended or modified, would not be permitted to be included in the documentation governing any senior subordinated or subordinated Permitted Additional Debt that was issued at such time; and

(c) Notwithstanding the foregoing and for the avoidance of doubt, nothing in this Section 11.7 shall prohibit the repayment or prepayment of intercompany subordinated Indebtedness owed among the Borrower and/or the Restricted Subsidiaries, in either case unless an Event of Default has occurred and is continuing and the Borrower has received a notice from the Administrative Agent instructing it not to make or permit the Borrower and/or the Restricted Subsidiaries to make any such repayment or prepayment, (i) substantially concurrent transfers of credit positions in connection with intercompany debt restructurings so long as such Indebtedness is permitted by Section 11.1 after giving effect to such transfer or (ii) the prepayment, repurchase, redemption or other defeasance of the Senior Notes or any Permitted Additional Debt comprised of senior subordinated or subordinated Indebtedness with an aggregate amount not to exceed the Applicable Equity Amount (with the Applicable Equity Amount being re-computed as of the last day of the most recently ended Test Period as if such prepayment, repurchase, redemption or other defeasance had occurred on the first day of such Test Period).

11.8 Negative Pledge Agreements . The Borrower will not, and will not permit any of the Restricted Subsidiaries to, enter into or permit to exist any Contractual Requirement (other than this Agreement or any other Credit Document or any documentation in respect of (a) secured Indebtedness otherwise permitted hereunder or (b) the Credit Parties’ Oil and Gas Properties to the extent that the property covered thereby is not required to be pledged as Collateral pursuant to the definition of “Collateral Requirements”) that limits the ability of the Borrower or any Guarantor to create, incur, assume or suffer to exist Liens on property of such Person for the benefit of the Secured Parties with respect to the Obligations or under the Credit Documents; provided that the foregoing shall not apply to Contractual Requirements that (i)(x) exist on the Effective Date and (to the extent not otherwise permitted by this Section 11.8 ) are listed on Schedule 11.8 and (y) to the extent Contractual Requirements permitted by clause (x) are set forth in an agreement evidencing Indebtedness or other obligations, are set forth in any agreement evidencing any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness or obligation so long as such Permitted Refinancing Indebtedness does not expand the scope of such Contractual Requirement, (ii) are binding on a Restricted Subsidiary at the time such Restricted Subsidiary first becomes a Restricted Subsidiary of the Borrower (or are binding on property at the time such property first becomes property of the Borrower or a Restricted Subsidiary), so long as such Contractual Requirements were not entered into solely in contemplation of such Person becoming a Restricted Subsidiary of the Borrower (or such property becomes property of the Borrower or a Restricted Subsidiary), (iii) represent Indebtedness of a Restricted Subsidiary of the Borrower that is not a Guarantor to the extent such Indebtedness is permitted by Section 11.1 so long as such Contractual Requirement applies only to such Subsidiary, (iv) arise pursuant to agreements entered into with respect to any sale, transfer, lease or other Disposition permitted by Section 11.4 and applicable solely to assets under such sale, transfer, lease or other Disposition, (v) are customary provisions in joint venture agreements and other similar agreements applicable to joint ventures permitted by Section 11.5 and applicable solely to such joint venture or otherwise arise in (A) agreements which restrict the Disposition or distribution of assets or property in oil and gas leases, joint operating agreements, joint exploration and/or development

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agreements, participation agreements or (B) any production sharing contract or similar instrument on which a Lien cannot be granted without the consent of a third party (to the extent that (i) the Administrative Agent and the Lenders otherwise have an Acceptable Security Interest in the property covered by such contract or instrument pursuant to the definition thereof or (ii) the property covered thereby is not required to be pledged as Collateral pursuant to the definition of “Collateral Requirements”) and, in each case, other similar agreements entered into in the ordinary course of the oil and gas exploration and development business, (vi) are negative pledges and restrictions on Liens in favor of any holder of Indebtedness permitted under Section 11.1 , but solely to the extent any negative pledge relates to the property financed by or the subject of such Indebtedness, (vii) are customary restrictions on leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto, (viii) comprise restrictions imposed by any agreement relating to secured Indebtedness permitted pursuant to Section 11.1 to the extent that such restrictions apply only to the property or assets securing such Indebtedness, (ix) are customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or any Subsidiary or in leases prohibiting Liens on retained property rights of the lessor in connection with operations of the lessee conducted on the leased property, (x) are customary provisions restricting assignment of any agreement entered into in the ordinary course of business, (xi) restrict the use of cash or other deposits imposed by customers under contracts entered into in the ordinary course of business, (xii) are imposed by applicable law, (xiii) exist under any documentation governing any Permitted Refinancing Indebtedness incurred to Refinance any Indebtedness but only to the extent such Contractual Requirement was contained in the document evidencing the Indebtedness being refinanced, (xiv) are customary net worth provisions contained in real property leases entered into by Subsidiaries of the Borrower, so long as the Borrower has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrower and its Subsidiaries to meet their ongoing obligations, (xv) relate to property, an interest in which has been granted or conveyed to a Royalty Trust or a master limited partnership or which is subject to a term net profits interest, and (xvi) are restrictions regarding licenses or sublicenses by the Borrower and its Restricted Subsidiaries of intellectual property in the ordinary course of business (in which case such restriction shall relate only to such intellectual property).

11.9 Limitation on Subsidiary Distributions . The Borrower will not, and will not permit any of its Restricted Subsidiaries that are not Guarantors to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to pay dividends or make any other distributions to the Borrower or any Restricted Subsidiary on its Stock or with respect to any other interest or participation in, or measured by, its profits or transfer any property to the Borrower or any Restricted Subsidiary except (in each case) for such encumbrances or restrictions existing under or by reason of:

(a) contractual encumbrances or restrictions in effect on the Effective Date that are described on Schedule 11.9 or pursuant to the Credit Documents;

(b) the Senior Notes, the Senior Notes Documents and related guarantees;

(c) purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on transferring the property so acquired;

(d) Requirement of Law or any applicable rule, regulation or order;

(e) any agreement or other instrument of a Person acquired by or merged or consolidated with or into the Borrower or any Restricted Subsidiary, or of an Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is assumed in connection with the acquisition of assets from such Person, in each case that is in existence at the time of such transaction (but not created in

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contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired or designated;

(f) contracts for the sale of assets, including customary restrictions with respect to a Subsidiary of the Borrower pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Stock or assets of such Subsidiary;

(g) secured Indebtedness otherwise permitted to be incurred pursuant to Sections 11.1 and 11.2 that limit the right of the debtor to dispose of the assets securing such Indebtedness;

(h) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(i) other Indebtedness, Disqualified Stock or preferred stock of Restricted Subsidiaries permitted to be incurred subsequent to the Funding Date pursuant to Section 11.1 and either (A) the provisions relating to such encumbrance or restriction contained in such Indebtedness are no less favorable to the Borrower, taken as a whole, as determined by the board of directors of the Borrower in good faith, than the provisions contained in this Agreement as in effect on the Funding Date or (B) any such encumbrance or restriction contained in such Indebtedness does not prohibit (except upon a default or an event of default thereunder) the payment of dividends in an amount sufficient, as determined by the board of directors of the Borrower in good faith, to make scheduled payments of cash interest on the Obligations when due;

(j) customary provisions in joint venture agreements or agreements governing property held with a common owner and other similar agreements or arrangements relating solely to such joint venture or property;

(k) customary provisions contained in leases, sub-leases, licenses, sub-licenses or similar agreements, in each case, entered into in the ordinary course of business; and

(l) any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (a) through (k) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Borrower’s board of directors, no more restrictive in any material respect with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

11.10 Hedge Agreements .

(a) During a Borrowing Base Trigger Period, the Borrower will not, and will not permit any Restricted Subsidiary to, enter into any Hedge Agreements with any Person other than:

(i) Hedge Agreements that are non-speculative (including Hedge Agreements entered into to unwind or offset other permitted Hedge Agreements); provided that:

(A) any such Hedge Agreement does not have a term greater than sixty (60) months from the date such Hedge Agreement is entered into;

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(B) at all times, on a net basis, (A) the aggregate notional volume for each of natural gas (including natural gas liquids) and crude oil, calculated separately, covered by market sensitive Hedge Agreements for any month in the first year of the forthcoming five year period (other than Excluded Hedges) shall not exceed 90% of the Projected Volume of natural gas (including natural gas liquids) and crude oil production, calculated separately, for each such month in such forthcoming period and (B) the aggregate notional volume for each of natural gas (including natural gas liquids) and crude oil, calculated separately, covered by market sensitive Hedge Agreements for any month in each of the second through fifth years of the forthcoming five year period (other than Excluded Hedges) shall not exceed 80% of the Projected Volume of natural gas (including natural gas liquids) and crude oil production, calculated separately, for each such month in such forthcoming period;

(C) notwithstanding the limitations set forth in clause (ii) of this Section 11.10(a) , in contemplation of a Permitted Acquisition, the Borrower and its Restricted Subsidiaries may enter into additional market sensitive Hedge Agreements such that the aggregate notional volumes for each of natural gas (including natural gas liquids) and crude oil, calculated separately, for each month in the forthcoming five year period covered by such additional market sensitive Hedge Agreements do not exceed 70% of the Projected Volume of natural gas (including natural gas liquids) and crude oil production, calculated separately, from the estimated reserves to be acquired in such Permitted Acquisition for each month in such forthcoming period; provided such additional Hedge Agreements are entered into (A) after the execution of a definitive agreement with respect to a proposed Acquisition, but in any event no earlier than 90 days prior to the proposed Funding Date of such Permitted Acquisition and (B) in the event such agreement is terminated or such Acquisition is otherwise not consummated within 90 days after such initial additional market sensitive Hedge Agreements have been entered into (or such longer period as may be reasonably acceptable to the Administrative Agent in the event the proposed closing of such Permitted Acquisition has been delayed beyond what the Borrower originally expected), then within 15 days after such termination or the end of such 90 day (or longer) period, as applicable, the Borrower shall and shall cause the Restricted Subsidiaries to novate, unwind or otherwise dispose of market sensitive Hedge Agreements to the extent necessary to be in compliance with the limitations set forth in clause (ii) of this Section 11.10(a) ; and

(D) so long as the Borrower and the Restricted Subsidiaries properly identify and consistently report such hedges, the Borrower and the Restricted Subsidiaries may utilize crude oil hedges as a substitute for hedging natural gas liquids.

(ii) Hedge Agreements entered into with the purpose and effect of (i) fixing or limiting interest rates on a principal amount of indebtedness of any Credit Party that is accruing interest at a variable rate or (ii) obtaining variable interest rates on a principal amount of indebtedness of any Credit Party that is accruing interest at a fixed rate (in each case including Hedge Agreements entered into to unwind or offset other permitted Hedge Agreements), provided that the aggregate notional amount of such Hedge Agreements does not (on a net basis) exceed the outstanding principal balance of the variable or fixed rate, as the case may be, Indebtedness of the Credit Parties at the time such Hedge Agreement is entered into.

(b) During an Investment Grade Period, the Borrower will not, and will not permit any Restricted Subsidiary to, enter into any Hedge Agreements with any Person other than (i) Hedge Agreements not for speculative purposes entered into to hedge or mitigate risks to which the Borrower or any Restricted Subsidiary has or may have exposure (including with respect to commodity prices), (ii) Hedge Agreements not for speculative purposes entered into in order to effectively cap, collar or

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exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any interest-bearing liability or investment of the Borrower or any Restricted Subsidiary and (iii) other Hedge Agreements not for speculative purposes permitted under the risk management policies approved by the Borrower’s Board of Directors from time to time and not subject the Borrower and its Subsidiaries to material speculative risks.

It is understood that for purposes of this Section 11.10 , the following Hedge Agreements shall not be deemed speculative or entered into for speculative purposes: (i) any commodity Hedge Agreement intended, at inception of execution, to hedge or manage any of the risks related to existing and or forecasted Hydrocarbon production of the Borrower or its Restricted Subsidiaries (whether or not contracted) and (ii) any Hedge Agreement intended, at inception of execution, (A) to hedge or manage the interest rate exposure associated with any debt securities, debt facilities or leases (existing or forecasted) of the Borrower or its Restricted Subsidiaries, (B) for foreign exchange or currency exchange management, (C) to manage commodity portfolio exposure associated with changes in interest rates or (D) to hedge any exposure that the Borrower or its Restricted Subsidiaries may have to counterparties under other Hedge Agreements such that the combination of such Hedge Agreements is not speculative taken as a whole.

11.11 Financial Performance Covenants . Commencing with the fiscal quarter ending December 31, 2014:

(a) Leverage Ratio . The Borrower will not permit the Leverage Ratio as of the last day of each fiscal quarter of the Borrower to be greater than 4.50 to 1.00.

(b) Interest Expense Ratio . The Borrower will not permit the Interest Expense Ratio as of the last day of each fiscal quarter of the Borrower to be less than 2.50 to 1.00.

(c) Asset Coverage Ratio . As of the last day of each fiscal quarter of the Borrower (other than during a Borrowing Base Trigger Period when a Borrowing Base has been established) when the Borrower’s Credit Rating is equal to or less than Ba3 by Moody’s or BB- by S&P, the Borrower will not permit the Asset Coverage Ratio to be less than 1.50 to 1.00.

11.12 Transactions with Affiliates . The Borrower will not, and will not permit any of the Restricted Subsidiaries to conduct, any material transaction with any of its Affiliates (other than the Borrower and the Restricted Subsidiaries or any entity that becomes a Restricted Subsidiary as a result of such transaction) on terms other than those that are substantially as favorable to the Borrower or such Restricted Subsidiary as it would obtain at the time in a comparable arm’s-length transaction (which includes, for the avoidance of doubt, any transaction consummated for Fair Market Value) with a Person that is not an Affiliate, as determined by the board of directors or managers of the Borrower or such Restricted Subsidiary in good faith; provided that the foregoing restrictions shall not apply to:

(a) the payment of Transaction Expenses,

(b) the OPC Related Transactions as in effect from time to time, provided that any amendment or modification after the Spinoff Date, taken as a whole, shall not be adverse to the Lenders in any material respect,

(c) loans, advances and other transactions between or among the Borrower, any Subsidiary or any joint venture (regardless of the form of legal entity) in which the Borrower or any Subsidiary has invested (and which Subsidiary or joint venture would not be an Affiliate of the Borrower

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or such Subsidiary, but for the Borrower’s or such Subsidiary’s ownership of Stock or Stock Equivalents in such joint venture or such Subsidiary) to the extent permitted under Article XI ,

(d) employment and severance arrangements and health, disability, retirement savings, employee benefit and similar insurance or benefit plans between the Borrower (or any direct or indirect parent thereof) and the Subsidiaries and their respective directors, officers, employees or consultants (including management and employee benefit plans or agreements, subscription agreements or similar agreements pertaining to the repurchase of Stock or Stock Equivalents pursuant to put/call rights or similar rights with current or former employees, officers, directors or consultants and equity option or incentive plans and other compensation arrangements) in the ordinary course of business or as otherwise approved by the board of directors or managers of the Borrower (or any direct or indirect parent thereof),

(e) the payment of customary fees and reasonable out of pocket costs to, and indemnities provided on behalf of, directors, managers, consultants, officers and employees of the Borrower (or any direct or indirect parent thereof) and the Subsidiaries in the ordinary course of business to the extent attributable to the ownership or operation of, or in connection with any services provided to, the Borrower and the Subsidiaries,

(f) transactions pursuant to agreements in existence on the Funding Date and set forth on Schedule 11.12 or any amendment thereto to the extent such an amendment is not adverse, taken as a whole, to the Lenders in any material respect,

(g) Restricted Payments, redemptions, repurchases and other actions permitted under Section 11.6 and Section 11.7 ,

(h) any issuance of Stock or Stock Equivalents or other payments, awards or grants in cash, securities, Stock, Stock Equivalents or otherwise pursuant to, or the funding of, employment arrangements, equity options and equity ownership plans approved by the board of directors or board of managers of the Borrower (or any direct or indirect parent thereof),

(i) transactions with joint ventures for the purchase or sale of goods, equipment and services entered into in the ordinary course of business and in a manner consistent with prudent business practice followed by companies in the industry of the Borrower and its Subsidiaries,

(j) payments by the Borrower (or any direct or indirect parent thereof) and the Subsidiaries pursuant to tax sharing agreements among the Borrower (and any such parent) and the Subsidiaries on customary terms; provided that payments by Borrower and the Subsidiaries under any such tax sharing agreements shall not exceed the excess (if any) of the amount they would have paid on a standalone basis over the amount they actually pay directly to Governmental Authorities, and

(k) customary agreements and arrangements with Royalty Trusts and master limited partnership agreements that comply with the affiliate transaction provisions of such Royalty Trust or master limited partnership agreement.

11.13 Change in Business . The Borrower and its Restricted Subsidiaries, taken as a whole, will not fundamentally and substantively alter the character of their business, taken as a whole, from the business of Industry Investments by the Borrower and its Restricted Subsidiaries and other business activities incidental or reasonably related to any of the foregoing.

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11.14 Use of Proceeds . The Borrower will not, and will not permit any of its Subsidiaries to, use the proceeds of any Loans or Letter of Credit, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the Board) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

ARTICLE XII
EVENTS OF DEFAULT

Upon the occurrence of any of the following specified events (each an “ Event of Default ”):

12.1 Payments . The Borrower shall default in the payment when due of any principal of the Loans or any interest on the Loans or any Unpaid Drawings, fees or of any other amounts owing hereunder or under any other Credit Document and such default shall continue for five or more days.

12.2 Representations, Etc . Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document or any certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made.

12.3 Covenants . Any Credit Party shall:

(a) default in the due performance or observance by it of any term, covenant or agreement contained in Section 10.1(d)(i) , 10.5 (solely with respect to the Borrower), 10.11(c) or Article XI ; or

(b) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Section 12.1 or 12.2 or clause (a) of this Section 12.3 ) contained in this Agreement or any Security Document and such default shall continue unremedied for a period of at least 30 days after receipt of written notice thereof by the Borrower from the Administrative Agent.

12.4 Default Under Other Agreements . The Borrower or any of the Restricted Subsidiaries shall (i) default in any payment with respect to any Indebtedness (other than Indebtedness described in Section 12.1 ) or Hedge Obligations in excess of $300,000,000, beyond the grace period, if any, provided in the instrument or agreement under which such Indebtedness or Hedge Obligation was created or (ii) without limiting the provisions of clause (i), any such Indebtedness or Hedge Obligations shall be declared to be due and payable, or shall be required to be prepaid, defeased or redeemed other than by a regularly scheduled required prepayment or as a mandatory prepayment (and, (A) with respect to any Hedge Obligations, other than due to a termination event or equivalent event pursuant to the terms of the related Hedge Agreements and (B) other than secured Indebtedness that becomes due as a result of a Disposition (including as a result of Casualty Event) of the property or assets securing such Indebtedness permitted under this Agreement), prior to the stated maturity thereof.

12.5 Bankruptcy, Etc . The Borrower or any Specified Subsidiary shall commence a voluntary case, proceeding or action concerning itself under (a) Title 11 of the United States Code entitled “Bankruptcy”; or (b) in the case of any Foreign Subsidiary that is a Specified Subsidiary, any domestic or foreign law relating to bankruptcy, judicial management, insolvency, reorganization, administration or relief of debtors in effect in its jurisdiction of incorporation, in each case as now or hereafter in effect, or any successor thereto (collectively, the “ Bankruptcy Code ”); or an involuntary case, proceeding or action is commenced against the Borrower or any Specified Subsidiary and the petition is not dismissed within

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60 days after commencement of the case, proceeding or action or, in connection with any such voluntary proceeding or action, the Borrower or any Specified Subsidiary commences any other proceeding or action under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Borrower or any Specified Subsidiary; or a custodian (as defined in the Bankruptcy Code), receiver, receiver manager, trustee or similar person is appointed for, or takes charge of, all or substantially all of the property of the Borrower or any Specified Subsidiary; or there is commenced against the Borrower or any Specified Subsidiary any such proceeding or action that remains undismissed for a period of 60 days; or any order of relief or other order approving any such case or proceeding or action is entered; or the Borrower or any Specified Subsidiary suffers any appointment of any custodian, receiver, receiver manager, trustee or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or the Borrower or any Specified Subsidiary makes a general assignment for the benefit of creditors.

12.6 ERISA .

(a) Any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code; any Plan or Multiemployer Plan is or shall have been terminated or is the subject of termination proceedings under ERISA (including the giving of written notice thereof); an event shall have occurred or a condition shall exist in either case entitling the PBGC to terminate any Plan or to appoint a trustee to administer any Plan (including the giving of written notice thereof); the Borrower or any ERISA Affiliate has incurred or is likely to incur a liability to or on account of a Plan or a Multiemployer Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 or of ERISA or Section 4971 or 4975 of the Code (including the giving of written notice thereof);

(b) there results from any event or events set forth in clause (a) of this Section 12.6 the imposition of a lien, the granting of a security interest, or a liability; and

12.7 Guarantee . The Guarantee or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof and thereof) or any Guarantor or any other Credit Party shall deny or disaffirm in writing any such Guarantor’s obligations under the Guarantee.

12.8 Security Documents . During a Borrowing Base Trigger Period, the Security Agreement, Mortgage or any other Security Document pursuant to which the assets of the Borrower or any Subsidiary are pledged as Collateral or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof or thereof) or any grantor thereunder or any other Credit Party shall deny or disaffirm in writing any grantor’s obligations under the Security Agreement, the Mortgage or any other Security Document.

12.9 Judgments . One or more monetary judgments or decrees shall be entered against the Borrower or any of the Restricted Subsidiaries involving a liability of $125,000,000 or more in the aggregate for all such judgments and decrees for the Borrower and the Restricted Subsidiaries (to the extent not paid or covered by insurance provided by a carrier not disputing coverage) and any such judgments or decrees shall not have been satisfied, vacated, discharged or stayed or bonded pending appeal within 60 days after the entry thereof.

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12.10 Change of Control . A Change of Control shall occur.

Then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent may and, upon the written request of the Majority Lenders, shall, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower or any other Credit Party, except as otherwise specifically provided for in this Agreement ( provided that, if an Event of Default specified in Section 12.5 shall occur with respect to the Borrower, the result that would occur upon the giving of written notice by the Administrative Agent as specified in clauses (a) , (b) and (d) below shall occur automatically without the giving of any such notice): (a) declare the Total Commitment and Swingline Commitment terminated, whereupon the Commitment of each Lender and the Swingline Lender, as the case may be, shall forthwith terminate immediately and any fees theretofore accrued shall forthwith become due and payable without any other notice of any kind; (b) declare the principal of and any accrued interest and fees in respect of any or all Loans and any or all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; (c) terminate any Letter of Credit that may be terminated in accordance with its terms; and/or (d) direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice, or upon the occurrence of an Event of Default specified in Section 12.5 with respect to the Borrower, it will pay) to the Administrative Agent at the Administrative Agent’s Office such additional amounts of cash, to be held as security for the Borrower’s respective reimbursement obligations for Drawings that may subsequently occur thereunder, equal to the aggregate Stated Amount of all Letters of Credit issued and then outstanding. In addition, after the occurrence and during the continuance of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.

Any amount received by the Administrative Agent from any Credit Party (or from proceeds of any Collateral) following any acceleration of the Obligations under this Agreement or any Event of Default with respect to the Borrower under Section 12.5 shall be applied:

(i) first , to payment or reimbursement of that portion of the Obligations constituting fees, expenses and indemnities payable to the Administrative Agent in each Person’s capacity as such;

(ii) second , to the Secured Parties, an amount equal to all Obligations due and owing to them on the date of distribution and, if such moneys shall be insufficient to pay such amounts in full, then ratably (without priority of any one over any other) to such Secured Parties in proportion to the unpaid amount thereof; and

(iii) third , pro rata to any other Obligations then due and owing; and

(iv) fourth , any surplus then remaining, after all of the Obligations then due shall have been indefeasibly paid in full in cash, shall be paid to the Borrower or its successors or assigns or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may award.

Notwithstanding the foregoing, amounts received from the Borrower or any Credit Party that is not an “eligible contract participant” under the Commodity Exchange Act shall not be applied to any Excluded Hedge Obligations (it being understood, that in the event that any amount is applied to Obligations other than Excluded Hedge Obligations as a result of this clause, the Administrative Agent shall make such adjustments as it determines are appropriate to distributions pursuant to clause second above from amounts received from “eligible contract participants” under the Commodity Exchange Act to ensure, as

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nearly as possible, that the proportional aggregate recoveries with respect to Obligations described in clause second above by the holders of any Excluded Hedge Obligations are the same as the proportional aggregate recoveries with respect to other Obligations pursuant to clause second above).

ARTICLE XIII
THE ADMINISTRATIVE AGENT

13.1 Appointment .

(a) Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Credit Documents and irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. The provisions of this Article XIII (other than Section 13.1(b) with respect to the Joint Lead Arrangers, the Joint Bookrunners, the Syndication Agent and the Documentation Agents and Section 13.10 with respect to the Borrower) are solely for the benefit of the Administrative Agent and the Lenders, and the Borrower shall not have rights as third party beneficiary of any such provision. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Administrative Agent.

(b) Each of the Syndication Agent, the Documentation Agents, the Joint Lead Arrangers and the Joint Bookrunners, each in its capacity as such, shall not have any obligations, duties or responsibilities under this Agreement but shall be entitled to all benefits of this Article XIII .

13.2 Delegation of Duties . The Administrative Agent may execute any of its duties under this Agreement and the other Credit Documents by or through agents, sub-agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents, sub-agents or attorneys-in-fact selected by it in the absence of gross negligence or willful misconduct (as determined in the final judgment of a court of competent jurisdiction).

13.3 Exculpatory Provisions . Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by any of them under or in connection with this Agreement or any other Credit Document (except for its or such Person’s own gross negligence or willful misconduct, as determined in the final judgment of a court of competent jurisdiction, in connection with its duties expressly set forth herein (IT BEING THE INTENTION OF THE PARTIES HERETO THAT THE ADMINISTRATIVE AGENT AND ANY RELATED PARTIES SHALL, IN ALL CASES, BE INDEMNIFIED FOR ITS ORDINARY, COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE)) or (b) responsible in any manner to any of the Lenders or any participant for any recitals, statements, representations or warranties made by any of the Borrower, any other Credit Party or any officer thereof contained in this Agreement or any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document, or the perfection or priority of any Lien or security interest created or purported to be created under the Security Documents, or for any failure of the Borrower or any other Credit Party to perform its obligations hereunder or thereunder.

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The Administrative Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party or any Affiliate thereof. The Administrative Agent shall not be under any obligation to any Lender, the Swingline Lender or any Letter of Credit Issuer to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party.

13.4 Reliance . The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or instruction believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the Lender specified in the Register with respect to any amount owing hereunder as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Majority Revolving Lenders, the Majority Term Loan Lenders, or the Majority Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Majority Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans; provided that the Administrative Agent shall not be required to take any action that, in its opinion or in the opinion of its counsel, may expose it to liability or that is contrary to any Credit Document or applicable Requirements of Law. For purposes of determining compliance with the conditions specified in Article VI and Article VIII on the Funding Date, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Funding Date specifying its objection thereto.

13.5 Notice of Default . The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, it shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Lenders; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.

13.6 Non-Reliance on Administrative Agent and Other Lenders . Each Lender expressly acknowledges that neither the Administrative Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereinafter taken, including any review of the affairs of the Borrower or any other Credit Party, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender, the Swingline Lender or any Letter of Credit Issuer. Each Lender, the Swingline Lender and each Letter of Credit Issuer represents to the Administrative Agent that it has,

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independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and each other Credit Party and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and any other Credit Party. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, assets, operations, properties, financial condition, prospects or creditworthiness of the Borrower or any other Credit Party that may come into the possession of the Administrative Agent any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates.

13.7 No Other Duties, Etc . Anything herein to the contrary notwithstanding, none of the Joint Bookrunners, Joint Lead Arrangers or Documentation Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or an Issuing Bank hereunder.

13.8 Indemnification . The Lenders agree to indemnify the Administrative Agent in its capacity as such (to the extent not reimbursed by the Credit Parties and without limiting the obligation of the Credit Parties to do so), ratably according to their respective portions of the Commitments or Loans, as applicable, outstanding in effect on the date on which indemnification is sought (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with their respective portions of the Total Exposure in effect immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time occur (including at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of the Commitments, this Agreement, any of the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall be liable to the Administrative Agent for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s gross negligence, bad faith or willful misconduct as determined by a final judgment of a court of competent jurisdiction (IT BEING THE INTENTION OF THE PARTIES HERETO THAT THE ADMINISTRATIVE AGENT AND ANY RELATED PARTIES SHALL, IN ALL CASES, BE INDEMNIFIED FOR ITS ORDINARY, COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE); provided , further , that no action taken in accordance with the directions of the Majority Lenders (or such other number or percentage of the Lenders as shall be required by the Credit Documents) shall be deemed to constitute gross negligence, bad faith or willful misconduct for purposes of this Section 13.8 . In the case of any investigation, litigation or proceeding giving rise to any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time occur (including at any time following the payment of the Loans), this Section 13.8 applies whether any such investigation, litigation or proceeding is brought by any Lender or any other Person. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including attorneys’ fees) incurred by the Administrative Agent in connection with the preparation, execution,

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delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice rendered in respect of rights or responsibilities under, this Agreement, any other Credit Document, or any document contemplated by or referred to herein, to the extent that the Administrative Agent is not reimbursed for such expenses by or on behalf of the Borrower; provided that such reimbursement by the Lenders shall not affect the Borrower’s continuing reimbursement obligations with respect thereto. If any indemnity furnished to the Administrative Agent for any purpose shall, in the opinion of the Administrative Agent, be insufficient or become impaired, the Administrative Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify the Administrative Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s pro rata portion thereof; and provided further, this sentence shall not be deemed to require any Lender to indemnify the Administrative Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement resulting from the Administrative Agent gross negligence, bad faith or willful misconduct. The agreements in this Section 13.8 shall survive the payment of the Loans and all other amounts payable hereunder.

13.9 Agent in Its Individual Capacity . The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower and any other Credit Party as though the Administrative Agent were not the Administrative Agent hereunder and under the other Credit Documents. With respect to the Loans made by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms “Lender” and “Lenders” shall include the Administrative Agent in its individual capacity.

13.10 Successor Agent . The Administrative Agent may at any time give notice of its resignation to the Lenders, the Swingline Lender, the Letter of Credit Issuer and the Borrower. If the Administrative Agent and/or Swingline Lender becomes a Defaulting Lender, then such Administrative Agent or Swingline Lender may be removed as the Administrative Agent or Swingline Lender, as the case may be, at the reasonable request of the Borrower and the Required Revolving Lenders. Upon receipt of any such notice of resignation or removal, as the case may be, the Majority Lenders shall have the right, subject to the consent of the Borrower (not to be unreasonably withheld or delayed) so long as no Default under Section 12.1 or 12.5 is continuing, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If, in the case of the resignation of the Administrative Agent, no such successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the Administrative Agent gives notice of its resignation, then the Administrative Agent may on behalf of the Lenders, the Swingline Lender and the Letter of Credit Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above. Upon the acceptance of a successor’s appointment as the Administrative Agent hereunder, and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Majority Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Security Documents, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower (following the effectiveness of such appointment) to the successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent’s resignation hereunder and under the other Credit Documents, the provisions of this Article XIII (including Section 13.8 ) and Section 14.5 shall continue in effect for the benefit of such retiring Administrative Agent, its

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sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as the Administrative Agent.

Any resignation of any Person as Administrative Agent pursuant to this Section shall also constitute its resignation as Letter of Credit Issuer and Swingline Lender. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Letter of Credit Issuer, (b) the retiring Letter of Credit Issuer shall be discharged from all of their respective duties and obligations hereunder or under the other Credit Documents, and (c) the successor Letter of Credit Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Letter of Credit Issuer to effectively assume the obligations of the retiring Letter of Credit Issuer with respect to such Letters of Credit.

13.11 Withholding Tax . To the extent required by any applicable Requirement of Law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding tax. If the Internal Revenue Service or any authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances that rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason), such Lender shall indemnify the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by any applicable Credit Party and without limiting the obligation of any applicable Credit Party to do so) fully for all amounts paid, directly or indirectly, by the Administrative Agent as Tax or otherwise, including penalties, additions to Tax and interest, together with all expenses incurred, including legal expenses, allocated staff costs and any out of pocket expenses. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Credit Document against any amount due to the Administrative Agent under this Section 13.11 . For the avoidance of doubt, for purposes of this Section 13.11 , the term “Lender” includes any Letter of Credit Issuer and any Swingline Lender.

13.12 Security Documents and Guarantee . Each Secured Party hereby further authorizes the Administrative Agent, on behalf of and for the benefit of Secured Parties, to be the agent for and representative of the Secured Parties with respect to the Collateral and the Security Documents. Subject to Section 14.1 , without further written consent or authorization from any Secured Party, the Administrative Agent may (a) execute any documents or instruments necessary in connection with a Disposition of assets permitted by this Agreement, (b) release any Lien encumbering any item of Collateral that is the subject of such Disposition of assets or with respect to which Majority Lenders (or such other Lenders as may be required to give such consent under Section 14.1 ) have otherwise consented or (c) release any Guarantor from the Guarantee with respect to which Majority Lenders (or such other Lenders as may be required to give such consent under Section 14.1 ) have otherwise consented.

13.13 Right to Realize on Collateral and Enforce Guarantee . Anything contained in any of the Credit Documents to the contrary notwithstanding, the Borrower, the Administrative Agent and each Secured Party hereby agree that (a) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guarantee; it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by the Administrative Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Security Documents may be exercised solely by the Administrative Agent, and (b) in the event of a foreclosure by the Administrative Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Administrative Agent or any Lender may be the purchaser or licensor of any or all of such Collateral

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at any such sale or other disposition and the Administrative Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Majority Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent at such sale or other disposition.

13.14 Administrative Agent May File Proofs of Claim . In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding, constituting an Event of Default under Section 12.5 , the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Indebtedness that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel, to the extent due under Section 14.5 ) allowed in such judicial proceeding; and

(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, to the extent due under Section 14.5 .

Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Indebtedness or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.

ARTICLE XIV
MISCELLANEOUS

14.1 Amendments, Waivers and Releases . Except as expressly set forth in this Agreement, neither this Agreement nor any other Credit Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 14.1 . The Majority Lenders may, or, with the written consent of the Majority Lenders, the Administrative Agent shall, from time to time, (a) enter into with the relevant Credit Party or Credit Parties written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Credit Parties hereunder or thereunder or (b) waive in writing, on such terms and conditions as the Majority Lenders or the Administrative Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences; provided , however , that each such waiver and each such

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amendment, supplement or modification shall be effective only in the specific instance and for the specific purpose for which given; provided , further , that no such waiver and no such amendment, supplement or modification shall (i) forgive or reduce any portion of any Loan or reduce the stated rate (it being understood that only the consent of the Majority Lenders shall be necessary to waive any obligation of the Borrower to pay interest at the Default Rate or amend Section 2.8(e) ), or forgive any portion, or extend the date for the payment, of any interest or fee payable hereunder (other than as a result of waiving the applicability of any post-default increase in interest rates), or extend the final expiration date of any Lender’s Commitment ( provided that any Lender, upon the request of the Borrower, may extend the final expiration date of its Commitment without the consent of any other Lender, including the Majority Lenders) or extend the final expiration date of any Letter of Credit beyond the L/C Maturity Date, or increase the amount of the Commitment of any Lender ( provided that, any Lender, upon the request of the Borrower, may increase the amount of its Commitment without the consent of any other Lender, including the Majority Lenders), or make any Loan, interest, fee or other amount payable in any currency other than Dollars, in each case without the written consent of each Lender directly and adversely affected thereby, or (ii) amend, modify or waive any provision of this Section 14.1 , or amend or modify any of the provisions of Section 14.8(a) to the extent it would alter the ratable allocation of payments thereunder, or reduce the percentages specified in the definitions of the terms “Majority Lenders”, “Majority Revolving Lenders”, “Majority Term Loan Lenders”, “Required Revolving Lenders” or “Borrowing Base Required Lenders”, consent to the assignment or transfer by the Borrower of its rights and obligations under any Credit Document to which it is a party (except as permitted pursuant to Section 11.3 ) or alter the order of application set forth in the final paragraph of Article XII or modify any definition used in such final paragraph if the effect thereof would be to alter the order of payment specified therein, in each case without the written consent of each Lender directly and adversely affected thereby, or (iii) amend, modify or waive any provision of Article XIII without the written consent of the then-current Administrative Agent, as applicable, or any other former Administrative Agent to whom Article XIII then applies in a manner that directly and adversely affects such Person, or (iv) amend, modify or waive any provision of Article III with respect to any Letter of Credit without the written consent of each Letter of Credit Issuer to whom Article III then applies in a manner that directly and adversely affects such Person, or (v) amend, modify or waive any provisions hereof relating to Swingline Loans without the written consent of the Swingline Lender, or (vi) release all or substantially all of the Guarantors under the Guarantee (except as expressly permitted by the Guarantee or this Agreement) without the prior written consent of each Lender, or (vii) release all or substantially all of the Collateral under the Security Documents (except as expressly permitted by the Security Documents or this Agreement, including upon the termination of any Borrowing Base Trigger Period) without the prior written consent of each Lender, or (viii) amend Section 2.9 so as to permit Interest Period intervals greater than six months without regard to availability to Lenders, without the written consent of each Lender directly and adversely affected thereby, or (ix) during a Borrowing Base Trigger Period, increase the Borrowing Base without the written consent of the Borrowing Base Required Lenders, decrease or maintain the Borrowing Base without the written consent of the Required Revolving Lenders or otherwise modify Section 2.14(b) , (c) , (d) , (e) or 2.14(i) without the written consent of Borrowing Base Required Lenders; provided that a Scheduled Redetermination may be postponed by the Majority Revolving Lenders, or (x) affect the rights or duties of, or any fees or other amounts payable to the Administrative Agent under this Agreement or any other Credit Document) without the prior written consent of the Administrative Agent, (xi) amend, modify or waive any provision of ARTICLE VII or ARTICLE VIII without the written consent of each Lender; provided , further , that any provision of this Agreement or any other Credit Document may be amended by an agreement in writing entered into by the Borrower and the Administrative Agent to cure any ambiguity, omission, defect or inconsistency so long as, in each case, the Lenders shall have received at least five Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Majority Lenders stating that the Majority Lenders object to such amendment. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the affected Lenders and shall be binding upon

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the Borrower, such Lenders, the Administrative Agent and all future holders of the affected Loans. In the case of any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Credit Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; it being understood that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. In connection with the foregoing provisions, the Administrative Agent may, but shall have no obligations to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender.

14.2 Notices . Unless otherwise expressly provided herein, all notices and other communications provided for hereunder or under any other Credit Document shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:

(a) if to the Borrower, the Administrative Agent, the Swingline Lender or the Letter of Credit Issuer, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 14.2 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and

(b) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower, the Administrative Agent, the Swingline Lender and the Letter of Credit Issuer.

All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii)(A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, three Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail, when delivered; provided that notices and other communications to the Administrative Agent or the Lenders pursuant to Sections 2.3 , 2.6 , 2.9 , 4.2 and 5.1 shall not be effective until received.

14.3 No Waiver; Cumulative Remedies . No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Requirements of Law.

14.4 Survival of Representations and Warranties . All representations and warranties made hereunder, in the other Credit Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.

14.5 Payment of Expenses; Indemnification . The Borrower agrees (a) to pay or reimburse the Administrative Agent and the Joint Lead Arrangers for all of their reasonable and documented out-of-pocket costs and expenses (with respect to attorney costs, limited to reasonable fees, disbursements and other charges of one primary counsel to the Administrative Agent and the Joint Lead Arrangers) incurred

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in connection with the preparation and execution and delivery of, and any amendment, waiver, supplement or modification to, this Agreement and the other Credit Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees, disbursements and other charges of Simpson Thacher & Bartlett LLP, in its capacity as counsel to the Administrative Agent, and one counsel in each appropriate local jurisdiction (other than any allocated costs of in-house counsel), (b) to pay or reimburse the Administrative Agent, and each Lender (for all its reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Credit Documents and any such other documents (with respect to attorney costs, limited to the reasonable fees, disbursements and other charges of one primary counsel and one additional local counsel in each material jurisdiction to the Administrative Agent and the Lenders and, solely in the case of an actual or potential conflict of interest, one additional legal counsel in each of the applicable jurisdictions of the affected Administrative Agent and Lenders), (c) to pay, indemnify, and hold harmless each Lender, Letter of Credit Issuer and the Administrative Agent from, any and all recording and filing fees and (d) to pay, indemnify, and hold harmless each Lender, Letter of Credit Issuer and the Administrative Agent and their respective Related Parties from and against any and all other liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, whether or not such proceedings are brought by the Borrower, any of its Related Parties or any other third Person (with respect to attorney costs, limited to the reasonable and documented fees, disbursements and other charges of one primary counsel for all such Persons, taken as a whole, and, if necessary, of a single firm of local counsel in each appropriate jurisdiction for all such Persons, taken as a whole (unless there is an actual or perceived conflict of interest in which case each such Person may, with the consent of the Borrower (not to be unreasonably withheld or delayed) retain its own counsel), with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Credit Documents and any such other documents, including, without limitation, any of the foregoing relating to the violation of, noncompliance with or liability under, any applicable Environmental Law (other than by such indemnified person or any of its Related Parties (other than any trustee or advisor)) or to any actual or alleged presence, release or threatened release of Hazardous Materials involving or attributable to the operations of the Borrower, any of its Subsidiaries or any of the Oil and Gas Properties (all the foregoing in this clause (d) , collectively, the “ Indemnified Liabilities ”); provided that the Borrower shall have no obligation hereunder to the Administrative Agent or any Lender or any of their respective Related Parties with respect to Indemnified Liabilities to the extent it has been determined by a final non-appealable judgment of a court of competent jurisdiction to have resulted from (i) the gross negligence, bad faith or willful misconduct of the party to be indemnified or any of its Related Parties (IT BEING THE INTENTION OF THE PARTIES HERETO THAT EACH LENDER, LETTER OF CREDIT ISSUER AND THE ADMINISTRATIVE AGENT AND THEIR RESPECTIVE RELATED PARTIES SHALL, IN ALL CASES, BE INDEMNIFIED FOR ITS ORDINARY COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE), (ii) any material breach of any Credit Document by the party to be indemnified or (iii) disputes, claims, demands, actions, judgments or suits not arising from any act or omission by the Borrower or its Affiliates, brought by an indemnified Person against any other indemnified Person (other than disputes, claims, demands, actions, judgments or suits involving claims against the Administrative Agent in its capacity as such). NO PERSON ENTITLED TO INDEMNIFICATION UNDER CLAUSE (D) OF THIS SECTION 14.5 SHALL BE LIABLE FOR ANY DAMAGES ARISING FROM THE USE BY UNINTENDED RECIPIENTS OF ANY INFORMATION OR OTHER MATERIALS DISTRIBUTED BY IT THROUGH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS IN CONNECTION WITH THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS USED BY THE ADMINISTRATIVE AGENT IS PROVIDED “AS IS” AND “AS AVAILABLE.” NONE OF THE ADMINISTRATIVE AGENT OR ANY OF ITS RELATED

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PARTIES WARRANT THE ADEQUACY OF SUCH TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD-PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ADMINISTRATIVE AGENT OR ANY OF ITS RELATED PARTIES IN CONNECTION WITH ANY COMMUNICATIONS OR ANY TELECOMMUNICATIONS, ELECTRONIC OR OTHER INFORMATION TRANSMISSION SYSTEMS. No Person entitled to indemnification under clause (d) of this Section 14.5 , nor the Borrower or any of its Subsidiaries, shall have any liability for any special, punitive, indirect, exemplary or consequential damages (including, without limitation, any loss of profits, business or anticipated savings) relating to this Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith (whether before or after the Funding Date); provided that the foregoing shall not negate the Borrower’s obligations with respect to Indemnified Liabilities. All amounts payable under this Section 14.5 shall be paid within 10 Business Days of receipt by the Borrower of an invoice relating thereto setting forth such expense in reasonable detail. The agreements in this Section 14.5 shall survive repayment of the Loans and all other amounts payable hereunder. This Section 14.5 shall not apply with respect to any claims for Taxes which shall be governed exclusively by Section 5.4 and, to the extent set forth therein, Sections 2.10 and 3.5 .

14.6 Successors and Assigns; Participations and Assignments .

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Letter of Credit Issuer that issues any Letter of Credit), except that (i) except as expressly permitted by Section 11.3 , the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 14.6 . Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Letter of Credit Issuer that issues any Letter of Credit), Participants (to the extent provided in clause (c) of this Section 14.6 ) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Letter of Credit Issuer and the Lenders and each other Person entitled to indemnification under Section 14.5 ) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) (i) Subject to the conditions set forth in clause (b)(ii) below, any Lender may at any time assign to one or more assignees (other than the Borrower, its Subsidiaries, their Affiliates, or any natural person) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans (including participations in L/C Obligations or Swingline Loans) at the time owing to it) with the prior written consent (such consent not be unreasonably withheld or delayed; it being understood that, notwithstanding the foregoing clause, the Borrower shall have the right to withhold or delay its consent to any assignment (x) if, in order for such assignment to comply with applicable Requirements of Law, the Borrower would be required to obtain the consent of, or make any filing or registration with, any Governmental Authority or (y) with respect to an assignment of Revolving Commitments to an entity other than a commercial bank or other financial institution customarily engaged in the business of making loans in the oil and gas industry) of:

(A) the Borrower; provided that no consent of the Borrower shall be required for an assignment (1) to a Lender, an Affiliate of a Lender or an Approved Fund or (2) if

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an Event of Default under Section 12.1 or Section 12.5 has occurred and is continuing; and provided , further , that if the Borrower’s has not responded within ten (10) Business Days after the delivery of any written request for a consent, such consent shall be deemed to have been given; and

(B) the Administrative Agent, each Swingline Lender and each Letter of Credit Issuer; provided that no consent of the Administrative Agent, a Swingline Lender or a Letter of Credit Issuer shall be required for assignments in respect of (1) the Revolving Facility if such assignment is to a Person that is a Revolving Lender, an Affiliate of such Revolving Lender or an Approved Fund with respect to such Revolving Lender, or (2) any Term Loans to a Person who is a Lender, an Affiliate of a Lender or an Approved Fund.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, (1) the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 and increments of $1,000,000 in excess thereof and (2) after giving effect to such assignment, the amount of the remaining Commitment or Loans of the assigning Lender (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $15,000,000, in each case unless each of the Borrower, each Letter of Credit Issuer and the Administrative Agent otherwise consents (which consents shall not be unreasonably withheld or delayed); provided that no such consent of the Borrower shall be required if an Event of Default under Section 12.1 or Section 12.5 has occurred and is continuing; provided , further , that contemporaneous assignments to a single assignee made by Affiliates of Lenders and related Approved Funds shall be aggregated for purposes of meeting the minimum assignment amount requirements stated above;

(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement;

(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee in the amount of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment; and

(D) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.

(iii) Subject to acceptance and recording thereof pursuant to clause (b)(iv) of this Section 14.6 , from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.10 , 2.11 , 3.5 , 5.4 and 14.5 ). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does

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not comply with this Section 14.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with clause (c) of this Section 14.6 .

(iv) The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount (and stated interest amounts) of the Loans and L/C Obligations and any payment made by the Letter of Credit Issuer under any Letter of Credit owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). Further, the Register shall contain the name and address of the Administrative Agent and the lending office through which each such Person acts under this Agreement. The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent, the Letter of Credit Issuer and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Letter of Credit Issuer, the Swingline Lender and, solely with respect to itself, each other Lender, at any reasonable time and from time to time upon reasonable prior notice.

(v) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in clause (b) of this Section 14.6 (unless waived) and any written consent to such assignment required by clause (b) of this Section 14.6 , the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register.

(c) (i) Any Lender may, without the consent of the Borrower, the Administrative Agent, any Swingline Lender or any Letter of Credit Issuer, sell participations to one or more banks or other entities other than the Borrower or any Subsidiary of the Borrower (each, a “ Participant ”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Letter of Credit Issuer and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement or any other Credit Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clauses (i) or (ii) of the proviso to Section 14.1 that affects such Participant, provided that the Participant shall have no right to consent to any modification to the percentages specified in the definitions of the terms “Majority Lenders”, “Majority Revolving Lenders”, “Majority Term Loan Lenders”, “Required Revolving Lenders” or “Borrowing Base Required Lenders”. Subject to clause (c)(ii) of this Section 14.6 , the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.10 , 2.11 , 3.5 and 5.4 to the same extent as if it were a Lender (subject to the limitations and requirements of those Sections as though it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this Section 14.6 , including the requirements of clause (e) of Section 5.4 ). To the extent permitted by Requirements of Law, each Participant also shall be entitled to the benefits of Section 14.8(b) as though it were a Lender; provided such Participant agrees to be subject to Section 14.8(a) as though it were a Lender.

(ii) A Participant shall not be entitled to receive any greater payment under Section 2.10 , 2.11 , 3.5 or 5.4 than the applicable Lender would have been entitled to receive with respect

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to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent (which consent shall not be unreasonably withheld); provided that the Participant shall be subject to the provisions in Section 2.12 as if it were an assignee under clauses (a) and (b) of this Section 14.6 . Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and related interest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “ Participant Register ”). The entries in the Participant Register shall be conclusive, absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Credit Document) except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations.

(d) Any Lender may, without the consent of the Borrower, the Administrative Agent, the Letter of Credit Issuer or the Swingline Lender at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction over such Lender, and this Section 14.6 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. In order to facilitate such pledge or assignment or for any other reason, the Borrower hereby agrees that, upon request of any Lender at any time and from time to time after the Borrower has made its initial borrowing hereunder, the Borrower shall provide to such Lender, at the Borrower’s own expense, a promissory note, substantially in the form of Exhibit I-1 or I-2 , as the case may be, evidencing the Loans and Swingline Loans, respectively, owing to such Lender.

(e) Subject to Section 14.16 , the Borrower authorizes each Lender to disclose to any Participant, secured creditor of such Lender or assignee (each, a “ Transferee ”) and any prospective Transferee any and all financial information in such Lender’s possession concerning the Borrower and its Affiliates that has been delivered to such Lender by or on behalf of the Borrower and its Affiliates pursuant to this Agreement or that has been delivered to such Lender by or on behalf of the Borrower and its Affiliates in connection with such Lender’s credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement.

(f) The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Acceptance shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

(g) Notwithstanding anything to the contrary contained herein, any Term Loan Lender (a “ Granting Lender ”) may grant to a special purpose funding vehicle (a “ SPV ”), identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Term Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to make any Term Loan and (ii) if an SPV elects not to

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exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Term Loan pursuant to the terms hereof. The making of a Term Loan by an SPV hereunder shall utilize the Term Loan Commitment of the Granting Lender to the same extent, and as if, such Term Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPV shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, to the extent so required by the terms of any commercial paper or other senior indebtedness to which any SPV is party, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of such SPV, it shall not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 14.6(g) , any SPV may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Term Loans to the Granting Lender or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of its Term Loans and (ii) disclose on a confidential basis any non-public information relating to its Term Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPV. This Section 14.6(g) may not be amended without the written consent of the SPV.

14.7 Replacements of Lenders under Certain Circumstances .

(a) The Borrower shall be permitted to replace any Lender that (i) requests reimbursement for amounts owing pursuant to Section 2.10 , 3.5 or 5.4 , (ii) is affected in the manner described in Section 2.10(a)(iii) and as a result thereof any of the actions described in such Section is required to be taken, (iii) becomes a Defaulting Lender or (iv) has failed to fund Loans, participations in Letters of Credit or Swingline Loans or has made a notification or public statement that it does not intend or expect to comply with its funding obligations hereunder, in each case as a result of its determination that a condition precedent to funding has not or cannot be satisfied pursuant to the definition of “Lender Default”, in each case, with a replacement bank, lending institution or other financial institution; provided that (A) such replacement does not conflict with any Requirement of Law, (B) no Event of Default under Section 12.1 or 12.5 shall have occurred and be continuing at the time of such replacement, (C) the replacement bank or institution shall purchase, at par, all Loans and the Borrower shall pay all other amounts (other than any disputed amounts), pursuant to Section 2.10 , 3.5 or 5.4 , as the case may be) owing to such replaced Lender prior to the date of replacement, (D) the replacement bank or institution, if not already a Lender, and the terms and conditions of such replacement, shall be reasonably satisfactory to the Administrative Agent (and if a Commitment is being assigned, the Letter of Credit Issuer), (E) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 14.6(b) ( provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein) and (F) any such replacement shall not be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.

(b) If any Lender, including a Non-Consenting B/B Lender (each such Lender, a “ Non-Consenting Lender ”) (i) has failed to consent to a proposed Borrowing Base pursuant to Section 2.14 or an amendment, waiver, discharge or termination that pursuant to the terms of Section 14.1 requires the consent of all of the Lenders affected, the Required Revolving Lenders or the Borrowing Base Required Lenders and with respect to which the Majority Lenders, or in the case of a Non-Consenting B/B Lender, the Borrowing Base Required Lenders, shall have granted their consent or (ii) does not agree to increase its Commitment pursuant to Section 2.16 to the prior maximum level of its Commitment before giving effect to any mandatory reduction in its Commitment pursuant to Section

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5.2(c) (but after giving effect to any Assignment and Acceptance occurring after such reduction), then provided no Event of Default then exists, the Borrower shall have the right (unless such Non-Consenting Lender grants such consent) to replace such Non-Consenting Lender by requiring such Non-Consenting Lender to assign its Loans and its Commitments hereunder to one or more assignees reasonably acceptable to the Administrative Agent (and if a Commitment is being assigned, the Letter of Credit Issuer); provided that: (i) all Obligations of the Borrower owing to such Non-Consenting Lender being replaced (other than principal and interest) shall be paid in full to such Non-Consenting Lender concurrently with such assignment, and (ii) the replacement Lender shall purchase the foregoing by paying to such Non-Consenting Lender a price equal to the principal amount thereof plus accrued and unpaid interest thereon. In connection with any such assignment, the Borrower, Administrative Agent, such Non-Consenting Lender and the replacement Lender shall otherwise comply with Section 14.6 .

(c) Notwithstanding anything herein to the contrary, each party hereto agrees that any assignment pursuant to the terms of this Section 14.7 may be effected pursuant to an Assignment and Acceptance executed by the Borrower, the Administrative Agent and the assignee and that the Lender making such assignment need not be a party thereto.

14.8 Adjustments; Set-off .

(a) If any Lender (a “ Benefited Lender ”) shall at any time receive any payment in respect of any principal of or interest on all or part of the Loans made by it, or the participations in Letter of Credit Obligations held by it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 12.5 , or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender’s Loans, or interest thereon, such Benefited Lender shall (i) notify the Administrative Agent of such fact, and (ii) purchase for cash at face value from the other Lenders a participating interest in such portion of each such other Lender’s Loans, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably in accordance with the aggregate principal of and accrued interest on their respective Loans and other amounts owing them; provided , however , that, (A) if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest and (B) the provisions of this paragraph shall not be construed to apply to (1) any payment made by the Borrower or any other Credit Party pursuant to and in accordance with the express terms of this Agreement and the other Credit Documents, (2) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans, Commitments or participations in Drawings to any assignee or participant or (3) any disproportionate payment obtained by a Lender as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans or Commitments or any increase in the Applicable Margin in respect of Loans or Commitments of Lenders that have consented to any such extension. Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under Requirements of Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Credit Party rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Credit Party in the amount of such participation.

(b) After the occurrence and during the continuance of an Event of Default, in addition to any rights and remedies of the Lenders provided by Requirements of Law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable Requirements of Law, upon any amount becoming due and payable by the Borrower hereunder or under any Credit Document (whether at the stated maturity, by

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acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower (and the Credit Parties, if applicable) and the Administrative Agent after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.

14.9 Counterparts . This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or other electronic transmission, i.e. a “pdf” or a “tif”), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent.

14.10 Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

14.11 Integration . This Agreement and the other Credit Documents represent the agreement of the Borrower, the Guarantors, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Borrower, the Guarantors, the Administrative Agent nor any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents.

14.12 GOVERNING LAW . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

14.13 Submission to Jurisdiction; Waivers . Each party hereto hereby irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York, County of New York, the courts of the United States of America for the Southern District of New York and appellate courts from any thereof;

(b) consents that any such action or proceeding shall be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;

(c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address set forth on Schedule 14.2 at such other address of which the Administrative Agent shall have been notified pursuant to Section 14.2 ;

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(d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by Requirements of Law or shall limit the right to sue in any other jurisdiction;

(e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 14.13 any special, exemplary, punitive or consequential damages; and

(f) agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

14.14 Acknowledgments . The Borrower hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents;

(b) (i) the credit facilities provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document) are an arm’s-length commercial transaction between the Borrower and the other Credit Parties, on the one hand, and the Administrative Agent and the Lenders, on the other hand, and the Borrower and the other Credit Parties are capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, each of the Administrative Agent and the Lenders is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary for any of the Borrower, any other Credit Parties or any of their respective Affiliates, equity holders, creditors or employees or any other Person; (iii) neither the Administrative Agent, any Joint Bookrunner, any Joint Lead Arranger, nor any Lender has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower or any other Credit Party with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Credit Document (irrespective of whether the Administrative Agent, any Joint Bookrunner, any Joint Lead Arranger or any Lender has advised or is currently advising any of the Borrower, the other Credit Parties or their respective Affiliates on other matters) and none of the Administrative Agent, any Joint Bookrunner, any Joint Lead Arranger or any Lender has any obligation to any of the Borrower, the other Credit Parties or their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; (iv) the Borrower, the other Credit Parties and their respective Affiliates will not assert any claim based on alleged breach of fiduciary duty; (v) the Administrative Agent and its Affiliates and each Lender and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its respective Affiliates, and none of the Administrative Agent or any Lender has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (vi) neither the Administrative Agent nor any Lender has provided and none will provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Credit Document) and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Administrative Agent with respect to any breach or alleged breach of agency or fiduciary duty; and

(c) no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower, on the one hand, and any Lender, on the other hand.

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14.15 WAIVERS OF JURY TRIAL . THE BORROWER, THE ADMINISTRATIVE AGENT, EACH LETTER OF CREDIT ISSUER AND EACH LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

14.16 Confidentiality . The Administrative Agent, each other Agent, any Letter of Credit Issuer, any Swingline Lender and each other Lender shall hold all non-public information furnished by or on behalf of the Borrower or any of its Subsidiaries in connection with such Lender’s evaluation of whether to become a Lender hereunder or obtained by such Lender, any Swingline Lender, the Administrative Agent, any Letter of Credit Issuer or such other Agent pursuant to the requirements of this Agreement (“ Confidential Information ”), confidential in accordance with its customary procedure for handling confidential information of this nature and in any event may make disclosure (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information, are instructed to keep such Information confidential and agree to keep such Information confidential on the same terms as provided herein) (b) as required or requested by any Governmental Authority, self-regulatory agency or representative thereof or pursuant to legal process or applicable Requirements of Law, (c) to any other party hereto (d) to such Lender’s or the Administrative Agent’s, any Letter of Credit Issuer’s or such other Agent’s attorneys, professional advisors, independent auditors, trustees or Affiliates, in each case who need to know such information in connection with the administration of the Credit Documents and are informed of the confidential nature of such information, (e) in connection with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder (f) to an investor or prospective investor in a securitization that agrees its access to information regarding the Credit Parties, the Loans and the Credit Documents is solely for purposes of evaluating an investment in a securitization and who agrees to treat such information as confidential, (g) to a trustee, collateral manager, servicer, backup servicer, noteholder or secured party in connection with the administration, servicing and reporting on the assets serving as collateral for a securitization and who agrees to treat such information as confidential, (h) to a nationally recognized ratings agency that requires access to information regarding the Credit Parties, the Loans and Credit Documents in connection with ratings issued with respect to a securitization, (i) to the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Facility, (j) subject to an agreement containing provisions substantially the same as those of this Section 14.16 , to (x) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement, or (y) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (k) with the consent of the Borrower and (l) to the extent such non-public information (x) becomes publicly available other than as a result of a breach of this Section, or (y) becomes available to the Administrative Agent, any Lender, Swingline Lender, Letter of Credit Issuer, such other Agent or any of their respective Affiliates on a non-confidential basis from a source other than the Borrower; provided that unless specifically prohibited by applicable Requirements of Law, each Lender, the Administrative Agent, the Swingline Lender, any Letter of Credit Issuer and each other Agent shall endeavor to notify the Borrower (without any liability for a failure to so notify the Borrower) of any request made to such Lender, the Administrative Agent, any Letter of Credit Issuer or such other Agent, as applicable, by any governmental, regulatory or self-regulatory agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information; provided further that in no event shall any Lender, the Administrative Agent, any Letter of Credit Issuer or any other Agent be obligated or required to return any materials furnished by the Borrower or any Subsidiary. In addition, each Lender, the Administrative Agent and each other Agent may provide

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Confidential Information to prospective Transferees or to any pledgee referred to in Section 14.6 or to prospective direct or indirect contractual counterparties in Hedge Agreements to be entered into in connection with Loans made hereunder as long as such Person is advised of and agrees to be bound by the provisions of this Section 14.16 or confidentiality provisions at least as restrictive as those set forth in this Section 14.16 .

14.17 Release of Collateral and Guarantee Obligations .

(a) The Lenders hereby irrevocably agree that the Liens granted to the Administrative Agent by the Credit Parties on any Collateral shall be automatically released (i) in full, as set forth in clauses (b) or (c) below, (ii) upon the Disposition of such Collateral (including as part of or in connection with any other Disposition permitted hereunder) to any Person other than another Credit Party, to the extent such Disposition is made in compliance with the terms of this Agreement (and the Administrative Agent may rely conclusively on a certificate to that effect provided to it by any Credit Party upon its reasonable request without further inquiry), (iii) to the extent such Collateral is comprised of property leased to a Credit Party, upon termination or expiration of such lease, (iv) if the release of such Lien is approved, authorized or ratified in writing by the Majority Lenders (or such other percentage of the Lenders whose consent may be required in accordance with Section 14.1 ), (v) to the extent the property constituting such Collateral is owned by any Guarantor, upon the release of such Guarantor from its obligations under the Guarantee (in accordance with the second succeeding sentence and Section 5.14(b) of the Guarantee) and (vi) as required by the Administrative Agent to effect any Disposition of Collateral in connection with any exercise of remedies of the Administrative Agent pursuant to the Security Documents. Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those being released) upon (or obligations (other than those being released) of the Credit Parties in respect of) all interests retained by the Credit Parties, including the proceeds of any Disposition, all of which shall continue to constitute part of the Collateral except to the extent otherwise released in accordance with the provisions of the Credit Documents. Additionally, the Lenders hereby irrevocably agree that the Guarantors shall be released from the Guarantees upon consummation of any transaction permitted hereunder resulting in such Subsidiary ceasing to constitute a Restricted Subsidiary or otherwise becoming an Excluded Subsidiary. The Lenders hereby authorize the Administrative Agent to execute and deliver any instruments, documents, and agreements necessary or desirable to evidence and confirm the release of any Guarantor or Collateral pursuant to the foregoing provisions of this paragraph, all without the further consent or joinder of any Lender. Any representation, warranty or covenant contained in any Credit Document relating to any such Collateral or Guarantor shall no longer be deemed to be repeated.

(b) Notwithstanding anything to the contrary contained herein or any other Credit Document, when all Obligations (other than (i) Hedge Obligations in respect of any Secured Hedge Agreements, (ii) Cash Management Obligations in respect of any Secured Cash Management Agreements and (iii) any contingent or indemnification obligations not then due) have been paid in full, all Commitments have terminated or expired and no Letter of Credit shall be outstanding that is not Cash Collateralized or back-stopped, upon request of the Borrower, the Administrative Agent shall (without notice to, or vote or consent of, any Secured Party) take such actions as shall be required to release its security interest in all Collateral, and to release all obligations under any Credit Document, whether or not on the date of such release there may be any (i) Hedge Obligations in respect of any Secured Hedge Agreements, (ii) Cash Management Obligations in respect of any Secured Cash Management Agreements and (iii) any contingent or indemnification obligations not then due. Any such release of Obligations shall be deemed subject to the provision that such Obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver,

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intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.

(c) Notwithstanding anything to the contrary contained herein or any other Credit Document, upon the Borrower’s election to enter into an Investment Grade Period pursuant to Section 14.18(b) and delivery of the written notice contemplated therein, the Administrative Agent shall (without notice to, or vote or consent of, any Secured Party) take such actions as shall be required to release its security interest in all Collateral, and to release all obligations under any Security Document.

14.18 Borrowing Base Election .

(a) At any time that is not a Borrowing Base Trigger Period, the Borrower may provide written notice to the Administrative Agent of its election to enter into a Borrowing Base Trigger Period, which notice shall include a certification of an Authorized Officer of the Borrower that the Borrower is exercising commercially reasonable efforts to grant to the Administrative Agent a Lien on the Collateral in accordance with the requirements of Section 10.10(a) . A Borrowing Base Trigger Period will commence upon the Administrative Agent’s receipt of such notice.

(b) At any time during a Borrowing Base Trigger Period, as long as no Borrowing Base Trigger Event has occurred and is continuing, the Borrower may provide notice to the Administrative Agent of its election to exit such Borrowing Base Trigger Period and enter into an Investment Grade Period together with a certificate of an Authorized Officer of the Borrower confirming that (A) no Event of Default exists and (B) no Borrowing Base Trigger Event has occurred and is continuing.

14.19 USA PATRIOT Act . The Administrative Agent and each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “ Patriot Act ”), it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow the Administrative Agent and such Lender to identify each Credit Party in accordance with the Patriot Act.

14.20 Payments Set Aside . To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect.

14.21 Reinstatement . This Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the

136

Borrower or any substantial part of its property, or otherwise, all as though such payments had not been made.

14.22 Disposition of Proceeds . The Security Documents contain an assignment by the Borrower and/or the Guarantors unto and in favor of the Administrative Agent for the benefit of the Lenders of all of the Borrower’s or each Guarantor’s interest in and to their as-extracted collateral in the form of production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Documents further provide in general for the application of such proceeds to the satisfaction of the Obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Documents, until the occurrence of an Event of Default, (a) the Administrative Agent and the Lenders agree that they will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such Subsidiaries.

14.23 Collateral Matters; Hedge Agreements . The benefit of the Security Documents and of the provisions of this Agreement relating to any Collateral securing the Obligations shall also extend to and be available on a pro rata basis to any Person (a) under any Secured Hedge Agreement, in each case, after giving effect to all netting arrangements relating to such Hedge Agreements or (b) under any Secured Cash Management Agreement; provided that, with respect to any Secured Hedge Agreement or Secured Cash Management Agreement that remains secured after the Hedge Bank thereto or the Cash Management Bank thereunder is no longer a Lender or an Affiliate of a Lender, the provisions of Article XIII shall also continue to apply to such Hedge Bank or Cash Management Bank in consideration of its benefits hereunder and each such Hedge Bank or Cash Management Bank, as applicable, shall, if requested by the Administrative Agent, promptly execute and deliver to the Administrative Agent all such other documents, agreements and instruments reasonably requested by the Administrative Agent to evidence the continued applicability of the provisions of Article XIII . No Person shall have any voting rights under any Credit Document solely as a result of the existence of obligations owed to it under any such Secured Hedge Agreement or Secured Cash Management Agreement.

137

IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

	CALIFORNIA RESOURCES CORPORATION , as the Borrower


	By:	/s/ Marshall D. Smith
	Name:	Marshall D. Smith
	Title:	Senior Executive Vice President and Chief Financial Officer

Signature Page

CRC Credit Agreement

	JPMORGAN CHASE BANK, N.A. , as Administrative Agent, Letter of Credit Issuer, Swingline Lender, Revolving Lender and Term Loan Lender





	By:	/s/ Dave Katz
	Name:	Dave Katz
	Title:	Executive Director

Signature Page

CRC Credit Agreement

	BANK OF AMERICA, N.A. , as Syndication Agent, Letter of Credit Issuer, Swingline Lender, Revolving Lender and Term Loan Lender




	By:	/s/ Bryan Heller
	Name:	Bryan Heller
	Title:	Director

Signature Page

CRC Credit Agreement

	CITIBANK, N.A. , as Documentation Agent, Letter of Credit Issuer, Revolving Lender and Term Loan Lender




	By:	/s/ Eamon Baqui
	Name:	Eamon Baqui
	Title:	Vice President

Signature Page

CRC Credit Agreement

	WELLS FARGO BANK, NATIONAL ASSOCIATION , as Documentation Agent, Letter of Credit Issuer, Revolving Lender and Term Loan Lender





	By:	/s/ Barry Parks
	Name:	Barry Parks
	Title:	Director

Signature Page

CRC Credit Agreement

	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. , as Revolving Lender and Term Loan Lender



	By:	/s/ Kevin Sparks
	Name:	Kevin Sparks
	Title:	Vice President

Signature Page

CRC Credit Agreement

	U.S. BANK NATIONAL ASSOCIATION , as Revolving Lender and Term Loan Lender



	By:	/s/ John Prigge
	Name:	John Prigge
	Title:	Vice President

Signature Page

CRC Credit Agreement

	MORGAN STANLEY BANK, N.A. , as Revolving Lender and Term Loan Lender



	By:	/s/ Michael King
	Name:	Michael King
	Title:	Authorized Signatory

Signature Page

CRC Credit Agreement

	HSBC BANK USA, NA , as Revolving Lender and Term Loan Lender



	By:	/s/ Steven Smith
	Name:	Steven Smith
	Title:	Director
		#20290

Signature Page

CRC Credit Agreement

	GOLDMAN SACHS BANK, N.A. , as Revolving Lender and Term Loan Lender



	By:	/s/ Mark Walton
	Name:	Mark Walton
	Title:	Authorized Signatory

Signature Page

CRC Credit Agreement

	COMPASS BANK , as Revolving Lender and Term Loan Lender
	COMPASS BANK , as Revolving Lender and Term Loan Lender


	By:	/s/ Michael Dixon
	Name:	Michael Dixon
	Title:	Senior Vice President

Signature Page

CRC Credit Agreement

	MIZUHO BANK, LTD. , as Revolving Lender and Term Loan Lender



	By:	/s/ Leon Mo
	Name:	Leon Mo
	Title:	Authorized Signatory

Signature Page

CRC Credit Agreement

	BANK OF NOVA SCOTIA , as Revolving Lender and Term Loan Lender



	By:	/s/ Mark Sparrow
	Name:	Mark Sparrow
	Title:	Director

Signature Page

CRC Credit Agreement

	SOCIÉTÉ GÉNÉRALE , as Revolving Lender and Term Loan Lender



	By:	/s/ Alexandre Huet
	Name:	Alexandre Huet
	Title:	Managing Director

	And

	By:	/s/ Diego Medina
	Name:	Diego Medina
	Title:	Director

Signature Page

CRC Credit Agreement

	PNC BANK, NATIONAL ASSOCIATION , as Revolving Lender and Term Loan Lender



	By:	/s/ John Berry
	Name:	John Berry
	Title:	Vice President

Signature Page

CRC Credit Agreement

	BRANCH BANKING AND TRUST COMPANY , as Revolving Lender and Term Loan Lender



	By:	/s/ Parul June
	Name:	Parul June
	Title:	Vice President

Signature Page

CRC Credit Agreement

	DNB CAPITAL LLC , as Revolving Lender and Term Loan Lender



	By:	/s/ Joe Hykle
	Name:	Joe Hykle
	Title:	Senior Vice President


	By:	/s/ Jill Ilski
	Name:	Jill Ilski
	Title:	First Vice President

Signature Page

CRC Credit Agreement

	THE BANK OF NEW YORK MELLON , as Revolving Lender and Term Loan Lender


	By:	/s/ Mark W. Rogers
	Name:	Mark W. Rogers
	Title:	Vice President

Signature Page

CRC Credit Agreement

	SUMITOMO MITSUI BANKING CORPORATION , as Revolving Lender and Term Loan Lender


	By:	/s/ James D. Weinstein
	Name:	James D. Weinstein
	Title:	Managing Director

Signature Page

CRC Credit Agreement

	INTESA SANPAOLO S.P.A., NEW YORK BRANCH , as Revolving Lender and Term Loan Lender


	By:	/s/ John Michalisin
	Name:	John Michalisin
	Title:	FVP

	By:	/s/ William S. Denton III
	Name:	William S. Denton III
	Title:	Global Relationship Manager

Signature Page

CRC Credit Agreement

	KEYBANK NATIONAL ASSOCIATION , as Revolving Lender and Term Loan Lender


	By:	/s/ George E. McKean
	Name:	George E. McKean
	Title:	Senior Vice President

Signature Page

CRC Credit Agreement

Schedule 1.1(a)

Revolving Commitments

Lender	Revolving Commitment
JPMorgan Chase Bank, N.A.	$	156,666,666.67
Bank of America, N.A.	$	156,666,666.67
Citibank, N.A.	$	156,666,666.67
Wells Fargo Bank, National Association	$	156,666,666.67
The Bank of Tokyo-Mitsubishi UFJ, Ltd.	$	156,666,666.67
U.S. Bank National Association	$	156,666,666.67
Morgan Stanley Bank, N.A.	$	156,666,666.67
HSBC Bank USA, NA	$	156,666,666.67
Goldman Sachs Bank USA	$	156,666,666.67
Compass Bank	$	66,666,666.67
Mizuho Bank, Ltd.	$	66,666,666.67
Bank of Nova Scotia	$	66,666,666.67
Société Générale	$	66,666,666.67
PNC Bank, National Association	$	66,666,666.67
Branch Banking and Trust Company	$	66,666,666.67
DNB Capital LLC	$	66,666,666.67
The Bank of New York Mellon	$	30,833,333.32
Sumitomo Mitsui Banking Corporation	$	30,833,333.32
Intesa Sanpaolo S.p.A., New York Branch	$	30,833,333.32
Keybank National Association	$	30,833,333.32
Total	$	2,000,000,000.00

Schedule 1.1(a) to Credit Agreement

Schedule 1.1(b)

Term Loan Commitments

Lender	Revolving Commitment
JPMorgan Chase Bank, N.A.	$	78,333,333.33
Bank of America, N.A.	$	78,333,333.33
Citibank, N.A.	$	78,333,333.33
Wells Fargo Bank, National Association	$	78,333,333.33
The Bank of Tokyo-Mitsubishi UFJ, Ltd.	$	78,333,333.33
U.S. Bank National Association	$	78,333,333.33
Morgan Stanley Bank, N.A.	$	78,333,333.33
HSBC Bank USA, NA	$	78,333,333.33
Goldman Sachs Bank USA	$	78,333,333.33
Compass Bank	$	33,333,333.33
Mizuho Bank, Ltd.	$	33,333,333.33
Bank of Nova Scotia	$	33,333,333.33
Société Générale	$	33,333,333.33
PNC Bank, National Association	$	33,333,333.33
Branch Banking and Trust Company	$	33,333,333.33
DNB Capital LLC	$	33,333,333.33
The Bank of New York Mellon	$	15,416,666.68
Sumitomo Mitsui Banking Corporation	$	15,416,666.68
Intesa Sanpaolo S.p.A., New York Branch	$	15,416,666.68
Keybank National Association	$	15,416,666.68
Total	$	1,000,000,000.00

Schedule 1.1(b) to Credit Agreement

Schedule 1.1(c)

Swingline Commitments

Lender	Swingline Commitment
JPMorgan Chase Bank, N.A.	$	100,000,000.00
Bank of America, N.A.	$	100,000,000.00
Total	$	200,000,000.00

Schedule 1.1(c) to Credit Agreement

Schedule 11.8

Funding Date Negative Pledge Agreements

None.

Schedule 11.8 to Credit Agreement

Schedule 11.9

Funding Date Contractual Encumbrance

None.

Schedule 11.9 to Credit Agreement

Schedule 14.2

Notice Addresses

Entity

Notice Address/Information

OPC

Occidental Petroleum Corporation
10889 Wilshire Blvd.
Los Angeles, CA 90024

Attention: Michael L. Preston
Fax: 310-443-6192
Email: Michael_Preston@oxy.com

Schedule 14.2 to Credit Agreement

EXHIBIT A

FORM OF NOTICE OF BORROWING

[Letterhead of Borrower]

[Date] (1)

JPMorgan Chase Bank, N.A.

as Administrative Agent

Re: California Resources Corporation Notice of Borrowing

Ladies and Gentlemen:

This Notice of Borrowing is delivered to you pursuant to Section 2.3 of that certain Credit Agreement, dated as of September 24, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among California Resources Corporation, a Delaware corporation (the “ Borrower ”), the lenders from time to time party thereto (the “ Lenders ”), JPMorgan Chase Bank, N.A., as Administrative Agent, a Swingline Lender, and a Letter of Credit Issuer, and each other Letter of Credit Issuer from time to time party thereto (such terms and each other capitalized term used but not defined herein having the meaning provided in Article I of the Credit Agreement).

The Borrower hereby requests that a Loan be extended as follows:

(i) Aggregate amount of the requested Loan is $[ ];

(ii) Date of such Borrowing is [ ], 201[ ];

(iii) Requested Borrowing is to be [an ABR Loan][a LIBOR Loan][Swingline Loan];

(iv) Requested Borrowing is to be [a Revolving Borrowing] [a Term Loan Borrowing];

(v) In the case of a LIBOR Loan, the initial Interest Period applicable thereto is [ ];(2)

(vi) In the case of a Borrowing Base Trigger Period, the amount of Borrowing Base in effect on the date hereof is $[ ];

(1) Date of Notice of Borrowing: To be submitted (A) prior to 1:00 p.m. (New York City time) at least two Business Days’ prior to each Borrowing of Loans if such Loans are to be made on the Funding Date initially as LIBOR Loans; (B) prior to 1:00 p.m. (New York City time) at least three Business Days’ prior to each Borrowing of Loans if such Loans are to be made after the Funding Date initially as LIBOR Loans; (C) prior to 1:00 p.m. (New York City time) on the date of each Borrowing of Loans that are to be ABR Loans; or (D) prior to 3:00 p.m. (New York City time) on the date of each Borrowing of Loans that are to be Swingline Loans.

(2) If no Interest Period is selected, the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

A-1

(vii) In the case of a Borrowing Base Trigger Period, the Total Revolving Exposure (i.e., the sum of the Lenders’ Revolving Exposures) on the date hereof (without regard to the requested Borrowing) is $[ ];

(viii) In the case of a Borrowing Base Trigger Period, the Total Term Loan Exposure (i.e., the sum of the Lenders’ Term Loan Exposures) on the date hereof (without regard to the requested Borrowing) is $[ ];

(ix) In the case of a Borrowing Base Trigger Period, the p ro forma Total Revolving Exposure (giving effect to the requested Borrowing) is $[ ];

(x) In the case of a Borrowing Base Trigger Period, the pro forma Total Term Loan Exposure (giving effect to the requested Borrowing) is $[ ]; and

(xi) Location and number of the Borrower’s account to which funds are to be disbursed is as follows:

[ ]

[Remainder of page intentionally left blank; signature page follows]

A-2

IN WITNESS WHEREOF, the undersigned has duly executed this Notice of Borrowing by its authorized representative as of the day and year first above written.

	CALIFORNIA RESOURCES CORPORATION


	By:
		Name:
		Title:

Signature Page

California Resources Corporation

Notice of Borrowing

EXHIBIT B

FORM OF LETTER OF CREDIT REQUEST

[Letterhead of Borrower]

[Date] (3)

[JPMorgan Chase Bank, N.A.

as Administrative Agent and a Letter of Credit Issuer]

[ ],

as a Letter of Credit Issuer

Re: California Resources Corporation Letter of Credit Request

Ladies and Gentlemen:

This Letter of Credit Request is delivered to you pursuant to Section 3.2 of that certain Credit Agreement, dated as of September 24, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), by and among California Resources Corporation , a Delaware corporation (the “ Borrower ”), the lenders from time to time party thereto (the “ Lenders ”), JPMorgan Chase Bank, N.A., as Administrative Agent, a Swingline Lender, and a Letter of Credit Issuer, and each other Letter of Credit Issuer from time to time party thereto (such terms and each other capitalized term used but not defined herein having the meaning provided in Article I of the Credit Agreement).

The Borrower hereby requests that a Letter of Credit be issued:

(i) on [insert date of requested issuance]

(ii) in the aggregate Stated Amount of $[ ];

(iii) in favor of [insert name and address of beneficiary];

(iv) which expires on [insert date at least five Business Days prior to Maturity Date];

(v) which automatically renews for [ ]-month periods; and

(vi) which specifies that a drawing may be made only in the event of the occurrence of the following conditions: [insert drawing conditions]

After giving effect to the requested issuance, the Stated Amount of the Letter of Credit requested by this Letter of Credit Request does not (x) when added to the Letters of Credit Outstanding at this time, exceed the Letter of Credit Commitment now in effect or (y) cause the Total Revolving Exposure to exceed the Revolving Loan Limit now in effect.

(3) Date of Letter of Credit Request (prior to 1:00 p.m. (New York City time) at least two Business Days prior to the date of issuance or such lesser number as may be agreed by the Administrative Agent and the Letter of Credit Issuer).

B-1

The undersigned hereby agrees that the Letter of Credit Issuer is expressly authorized to make such changes from the form of this Request as the Letter of Credit Issuer in its reasonable discretion may deem advisable, provided no such changes shall vary the principal terms hereof.

[Remainder of page intentionally left blank; signature page follows]

B-2

IN WITNESS WHEREOF, the undersigned has duly executed this Letter of Credit Request by its authorized representative as of the day and year first above written.

	CALIFORNIA RESOURCES CORPORATION


	By:
		Name:
		Title:

Signature Page

California Resources Corporation

Letter of Credit Request

EXHIBIT C

FORM OF GUARANTEE

[See attached.]

C-1

EXHIBIT D

FORM OF SECURITY AGREEMENT

[See attached.]

D-1

EXHIBIT E

FORM OF PLEDGE AGREEMENT

[See attached.]

E-1

EXHIBIT F

FORM OF MORTGAGE/DEED OF TRUST (CALIFORNIA)

[See attached.]

F-1

EXHIBIT G

FORM OF CREDIT PARTY CLOSING CERTIFICATE

CLOSING CERTIFICATE

[NAME OF CERTIFYING CREDIT PARTY]

[ ], 2014

Reference is made to that certain Credit Agreement, dated as of September 24, 2014(the “ Credit Agreement ”), among California Resources Corporation, a Delaware corporation, as the initial Borrower, the banks, financial institutions and other lending institutions from time to time parties hereto (the “ Lenders ”), JPMorgan Chase Bank, N.A., as Administrative Agent, a Swingline Lender, and a Letter of Credit Issuer, and each other Letter of Credit Issuer from time to time party thereto. Capitalized terms used but not defined herein shall have the meanings given to such terms in the Credit Agreement.

1. The undersigned, [ ], [President/Vice President] of [ ] (the “ Certifying Credit Party ”), solely in his or her capacity as [President/Vice President] of the Certifying Credit Party and not individually, hereby certifies as follows:

(a) All representations and warranties made by the Certifying Credit Party in each of the Credit Documents, in each case as they relate to the Certifying Credit Party on the date hereof, to the knowledge of an Authorized Officer of the Borrower and its Restricted Subsidiaries are true and correct in all material respects (unless such representations and warranties are already qualified by materiality, Material Adverse Effect or a similar qualification, in which case they are true and correct in all respects) on and as of the date hereof (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties are true and correct in all material respects (unless such representations and warranties are already qualified by materiality, Material Adverse Effect or a similar qualification, in which case they are true and correct in all respects) as of such earlier date).

(b) [ ] is the duly elected and qualified [Assistant] Secretary of the Certifying Credit Party and the signature set forth on the signature line for such officer below is such officer’s true and genuine signature, and such officer is duly authorized to execute and deliver on behalf of the Certifying Credit Party each Credit Document to which it is a party and any certificate or other document to be delivered by the Certifying Credit Party pursuant to such Credit Documents.

2. The undersigned [Assistant] Secretary of the Certifying Credit Party, solely in his or her capacity as [Assistant] Secretary of the Certifying Credit Party and not individually, hereby certifies as follows:

G-1

(a) Attached hereto as Exhibit A is a true and complete copy of the resolutions duly adopted by the [Board of Directors/General Partner/Sole Member/Manager] (or a duly authorized committee thereof) of the Certifying Credit Party, authorizing (i) the execution, delivery and performance of the Credit Documents (and any agreements relating thereto) to which it is a party and (ii) the extensions of credit contemplated by the Credit Agreement; such resolutions have not in any way been amended, modified, revoked or rescinded and have been in full force and effect since their adoption to and including the date hereof and are now in full force and effect; and such resolutions are the only corporate proceedings of the Certifying Credit Party now in force relating to or affecting the matters referred to therein;

(b) Attached hereto as Exhibit B is a true and complete copy of the charter of the Certifying Credit Party certified by the Secretary of State of the Certifying Credit Party’s jurisdiction of organization, as in effect at all times since the date shown on the attached certificate;

(c) Attached hereto as Exhibit C is a true and complete copy of the [by-laws/limited partnership agreement/limited liability company agreement] of the Certifying Credit Party. As of the date hereof such [by-laws/limited partnership agreement/limited liability company agreement] [has/have] not been further amended, modified or repealed and remain[s] in full force and effect; and

(d) Set forth on Exhibit D hereto is a list of now duly elected and qualified officers of the Certifying Credit Party holding the offices indicated next to their respective names below, and such officers hold such offices with the Certifying Credit Party on the date hereof, and the signatures appearing opposite their respective names below are the true and genuine signatures of such officers, and each of such officers is duly authorized to execute and deliver on behalf of the Certifying Credit Party each Credit Document to which it is a party and any certificate or other document to be delivered by the Certifying Credit Party pursuant to such Credit Documents.

The undersigned hereby acknowledges that Vinson & Elkins LLP is relying on the truth and accuracy of the above certifications in delivering its legal opinion in furtherance of Section 7.2 of the Credit Agreement and the undersigned hereby consents to such reliance.

[Remainder of page intentionally left blank; signature page follows]

G-2

IN WITNESS WHEREOF, the undersigned have hereto set our names as of the date set forth above.


Name:	[ ]	Name:	[ ]
Title:	[President/Vice President]	Title:	[Secretary/Assistant Secretary]

Signature Page

[Certifying Credit Party]

Closing Certificate

G-3

Exhibit A

Resolutions

[See attached.]

G-4

Exhibit B

[Certificate of Organization/Formation/Incorporation/Limited Partnership]

[See attached.]

G-5

Exhibit C

[By-Laws/(LLC) Operating Agreement/Limited Partnership Agreement]

[See attached]

G-6

Exhibit D

Specimen Signatures

Name	Title	Signature
[ ]	[President/Vice President]
[ ]	[Secretary/Assistant Secretary]
[ ]	[ ]
[ ]	[ ]

G-7

EXHIBIT H

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This Assignment and Acceptance Agreement (the “Assignment” ) is dated as of the Effective Date set forth below and is entered into by and between [ Insert name of Assignor ] (the “Assignor” ) and [ Insert name of Assignee ] (the “Assignee” ). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement (as defined below), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases, assumes and accepts from the Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, the interest in and to all of the Assignor’s rights and obligations under the Credit Agreement and any other documents or instruments delivered pursuant thereto that represents the amount and percentage interest identified below of all of the Assignor’s outstanding rights and obligations under the respective facilities identified below (including, to the extent included in any such facilities, letters or credit) (the “Assigned Interest” ). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and the Credit Agreement, without representation or warranty by the Assignor.

1.	Assignor:

2.	Assignee:

3.	Borrower:	California Resources Corporation

4.	Administrative Agent:	JPMorgan Chase Bank, N.A., as Administrative Agent under the Credit Agreement (as defined below).

5.	Credit Agreement:	That certain Credit Agreement, dated as of September 24, 2014 (the “ Credit Agreement ”), among CALIFORNIA RESOURCES CORPORATION, a Delaware corporation (the “ Borrower ”), the lenders from time to time party thereto (the “ Lenders ”), JPMORGAN CHASE BANK, N.A., as Administrative Agent, a Swingline Lender, and a Letter of Credit Issuer, and each other Letter of Credit Issuer from time to time party thereto (such terms and each other capitalized term used but not defined herein having the meaning provided in Article I of the Credit Agreement).

H-1

6. Assigned Interest:

Total Commitment for all Lenders	Amount of Commitment/Loans Assigned(1)	Type of Commitment/Loans Assigned	Commitment Percentage(2)
$	$	[Revolving Commitment/Loans][Term Commitment/Loans]		%

Effective Date: , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

7. Notice and Wire Instructions:

[NAME OF ASSIGNOR]		[NAME OF ASSIGNEE]

Notices :		Notices :

Attention:		Attention:
Telecopier:		Telecopier:

with a copy to:		with a copy to:

Attention:		Attention:
Telecopier:		Telecopier:

Wire Instructions :		Wire Instructions :

[ ]		[ ]

[Remainder of page intentionally left blank; signature page follows]

(1) (1) The amount of the Commitment or Loans of the assigning Lender being assigned pursuant to this Assignment shall not be less than $5,000,000 and increments of $1,000,000 in excess thereof and (2) after giving effect to this Assignment, the amount of the remaining Commitment or Loans of the assigning Lender (determined as of the date this Assignment is delivered to the Administrative Agent) shall not be less than $15,000,000, in each case unless each of the Borrower, each Letter of Credit Issuer and the Administrative Agent otherwise consents (which consents shall not be unreasonably withheld or delayed).

(2) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

H-2

The terms set forth in this Assignment are hereby agreed to:

	ASSIGNOR:

	[NAME OF ASSIGNOR]


	By:
		Name:
		Title:


	ASSIGNEE:

	[NAME OF ASSIGNEE]


	By:
		Name:
		Title:

Signature Page

California Resources Corporation

Assignment and Acceptance Agreement

Consented to and Accepted:

JPMORGAN CHASE BANK, N.A., as Administrative Agent, Letter of Credit Issuer and Swingline Lender


By:
	Name:
	Title:

Signature Page

California Resources Corporation

Assignment and Acceptance Agreement

Consented to:

CALIFORNIA RESOURCES CORPORATION


By:
	Name:
	Title:

Signature Page

California Resources Corporation

Assignment and Acceptance Agreement

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT
AND ACCEPTANCE AGREEMENT

Representations and Warranties .

Assignor . The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with any Credit Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document delivered pursuant thereto, other than this Assignment (herein collectively the “Credit Documents” ), or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Credit Document.

Assignee . The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iii) it has received a copy of the Credit Agreement and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest on the basis of which it has made such analysis and decision, and (iv) if it is a Non-U.S. Lender, attached to the Assignment is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall deem appropriate at that time, continue to make its own credit decisions in taking or not taking action under the Credit Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Documents are required to be performed by it as a Lender.

Payments . From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

Annex 1-1

General Provisions . This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment. This Assignment shall be governed by, and construed in accordance with, the internal laws of the State of New York.

Annex-1-2

EXHIBIT I

FORM OF PROMISSORY NOTE

New York, New York

[ ], 201[ ]

FOR VALUE RECEIVED, the undersigned, CALIFORNIA RESOURCES CORPORATION, a Delaware corporation (the “ Borrower ”), hereby unconditionally promises to pay to the order of [ ] or its registered assigns (the “ Lender ”), at the Administrative Agent’s Office or such other place as JPMORGAN CHASE BANK, N.A. (the “ Administrative Agent ”) shall have specified, in Dollars and in immediately available funds, in accordance with Section 5.3 of the Credit Agreement (as defined below; capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in Article I of the Credit Agreement) on the Maturity Date or the Swingline Maturity Date, as applicable, the aggregate unpaid principal amount, if any, of all advances made by the Lender to the Borrower in respect of Loans pursuant to the Credit Agreement. The Borrower further promises to pay interest in like money at such office on the unpaid principal amount hereof from time to time outstanding at the rates per annum and on the dates specified in Section 2.8 of the Credit Agreement.

This Promissory Note is one of the promissory notes referred to in Section 2.5(f) of that certain Credit Agreement, dated as of September 24, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Borrower, the lenders from time to time party thereto (the “ Lenders ”), JPMORGAN CHASE BANK, N.A., as Administrative Agent, a Swingline Lender, and a Letter of Credit Issuer, and each other Letter of Credit Issuer from time to time party thereto (such terms and each other capitalized term used but not defined herein having the meaning provided in Article I of the Credit Agreement).

This Promissory Note is subject to, and the Lender is entitled to the benefits of, the provisions of the Credit Agreement, and the Loans evidenced hereby are guaranteed and secured as provided therein and in the other Credit Documents. The Loans evidenced hereby are subject to prepayment prior to the Maturity Date and the Swingline Maturity Date, as applicable, in whole or in part, as provided in the Credit Agreement.

All parties now and hereafter liable with respect to this Promissory Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive diligence, presentment, demand, protest and notice of any kind whatsoever in connection with this Promissory Note. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or the Lender, any right, remedy, power or privilege hereunder or under the Credit Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. A waiver by the Administrative Agent or the Lender of any right, remedy, power or privilege hereunder or under any Credit Document on any one occasion shall not be construed as a bar to any right or remedy that the Administrative Agent or the Lender would otherwise have on any future occasion. The rights, remedies, powers and privileges herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights, remedies, powers and privileges provided by law.

All payments in respect of the principal of and interest on this Promissory Note shall be made to the Person recorded in the Register as the holder of this Promissory Note, as described more fully in

I-1

Section 2.5 of the Credit Agreement, and such Person shall be treated as the Lender hereunder for all purposes of the Credit Agreement.

[Remainder of page intentionally left blank]

I-2

THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

	CALIFORNIA RESOURCES CORPORATION


	By:
		Name:
		Title:

Promissory Note

California Resources Corporation

Credit Agreement

Exhibit 10.26

[FORM OF]

California Resources Corporation

Supplemental Savings Plan

Effective as of January 1, 2015

Contents

Article 1. Introduction	1
1.1 Adoption of the Plan	1
1.2 Purpose of the Plan	1
1.3 Status of the Plan	1
1.4 Application of the Plan	2

Article 2. Definitions	3
2.1 Definitions	3

Article 3. Eligibility and Participation	8
3.1 Eligibility	8
3.2 Effective Date of Participation	8
3.3 Reemployment; Resumption of Participation	8

Article 4. Benefits	9
4.1 Allocations Relating to the Annual Additions Limit	9
4.2 Allocations Relating to the Compensation Limit	9
4.3 Maintenance of Accounts	10
4.4 Vesting and Forfeiture	10

Article 5. Payments	11
5.1 Timing and Form of Payments	11
5.2 Payment Elections and Changes	12
5.3 LTD Participants	13
5.4 Death	13
5.5 Small Benefits	13
5.6 Qualified Divorce Orders	13
5.7 Tax Withholding	13
5.8 Reemployment	14

Article 6. Administration	15
6.1 The Administrative Committee	15
6.2 Compensation and Expenses	15
6.3 Manner of Action	15
6.4 Chairman, Secretary, and Employment of Specialists	15
6.5 Subcommittees	15
6.6 Other Agents	15
6.7 Records	16
6.8 Rules	16

6.9 Powers and Duties	16
6.10 Decisions Conclusive	16
6.11 Fiduciaries	17
6.12 Notice of Address	17
6.13 Data	17
6.14 Adjustments	17
6.15 Member’s Own Participation	17
6.16 Indemnification	18

Article 7. Amendment and Termination	20
7.1 Amendment and Termination	20
7.2 Payments Upon Termination	20
7.3 Reorganization of Employer	20

Article 8. Claims and Appeals Procedures	21
8.1 Application for Benefits	21
8.2 Claims Procedure for Benefits	21
8.3 Limitations on Actions	23

Article 9. General Provisions	24
9.1 Unsecured General Creditor	24
9.2 Trust Fund	24
9.3 Nonassignability	24
9.4 Release from Liability to Participant	24
9.5 Employment Not Guaranteed	25
9.6 Gender, Singular & Plural	25
9.7 Captions	25
9.8 Validity	25
9.9 Notice	25
9.10 Applicable Law	25

Article 1. Introduction

1.1 Adoption of the Plan

The California Resources Corporation Supplemental Savings Plan (the “Plan”) is adopted by California Resources Corporation (the “Company”) effective as of January 1, 2015 (“Effective Date”).

1.2 Purpose of the Plan

It is the purpose of this Plan to provide eligible employees with benefits that will compensate them for maximums imposed by law upon contributions to qualified plans. The portion of the Plan reflecting credits to compensate for the maximum limits imposed by Code section 415 is intended to constitute an “excess plan” as defined in ERISA section 3(36). The remaining portion of the Plan is intended to constitute a plan which is unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees and is intended to meet the exemptions provided in ERISA sections 201(2), 301(a)(3), and 401(a)(1), as well as the requirements of Department of Labor Regulation section 2520.104-23. The Plan shall be administered and interpreted so as to meet the requirements of this exemption and the regulations thereunder.

1.3 Status of the Plan

(a) Nonqualified Plan. The Plan is not qualified within the meaning of Code section 401(a). The Plan is intended to provide an unfunded and unsecured promise to pay money in the future and thus not to involve, pursuant to Treas. Reg. § 1.83-3(e), the transfer of “property” for purposes of Code section 83. Likewise, allocations under this Plan to the account maintained for a Participant, and earnings credited thereon, are not intended to confer an economic benefit upon the Participant nor is the right to the receipt of future benefits under the Plan intended to result in any Participant, Beneficiary or Alternate Payee being in constructive receipt of any amount so as to result in any benefit due under the Plan being includible in the gross income of any Participant, Beneficiary or Alternate Payee in advance of the date on which payment of any benefit due under the Plan is actually made.

(b) Compliance with Code Section 409A. This Plan generally is intended to comply with the requirements of Code section 409A and related regulatory guidance, so that the taxation of Participants and Beneficiaries on any compensation deferred under this Plan is deferred.

(c) No Guarantees of Intended Tax Treatment. The Plan shall be administered and interpreted so as to satisfy the requirements for the intended tax treatment under the Code described in this section. However, the treatment of benefits earned under and benefits received from this Plan, for purposes of the Code and other applicable tax laws (such as state income and employment tax laws), shall be determined under the Code and other applicable tax laws and no guarantee or commitment is made to any Participant, Beneficiary or Alternate Payee with respect to the treatment of accruals

under or benefits payable from the Plan for purposes of the Code and other applicable tax laws.

1.4 Application of the Plan

The provisions of this Plan apply only to Employees who are credited with at least one Hour of Service earned on or after January 1, 2015.

Article 2. Definitions

2.1 Definitions

Whenever the following words and phrases are used in the Plan with the first letter capitalized, they shall have the meanings specified below, unless the context clearly indicates otherwise:

(a) “Administrative Committee” means the committee with authority to administer the Plan as provided under section 6.1.

(b) “Affiliate” means:

(1) Any corporation or other business organization while it is controlled by or under common control with the Company within the meaning of Code sections 414 and 1563;

(2) Any member of an affiliated service group within the meaning of Code section 414(m) of which the Company or any Affiliate is a member;

(3) Any entity which, pursuant to Code section 414(o) and related Treasury regulations, must be aggregated with the Company or any Affiliate for plan qualification purposes; or

(4) Any corporation, trade or business which is more than 50 percent owned, directly or indirectly, by the Company and which is designated by the Board or, if authorized by the Board, the Administrative Committee as an Affiliate.

(c) “Alternate Payee” means a former spouse of a Participant who is recognized by a Divorce Order as having a right to receive all, or a portion of, the benefits payable under this Plan with respect to the Participant.

(d) “Annual Additions” means the same as annual additions under the Savings Plan.

(e) “Beneficiary” means the person or persons designated by the Participant to receive payment under this Plan in the event of the Participant’s death prior to the complete distribution to the Participant of the benefits due under the Plan. A beneficiary designation shall become effective only when filed in writing with the Administrative Committee during the Participant’s lifetime on a paper form prescribed by the Administrative Committee. The filing of any new Beneficiary designation form will cancel any inconsistent Beneficiary designation previously filed.

If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, the Participant’s Beneficiary shall be the Participant’s spouse, or if the deceased Participant has no surviving spouse, his or her surviving children equally, or if there are no surviving children, his or her surviving

parents equally, or if only one parent is living, his or her living parent, or if no parent is living, his or her surviving siblings equally, or if no sibling is living, his or her estate.

(f) “Board” means the Board of Directors of the Company.

(g) “Code” means the Internal Revenue Code of 1986, as amended.

(h) “Company” means California Resources Corporation and any successor thereto.

(h) “ Compensation” means the same as Compensation as defined under the Savings Plan.

(i) “Deferral Contribution” means the same as Deferral Contribution under the Savings Plan.

(j) “Divorce Order” means any judgment, decree, or order (including judicial approval of a property settlement agreement) that relates to the settlement of marital property rights between a Participant and his former spouse pursuant to a state domestic relations law (including, without limitation and if applicable, community property law), as described in Treas. Reg. § 1.409A-3(j)(4)(ii) (or any successor provision).

(k) “Employee” means any person employed by the Company or an Affiliate.

Notwithstanding the foregoing, no individual shall be considered an Employee if such individual is not classified as a common-law employee in the employment records of the Employer, without regard to whether the individual is subsequently determined to have been a common-law employee of the Employer. The persons excluded by this paragraph from being Employees are to be interpreted broadly to include and to have at all times included individuals engaged by the Employer to perform services for such entity in a relationship that the entity characterizes as other than an employment relationship, such as where the Employer engages the individual to perform services as an independent contractor or leases the individual’s services from a third party. The exclusion of the individual from being an Employee shall apply even if a determination is subsequently made by the Internal Revenue Service, another governmental agency, a court or other tribunal, after the individual is engaged to perform such services, that the individual is an employee of the Employer for purposes of pertinent Code sections or for any other purpose.

(l) “Employer” means the Company and any Affiliate which is designated by the Board or the Administrative Committee.

The Board or, if authorized by the Board, the Administrative Committee may designate any Affiliate as an Employer under this Plan. The Affiliate shall become an Employer and a party to this Plan upon acceptance of such designation effective as of the date specified by the Board or Administrative Committee.

By accepting such designation or continuing as a party to the Plan, each Employer acknowledges that:

(A) It is bound by such terms and conditions relating to the Plan as the Company or the Administrative Committee may reasonably require;

(B) The Company and the Administrative Committee have the authority to review the Affiliate’s compliance procedures and to require changes in such procedures to protect the Plan;

(C) It has authorized the Company and the Administrative Committee to act on its behalf with respect to Employer matters pertaining to the Plan;

(D) It shall cooperate fully with Plan officials and their agents by providing such information and taking such other actions as they deem appropriate for the efficient administration of the Plan; and

(E) Its status as an Employer under the Plan is expressly conditioned on its being and continuing to be an Affiliate of the Company.

Subject to the concurrence of the Board or Administrative Committee, any Affiliate may withdraw from the Plan, and end its status as an Employer hereunder, by communicating to the Administrative Committee its desire to withdraw. Upon withdrawal, which shall be effective as of the date agreed to by the Board or Administrative Committee, as the case may be, and the Affiliate, the Plan shall be considered frozen as to Employees of such Affiliate.

(m) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(n) “Hour of Service” means the same as Hour of Service under the Savings Plan.

(o) “LTD Participant” means an Employee who, during the Plan Year, is receiving benefits under the Long-Term Disability Plan.

(p) “Long-Term Disability Plan” means the California Resources Corporation Long-Term Disability Plan.

(q) “Matching Employer Contribution” means the same as Matching Employer Contribution under the Savings Plan.

(r) “Nonelective Employer Contribution” means the same as Nonelective Employer Contribution under the Savings Plan.

(s) “Participant” means (i) a person meeting the requirements to participate in the Plan set forth in Article 3 and (ii) any other person who has an account under the Plan because he previously met such requirements.

(t) “Plan Year” means the calendar year.

(u) “Qualified Divorce Order” means a Divorce Order that:

(1) Creates or recognizes the existence of an Alternate Payee’s right to, or assigns to an Alternate Payee the right to, receive all or a portion of the benefits payable to a Participant under this Plan;

(2) Clearly specifies:

(A) The name and the last known mailing address of the Participant and the name and mailing address of the Alternate Payee covered by the order;

(B) The amount or percentage of the Participant’s benefits to be paid by this Plan to the Alternate Payee, or the manner in which such amount or percentage is to be determined;

(D) That it applies to this Plan.

(3) And does not:

(A) Require this Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan;

(B) Require this Plan to provide increased benefits;

(C) Require the payment of benefits to an Alternate Payee that are required to be paid to another Alternate Payee under another Divorce Order previously determined to be a Qualified Divorce Order; or

(D) Require the payment of benefits under this Plan at a time or in a manner that would cause the Plan to fail to satisfy the requirements of Code section 409A (or other applicable section) and any regulations promulgated thereunder or otherwise jeopardize the deferred taxation of any amounts under this Plan.

(v) “Savings Plan” means the California Resources Corporation Savings Plan, as amended from time to time.

(w) “Separation from Service” means a Participant’s “separation from service” as defined under Code section 409A and Treas. Reg. § 1.409A-1(h) (or successor provisions). For this purpose, a Participant shall have a Separation from Service if the Participant ceases to be an employee of both:

(1) The Participant’s Employer;

(2) All Affiliates with whom the Participant’s Employer would be considered a single employer under Code section 414(b) or 414(c).

For purposes of the preceding provisions, a Participant who ceases to be an employee of an entity described in (1) or (2) above shall not be considered to have a Separation from Service if such cessation of employment is followed immediately by his commencement of employment with another entity described in (1) or (2) above.

A Participant shall have a Separation from Service if it is reasonably anticipated that no further services shall be performed by the Participant, or that the level of services the Participant shall perform shall permanently decrease to no more than 20 percent of the average level of services performed by the Participant over the immediately preceding 36-month period (or the Participant’s full period of service, if the Participant has been performing services for less than 36 months).

(x) “ Service ” means the same as “Vesting Service” under the Savings Plan.

(y) “Specified Employee” means an Employee who is a “specified employee” within the meaning of Code section 409A and Treas. Reg. § 1.409A-1(i) (or successor provisions) and as determined pursuant to any rules adopted for such purposes by the Company.

Article 3. Eligibility and Participation

3.1 Eligibility

Eligibility to participate in the Plan shall be limited and selective. Eligibility is limited to a select group of management or highly compensated employees who have a benefit that would otherwise be payable under the Savings Plan that is reduced because of the limitations of sections 401(a)(17) and 415 of the Code.

3.2 Effective Date of Participation

Any Employee shall become a Participant on the last day of the month next following the year in which the Employee’s Savings Plan benefit is reduced because of the limitations of sections 401(a)(17) or 415 of the Code.

3.3 Reemployment; Resumption of Participation

If a Participant has a Separation from Service and is subsequently reemployed as an Employee by an Employer, the Participant shall resume active participation in the Plan on the first date that the Participant again meets the requirement set forth in Section 3.1.

Article 4. Benefits

The deferred compensation benefit payable to an eligible Participant shall be determined in accordance with the provisions of this Article 4.

4.1 Allocations Relating to the Annual Additions Limit

The amount to be allocated under this subsection of the Plan, with respect to a Participant whose allocations under the Savings Plan are limited by section 415 of the Code, shall equal the difference between (a) and (b), where

(a) is the sum of the following:

(i) Participant actual Deferral Contributions

(ii) Employer Matching Employer Contributions, and

(iii) Employer Nonelective Employer Contributions,

The amounts calculated under (ii) and (iii) above shall be calculated for the Participant without the limitations provided in section 415 of the Code; and

(b) is the Annual Additions allocated to the Participant under the Savings Plan after application of the limitations of section 415 of the Code.

Each of the amounts described above shall be calculated and allocated no later than the last day of second month next following the year in which the Employee’s Savings Plan benefit is restricted because of the limitations of section 415 of the Code.

4.2 Allocations Relating to the Compensation Limit

The amount to be allocated under this subsection of the Plan, with respect to a Participant whose compensation under the Savings Plan exceeds the amount specified in Code section 401(a)(17), as adjusted and in effect for the Plan Year, shall equal the sum of:

(1) 19% percent (7% relating to Matching Employer Contribution and 12% relating to Nonelective Employer Contribution) of the Participant’s Compensation in excess of the amount specified in Code section 401(a)(17) as adjusted and in effect for the Plan Year; and

(2) 5 percent of the amount allocated under paragraph (1) which shall be allocated to the account maintained for the Participant in lieu of interest on such amount for the Plan Year.

The amount to be allocated under this section of the Plan shall be calculated and allocated no later than the last day of the second month next following the year in which the Participant’s Savings Plan benefit is restricted because of the limitations of section 401(a)(17) of the Code.

4.3 Maintenance of Accounts

(a) The Employer shall establish and maintain, in the name of each Participant employed by the Employer, an individual account which shall consist of all amounts credited to the Participant. At the end of each month, the Participant’s daily account balance shall be multiplied by the Daily Rate for each day in the month. The sum of the products in the preceding sentence shall be added to the Participant’s account. The Daily Rate shall be the sum of: (i) .167% divided the number of days in the month and (ii) the monthly yield on 5-Year Treasury Constant Maturities divided by 365.

(b) The individual account of each Participant shall represent a liability, payable when due under this Plan, out of the general assets of the Company, or from the assets of any trust, custodial account or escrow arrangement which the Company may establish for the purpose of assuring availability of funds sufficient to pay benefits under this Plan, provided that no assets shall be transferred to a trust or other account if such transfer would result in the taxation of benefits prior to distribution under Code section 409A(b). The money and any other assets in any such trust or account shall at all times remain the property of the Company, and neither this Plan nor any Participant shall have any beneficial ownership interest in the assets thereof. No property or assets of the Company shall be pledged, encumbered, or otherwise subjected to a lien or security interest for payment of benefits hereunder. Accounting for this Plan shall be based on generally accepted accounting principles.

4.4 Vesting and Forfeiture

Notwithstanding any other Plan provision, all benefits under this Plan shall be contingent and forfeitable and no Participant shall have a vested interest in any benefit unless, with respect to allocations relating to Nonelective Employer Contributions and earnings thereon, the Participant completes three years of Service and shall be 100 percent vested in his or her account when the Participant is credited with three or more years of Service. With respect to allocations relating to Deferred Contributions and Matching Employer Contributions and earnings thereon, the Participant shall be immediately vested.

A Participant who becomes a LTD Participant shall become 100% vested in his or her Account at the time he or she first receives benefits under the LTD Plan.

A person who incurs a Separation from Service with an Employer for any reason prior to becoming fully vested hereunder shall not receive a benefit with respect to the nonvested portion of his account, provided that, upon rehire by an Employer, any amounts forfeited by a Participant at the time of his Separation from Service shall be restored, without interest, to his account and, as set forth in Section 5.8, shall be subject to the same terms and conditions relating to distribution as were applicable at the time of his prior Separation from Service.

Article 5. Payments

5.1 Timing and Form of Payments

(a) Payment Events. A Participant’s vested account under this Plan shall be paid on the earliest to occur of the following payment events:

(1) The Participant’s Separation from Service; or

(2) The Participant’s death.

(b) Timing and Form.

(1) Separation from Service.

(A) If payment is made on account of the Participant’s Separation from Service, payment shall be made or commence within the first 90 days of the calendar year following the calendar year in which the Participant’s Separation from Service occurs. Notwithstanding the foregoing, in the case of a Participant who is a Specified Employee, payment shall be made or commence in the month next following the date that is six (6) months after the date of the Participant’s Separation from Service, if later than the time provided above.

(B) Payment shall be made in a single lump sum or in annual installments of 5, 10, 15, or 20 years, as elected by the Participant. If the Participant elects to have payment made in annual installments, the installments shall be paid within the first 90 days of each calendar year during the installment period (except that the first installment may be delayed in the case of a Specified Employee as provided above). During the installment period, the Participant’s account shall continue to be adjusted as provided in Section 4.3(a) until the installments have been completed. The amount of each annual installment shall equal the amount credited to the Participant’s vested account as of the date of payment multiplied by a fraction, the numerator of which is one (1), and the denominator of which is the number of installments (including the current installment) which remain to be paid.

(2) Death. If payment is made on account of the Participant’s death, payment shall be made to the Participant’s Beneficiary in a single lump sum 120 days following the date of the Participant’s death.

(c) Valuation of Benefits. The amount of any payment to a Participant under this Article shall be determined based on the value of the Participant’s vested account as of the date of payment.

5.2 Payment Elections and Changes

(a) Payment Elections.

(1) An Employee who becomes a Participant shall make the elections provided for in Section 5.1 within 30 days after date the Employee (i) receives from the Company a notice of participation and (ii) first meets the requirement for participation set forth in Section 3.1, consistent with Treas. Reg. section 1.409A-2(a)(7)(iii) (relating to application of the first year of eligibility rule to excess benefit plans). Except as provided by Section 5.2(c), such payment election shall be irrevocable and shall apply to the Participant’s entire account under the Plan.

(2) Payment shall be made on the earlier of the Participant’s Separation from Service or death in accordance with Section 5.1(b)(1) or (2), as applicable. If a Participant does not elect an installment payment option for payment on account of a Separation from Service, any payment on account of the Participant’s Separation from Service shall be made in a single lump sum at the time provided in Section 5.1(b)(1).

(b) Changes in Time or Form of Payment. A Participant may elect to change the time or form of payment of his account in accordance with the rules set forth below. For purposes of these rules, an election to receive distribution in a series of annual installments shall be treated as a single payment.

(1) Permitted Changes.

A Participant may elect to change the form of payment upon Separation from Service.

(2) Requirements. Any election by a Participant under this subsection shall meet the following requirements:

(A) The election shall not be effective until at least 12 months after the election is filed with the Administrative Committee;

(B) The election must defer payment (or payment of the initial installment, if applicable) for a period of at least five years from the date that payment (or payment of the initial installment, if applicable) would otherwise have been made; and

(C) The election must be made at least 12 months prior to the date in which payment (or payment of the initial installment, if applicable) is otherwise scheduled to be made.

(3) A Participant may make only two changes pursuant to this Section 5.2(b). Each such change must satisfy all of the requirements of Section 5.2(b)(2).

No further changes may be made following a Participant’s Separation from Service.

(c) Procedures. All payment elections under this Plan shall be made in accordance with the provisions of this Plan and the rules and procedures established by the Administrative Committee for the time and manner of making elections.

5.3 LTD Participants

A LTD Participant’s vested account shall be paid on the Participant’s Separation of Service in accordance with Section 5.1(b)(1) or death in accordance with Section 5.1(b)(2).

5.4 Death

If a Participant dies before the complete distribution of his account, the account or remaining account shall be paid to the Participant’s Beneficiary in a single lump sum 120 days following the date of the Participant’s death.

5.5 Small Benefits

Notwithstanding any election by a Participant to receive payment of any account maintained for the Participant under the Plan in an installment payment form, if the value of such account is less than $50,000 at the time payment in such form is scheduled to commence, the account shall be paid to the Participant in a single lump sum on the scheduled commencement date.

5.6 Qualified Divorce Orders

Subject to the policies and procedures established by the Administrative Committee under Section 9.3(b), payment may be made from the balance of a Participant’s vested account to the extent necessary to fulfill a Qualified Divorce Order.

5.7 Tax Withholding

(a) To the extent required by law in effect at the time payments are made, the Participant’s Employer shall withhold from payments made hereunder the taxes required to be withheld by Federal, state and local law.

(b) The Participant’s Employer shall have the right at its option (1) to require a Participant to pay or provide for payment of the amount of any taxes that the Employer may be required to withhold with respect to amounts credited to the Participant’s account or (2) deduct from any amount of salary, bonus or other payment otherwise payable in cash to the Participant the amount of any taxes that the Employer may be required to withhold with respect to amounts credited to the Participant’s account. In addition, as permitted by Treas. Reg. § 1.409A-3(j)(4)(vi) (or any successor provision), payments may be made under the Plan to pay any Federal Insurance Contributions Act (FICA) tax imposed under Code sections 3101 and 3121(v)(2) on the Participant’s account, and to pay any income tax imposed under Code section 3401 ( i.e., wage withholding) or the corresponding withholding provisions of applicable state or local law as a result of payment of the FICA amount,

as well as to pay the additional income tax attributable to the pyramiding wages and taxes. The total payment may not exceed the aggregate FICA tax amount and the income tax withholding related to such FICA tax amount.

5.8 Reemployment

(a) Continued distribution of account. If a Participant who is receiving payment on account of his Separation from Service is reemployed by an Employer or Affiliate prior to the complete distribution of his account, the account or remaining account shall be paid to the Participant at the scheduled time or times without regard to the Participant’s reemployment.

(b) New account. If a terminated Participant is reemployed by an Employer and resumes active participation in the Plan pursuant to Section 3.2, a new account shall be established for such Participant to which allocations relating to the period following the Participant’s reemployment (and any unvested amounts forfeited from the Participant’s account at the time of his first termination) shall be credited. Such new account, to the extent vested, shall be paid in accordance with the provisions of this Plan and the Participant’s most recent payment election, if any, prior to his first termination.

Article 6. Administration

6.1 The Administrative Committee

The Plan shall be administered by an Administrative Committee. The Administrative Committee shall be composed of three or more members, who shall be appointed by the Board and shall hold office at the discretion of the Board. Such members may, but need not, be Employees of the Company.

Any member of the Administrative Committee may resign by delivering his written resignation to the Board and to the Administrative Committee Secretary. Such resignation shall be effective no earlier than the date of the written notice.

6.2 Compensation and Expenses

The members of the Administrative Committee who are Employees shall serve without compensation for services as a member. All expenses of the Administrative Committee shall be paid directly by the Company. Such expenses may include any expenses incident to the functioning of the Administrative Committee, including, but not limited to, fees of the Plan’s accountants, outside counsel and other specialists and other costs of administering the Plan.

6.3 Manner of Action

A majority of the members of the Administrative Committee at the time in office shall constitute a quorum for the transaction of business. All resolutions adopted and other actions taken by the Administrative Committee at any meeting shall be by the vote of a majority of those present at any such meeting. The Administrative Committee may take action without a meeting if a majority of the members at the time in office give written consent.

6.4 Chairman, Secretary, and Employment of Specialists

The members of the Administrative Committee shall elect one of their number as Chairman and shall elect a Secretary who may, but need not, be a member. They may authorize one or more of their number or any agent to execute or deliver any instrument or instruments on their behalf, and may employ such counsel, auditors, and other specialists and such other services as they may require in carrying out the provisions of the Plan.

6.5 Subcommittees

The Administrative Committee may appoint one or more subcommittees and delegate such of its power and duties as it deems desirable to any such subcommittee, in which case every reference herein made to the Administrative Committee shall be deemed to mean or include the subcommittees as to matters within their jurisdiction. The members of any such subcommittee shall consist of such officers or other employees of the Company and such other persons as the Administrative Committee may appoint.

6.6 Other Agents

The Administrative Committee may also appoint one or more persons or agents to aid it in carrying out its duties as a fiduciary, and delegate such of its powers and duties as it deems desirable to such person or agents.

6.7 Records

All resolutions, proceedings, acts, and determinations of each Committee shall be recorded by the Secretary thereof or under his supervision, and all such records, together with such documents and instruments as may be necessary for the administration of the Plan, shall be preserved in the custody of the Secretary.

6.8 Rules

Subject to the limitations contained in the Plan, the Administrative Committee shall be empowered from time to time in its discretion to adopt by-laws and establish rules for the conduct of its affairs and the exercise of the duties imposed upon it under the Plan.

6.9 Powers and Duties

The Administrative Committee shall have responsibility for the general administration of the Plan and for carrying out its provisions. The Administrative Committee shall have such powers and duties as may be necessary to discharge its functions hereunder, including, but not limited to, the following:

(a) To construe and interpret the Plan, to supply all omissions from, correct deficiencies in and resolve ambiguities in the language of the Plan;

(b) To decide all questions of eligibility, to determine the right of any person to an allocation and the amount thereof, and to determine the manner and time of payment of any benefits hereunder, all in accordance with the Plan;

(c) To obtain from the Employees such information as shall be necessary for the proper administration of the Plan and, when appropriate, to furnish such information promptly to other persons entitled thereto;

(d) To prepare and distribute, in such manner as the Company determines to be appropriate, information explaining the Plan; and

(e) To establish and maintain such accounts in the name of each Participant as are necessary.

In administering the Plan, the Administrative Committee shall exercise its powers in a manner designed to ensure that the Plan complies with the requirements of Code section 409A, to the extent applicable.

6.10 Decisions Conclusive

The Administrative Committee shall exercise its powers hereunder in a uniform and nondiscriminatory manner. Any and all disputes with respect to the Plan which may arise involving Participants or their Beneficiaries shall be referred to the Administrative Committee and its decision shall be final, conclusive, and binding. Furthermore, if any question arises as to the meaning, interpretation, or application of any provision hereof, the decision of the Administrative Committee with respect thereto shall be final.

6.11 Fiduciaries

The fiduciaries named in this Article shall have only those specific powers, duties, responsibilities, and obligations as are specifically given them under this Plan. The Company shall have the sole authority to amend or terminate, in whole or in part, this Plan. The Administrative Committee shall be a fiduciary under the Plan and shall have the sole responsibility for the administration of this Plan. The officers and Employees of the Company shall have the responsibility of implementing the Plan and carrying out its provisions as the Administrative Committee shall direct. A fiduciary may rely upon any direction, information, or action of another fiduciary as being proper under this Plan, and is not required under this Plan to inquire into the propriety of any such direction, information, or action. It is intended under this Plan that each fiduciary shall be responsible for the proper exercise of his own powers, duties, responsibilities, and obligations under this Plan and shall not be responsible for any act or failure to act of another fiduciary. No fiduciary guarantees in any manner the payment of benefits from this Plan. Any party may serve in more than one fiduciary capacity with respect to the Plan.

6.12 Notice of Address

Each person entitled to benefits from the Plan must file with the Administrative Committee or its agent, in writing (electronic or non-electronic), his mailing address and each change of his mailing address. Any communication, statement, or notice addressed to such a person at his latest reported mailing address will be binding upon him for all purposes of the Plan, and neither the Administrative Committee nor the Company shall be obliged to search for or ascertain his whereabouts.

6.13 Data

All persons entitled to benefits from the Plan must furnish to the Administrative Committee such documents, evidence, or information, including information concerning marital status, as the Administrative Committee considers necessary or desirable for the purpose of administering the Plan. It shall be an express condition of the Plan that each such person must furnish such information and sign such documents as the Administrative Committee may require before any benefits become payable from the Plan, provided that payment shall in all cases be made by the time required by Code section 409A. The Administrative Committee shall be entitled to distribute to a non-spouse Beneficiary in reliance upon the signed statement of the Participant that he is unmarried without any further liability to a spouse if such statement is false.

6.14 Adjustments

Subject to the requirements of Code section 409A, the Administrative Committee may adjust benefits under the Plan or make such other adjustments with respect to a Participant or Beneficiary as are required to correct administrative errors or provide uniform treatment in a manner consistent with the intent and purposes of the Plan.

6.15 Member’s Own Participation

No member of the Administrative Committee may act, vote or otherwise influence a decision specifically relating to his own participation under the Plan.

6.16 Indemnification

(a) To the extent permitted by the Company’s bylaws and applicable law, the Company shall indemnify and hold harmless each of the following persons ( “Indemnified Persons” ) under the terms and conditions of this section:

(1) The Administrative Committee and each of its members, which, for purposes of this section, includes any Employee to whom the Administrative Committee has delegated fiduciary or other duties.

(2) The Board and each member of the Board and any Employer who has responsibility (whether by delegation from another person, an allocation of responsibilities under the terms of this Plan document, or otherwise) for a fiduciary duty, a nonfiduciary settlor function (such as deciding whether to approve a plan amendment), or a nonfiduciary administrative task relating to the Plan.

(b) The Company shall indemnify and hold harmless each Indemnified Person against any and all claims, losses, damages, and expenses, including reasonable attorney’s fees and court costs, incurred by that person on account of his or her good faith actions or failures to act with respect to his or her responsibilities relating to the Plan. The Company’s indemnification shall include payment of any amounts due under a settlement of any lawsuit or investigation, but only if the Company agrees to the settlement.

(1) An Indemnified Person shall be indemnified under this section only if he or she notifies an Appropriate Person at the Company of any claim asserted against or any investigation of the Indemnified Person that relates to the Indemnified Person’s responsibilities with respect to the Plan.

(A) A person is an “Appropriate Person” to receive notice of the claim or investigation if a reasonable person would believe that the person notified would initiate action to protect the interests of the Company in response to the Indemnified Person’s notice.

(B) The notice may be provided orally or in writing. The notice must be provided to the Appropriate Person promptly after the Indemnified Person becomes aware of the claim or investigation. No indemnification shall be provided under this section to the extent that the Company is materially prejudiced by the unreasonable delay of the Indemnified Person in notifying an Appropriate Person of the claim or investigation.

(2) An Indemnified Person shall be indemnified under this section with respect to attorney’s fees, court costs or other litigation expenses or any settlement of

such litigation only if the Indemnified Person agrees to permit the Company to select counsel and to conduct the defense of the lawsuit.

(3) No Indemnified Person shall be indemnified under this section with respect to any action or failure to act that is judicially determined to constitute or be attributable to the willful misconduct of the Indemnified Person.

(4) Payments of any indemnity under this section shall be made only from insurance or other assets of the Company. The provisions of this section shall not preclude such further indemnities as may be available under insurance purchased by the Company or as may be provided by the Company under any by-law, agreement or otherwise, provided that no expense shall be indemnified under this section that is otherwise indemnified by the Company or by an insurance contract purchased by the Company.

(5) Payment of any indemnity under this section that is not exempt from Code section 409A shall comply with Code section 409A’s requirements for reimbursement plans, as set forth in Treas. Reg. § 1.409A-3(i)(1)(iv) (or any successor provision). For this purpose, (i) the indemnity under this section shall continue for the Indemnified Person’s lifetime, and, if later, until the complete disposition of all covered claims, (ii) the amount of expenses indemnified during one taxable year of an Indemnified Person shall not affect the amount of expenses indemnified in any other taxable year; (iii) payment of an indemnity shall be made by the last day of the Indemnified Person’s taxable year following the taxable year in which the expense was incurred and (iv) the Indemnified Person’s right to indemnification shall not be subject to liquidation or exchange for any other benefit. If, after payment of any amount to the Indemnified Person pursuant to this provision, it is determined, pursuant to paragraph (3) above or otherwise, that the Indemnified Person is not entitled to indemnification, the Indemnified Person shall promptly repay such amount to the Company.

Article 7. Amendment and Termination

7.1 Amendment and Termination

The Company expects the Plan to be permanent, but since future conditions affecting the Company or any Employer cannot be anticipated or foreseen, the Company must necessarily and does hereby reserve the right to amend, modify, or terminate the Plan at any time by action of the Board, except that no amendment shall reduce the dollar amount permanently credited to a Participant’s account. The Administrative Committee, in its discretion, may amend the Plan if it finds that such amendment does not significantly increase or decrease benefits or costs. Notwithstanding the foregoing, the Board or the Administrative Committee may amend the Plan to:

(a) Ensure that this Plan complies with the requirements of Code section 409A for deferral of taxation on compensation deferred hereunder until the time of distribution; and

(b) Add provisions for changes to elections as to time and manner of distributions and other changes that comply with the requirements of Code section 409A for the deferral of taxation on deferred compensation until the time of distribution.

7.2 Payments Upon Termination

If the Plan is terminated, distributions to Participants and Beneficiaries shall be made on the dates on which such distributions would be made under the Plan without regard to such termination, except that payments may, in the discretion of the Board, be accelerated if:

(a) Accelerated payment is permitted under Treas. Reg. § 1.409A-3(j)(4)(ix) (or any successor provision); or

(b) The Plan is terminated because Participants have become subject to tax on their deferrals due to the Plan’s failure to satisfy the requirements of Code section 409A. Payment to a Participant may not exceed the amount required to be included in income as a result of such failure.

7.3 Reorganization of Employer

In the event of a merger or consolidation of an Employer, or the transfer of substantially all of the assets of an Employer to another corporation, such continuing, resulting or transferee corporation shall have the right to continue and carry on the Plan and to assume all liabilities of the Employer hereunder without obtaining the consent of any Participant or Beneficiary. If such successor shall assume the liabilities of the Employer hereunder, then the Employer shall be relieved of all such liability, and no Participant or Beneficiary shall have the right to assert any claim against the Employer for benefits under or in connection with the Plan.

Article 8. Claims and Appeals Procedures

8.1 Application for Benefits

All applications for benefits under the Plan shall be submitted to: California Resources Corporation, Attention: Administrative Committee, 10889 Wilshire Blvd., Los Angeles, CA 90024. Applications for benefits must be in writing on the forms prescribed by the Administrative Committee and must be signed by the Participant, Beneficiary, spouse, Alternate Payee, or other person claiming benefits under this Plan (each of which may be “Claimant” ).

8.2 Claims Procedure for Benefits

(a) If a Claimant believes he is entitled to a benefit, or a benefit different from the one received, then the Claimant may file a claim for the benefit by writing a letter to the Administrative Committee or its authorized delegate. Any such claim must be made no later than the time prescribed by Treas. Reg. § 1.409A-3(g) (or any successor provision).

(b) Within a reasonable period of time, but not later than 90 days after receipt of a claim for benefits, the Administrative Committee or its delegate shall notify the Claimant of any adverse benefit determination on the claim, unless special circumstances require an extension of time for processing the claim. In no event may the extension period exceed 90 days from the end of the initial 90-day period. If an extension is necessary, the Administrative Committee or its delegate shall provide the Claimant with a written notice to this effect prior to the expiration of the initial 90-day period. The notice shall describe the special circumstances requiring the extension and the date by which the Administrative Committee or its delegate expects to render a determination on the claim.

(c) In the case of an adverse benefit determination, the Administrative Committee or its delegate shall provide to the Claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant:

(1) The specific reason or reasons for the adverse benefit determination;

(2) Reference to the specific Plan provisions on which the adverse benefit determination is based;

(3) A description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why the material or information is necessary; and

(4) A description of the Plan’s claim review procedures and the time limits applicable to such procedures, including a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with section 8.3.

(d) Within 60 days after receipt by the Claimant of notification of the adverse benefit determination, the Claimant or his duly authorized representative, upon written application to the Administrative Committee, may request that the Administrative Committee fully and fairly review the adverse benefit determination. On review of an adverse benefit determination, upon request and free of charge, the Claimant shall have reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits. The Claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits. The Administrative Committee’s (or delegate’s) review shall take into account all comments, documents, records, and other information submitted regardless of whether the information was previously considered in the initial adverse benefit determination.

(e) Within a reasonable period of time, but not later than 60 days after receipt of such request for review, the Administrative Committee or its delegate shall notify the Claimant of any final benefit determination on the claim, unless special circumstances require an extension of time for processing the claim. In no event may the extension period exceed 60 days from the end of the initial 60-day period. If an extension is necessary, the Administrative Committee or its delegate shall provide the Claimant with a written notice to this effect prior to the expiration of the initial 60-day period. The notice shall describe the special circumstances requiring the extension and the date by which the Administrative Committee or its delegate expects to render a final determination on the request for review. In the case of an adverse final benefit determination, the Administrative Committee or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the Claimant:

(1) The specific reason or reasons for the adverse final benefit determination;

(2) Reference to the specific Plan provisions on which the adverse final benefit determination is based;

(3) A statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant’s claim for benefits; and

(4) A statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with section 8.3.

(f) If a Claimant’s claim or appeal is approved, any resulting payment of benefits will be made no later than the time prescribed for payment of benefits by Treas. Reg. § 1.409A-3(g) (or any successor provision).

8.3 Limitations on Actions

All decisions made under the procedure set out in this Article shall be final and there shall be no further right of appeal. No person may initiate a lawsuit before fully exhausting the claims procedures set out in this Article, including appeal. To provide for an expeditious resolution of any dispute concerning a claim for benefits that has been denied and to ensure that all evidence pertinent to such claim is available, no lawsuit may be brought contesting a denial of benefits more than the later of:

(a) 180 days after receiving the written response of the Administrative Committee to an appeal; or

(b) 365 days after an applicant’s original application for benefits.

Article 9. General Provisions

9.1 Unsecured General Creditor

The rights of a Participant, Beneficiary, Alternate Payee or their heirs, successors, and assigns, as relates to any Company or Employer promises hereunder, shall not be secured by any specific assets of the Company or any Employer, nor shall any assets of the Company or any Employer be designated as attributable or allocated to the satisfaction of such promises.

9.2 Trust Fund

The Company shall be responsible for the payment of all benefits provided under the Plan. At its discretion, the Company may establish one or more trusts, with such trustees as the Board or Administrative Committee may approve, for the purpose of providing for the payment of such benefits. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company’s creditors. To the extent any benefits provided under the Plan are actually paid from any such trust, the Company shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Company. No assets shall be transferred to a trust if such transfer would result in the taxation of benefits prior to distribution under Code section 409A(b).

9.3 Nonassignability

(a) Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey in advance of actual receipt the amount, if any, payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

(b) Notwithstanding subsection (a), the right to benefits payable with respect to a Participant pursuant to a Qualified Divorce Order may be created, assigned, or recognized. The Administrative Committee shall establish appropriate policies and procedures to determine whether a Divorce Order presented to the Administrative Committee constitutes a qualified Divorce Order under this Plan, and to administer distributions pursuant to the terms of Qualified Divorce Orders. In the event that a Qualified Divorce Order exists with respect to benefits payable under the Plan, such benefits otherwise payable to the Participant specified in the Qualified Divorce Order shall be payable to the Alternate Payee specified in such Qualified Divorce Order.

9.4 Release from Liability to Participant

A Participant’s right to receive benefits under the Plan shall be reduced to the extent that any portion of the account maintained for the Participant has been paid or set aside for payment

to an Alternate Payee pursuant to a Qualified Divorce Order. The Participant shall be deemed to have released the Company and the Plan from any claim with respect to such amounts in any case in which: (a) the Company, the Plan, or any Plan representative has been served with legal process or otherwise joined in a proceeding relating to such amounts; and (b) the Participant fails to obtain an order of the court in the proceeding relieving the Company and the Plan from the obligation to comply with the judgment, decree or order.

9.5 Employment Not Guaranteed

Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant any right to be retained in employment with the Company or any Employer. Accordingly, subject to the terms of any written employment agreement to the contrary, the Company and Employer shall have the right to terminate or change the terms of employment of a Participant at any time and for any reason whatsoever, with or without cause.

9.6 Gender, Singular & Plural

All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.

9.7 Captions

The captions of the articles, sections, and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

9.8 Validity

In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan.

9.9 Notice

Any notice or filing required or permitted to be given to the Administrative Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company. Such notice shall be deemed given as to the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

9.10 Applicable Law

The Plan shall be governed by and construed in accordance with Code section 409A (or any successor provision), and any regulations promulgated thereunder, to the extent applicable, and in accordance with the laws of the State of California to the extent such laws are not preempted by ERISA.

IN WITNESS WHEREOF , California Resources Corporation has caused its duly authorized officer to execute this document this day of , 2014.

	CALIFORNIA RESOURCES CORPORATION


	By
		[ ]
		Title:

Exhibit 10.27

[FORM OF]

California Resources Corporation

Supplemental Retirement Plan II

Effective as of December 1, 2014

Contents

Article 1. Introduction	1
1.1 Adoption of the Plan	1
1.2 Purpose of the Plan	1
1.3 Status of the Plan	1
1.4 Application of the Plan	2

Article 2. Definitions	3
2.1 Definitions	3

Article 3. Participation	11
3.1 Effective Date of Participation	11
3.2 No New Participants After November 30, 2014	11
3.3 Allocations to Participants	11

Article 4. Benefits	12
4.1 Allocations Relating to the Annual Additions Limit	12
4.2 Allocations Relating to the Compensation Limit	12
4.3 Maintenance of Accounts	13
4.4 Vesting and Forfeiture	14
4.5 No New Allocations Relating to Plan Years After December 31, 2014	14

Article 5. Payments	15
5.1 Timing and Form of Payments	15
5.2 Payment Elections and Changes	16
5.3 Death	17
5.4 Small Benefits	17
5.5 Qualified Divorce Orders	18
5.6 Tax Withholding	18
5.7 Reemployment and Continued Distribution of Account	18

Article 6. Administration	19
6.1 The Administrative Committee	19
6.2 Compensation and Expenses	19
6.3 Manner of Action	19
6.4 Chairman, Secretary, and Employment of Specialists	19
6.5 Subcommittees	19
6.6 Other Agents	19
6.7 Records	20

6.8 Rules	20
6.9 Powers and Duties	20
6.10 Decisions Conclusive	20
6.11 Fiduciaries	21
6.12 Notice of Address	21
6.13 Data	21
6.14 Adjustments	21
6.15 Member’s Own Participation	21
6.16 Indemnification	22

Article 7. Amendment and Termination	24
7.1 Amendment and Termination	24
7.2 Payments Upon Termination	24
7.3 Reorganization of Employer	24

Article 8. Claims and Appeals Procedures	25
8.1 Application for Benefits	25
8.2 Claims Procedure for Benefits	25
8.3 Limitations on Actions	27

Article 9. General Provisions	28
9.1 Unsecured General Creditor	28
9.2 Trust Fund	28
9.3 Nonassignability	28
9.4 Release from Liability to Participant	28
9.5 Employment Not Guaranteed	29
9.6 Gender, Singular & Plural	29
9.7 Captions	29
9.8 Validity	29
9.9 Notice	29
9.10 Applicable Law	29

Article 1. Introduction

1.1 Adoption of the Plan

Occidental Petroleum Corporation, a Delaware corporation (“ OPC ”), and California Resources Corporation, a Delaware corporation (“ CRC ”), have entered into that certain Separation and Distribution Agreement, dated as of [ · ], 2014, which generally governs the separation of CRC’s businesses from OPC’s other businesses and provides for, among other things, OPC’s distribution to holders of shares of OPC’s common stock, through a spin-off, approximately 80.1% of the outstanding shares of CRC’s common stock (the “ Spin-Off ”). In connection with the Spin-Off, OPC and CRC have also entered into that certain Employee Matters Agreement dated as of [ · ], 2014 (the “ Employee Matters Agreement ”). In connection with the Spin-off, CRC establishes a supplemental retirement plan to assume the liabilities under the Occidental Petroleum Corporation Supplemental Retirement Plan II (the “ OPC SRPII ”) in respect of certain employees of CRC and its subsidiaries as of immediately prior to the effective time of the Spin-Off who were participants in the OPC SRPII as of such time (the “ CRC SRPII Participants ”). In order to satisfy its obligations under the Employee Matters Agreement with respect to such liabilities, CRC hereby establishes this California Resources Corporation Supplemental Retirement Plan II (the “ Plan ”) effective as of December 1, 2014 (the “ Effective Date ”).

Notwithstanding any other Plan provision and except for earnings, no new allocations relating to the 2015 Plan Year and thereafter shall be made under this Plan.

1.2 Purpose of the Plan

It was the purpose of the OPC SRPII to provide eligible employees with benefits that will compensate them for maximums imposed by law upon contributions to qualified plans. The portion of the OPC SRPII reflecting credits to compensate for the maximum limits imposed by Code section 415 was intended to constitute an “excess plan” as defined in ERISA section 3(36). The remaining portion of the OPC SRPII was intended to constitute a plan which was unfunded and maintained primarily for the purpose of providing deferred compensation to a select group of management or highly compensated employees and was intended to meet the exemptions provided in ERISA sections 201(2), 301(a)(3), and 401(a)(1), as well as the requirements of Department of Labor Regulation section 2520.104-23. Thus, the Plan shall be administered and interpreted so as to meet the requirements of these exemptions and the regulation.

1.3 Status of the Plan

right to the receipt of future benefits under the Plan intended to result in any Participant, Beneficiary or Alternate Payee being in constructive receipt of any amount so as to result in any benefit due under the Plan being includible in the gross income of any Participant, Beneficiary or Alternate Payee in advance of the date on which payment of any benefit due under the Plan is actually made.

(b) Compliance with Code Section 409A. This Plan is intended to comply with the requirements of Code section 409A and related regulatory guidance, so that the taxation of Participants and Beneficiaries on any compensation deferred under this Plan is deferred. Notwithstanding the foregoing, any amounts that are credited and paid annually from a Participant’s account following the Participant’s attainment of a specified age, as described in Section 5.1(b)(1), are intended to qualify as short-term deferrals under Treas. Reg. § 1.409A-1(b)(4) (or any successor provision) and accordingly to be exempt from such requirements.

1.4 Application of the Plan

This Plan is applicable only to CRC SRPII Participants. All distributions made under the Plan on or after December 1, 2014 shall be made in accordance with the provisions of this Plan, as amended from time to time.

Article 2. Definitions

2.1 Definitions

Whenever the following words and phrases are used in the Plan with the first letter capitalized, they shall have the meanings specified below, unless the context clearly indicates otherwise:

(a) “Administrative Committee” means the committee with authority to administer the Plan as provided under section 6.1.

(b) “Affiliate” means:

(1) Any corporation or other business organization while it is controlled by or under common control with the Company within the meaning of Code sections 414 and 1563;

(2) Any member of an affiliated service group within the meaning of Code section 414(m) of which the Company or any Affiliate is a member;

(3) Any entity which, pursuant to Code section 414(o) and related Treasury regulations, must be aggregated with the Company or any Affiliate for plan qualification purposes; or

(d) “Annual Bonus Paid” means up to the first $100,000 of bonus paid to a Participant, who is not a “named executive officer”, as that term is defined in Regulations S-K under the Securities Exchange Act of 1934 (17 CFR §229.402(a)(3)), during the period beginning on January 1, 2014 and ending on November 30, 2014 under a regular annual incentive compensation plan, such as OPC’s Variable Compensation Program or Incentive Compensation Program (but excluding without limitation a special individual or group bonus, a project bonus, and any other special bonus). For avoidance of doubt, “Annual Bonus Paid” means no more than $100,000 of bonus paid to a Participant, who is not a “named executive officer”, as that term is defined in Regulations S-K under the Securities Exchange Act of 1934 (17 CFR §229.402(a)(3)), during the period beginning on January 1, 2014 and ending on November 30, 2014 under any one or more regular annual incentive compensation plans.

(e) “Base Pay of Record” means the base salary and wages earned during the period beginning on January 1, 2014 and ending on November 30, 2014 while a participant in the OPC SRPII from an Employer (or OPC or its subsidiaries) for services rendered prior to the Effective Date, including pretax deferrals under the Savings Plan, and amounts contributed pursuant to the Occidental Petroleum Flexible Spending Accounts Plan, as amended from time to time.

(1) Base Pay of Record does not include:

(A) Bonuses, incentives, overtime, shift differential, and overseas differentials;

(B) Reimbursement for expenses or allowances, including automobile allowances and moving allowances;

(C) Any amount contributed by the Employer (or OPC or its subsidiaries) (other than pretax deferrals under the Savings Plan and any amounts contributed pursuant to the Occidental Petroleum Flexible Spending Accounts Plan, as amended from time to time) to any qualified plan or plan of deferred compensation;

(D) Any amount paid by an Employer (or OPC or its subsidiaries) for other fringe benefits, such as health and hospitalization, and group life insurance benefits, or perquisites; and

(E) Allowances paid during furlough and, for purposes of subsection (2)(F), such furloughs shall not be treated as paid leaves of absence.

(2) Base Pay of Record is determined in accordance with the following rules:

(A) For Participants compensated by salary, Base Pay of Record means the actual base salary of record for the Participant (subject to the exclusions listed above).

(B) For Participants compensated based on mileage driven (primarily truck drivers), Base Pay of Record means the number of miles driven multiplied by the applicable mileage pay rate (subject to the exclusions listed above), plus the Participant’s scheduled number of hours worked in the pay period multiplied by the Participant’s base hourly rate (subject to the exclusions listed above).

(C) For Participants compensated at an hourly rate, Base Pay of Record means the base hourly rate (subject to the exclusions listed above) multiplied by the number of regularly scheduled hours worked in a pay period. If the Active Participant’s regularly scheduled work week is

more than 40 hours, Base Pay of Record shall include an additional amount equal to the base hourly rate (subject to the exclusions listed above) times one half the number of regularly scheduled hours worked in excess of 40 in the work week.

(D) For Participants compensated on an eight, ten, twelve, or some other assigned hour Shift Basis and whose annual compensation is pre-determined under the Participant’s employer’s payroll recordkeeping system, Base Pay of Record for each pay period shall be the Participant’s pre-determined annual compensation (subject to the exclusions listed above) divided by the number of pay periods applicable to the Participant during the Plan Year. For the purpose of this subsection, the term “Shift Basis” means any arrangement whereby Participants work the assigned hour daily shifts which may result in alternating work weeks of more and less than 40 hours per week.

(E) Base Pay of Record includes vacation pay received in periodic payments and annual vacation payments made to Employees paid by commission, but does not include single sum vacation payments to active or terminating Employees.

(F) Base Pay of Record includes base salary or wages received during paid leaves of absence and periodic notice pay, but Base Pay of Record does not include single sum notice pay payments or any severance pay payments.

(G) Base Pay of Record does not include long-term disability payments or payments made to any Participant pursuant to the Occidental Chemical Corporation Weekly Sickness and Accident Plan unless:

(i) Such payments are made to the Participant through the payroll accounting department of OPC and its subsidiaries, and

(ii) The Participant is ineligible for participation in the Retirement Plan.

(f) “Base Pay Paid” means the Employee Base Pay of Record, reduced for any deferral of base salary under the Deferred Compensation Plan.

(g) “Beneficiary” means the person or persons designated by the Participant to receive payment under this Plan in the event of the Participant’s death prior to the complete distribution to the Participant of the benefits due under the Plan. The OPC SRPII beneficiary designation of a CRC SRPII Participant shall carry over to this Plan. A beneficiary designation shall become effective only when filed in writing with the Administrative Committee during the Participant’s lifetime on a paper form prescribed by the Administrative Committee. The filing of any new Beneficiary

designation form will cancel any inconsistent Beneficiary designation previously filed.

If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, the Participant’s Beneficiary shall be the person or persons entitled to receive the Participant’s benefits under the CRC Savings Plan in the event of the Participant’s death, provided, that if a Participant has previously designated a Beneficiary under Appendix A of the Occidental Petroleum Corporation Supplemental Retirement Plan who survives the Participant, the Participant’s Beneficiary shall be the person or persons so designated under Appendix A of the Occidental Petroleum Corporation Supplemental Retirement Plan.

(h) “Board” means the Board of Directors of the Company.

(i) “Code” means the Internal Revenue Code of 1986, as amended.

(j) “Company” means CRC and any successor thereto.

(k) “ CRC ” has the meaning assigned to such term in Section 1.1.

(l) “ CRC Compensation” means the same as Compensation under the CRC Savings Plan.

(m) “ CRC Savings Plan” means the California Resources Corporation Savings Plan.

(n) “ CRC SRP II Participants” has the meaning assigned to such term in Section 1.1.

(o) “ Deferral Contribution” means the same as Deferral Contribution under the CRC Savings Plan.

(p) “Deferred Compensation Plan” means the Occidental Petroleum Corporation Modified Deferred Compensation Plan, as amended from time to time.

(q) “Divorce Order” means any judgment, decree, or order (including judicial approval of a property settlement agreement) that relates to the settlement of marital property rights between a Participant and his former spouse pursuant to a state domestic relations law (including, without limitation and if applicable, community property law), as described in Treas. Reg. § 1.409A-3(j)(4)(ii) (or any successor provision).

(r) “Effective Date” has the meaning assigned to such term in Section 1.1.

(s) “Employee” means any person who is a CRC Group Employee, as defined in the Employee Matters Agreement.

paragraph from being Employees are to be interpreted broadly to include and to have at all times included individuals engaged by the Employer to perform services for such entity in a relationship that the entity characterizes as other than an employment relationship, such as where the Employer engages the individual to perform services as an independent contractor or leases the individual’s services from a third party. The exclusion of the individual from being an Employee shall apply even if a determination is subsequently made by the Internal Revenue Service, another governmental agency, a court or other tribunal, after the individual is engaged to perform such services, that the individual is an employee of the Employer for purposes of pertinent Code sections or for any other purpose.

(t) “ Employee Matters Agreement” has the meaning assigned to such term in Section 1.1.

(u) “Employer” means the Company and any Affiliate which is designated by the Board or the Administrative Committee and which adopts the Plan.

By accepting such designation or continuing as a party to the Plan, each Employer acknowledges that:

(A) It is bound by such terms and conditions relating to the Plan as the Company or the Administrative Committee may reasonably require;

(B) The Company and the Administrative Committee have the authority to review the Affiliate’s compliance procedures and to require changes in such procedures to protect the Plan;

(C) It has authorized the Company and the Administrative Committee to act on its behalf with respect to Employer matters pertaining to the Plan;

(E) Its status as an Employer under the Plan is expressly conditioned on its being and continuing to be an Affiliate of the Company.

Administrative Committee, as the case may be, and the Affiliate, the Plan shall be considered frozen as to Employees of such Affiliate.

(v) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

(w) “ Matching Employer Contribution” means the same as Matching Employer Contribution under the CRC Savings Plan.

(x) “ Nonelective Employer Contribution” means the same as Nonelective Employer Contribution under the CRC Savings Plan.

(y) “OPC” has the meaning assigned to such term in Section 1.1.

(z) “OPC SRPII” has the meaning assigned to such term in Section 1.1.

(aa) “Participant” means (i) a person meeting the requirements to participate in the Plan set forth in Article 3 and (ii) any other person who has an account under the Plan because he previously met such requirements.

(bb) “Plan” has the meaning assigned to such term in Section 1.1.

(cc) “Plan Year” means the calendar year.

(dd) “Qualified Divorce Order” means a Divorce Order that:

(2) Clearly specifies:

(A) The name and the last known mailing address of the Participant and the name and mailing address of the Alternate Payee covered by the order;

(B) The amount or percentage of the Participant’s benefits to be paid by this Plan to the Alternate Payee, or the manner in which such amount or percentage is to be determined;

(D) That it applies to this Plan; and

(3) Does not:

(A) Require this Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan;

(B) Require this Plan to provide increased benefits;

(C) Require the payment of benefits to an Alternate Payee that are required to be paid to another Alternate Payee under another Divorce Order previously determined to be a Qualified Divorce Order; or

(ee) “Retirement Plan” means the Occidental Petroleum Corporation Retirement Plan, as amended from time to time.

(ff) “Savings Plan” means the Occidental Petroleum Corporation Savings Plan, as amended from time to time.

(gg) “Separation from Service” means a Participant’s “separation from service” as defined under Code section 409A and Treas. Reg. § 1.409A-1(h) (or successor provisions). For this purpose, a Participant shall have a Separation from Service if the Participant ceases to be an employee of both:

(1) The Participant’s Employer;

(2) All Affiliates with whom the Participant’s Employer would be considered a single employer under Code section 414(b) or 414(c).

(hh) “Specified Employee” means an Employee who is a “specified employee” within the meaning of Section 409A and Treas. Reg. § 1.409A-1(i) (or successor provisions) and as determined pursuant to any rules adopted for such purposes by the Company.

(ii) “Spin-Off” has the meaning assigned to such term in Section 1.1.

Article 3. Participation

3.1 Effective Date of Participation

An Employee who was a participant in the OPC SRPII on November 30, 2014 shall continue as a Participant of this Plan on December 1, 2014.

3.2 No New Participants After November 30, 2014

Notwithstanding any other Plan provision, except for an OPC SRPII participant who continues as a Participant under this Plan, no new Participant shall enter this Plan on or after December 1, 2014.

3.3 Allocations to Participants

Notwithstanding any other Plan provision and except for earnings, no new allocations relating to the 2015 Plan Year and thereafter shall be made under this Plan.

Article 4. Benefits

4.1 Allocations Relating to Annual Additions Limit

(a) Eligibility. The Employees who become Participants under Section 3.1 may be eligible for the allocation for the Plan Year specified in subsection (b):

(b) Allocation Amount.

(1) An allocation shall be made to the account maintained for each Participant described in subsection (a). The amount of the allocation shall be equal to the difference between (A) and (B), where

(A) is the sum of the following:

(i) Participant actual Deferral Contribution

(ii) Employer Matching Employer Contribution, and

(iii) Employer Nonelective Employer Contribution,

The amounts calculated under (ii) and (iii) above shall be calculated for the Participant without the limitations provided in section 415 of the Code; and

(B) is 1/12 of $52,000.

(2) Earnings Allocation. The Employer shall also permanently credit earnings on the monthly allocations under paragraph (1) for the Plan Year as if such allocations shared in earnings at the rate and in the manner described in section 4.3.

4.2 Allocations Relating to Compensation Limit

(a) Eligibility for Allocations Relating to Limits Under Code section 401(a)(17). An Employee who, on November 30, 2014, would have been eligible to participate in the Savings Plan for the Plan Year and whose Base Pay Paid plus Annual Bonus Paid for the Plan Year exceeds the amount specified in Code section 401(a)(17) as adjusted and in effect for the Plan Year or an Employee whose CRC Compensation for December 2014 exceeds one-twelfth of the amount specified in Code section 401(a)(17) as adjusted and in effect for the Plan Year shall be provided the allocation for the Plan Year specified in subsection (b).

(b) Allocation Amount. The amount to be allocated effective as of the last day of the Plan Year under this Plan with respect to a Participant described in subsection (a) above for the Plan Year shall equal the sum of (1) and (2) below, where

(1) equals 6 percent of the difference between (i) and (ii), where

(i) equals the sum of the Employee’s Base Pay Paid plus Annual Bonus Paid and

(ii) equals $260,000.

(2) equals 19 percent of the difference between (i) and (ii), where

(i) equals CRC Compensation for December 2014 and

(ii) equals 1/12 of $260,000.

4.3 Maintenance of Accounts

(a) As of the Effective Date, the OPC SRPII account balance of a CRC SRPII Participant will be credited to his or her account under this Plan.

(b) Each Employer shall establish and maintain, in the name of each Participant employed by that Employer, an individual account which shall consist of all amounts credited to the Participant. As of the end of each month, the Administrative Committee shall increase the balance, if any, of the Participant’s individual account as of the last day of the preceding month, by multiplying such amount by a number equal to one plus .167% plus the monthly yield on 5-Year Treasury Constant Maturities for the monthly processing period.

(c) The individual account of each Participant shall represent a liability, payable when due under this Plan, out of the general assets of the Employer, or from the assets of any trust, custodial account or escrow arrangement which the Company may establish for the purpose of assuring availability of funds sufficient to pay benefits under this Plan, provided that no assets shall be transferred to a trust or other account if such transfer would result in the taxation of benefits prior to distribution under Code section 409A(b). The money and any other assets in any such trust or account shall at all times remain the property of the Employer, and neither this Plan nor any Participant shall have any beneficial ownership interest in the assets thereof. No property or assets of the Employer shall be pledged, encumbered, or otherwise subjected to a lien or security interest for payment of benefits hereunder. Accounting for this Plan shall be based on generally accepted accounting principles.

4.4 Vesting and Forfeiture

The OPC SRPII account balance of a CRC SRPII Participant that is credited to his or her account under this Plan shall be fully vested as of the Effective Date. Each Participant’s account under this Plan shall be fully vested at all times.

4.5 No New Allocations relating to Plan Years after December 31, 2014

Notwithstanding any other Plan provision and except for earnings, no new allocations relating to the 2015 Plan Year and thereafter shall be made under this Plan.

Article 5. Payments

5.1 Timing and Form of Payments

(a) Payment Events. A Participant’s vested account under this Plan shall be paid on the earliest to occur of the following payment events:

(1) The Participant’s attainment of a specified age elected by the Participant that is age 60 or above;

(2) The Participant’s Separation from Service; or

(3) The Participant’s death.

(b) Timing and Form.

(1) Attainment of Specified Age. If payment is made on account of a Participant’s attainment of a specified age (60 or above), payment shall be made to the Participant in a single lump sum within the first 90 days of the calendar year following the calendar year in which the Participant reaches the specified age. In addition, within the first 70 days of each subsequent calendar year, the Participant shall be paid any additional amounts credited to the Participant’s account since the prior payment date.

(2) Separation from Service.

(B) Payment shall be made in a single lump sum or in annual installments over 5, 10, 15, or 20 years, as elected by the Participant. If the Participant elects to have payment made in annual installments, the installments shall be paid within the first 90 days of each calendar year during the installment period (except that the first installment may be delayed in the case of a Specified Employee as provided above). During the installment period, the Participant’s account shall continue to be adjusted as provided in Section 4.3(b) until the installments have been completed. The amount of each annual installment shall equal the amount credited to the Participant’s account as of the last day of the month preceding the date of payment multiplied by a fraction, the numerator of which is one (1), and the denominator of which is the

number of installments (including the current installment) which remain to be paid.

(C) If a Participant who is receiving installment payments on account of his Separation from Service has also made a specified age election and attains the specified age before the completion of all installments, the remaining installments shall be paid to him at the scheduled time or times without regard to his attainment of such age.

(3) Death. If payment is made on account of the Participant’s death, payment shall be made to the Participant’s Beneficiary in a single lump sum 120 days following the date of the Participant’s death.

(c) Valuation of Benefits. The amount of any payment to a Participant under this Article shall be determined based on the value of the Participant’s vested account as of the last day of the month preceding the date of payment.

5.2 Payment Elections and Changes

(a) Participants under the OPC SRPII. The payment election made by the Participant under the OPC SRPII that was in effect immediately prior to the Effective Date shall remain in effect under this Plan.

(b) Payment Elections.

If a Participant did not elect to have payment made at a specified age, payment shall be made on the earlier of the Participant’s Separation from Service or death in accordance with Section 5.1(b)(2) or (3), as applicable. If a Participant did not elect an installment payment option for payment on account of a Separation from Service, any payment on account of the Participant’s Separation from Service shall be made in a single lump sum at the time provided in Section 5.1(b)(2).

(c) Changes in Time or Form of Payment. A Participant may elect to change the time or form of payment of his account in accordance with the rules set forth below. For purposes of these rules, an election to receive distribution in a series of annual installments shall be treated as a single payment.

(1) Permitted Changes.

(A) A Participant who has elected payment at a specified age may elect another specified age that is age 65 or above, subject to the limitations of paragraph (2).

(B) A Participant may elect to change the form of payment upon Separation from Service.

(2) Requirements. Any election by a Participant under this subsection shall meet the following requirements:

(A) The election shall not be effective until at least 12 months after the election is filed with the Administrative Committee;

(C) The election must be made at least 12 months prior to the beginning of the calendar year in which payment (or payment of the initial installment, if applicable) is otherwise scheduled to be made.

(3) A Participant may make only two changes pursuant to this Section 5.2(c). Each such change must satisfy all of the requirements of Section 5.2(c)(2). No further changes may be made following a Participant’s Separation from Service.

(d) Procedures. All payment elections under this Plan shall be made in accordance with the provisions of this Plan and the rules and procedures established by the Administrative Committee for the time and manner of making elections.

5.3 Death

5.4 Small Benefits

5.5 Qualified Divorce Orders

5.6 Tax Withholding

5.7 Reemployment and Continued Distribution of Account

If a Participant who is receiving payment on account of his Separation from Service is reemployed by an Employer or Affiliate prior to the complete distribution of his account, the account or remaining account shall be paid to the Participant at the scheduled time or times without regard to the Participant’s reemployment.

Article 6. Administration

6.1 The Administrative Committee

6.2 Compensation and Expenses

6.3 Manner of Action

6.4 Chairman, Secretary, and Employment of Specialists

6.5 Subcommittees

6.6 Other Agents

6.7 Records

6.8 Rules

6.9 Powers and Duties

(a) To construe and interpret the Plan, to supply all omissions from, correct deficiencies in and resolve ambiguities in the language of the Plan;

(d) To prepare and distribute, in such manner as the Company determines to be appropriate, information explaining the Plan; and

(e) To establish and maintain such accounts in the name of each Participant as are necessary.

6.10 Decisions Conclusive

6.11 Fiduciaries

6.12 Notice of Address

Each person entitled to benefits from the Plan must file with the Administrative Committee or its agent, in writing, his mailing address and each change of his mailing address. Any communication, statement, or notice addressed to such a person at his latest reported mailing address will be binding upon him for all purposes of the Plan, and neither the Administrative Committee nor the Company shall be obliged to search for or ascertain his whereabouts.

6.13 Data

6.14 Adjustments

6.15 Member’s Own Participation

No member of the Administrative Committee may act, vote or otherwise influence a decision specifically relating to his own participation under the Plan.

6.16 Indemnification

(1) The Administrative Committee and each of its members, which, for purposes of this section, includes any Employee to whom the Administrative Committee has delegated fiduciary or other duties.

(2) An Indemnified Person shall be indemnified under this section with respect to attorney’s fees, court costs or other litigation expenses or any settlement of

such litigation only if the Indemnified Person agrees to permit the Company to select counsel and to conduct the defense of the lawsuit.

Article 7. Amendment and Termination

7.1 Amendment and Termination

(a) Ensure that this Plan complies with the requirements of Code section 409A for deferral of taxation on compensation deferred hereunder until the time of distribution; and

7.2 Payments Upon Termination

(a) Accelerated payment is permitted under Treas. Reg. § 1.409A-3(j)(4)(ix) (or any successor provision); or

7.3 Reorganization of Employer

Article 8. Claims and Appeals Procedures

8.1 Application for Benefits

8.2 Claims Procedure for Benefits

(1) The specific reason or reasons for the adverse benefit determination;

(2) Reference to the specific Plan provisions on which the adverse benefit determination is based;

(3) A description of any additional material or information necessary for the Claimant to perfect the claim and an explanation of why the material or information is necessary; and

(1) The specific reason or reasons for the adverse final benefit determination;

(2) Reference to the specific Plan provisions on which the adverse final benefit determination is based;

(4) A statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with section 8.3.

8.3 Limitations on Actions

(a) 180 days after receiving the written response of the Administrative Committee to an appeal; or

(b) 365 days after an applicant’s original application for benefits.

Article 9. General Provisions

9.1 Unsecured General Creditor

9.2 Trust Fund

9.3 Nonassignability

9.4 Release from Liability to Participant

A Participant’s right to receive benefits under the Plan shall be reduced to the extent that any portion of the account maintained for the Participant has been paid or set aside for payment

9.5 Employment Not Guaranteed

9.6 Gender, Singular & Plural

9.7 Captions

The captions of the articles, sections, and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

9.8 Validity

In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of this Plan.

9.9 Notice

9.10 Applicable Law

IN WITNESS WHEREOF , California Resources Corporation has caused its duly authorized officer to execute this document this day of , 2014.

	CALIFORNIA RESOURCES CORPORATION


	By

Exhibit 10.28

[FORM OF]

CALIFORNIA RESOURCES CORPORATION

DEFERRED COMPENSATION PLAN

(Effective December 1, 2014)

Table of Contents

		Page

ARTICLE I PURPOSE		1

ARTICLE II DEFINITIONS		1

ARTICLE III ADMINISTRATION OF THE PLAN		7

ARTICLE IV PARTICIPATION		8

4.1	Election to Participate	8

4.2	DCP Deferral Accounts	10

4.3	Interest	10

4.4	Valuation of Deferral Accounts	11

4.5	Savings Plan Restoration Contribution	11

4.6	Vesting of Deferral Accounts	11

4.7	Statement of Deferral Accounts	11

ARTICLE V BENEFITS		12

5.1	Separation from Service for a Reason other than Death	12

5.2	Beneficiary Benefits	13

5.3	Early Payment	14

5.4	Emergency Benefit	14

5.5	Effect of Change in Control	15

5.6	Small Benefit	15

5.7	Tax Withholding and Reporting	15

5.8	Reemployment	16

5.9	Qualified Divorce Orders	16

ARTICLE VI BENEFICIARY DESIGNATION		16

ARTICLE VII CLAIMS PROCEDURE		17

7.1	Applications for Benefits	17

7.2	Claims Procedure	17

7.3	Section 409A Compliance	18

7.4	Limitations on Actions	18

ARTICLE VIII AMENDMENT AND TERMINATION OF PLAN		18

8.1	Amendment	18

8.2	Termination	19

ARTICLE IX MISCELLANEOUS		19

9.1	Unsecured General Creditor	19

9.2	Trust Fund	19

9.3	Nonassignability	20

9.4	Release from Liability to Participant	20

9.5	Employment Not Guaranteed	20

9.6	Gender, Singular & Plural	21

9.7	Captions	21

9.8	Validity	21

9.9	Notice	21

9.10	Applicable Law	21

CALIFORNIA RESOURCES CORPORATION

DEFERRED COMPENSATION PLAN

(Effective [ · ], 2014)

ARTICLE I
PURPOSE

Occidental Petroleum Corporation, a Delaware corporation (“ OPC ”), and California Resources Corporation, a Delaware corporation (“ CRC ”), have entered into that certain Separation and Distribution Agreement (the “ Separation Agreement ”), dated as of [ · ], 2014, which generally governs the separation of CRC’s businesses from OPC’s other businesses and provides for, among other things, OPC’s distribution to holders of shares of OPC’s common stock, through a spin-off, approximately [80.1%] of the outstanding shares of CRC’s common stock (the “ Spin-Off ”). In connection with the Spin-Off, OPC and CRC have also entered into that certain Employee Matters Agreement dated as of [ · ], 2014 (the “ Employee Matters Agreement ”), which requires, among other things, that CRC establish a deferred compensation plan to assume the liabilities under the Occidental Petroleum Corporation Modified Deferred Compensation Plan (the “ OPC MDCP ”) in respect of certain employees of CRC and its subsidiaries as of immediately prior to the effective time of the Spin-Off who were participants in the OPC MDCP as of such time (the “ CRC MDCP Participants ”). In order to satisfy its obligations under the Employee Matters Agreement with respect to such liabilities, CRC establishes this California Resources Corporation Deferred Compensation Plan (the “ Plan ”) effective as of December 1, 2014 (the “ Effective Date ”). The Plan is also intended to provide a tax-deferred opportunity for key management and highly compensated employees of CRC and its Affiliates (as defined below) to accumulate additional retirement income through deferrals of compensation.

As of the Effective Date, the “DCP Deferral Account” (if any) and the “Savings Plan Restoration Account” (if any) of each CRC MDCP Participant under the OPC MDCP is transferred to and assumed by the Plan and shall be credited to such CRC MDCP Participant’s corresponding “ DCP Deferral Account ” and “ Savings Plan Restoration Account ,” respectively, maintained under the Plan.

The Plan is intended to satisfy the requirements of Section 409A of the Internal Revenue Code, and any regulations promulgated thereunder, so that the taxation to Participants or Beneficiaries of any compensation deferred under the Plan is deferred.

ARTICLE II
DEFINITIONS

Whenever the following words and phrases are used in the Plan with the first letter capitalized, they shall have the meanings specified below:

Affiliate . “ Affiliate ” means (i) any corporation that is a member of a controlled group of corporations (within the meaning of Code Section 1563(a), determined without regard to Code

Sections 1563(a)(4) and (e)(3)(C), and with the phrase “more than 50%” substituted for the phrase “at least 80%” each place it appears in Code Section 1563(a)) of which CRC is a component member, or (ii) any entity (whether or not incorporated) that is under common control with CRC (as defined in Code Section 414(c) and the Treasury Regulations thereunder, and with the phrase “more than 50%” substituted for the phrase “at least 80%” each place it appears in the Treasury Regulations under Code Section 414(c)).

Alternate Payee . “ Alternate Payee ” means a former spouse of a Participant who is recognized by a Divorce Order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to such Participant.

Amortization Method . “ Amortization Method ” means an annual installment method of paying a Participant’s benefits under which the Company will pay the Participant an initial payment in an amount equal to (i) plus (ii) divided by (iii), where (i) is the value of the Participant’s Deferral Accounts as of the end of the month preceding such payment, (ii) is the amount of interest that would accrue during the entire payout period on the unpaid balance credited to the Participant’s Deferral Accounts immediately following such initial payment if the Declared Rate then in effect remained unchanged and (iii) is the number of years over which annual installments are to be paid. For each Plan Year after the initial benefit payment is made, the annual benefit payment will be determined under the same equation where (i) is the value of the Participant’s Deferral Accounts as of the end of the month preceding the benefit payment, (ii) is the amount of interest that would accrue during the remaining payout period on the unpaid balance credited to the Participant’s Deferral Accounts immediately following such annual payment if the Declared Rate then in effect remained unchanged and (iii) is the number of annual payments remaining.

Base Salary . “ Base Salary ” means the base salary earned by a Participant during pay periods beginning in a Plan Year, excluding Bonus, all severance allowances, forms of incentive compensation, Savings Plan or other Company qualified plan contributions or benefits, retainers, insurance premiums or benefits, reimbursements, and all other payments, prior to reduction for any deferrals under the Plan or any other plan of the Company or reductions under the Savings Plan allowed under Code Section 401(k).

Beneficiary . “ Beneficiary ” means the person or persons designated as such in accordance with Article VI.

Beneficiary Benefit . “ Beneficiary Benefit ” means the payment to a Participant’s Beneficiary of the value of the Participant’s Deferral Accounts pursuant to Section 5.2 on account of the Participant’s death.

Board . “ Board ” means the Board of Directors of CRC.

Bonus . “ Bonus ” means the bonus earned by a Participant under a regular annual incentive compensation plan (excluding without limitation a special individual or group bonus, a project bonus, and any other special bonus) during a Plan Year prior to reduction for any deferral under the Plan or any other plan of the Company.

Change in Control . “ Change in Control ” means (i) for purposes of Sections 8.1 and 8.2(a), any event described in (a), (b), (c) or (d) below, and (ii) for purposes of Section 5.5, any event that constitutes a “change in control event” for purposes of Code Section 409A and Treas. Reg. § 1.409A-3(i)(5) (or any successor provisions) and that is described in subsection (a), (b), (c) or (d) below:

(a) Approval by the stockholders of CRC (or, if no stockholder approval is required, by the Board) of the dissolution or liquidation of CRC, other than in the context of a transaction that does not constitute a Change in Control under subsection (b) below;

(b) Consummation of a merger, consolidation, or other reorganization, with or into, or the sale of all or substantially all of CRC’s business and/or assets as an entirety to, one or more entities that are not subsidiaries or other affiliates of CRC (a “ Business Combination ”), unless (i) as a result of the Business Combination, more than 50% of the outstanding voting power of the surviving or resulting entity or a parent thereof (the “ Successor Entity ”) immediately after the Business Combination is, or will be, owned, directly or indirectly, by holders of CRC’s voting securities immediately before the Business Combination; (ii) no “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended from time (the “ Exchange Act ”)), excluding the Successor Entity, OPC or any employee benefit plan of OPC or CRC and any trustee or other fiduciary holding securities under an OPC or CRC employee benefit plan or any person described in and satisfying the conditions of Rule 13d-1(b)(i) of the Exchange Act (an “ Excluded Person ”; provided, however, that OPC, employee benefit plans of OPC and trustees and fiduciaries holding securities under an OPC employee benefit plan shall cease to be Excluded Persons at such time as OPC distributes the remaining outstanding shares of CRC common stock to the OPC shareholders following the Spin-Off and as contemplated in the Separation Agreement), beneficially owns, directly or indirectly, more than 30% of the outstanding shares or the combined voting power of the outstanding voting securities of the Successor Entity, after giving effect to the Business Combination, except to the extent that such ownership existed prior to the Business Combination; and (iii) at least 50% of the members of the board of directors of the entity resulting from the Business Combination were members of the Board at the time of the execution of the initial agreement or of the action of the Board approving the Business Combination;

(c) Any “ person ” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any Excluded Person) is or becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of CRC representing 30% or more of the combined voting power of CRC’s then outstanding voting securities, other than as a result of (i) an acquisition directly from CRC; (ii) an acquisition by CRC; or (iii) an acquisition by any employee benefit plan (or related trust) sponsored or maintained by CRC or a Successor Entity; or

(d) During any period not longer than two consecutive years and beginning no earlier than the Effective Date, individuals who at the beginning of such period constituted the Board cease to constitute at least a majority thereof, unless the election, or the nomination for election by CRC’s stockholders, of each new Board member was approved by a vote of at least two-thirds (2/3) of the Board members then still in office who were Board members at the beginning of such period (including for these purposes, new members whose election or

nomination was so approved), but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board.

Code . “ Code ” means the Internal Revenue Code of 1986, as amended.

Committee . “ Committee ” means the administrative committee appointed to administer the Plan pursuant to Article III.

Company . “ Company ” means CRC, or any successor thereto, and any Affiliates.

Company Management . “ Company Management ” means the Chairman of the Board, Chief Executive Officer, President or any Executive Vice President of CRC.

Compensation . “ Compensation ” means Base Salary and/or Bonus.

CRC . “ CRC ” has the meaning assigned to such term in Article I.

CRC MDCP Participants . “ CRC MDCP Participants ” has the meaning assigned to such term in Article I.

DCP Deferral Account . “ DCP Deferral Account ” means the account maintained on the books of account of the Company for each Participant pursuant to Article IV to account for amounts deferred under the Prior Plans and the Plan (other than pursuant to Section 4.5).

DCP Deferral Amount . “ DCP Deferral Amount ” means an amount of a Participant’s Base Salary and/or Bonus that is deferred under the Plan, including amounts deferred under the Prior Plans and the Plan.

DCP2 . “ DCP2 ” means the Occidental Petroleum Corporation Deferred Compensation Plan 2, effective as of October 12, 2006.

Declared Rate . “ Declared Rate ” with respect to any Plan Year means the rate at which interest will be credited on Deferral Accounts for such Plan Year. The Declared Rate for each Plan Year will be the monthly yield on 5-year Treasury Constant Maturities plus 2%.

Deferral Account(s) . “ Deferral Account(s) ” means a Participant’s DCP Deferral Account and/or Savings Plan Restoration Account (if any) maintained on the books of account of the Company for each Participant pursuant to Article IV.

Deferral Election Form . “ Deferral Election Form ” means a paper or electronic election form provided by the Committee on which an Eligible Employee may elect to defer Base Salary and/or Bonus and may elect to receive an Early Payment Benefit in accordance with Article IV.

Distribution Election Form . “ Distribution Election Form ” means a paper or electronic election form provided by the Committee on which a Participant may elect the form of payment

of his Retirement Benefits and/or the form of payment of Beneficiary Benefits to his Beneficiary in accordance with Article V.

Divorce Order . “ Divorce Order ” means any judgment, decree, or order (including judicial approval of a property settlement agreement) that relates to the settlement of marital property rights between a Participant and his former spouse pursuant to state domestic relations law (including, without limitation and if applicable, community property law), as described in Treas. Reg. § 1.409A-3(j)(4)(ii).

Early Payment Benefit . “ Early Payment Benefit ” means the payment to a Participant of part or all of the Participant’s DCP Deferral Account in an Early Payment Year beginning prior to the Participant’s Retirement or other Separation from Service pursuant to Section 5.3.

Early Payment Year . “ Early Payment Year ” means any year beginning prior to a Participant’s Retirement or other Separation from Service that a Participant elects pursuant to Section 4.1(c) to have an Early Payment Benefit paid or commenced to be paid.

Early Payment Year Subaccount . “ Early Payment Year Subaccount ” means any subaccount of a Participant’s DCP Deferral Account established to separately account for deferred Base Salary and/or Bonus (and interest credited thereto) that is subject to an Early Payment Benefit election.

Effective Date . “ Effective Date ” has the meaning assigned to such term in Article I.

Eligible Employee . “ Eligible Employee ” means each key management employee or other highly compensated employee of the Company who is selected by Company Management to participate in the Plan.

Emergency Benefi t. “ Emergency Benefit ” means the payment to a Participant of part or all of his Deferral Accounts in the event that the Participant has an Unforeseeable Emergency pursuant to Section 5.4.

Employee Matters Agreement . “ Employee Matters Agreement ” has the meaning assigned to such term in Article I.

ERISA . “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

Fractional Method . “ Fractional Method ” means an installment method of paying a Participant’s Retirement Benefit under which the Company will determine the amount of each annual installment by dividing the value of the Participant’s Deferral Accounts as of the end of the month preceding the payment date by the number of annual installments remaining to be paid.

OPC. “ OPC ” has the meaning assigned to such term in Article I.

OPC DCP . “ OPC DCP ” means the Occidental Petroleum Corporation Deferred Compensation Plan, as amended and restated as of January 1, 2003, under which deferrals ceased as of December 31, 2004.

OPC MDCP . “ OPC MDCP ” has the meaning assigned to such term in Article I

Participant . “ Participant ” means (i) each CRC MDCP Particpant, (ii) an Eligible Employee who has filed a completed and fully executed Deferral Election Form with the Committee and is participating in the Plan in accordance with the provisions of Article IV, and (iii) any person who has a Deferral Account by reason of his prior status as an Eligible Employee. Under no circumstances shall “Participant” mean any Alternate Payee.

Plan . “ Plan ” has the meaning assigned to such term in Article I.

Plan Year . “ Plan Year ” means the calendar year beginning on January 1 and ending on December 31; provided, however, that the first Plan Year shall begin of the Effective Date and end on December 31, 2014.

Prior Plans . “ Prior Plans ” means (a) the OPC MDCP, (b) the OPC DCP, (c) the DCP2, and (d) the 2005 DCP.

Qualified Divorce Order . “ Qualified Divorce Order ” means a Divorce Order that (a) creates or recognizes the existence of an Alternate Payee’s right to, or assigns to an Alternate Payee the right to, receive all or a portion of the benefits payable to a Participant under the Plan; (b) clearly specifies (i) the name and the last known mailing address of the Participant and the name and last known mailing address of the Alternate Payee covered by the order, (ii) the amount or percentage of the Participant’s benefits to be paid by the Plan to the Alternate Payee, or the manner in which such amount or percentage is to be determined, (iii) the number of payments or period to which such order applies, and (iv) that it applies to the Plan; and (c) does not (i) require the Plan to provide any type or form of benefit, or any option, not otherwise provided under the Plan, (ii) require the Plan to provide increased benefits, or (iii) require the payment of benefits to an Alternate Payee that are required to be paid to another Alternate Payee under another Divorce Order previously determined to be a Qualified Divorce Order.

Retirement . “ Retirement ” means the Participant’s Separation from Service for reasons other than death after the Participant attains age 55.

Retirement Benefit . “ Retirement Benefit ” means the payment to a Participant of the value of the Participant’s Deferral Accounts pursuant to Section 5.1 following Retirement.

Savings Plan . “ Savings Plan ” means the California Resources Corporation Savings Plan, as amended from time to time.

Savings Plan Restoration Account . “ Savings Plan Restoration Account ” means the account maintained on the books of account of the Company to reflect a CRC MDCP Participant’s account balance, if any, transferred to the Plan as of the Effective Date from such Participant’s “Savings Plan Restoration Account” maintained under the OPC MDCP. The Savings Plan Restoration Account also includes the contributions made by the Company on

behalf of a Participant from and after the Effective Date pursuant to Section 4.5, and such amounts may be held in one or more subaccounts of the Savings Plan Restoration Account.

Separation Agreement . “ Separation Agreement ” has the meaning assigned to such term in Article I.

Separation from Service . “ Separation from Service ” means a Participant’s “separation from service” as defined under Code Section 409A and Treas. Reg. § 1.409A-1(h) (or successor provisions) from the Company.

Specified Employee . “ Specified Employee ” means an employee who is a “specified employee” within the meaning of Section 409A and Treas. Reg. § 1.409A-1(i) (or successor provisions) and as determined pursuant to any rules adopted for such purposes by CRC.

Spin-Off . “ Spin-Off ” has the meaning assigned to such term in Article I.

Termination Benefit . “ Termination Benefit ” means the payment to a Participant of the value of the Participant’s Deferral Accounts pursuant to Section 5.1 on account of the Participant’s Separation from Service other than due to Retirement or death.

2005 DCP . “ 2005 DCP ” means the Occidental Petroleum Corporation 2005 Deferred Compensation Plan, restated as of January 1, 2005 and as subsequently amended.

Unforeseeable Emergency . “ Unforeseeable Emergency ” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code Section 152, without regard to Code Sections 152(b)(1), (b)(2) and (d)(1)(B)) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

ARTICLE III
ADMINISTRATION OF THE PLAN

A Committee shall be appointed by the Board to administer the Plan and establish, adopt, or revise such rules and regulations as the Committee may deem necessary or advisable for the administration of the Plan and to interpret the provisions of the Plan, and, except as otherwise indicated herein, any such interpretations shall be conclusive and binding. All decisions of the Committee shall be by vote of at least two of the Committee members and shall be final. The Committee may appoint any agent and delegate to such agent such powers and duties in connection with the administration of the Plan as the Committee may from time to time prescribe. The Plan is intended to comply with the requirements of Code Section 409A and shall be interpreted and administered accordingly.

Members of the Committee shall be eligible to participate in the Plan while serving as members of the Committee, but a member of the Committee shall not vote or act upon any matter which relates solely to such member’s interest in the Plan as a Participant.

ARTICLE IV
PARTICIPATION

4.1 Election to Participate .

(a) CRC MDCP Participants . Notwithstanding any provision in the Plan to the contrary, the participation in the Plan of each CRC MDCP Participant shall be subject to the following:

(i) The CRC MDCP Participant shall become an Eligible Employee and a Participant as of the Effective Date;

(ii) All deferral elections made by the CRC MDCP Participant under the OPC MDCP for calendar year 2014 that were in effect immediately prior to the Effective Date shall remain in effect under the Plan for the Plan Year that begins on the Effective Date;

(iii) All time and form of payment elections (including, without limitation, elections with respect to “Early Payment Benefits” under the OPC MDCP) made by the CRC MDCP Participant under the OPC MDCP that were in effect immediately prior to the Effective Date shall continue in effect under the Plan, shall be treated as elections under the Plan, and may be changed only in accordance with the provisions of Sections 5.1(b)(iii) and (iv);

(iv) All Beneficiary designations and time and form of payment elections relating to the distribution of benefits to Beneficiaries made by the CRC MDCP Participant under the OPC MDCP that were in effect immediately prior to the Effective Date shall continue in effect under the Plan, shall be treated as elections under the Plan, and may be changed only in accordance with the provisions of Sections 5.2(c); and

(v) Subaccounts shall be maintained under the CRC MDCP Participant’s Deferral Accounts to the extent necessary to reflect the matters described in clauses (ii), (iii) and (iv) above.

(b) Deferral Elections . Elections under this Section 4.1(b) and under Section 4.1(c) may be made only with respect to Plan Years beginning on or after January 1, 2015. An Eligible Employee may elect to participate in the Plan and elect to defer annual Base Salary and/or Bonus under the Plan by filing with the Committee a completed and fully executed Deferral Election Form prior to the beginning of the Plan Year during which the Eligible Employee performs the services for which such Base Salary and Bonus are to be earned, or at such other time as the Committee may permit in accordance with the regulations promulgated under Code Section 409A. Such Deferral Election Forms must be filed in accordance with the instructions set forth in the Deferral Election Forms and will become irrevocable as of the day immediately preceding the Plan Year to which they relate.

An employee who first becomes an Eligible Employee during a Plan Year may make an initial deferral election under the Plan within 30 days after the date the employee becomes an Eligible Employee provided that such Eligible Employee has not previously become eligible to participate in any other account balance plan that is required to be aggregated with the Plan as described in Treas. Reg. § 1.409A-1(c)(2) (or any successor provision). Any such election shall

apply to Base Salary earned for services performed after the 30-day election window described in the previous sentence and to that portion of the Bonus earned during such Plan Year equal to the total amount of the Bonus multiplied by the ratio of the number of days remaining in the Plan Year after the 30-day election window described in the previous sentence ends over the total number of days in the Plan Year. Any such election shall become irrevocable at the end of the 30-day election window described in the first sentence of this paragraph.

A Deferral Election Form filed for a Plan Year shall be effective for Base Salary and/or Bonus to be earned during that Plan Year only. For each subsequent Plan Year, an Eligible Employee who wishes to defer Base Salary and/or Bonus must file a new complete and fully executed Deferral Election Form in accordance with the instructions set forth in the Deferral Election Form but in any event prior to January 1 of such Plan Year.

Each Deferral Election Form will designate the DCP Deferral Amounts as a fixed dollar amount or fixed percentage (in increments of 1%) of Base Salary and/or (i) a fixed dollar amount or a fixed percentage of Bonus or (ii) 100% of any Bonus exceeding a specified dollar amount, as elected by the Participant. Deferrals of Base Salary will normally be deducted ratably during the Plan Year, except as otherwise determined by the Committee to take into account special circumstances; provided that in no event will the Committee’s action alter the total amount of deferrals for the Plan Year. In its sole discretion, the Committee may also permit amounts that an Eligible Employee has previously elected to defer under other plans or agreements with the Company to be transferred to the Plan and credited to his Deferral Accounts that are maintained hereunder, provided that no change shall be made in the time or form of payment of such transferred amounts except as may be permitted by Code Section 409A.

(A) Minimum Deferral . For each Plan Year, the minimum amount of Base Salary that a Participant may elect to defer is $5,000, if expressed as a dollar amount, or 5% of Base Salary, if expressed as a percentage, and the minimum amount of Bonus that a Participant may elect to defer is any of the following: (I) $5,000, (II) 5% of Bonus, or (III) 100% of that portion of any Bonus that exceeds a dollar amount specified by the Participant on his Deferral Election Form.

(B) Maximum Deferral . For each Plan Year, the maximum amount of Base Salary that a Participant may elect to defer is 75% of Base Salary, and the maximum amount of Bonus that a Participant may elect to defer is 90% of Bonus. Notwithstanding the foregoing, for each Plan Year, the maximum total amount of Compensation that a Participant may elect to defer is $75,000 and such limit shall apply to amounts of Base Salary and Bonus earned in any one Plan Year. For example, in Plan Year 2015, the $75,000 limit shall first apply to deferrals of Base Salary that would have otherwise been paid in 2015 and then to deferrals of Bonus that are earned in 2015 and would otherwise be payable in 2016.

(C) Deferral Account Balance . Notwithstanding anything herein to the contrary, if as of December 31 of any Plan Year, a Participant’s total Deferral Account balance is $1,000,000 or more, then the Participant may not defer any compensation earned in the following Plan Year and any election to do so shall be considered void. If as of December 31 of any Plan Year, a Participant’s total Deferral

Account balance is less than $1,000,000, then the Participant may defer compensation earned in the following Plan Year in accordance with this Article IV.

(c) Early Payment Benefit Election . On the Deferral Election Form filed pursuant to Section 4.1(b), an Eligible Employee may irrevocably elect to receive all or a portion of the Base Salary and/or Bonus deferred pursuant to that election in a lump sum payment or in annual installments over two (2) to five (5) years commencing prior to Separation from Service in an Early Payment Year. If a Participant fails to designate the form of distribution for an Early Payment Benefit, the distribution shall be in the form of a lump sum. The Early Payment Year elected must be a year that begins at least two (2) years after the end of each Plan Year to which the election applies. An Early Payment Benefit election filed for the Plan Year shall be effective for the deferred Base Salary and/or Bonus earned during that Plan Year. A Participant may make an election for an Early Payment Benefit with respect to deferred Base Salary and/or Bonus earned in any future Plan Year by filing a new Deferral Election Form with the Committee prior to January 1 of such Plan Year. A Participant may not, however, change the form of benefit or time of commencement of an Early Payment Benefit with respect to Base Salary and/or Bonus deferred pursuant to a Deferral Election Form after that Deferral Election is filed pursuant to Section 4.1(b).

A Participant may not at any time have Early Payment Benefits scheduled for more than two Early Payment Years. However, after an Early Payment Year has occurred and all payments with respect to the corresponding Early Payment Year election have been completed, a Participant may elect a new Early Payment Year for future deferrals of Base Salary and/or Bonuses. For purposes of applying the limitations described in this paragraph, elections with respect to “Early Payment Benefits” under the OPC MDCP made by a CRC MDCP Participant shall be counted.

4.2 DCP Deferral Accounts . The Committee shall establish and maintain a separate DCP Deferral Account for each Participant. A DCP Deferral Amount shall be credited by the Company to the Participant’s DCP Deferral Account, subject to the Committee’s authority in Section 4.1(b), as of the date that the Participant’s Base Salary and/or Bonus would otherwise have been paid. Such DCP Deferral Account shall be debited by the amount of any payments made by the Company to the Participant or the Participant’s Beneficiary therefrom as of the date of payment. The Committee shall establish an Early Payment Year Subaccount within a Participant’s DCP Deferral Account for each Early Payment Year elected by that Participant. Any such Early Payment Year Subaccount shall be debited by the amount of any Early Payment Benefit paid by the Company to the Participant pursuant to Section 5.3 as of the date of payment.

4.3 Interest . Each Deferral Account of a Participant shall be deemed to bear interest on the monthly balance of such Deferral Account at the Declared Rate, compounded monthly. Interest will be credited to each Deferral Account on a monthly basis on the last day of each month as long as any amount remains credited to such Deferral Account. Amounts of deferred Compensation that are credited to a DCP Deferral Account prior to the end of a calendar month shall accrue interest from the date of crediting, computed from date of crediting to the end of the month.

4.4 Valuation of Deferral Accounts . The value of a Deferral Account as of any date shall equal the amounts previously credited to such Deferral Account less any payments debited to such Deferral Account plus the interest deemed to be earned on such Deferral Account in accordance with Section 4.3 through the end of the preceding month.

4.5 Savings Plan Restoration Contribution .

(a) General Rule . For each Plan Year, the Company shall credit to the Savings Plan Restoration Account of each Participant an amount equal to the amount by which the matching employer contribution and other non-elective employer contribution that would otherwise have been made by the Company on behalf of the Participant to the Savings Plan for such Plan Year is reduced by reason of the reduction in the Participant’s Compensation (as defined in the Savings Plan) for such Plan Year because of deferrals under this Plan (which amount shall be determined in accordance with the remaining paragraphs of this Section 4.5(a)). Such amount shall be credited to the Savings Plan Restoration Account of each Participant for each Plan Year at the same time as the Company matching employer contribution and other non-elective employer contribution for such Plan Year is made to the Savings Plan.

The amount to be allocated relating to the Plan Year with respect to a Participant’s matching employer contribution under the Savings Plan shall equal seven percent (7%) multiplied by the amount of Compensation the Participant has deferred under this Plan for the Plan Year.

The amount to be allocated relating to the Plan Year with respect to a Participant’s other nonelective employer contribution under the Savings Plan shall equal twelve percent (12%) multiplied by the amount of Compensation the Participant has deferred under this Plan for the Plan Year.

(b) Vesting . A Participant’s interest in any credit to his Savings Plan Restoration Account relating to matching employer contributions pursuant to Section 4.5(a) and earnings thereon shall be immediately vested.

A Participant’s interest in any credit to his Savings Plan Restoration Account relating to other nonelective employer contributions pursuant to Section 4.5(a) and earnings thereon shall vest at the same rate and at the same time as would have been the case had such contribution been made to the Savings Plan.

Notwithstanding anything contained herein to the contrary, if, upon a Participant’s Separation from Service, the Participant has not or does not become 100% vested in his Savings Plan Restoration Account, the unvested portion of his Savings Plan Restoration Account shall be forfeited prior to the determination of the amount of any benefits under Article V.

4.6 Vesting of Deferral Accounts . Except as provided in Section 4.5(b), each Participant shall be 100% vested in his Deferral Accounts at all times.

4.7 Statement of Deferral Accounts . The Committee shall submit to each Participant, within 120 days after the close of each Plan Year, a statement in such form as the Committee deems desirable, setting forth the Participant’s Deferral Account(s).

ARTICLE V
BENEFITS

5.1 Separation from Service for a Reason other than Death .

(a) Form and Time of Benefit . Except as otherwise provided in this Section 5.1 and Section 5.3, upon a Participant’s Separation from Service for a reason other than death (including Retirement), the Company shall pay to the Participant in a single lump sum within the first 90 days of the calendar year following the year of the Participant’s Separation from Service an amount equal to the value of the Participant’s Deferral Accounts as of the end of the month preceding payment. Any Retirement Benefit paid in annual installments pursuant to Section 5.1(b) shall be paid within the first 90 days of each calendar year, beginning with the year following the Participant’s Retirement, and shall be determined based on the value of the Participant’s Deferral Accounts as of the last day of the month preceding payment. Notwithstanding anything herein to the contrary, in the event that a Participant who is a Specified Employee is entitled to a distribution from the Plan upon or by virtue of such Participant’s Separation from Service for a reason other than death, the lump sum payment or the first annual installment payment, as the case may be, shall be paid in the month next following the date that is six (6) months after the date of the Participant’s Separation from Service, if later than the time provided above. Any additional installment payments shall be paid within the first 90 days of each subsequent calendar year.

(b) Retirement . (i) On a Distribution Election Form filed simultaneously with and in the same manner as the first Deferral Election Form that a Participant is required to file in accordance with the requirements set forth in Section 4.1(b) hereof, a Participant (A) may elect to have the Retirement Benefit, but which will not include any amounts attributable to an Early Payment Year Subaccount if Separation from Service occurs after the beginning of the relevant Early Payment Year, paid to him in a lump sum or annual payments for any other number of years between two (2) and twenty (20) years, and (B) may elect to have the amount of each annual installment determined under either the Amortization Method or the Fractional Method. If a Participant fails to elect either the Amortization Method or the Fractional Method, such Participant shall be deemed to have elected the Fractional Method. Notwithstanding the foregoing, the preceding provisions of this Section 5.1(b) shall not apply to a CRC MDCP Participant and, in accordance with Section 4.1(a)(iii), such a Participant’s elections under the OPC MDCP that were in effect immediately prior to the Effective Date shall continue in effect under the Plan, shall be treated as elections under the Plan, and may only be changed in accordance with the provisions of Section 5.1(b)(iii) and (iv).

(ii) Notwithstanding anything herein to the contrary, an election to receive distribution in a series of annual installments shall be treated as a single payment for purposes of Code Section 409A.

(iii) Subject to Section 5.1(b)(iv), a Participant may change his election as to the form of Retirement distribution under the Plan subject to the following conditions: (A) the election shall not be effective until twelve (12) months after the election is filed with the Committee; (B) the election must defer the lump sum payment or the initial amount of an installment payment for a period of at least five (5) years from the date that the lump sum

payment or initial amount of the installment payment, as the case may be, was otherwise payable; and (C) the election must be made at least twelve (12) months prior to the beginning of the calendar year in which the lump sum payment or initial amount of the installment payment, as the case may be, would have been payable if no change as to the form of distribution were ever made.

(iv) A Participant may only make two changes pursuant to Section 5.1(b)(iii). Each such change must satisfy all of the requirements of Section 5.1(b)(iii). No further changes may be made following a Participant’s Separation from Service.

(c) Separation Prior to Retirement . If a Participant’s Separation from Service is for any reason other than Retirement or death, then the Participant shall receive a Termination Benefit in a lump sum as provided in Section 5.1(a).

5.2 Beneficiary Benefits .

(a) If a Participant’s Separation from Service is due to death, the Company will pay to the Participant’s Beneficiary in a single lump sum a Beneficiary Benefit that is an amount equal to the value of the Participant’s Deferral Accounts (other than his or her Early Payment Year Subaccount attributable to an Early Payment Year beginning before the date of the Participant’s death (if any)).

(b) Notwithstanding the foregoing, if a Participant’s Separation from Service is due to death after attaining age 55, payment to his Beneficiary (other than payment of his or her Early Payment Year Subaccount attributable to an Early Payment Year beginning before the date of the Participant’s death (if any)) shall be made in the same form as payment of the Participant’s Retirement Benefit would have been made to the Participant if he were living.

(c) Notwithstanding the foregoing, a Participant may elect, on a Beneficiary Distribution Election Form filed simultaneously with and in the same manner as the first Deferral Election Form that the Participant is required to file in accordance with the requirements set forth in Section 4.1(b) hereof, that, if his Separation from Service is due to death prior to attaining age 55, payment to his Beneficiary (other than amounts in his or her Early Payment Year Subaccount attributable to an Early Payment Year beginning before the date of the Participant’s death (if any)) shall be made in any form and calculated in any other manner described in Section 5.1(b) (which may be different than the form of payment elected by the Participant for his Retirement Benefit). The provisions of the preceding sentence shall not apply to a CRC MDCP Participant and, in accordance with Section 4.1(a)(iv), such a Participant’s elections under the OPC MDCP that relate to the distribution of benefits to Beneficiaries and that were in effect immediately prior to the Effective Date shall continue in effect under the Plan, shall be treated as elections under the Plan, and may only be changed in accordance with the remaining provisions of this Section 5.2(c). A Participant may change his election as to the form of payment to his Beneficiary subject to the following conditions: (1) the election shall not be effective until twelve (12) months after the election is filed with the Committee and (2) the election must be made at least twelve (12) months prior to the beginning of the calendar year in which the lump sum payment or initial amount of the installment payment, as the case may be, would have been

payable if no change as to the form of distribution were ever made. Each such change must satisfy all of the requirements of this Section 5.2(c).

(d) If a Participant dies after Separation from Service but before commencement or completion of his benefits under the Plan, payment to his Beneficiary shall be made in the same amount, at the same time and in the same form as payment would have been made to the Participant under the Plan if he were living. If installment payments to the Participant have already commenced, then the remaining installments (if any) shall be paid to his Beneficiary in the same amounts and at the same times as such remaining installments would have been paid to the Participant if he were living.

(e) The payment or payments to a Beneficiary of a deceased Participant under Section 5.2(a), (b) or (c) shall be made or commence during the first 90 days of the calendar year following the year in which the Participant’s death occurred, with any subsequent installments paid within the first 90 days of each subsequent calendar year, and the amount of such payment shall be equal to, or determined based on, the value of the Participant’s Deferral Accounts as of the end of the month preceding payment.

(f) In the event that the Beneficiary of a deceased Participant dies prior to the completion of payments under the Plan to that Beneficiary, then the remaining payments shall be paid to that Beneficiary’s estate in the same amounts and at the same times as such payments would have been paid to the Beneficiary if he were living.

5.3 Early Payment . Payment of the amounts credited to any Early Payment Year Subaccount of a Participant shall be paid or commence to be paid within the first 90 days of the year elected as the Early Payment Year in accordance with the Participant’s election under Section 4.1(c) (or, if applicable, under the Prior Plans), with any subsequent annual payments paid in the first 90 days of each applicable year. The amount of each annual installment will be determined under the Fractional Method unless the Participant otherwise irrevocably elects the Amortization Method at the time of making the Early Payment Benefit election.

Notwithstanding the foregoing, if a Participant has a Separation from Service for any reason prior to the Early Payment Year elected by the Participant, the election made by the Participant to receive the Early Payment Benefit shall terminate and the amount credited to the Participant’s Early Payment Year Subaccount shall be paid, together with the other amounts credited to the Participant’s Deferral Account, as set forth in Section 5.1 or 5.2, as the case may be. If the Participant has a Separation from Service for any reason after the start of the Early Payment Year but before the commencement or completion of the Early Payment Benefit, the benefit or remaining benefit attributable to the relevant Early Payment Year Subaccount shall be paid to the Participant (or his Beneficiary) in accordance with the Participant’s Early Payment Benefit election without regard to the Participant’s Separation from Service (i.e., once the Early Payment Year is reached, the Participant’s subsequent Separation from Service for any reason shall not affect the payment of the relevant Early Payment Year Subaccount).

5.4 Emergency Benefit . In the event that the Committee, upon written petition of the Participant, determines in its sole discretion that the Participant has suffered an Unforeseeable Emergency, the Company shall pay to the Participant, as soon as practicable following such

determination, an Emergency Benefit that does not exceed the amount reasonably necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets to the extent the liquidation of such assets would not itself cause severe financial hardship and the additional compensation available to the Participant upon the termination of the Participant’s current deferral elections under the Plan, as described in the following paragraph of this Section 5.4.

Whenever a Participant receives a distribution under this Section 5.4, the Participant will be deemed to have revoked all current deferral elections under the Plan effective as of the date of the distribution. The Participant will not be permitted to participate in the next enrollment period under the Plan and will be precluded from electing to make new deferrals under the Plan for a minimum period of one (1) year (or such lesser period as the Committee may permit) following receipt of the distribution. Such new election shall comply with the provisions of Section 4.1(b).

5.5 Effect of Change in Control . In the event of a Change in Control, the Board may, in its sole discretion, within the 30 days preceding such Change in Control, irrevocably take action to terminate and liquidate the Plan, provided that the requirements of Treas. Reg. § 1.409A-3(j)(4)(ix)(B) (or any successor provision) are satisfied.

5.6 Small Benefit . Notwithstanding any election by a Participant to receive payment of any account maintained for the Participant under the Plan in an installment payment form, if the value of such account is less than $50,000 at the time payment in such form is scheduled to commence under Section 5.1 or 5.2, the account shall be paid to the Participant in a single lump sum on the scheduled commencement date. This provision shall not apply to any Early Payment Year Subaccount that is being paid pursuant to an Early Payment Benefit election.

5.7 Tax Withholding and Reporting .

(a) To the extent required by the law in effect at the time payments are made, the Company shall withhold from payments made hereunder the taxes required to be withheld by Federal, state and local law.

(b) The Company shall have the right at its option to (i) require a Participant to pay or provide for payment of the amount of any taxes that the Company may be required to withhold with respect to interest or other amounts that the Company credits to a Participant’s Deferral Accounts or (ii) deduct from any amount of salary, bonus or other payment otherwise payable in cash to the Participant the amount of any taxes that the Company may be required to withhold with respect to interest or other amounts that the Company credits to a Participant’s Deferral Accounts. In addition, as permitted by Treas. Reg. § 1.409A-3(j)(4)(vi) (or any successor provision), payments may be made under the Plan to pay any Federal Insurance Contributions Act (FICA) tax imposed under Code Sections 3101 and 3121(v)(2) on the Participant’s Deferral Accounts, and to pay any income tax imposed under Code Section 3401 (i.e., wage withholding) or the corresponding withholding provisions of applicable state or local law as a result of payment of the FICA amount, as well as to pay the additional income tax

attributable to the pyramiding wages and taxes. The total payment may not exceed the aggregate FICA tax amount and the income tax withholding related to such FICA tax amount.

5.8 Reemployment .

(a) If, after a Participant’s Separation from Service, such Participant is reemployed by the Company prior to the payment of his benefits in a cash lump sum payment or while he is receiving benefits in the form of annual installment payments, the payment of the lump sum amount or the future installments, as the case may be, shall be made as scheduled without regard to the Participant’s reemployment.

(b) A reemployed Participant may elect to again participate in the Plan and to defer additional Base Salary and/or Bonus as provided in Section 4.1, in which case a new Deferral Account shall be established for such Participant to which allocations relating to the period following the Participant’s re-employment shall be credited. The Participant also shall be permitted to file a new Distribution Election Form, simultaneously with and in the same manner as the first Deferral Election Form that the Participant files upon his reemployment, governing the payment of his new Retirement Benefit in accordance with Section 5.1(b) and payment to his Beneficiary in accordance with Section 5.2(c).

5.9 Qualified Divorce Orders . Subject to the policies and procedures established by the Committee under Section 9.3(b) hereof and the provisions of the Plan, benefits may be paid from the balance of a Participant’s Deferral Account(s) in accordance with a Qualified Divorce Order.

ARTICLE VI
BENEFICIARY DESIGNATION

Each Participant shall have the right, at any time, to designate any person or persons as the Beneficiary to whom payments under the Plan shall be made in the event of the Participant’s death prior to complete distribution to the Participant of the benefits due under the Plan. Each Beneficiary designation shall become effective only when filed in writing with the Committee during the Participant’s lifetime on a paper form prescribed by the Committee.

The filing of a new Beneficiary designation form will cancel any inconsistent Beneficiary designation previously filed.

If a Participant fails to designate a Beneficiary as provided above, or if all designated Beneficiaries predecease the Participant, any benefits remaining unpaid shall be paid in accordance with the Participant’s Beneficiary designation under the Savings Plan, and if there is no such valid Beneficiary designation, to the Participant’s then surviving spouse, or if none, to the Participant’s estate, unless directed otherwise by the court that has jurisdiction over the assets belonging to the Participant’s probate estate.

ARTICLE VII
CLAIMS PROCEDURE

7.1 Applications for Benefits . All applications for benefits under the Plan shall be submitted to California Resources Corporation, Attention: Deferred Compensation Plan Committee, at the address of CRC’s principal office. Applications for benefits must be in writing on the forms prescribed by the Committee and must be signed by the Participant, or in the case of a Beneficiary Benefit, by the Beneficiary or legal representative of the deceased Participant.

7.2 Claims Procedure .

(a) Within a reasonable period of time, but not later than 90 days after receipt of a claim for benefits, the Committee or its delegate shall notify the claimant of any adverse benefit determination on the claim, unless special circumstances require an extension of time for processing the claim. In no event may the extension period exceed 90 days from the end of the initial 90-day period. If an extension is necessary, the Committee or its delegate shall provide the claimant with a written notice to this effect prior to the expiration of the initial 90-day period. The notice shall describe the special circumstances requiring the extension and the date by which the Committee or its delegate expects to render a determination on the claim.

(b) In the case of an adverse benefit determination, the Committee or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant (i) the specific reason or reasons for the adverse benefit determination; (ii) reference to the specific Plan provisions on which the adverse benefit determination is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why the material or information is necessary; and (iv) a description of the Plan’s claim review procedures and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with Section 7.4.

(c) Within 60 days after receipt by the claimant of notification of the adverse benefit determination, the claimant or his duly authorized representative, upon written application to the Committee, may request that the Committee fully and fairly review the adverse benefit determination. On review of an adverse benefit determination, upon request and free of charge, the claimant shall have reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits. The claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits. The Committee’s (or delegate’s) review shall take into account all comments, documents, records, and other information submitted regardless of whether the information was previously considered in the initial adverse benefit determination.

(d) Within a reasonable period of time, but not later than 60 days after receipt of such request for review, the Committee or its delegate shall notify the claimant of any final benefit determination on the claim, unless special circumstances require an extension of time for processing the claim. In no event may the extension period exceed 60 days from the end of the

initial 60-day period. If an extension is necessary, the Committee or its delegate shall provide the claimant with a written notice to this effect prior to the expiration of the initial 60-day period. The notice shall describe the special circumstances requiring the extension and the date by which the Committee or its delegate expects to render a final determination on the request for review. In the case of an adverse final benefit determination, the Committee or its delegate shall provide to the claimant written or electronic notification setting forth in a manner calculated to be understood by the claimant (i) the specific reason or reasons for the adverse final benefit determination; (ii) reference to the specific Plan provisions on which the adverse final benefit determination is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant’s claim for benefits; and (iv) a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following an adverse final benefit determination on review and in accordance with Section 7.4.

7.3 Section 409A Compliance . Any claim for benefits under this Article must be made by the claimant no later than the time prescribed by Treas. Reg. § 1.409A-3(g) (or any successor provision). If a claimant’s claim or appeal is approved, any resulting payment of benefits will be made no later than the time prescribed for payment of benefits by Treas. Reg. § .409A-3(g) (or any successor provision).

7.4 Limitations on Actions . No legal action may be commenced prior to the completion of the benefit claims procedure described herein. In addition, no legal action may be commenced after the later of (a) 180 days after receiving the written response of the Committee to an appeal, or (b) 365 days after an applicant’s original application for benefits.

ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN

8.1 Amendment . The Board may amend the Plan in whole or in part at any time for any reason, including but not limited to, tax, accounting or other changes, which may result in termination of the Plan for future deferrals. The Compensation Committee of the Board may amend the Plan to (a) ensure that the Plan complies with the requirements of Code Section 409A for deferral of taxation on compensation deferred hereunder until the time of distribution and (b) add provisions for changes to deferral elections and elections as to time and manner of distributions and other changes that comply with the requirements of Code Section 409A for the deferral of taxation on deferred compensation until the time of distribution. The Committee appointed pursuant to Article III, in its discretion, may amend the Plan if the Committee determines that such amendment does not significantly increase or decrease Plan benefits or costs. Notwithstanding the foregoing, except for any amendment required to preserve the deferral of taxation of amounts deferred under the Plan, no amendment shall reduce the amounts that have been credited to the Deferral Account(s) of any Participant prior to the date such amendment is adopted. Any amendment that would either change the terms of the amendment provisions of this Section 8.1 or the terms of the termination provisions of Section 8.2 shall not be effective prior to the date that is two years after the date such amendment is adopted, unless the amendment is required by a change in the tax or other applicable laws or accounting rules, or the amendment is required in order to preclude any amounts deferred under the Plan from being included in the income of Participants prior to a date of distribution as specified under the Plan.

Notwithstanding the foregoing, following a Change in Control, no amendment shall (x) reduce the amounts that have been credited to the Deferral Account(s) of any Participant prior to the date such amendment is adopted; or (y) change the terms of the amendment provisions of this Section 8.1 or the terms of the termination provisions of Section 8.2.

8.2 Termination .

(a) Company’s Right to Terminate . The Board may terminate the Plan at any time, if in the Board’s judgment, the continuance of the Plan would not be in the Company’s best interest due to tax, accounting or other effects thereof, or potential payouts thereunder, or other reasons, provided that any termination of the Plan shall not be effective prior to the date that is two years after the date the Board adopts a resolution to terminate the Plan, unless (i) the termination of the Plan is required by a change in the tax or other applicable laws or accounting rules, or (ii) the Participants have become subject to tax on the amounts deferred under the Plan. Notwithstanding the foregoing, following a Change in Control, the Plan may not be terminated prior to the date that is three years after the date the Change in Control occurs, or, if earlier, the date on which amounts deferred under the Plan have become taxable to Participants. In the event the Board adopts a resolution terminating the Plan, the Board or the Committee shall determine the date as of which deferral elections shall cease to have effect in accordance with the requirements of Code Section 409A.

(b) Payments Upon Termination . Distributions to the Participants or their Beneficiaries shall be made on the dates on which the Participants or their Beneficiaries would receive benefits hereunder without regard to the termination of the Plan, except that payments may, in the discretion of the Board, be accelerated if:

(A) The Plan is terminated and liquidated pursuant to Section 5.5 of the Plan;

(B) Accelerated payment is otherwise permitted by Treas. Reg. § 1.409A-3(j)(4)(ix) (or any successor provision) or other guidance issued by the Secretary of the Treasury, or

(C) The Plan is terminated because Participants have become subject to tax on their deferrals due to the Plan’s failure to satisfy the requirements of Code Section 409A. Payment to a Participant may not exceed the amount required to be included in income as a result of such failure.

ARTICLE IX
MISCELLANEOUS

9.1 Unsecured General Creditor . The rights of a Participant, Beneficiary, or their heirs, successors, and assigns, as relates to any Company promises hereunder, shall not be secured by any specific assets of the Company, nor shall any assets of the Company be designated as attributable or allocated to the satisfaction of such promises.

9.2 Trust Fund . The Company shall be responsible for the payment of all benefits provided under the Plan. At its discretion, the Company may establish one or more trusts, with

such trustees as the Board or Committee may approve, for the purpose of providing for the payment of such benefits. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company’s creditors. To the extent any benefits provided under the Plan are actually paid from any such trust, the Company shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Company. No assets shall be transferred to a trust if such transfer would result in the taxation of benefits prior to distribution under Code Section 409A(b).

9.3 Nonassignability .

(a) Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.

(b) Notwithstanding subsection (a), the right to benefits payable with respect to a Participant pursuant to a Qualified Divorce Order may be created, assigned, or recognized. The Committee shall establish appropriate policies and procedures to determine whether a Divorce Order presented to the Committee constitutes a Qualified Divorce Order under the Plan, and to administer distributions pursuant to the terms of Qualified Divorce Orders. In the event that a Qualified Divorce Order exists with respect to benefits payable under the Plan, such benefits otherwise payable to the Participant specified in the Qualified Divorce Order shall be payable to the Alternate Payee specified in such Qualified Divorce Order.

9.4 Release from Liability to Participant . A Participant’s right to receive benefits under the Plan shall be reduced to the extent that any portion of a Participant’s Deferral Account(s) has been paid or set side for payment to an Alternate Payee pursuant to a Qualified Divorce Order. The Participant shall be deemed to have released the Company and the Plan from any claim with respect to such amounts in any case in which (a) the Company, the Plan, or any Plan representative has been served with legal process or otherwise joined in a proceeding relating to such amounts, and (b) the Participant fails to obtain an order of the court in the proceeding relieving the Company and the Plan from the obligation to comply with the judgment, decree or order.

9.5 Employment Not Guaranteed . Nothing contained in the Plan nor any action taken hereunder shall be construed as a contract of employment or as giving any Participant any right to be retained in employment with the Company. Accordingly, subject to the terms of any written employment agreement to the contrary, the Company shall have the right to terminate or change the terms of employment of a Participant at any time and for any reason whatsoever, with or without cause.

9.6 Gender, Singular & Plural . All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.

9.7 Captions . The captions of the articles, sections, and paragraphs of the Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

9.8 Validity . In the event any provision of the Plan is held invalid, void, or unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other provision of the Plan.

9.9 Notice . Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company. Such notice shall be deemed given as to the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

9.10 Applicable Law . The Plan shall be governed by and construed in accordance with Code Section 409A, and any regulations promulgated thereunder, and in accordance with the laws of the State of California to the extent such laws are not preempted by ERISA.

IN WITNESS WHEREOF, CRC has executed this document this day of , 2014.

	CALIFORNIA RESOURCES CORPORATION


	By:

	Name:

	Title:

Exhibit 21.1

California Resources Corporation

List of Subsidiaries

We expect the following to be subsidiaries of California Resources Corporation on the date of the distribution.

Name of Entity		Jurisdiction of Organization

California Heavy Oil, Inc.		Delaware
California Resources Elk Hills, LLC		Delaware
California Resources Production Corporation		Delaware
CRC Marketing, Inc.		Delaware
CRC Services, LLC		Delaware
Elk Hills Power, LLC		Delaware
Felix Oil Company		California
Lomita Gasoline Company, Inc.		California
Monument Production, Inc.		California
Oxy Long Beach, Inc.		Delaware
OXY Tidelands, Inc.		Delaware
OXY Wilmington, LLC		Delaware
Socal Holding, LLC		Delaware
Southern San Joaquin Production, Inc.		Delaware
Tenby, Inc.		California
Thums Long Beach Company		Delaware
Tidelands Oil Production Company		Texas
Vintage Petroleum, Inc.		Delaware

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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

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Exhibit 99.1

, 2014
Dear Occidental Petroleum Corporation Stockholder:

I am pleased to inform you that on October 2, 2014, the board of directors of Occidental Petroleum Corporation ("Occidental") approved the spin-off of our California oil and gas operations and related assets as a separate, publicly traded company, which we have named California Resources Corporation ("CRC"). We believe that this separation of CRC to form a new, independent, publicly traded company is in the best interests of Occidental, its stockholders and CRC.

The spin-off will be completed by way of a pro rata distribution on November 30, 2014 of at least 80.1% of CRC's outstanding common stock to Occidental stockholders of record as of the close of business on November 17, 2014, the spin-off record date. Each Occidental stockholder will receive 0.4 shares of CRC common stock for each share of Occidental common stock held by such stockholder on the record date. The distribution of these shares will be made in book-entry form, which means that no physical share certificates will be issued. Following the spin-off, stockholders may request that their shares of CRC common stock be transferred to a brokerage or other account at any time. No fractional shares of CRC common stock will be issued. If you would otherwise have been entitled to a fractional common share in the distribution, you will receive the net cash proceeds of the sale of such fractional share instead.

The spin-off is subject to certain customary conditions. Stockholder approval of the distribution is not required, nor are you required to take any action to receive your shares of CRC common stock.

Immediately following the spin-off, you will own common stock in both Occidental and CRC. Occidental's common stock will continue to trade on the New York Stock Exchange under the symbol "OXY." CRC's common stock will trade on the New York Stock Exchange under the symbol "CRC."

Occidental has received a private letter ruling from the Internal Revenue Service to the effect that certain aspects of the transactions that will be undertaken in preparation for, or in connection with, the spin-off will not cause the distribution to be taxable to Occidental or its affiliates. However, any cash that you receive in lieu of fractional shares generally will be taxable to you. You should consult your own tax advisor as to the particular tax consequences of the distribution to you, including potential tax consequences under state, local and non-U.S. tax laws. The spin-off is also subject to other conditions, as described in the enclosed information statement.

The enclosed information statement, which is being mailed to all Occidental stockholders, describes the spin-off in detail and contains important information about CRC, including its combined financial statements. We urge you to read this information statement carefully.

I want to thank you for your continued support of Occidental. We look forward to your support of CRC in the future.

Yours sincerely,

Stephen I. Chazen
President and Chief Executive Officer
Occidental Petroleum Corporation

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, 2014
Dear California Resources Corporation Stockholder:

It is our pleasure to welcome you as a stockholder of our company, California Resources Corporation. We are an independent oil and natural gas exploration and production company focused on high-growth, high-return conventional and unconventional assets exclusively in California. We are the largest producer in California on a gross-operated basis and believe we have established the largest privately-held mineral acreage position in the state.

As an independent, publicly-traded company, we believe we can more effectively focus on our objectives and satisfy the capital needs of our company, and thus bring more value to you as a stockholder.

Our common stock will trade on the New York Stock Exchange under the ticker symbol "CRC" in connection with the distribution of our common stock by Occidental Petroleum Corporation.

We invite you to learn more about California Resources Corporation by reviewing the enclosed information statement. We look forward to our future as an independent, publicly-traded company and to your support as a holder of our common stock.

Very truly yours,

Todd A. Stevens
President and Chief Executive Officer
California Resources Corporation

"Energy for California by Californians"

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Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

PRELIMINARY INFORMATION STATEMENT
(Subject to Completion, Dated October 8, 2014)

INFORMATION STATEMENT

California Resources Corporation

Common Stock

(par value $0.01 per share)

This information statement is being sent to you in connection with the separation of California Resources Corporation ("CRC") from Occidental Petroleum Corporation ("Occidental"), following which CRC will be an independent, publicly traded company. As part of the separation, Occidental will distribute at least 80.1% of the outstanding shares of CRC common stock on a pro rata basis to the holders of Occidental's common stock. We refer to this pro rata distribution as the "distribution" and we refer to the separation, including the restructuring transactions (which will precede the separation) and the distribution, as the "spin-off." We expect that the spin-off will be tax-free to Occidental stockholders for U.S. federal income tax purposes, except to the extent of cash received in lieu of fractional shares. Each Occidental stockholder will receive 0.4 shares of CRC common stock for each share of Occidental common stock held by such stockholder as of the close of business on November 17, 2014, the record date for the distribution. The distribution of shares will be made in book-entry form. Occidental will not distribute any fractional shares of CRC common stock. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds from the sales pro rata to each holder who would otherwise have been entitled to receive a fractional share in the spin-off. See "The Spin-Off—Treatment of Fractional Shares." As discussed under "The Spin-Off—Trading Prior to the Distribution Date," if you sell your Occidental common stock in the "regular-way" market after the record date and before the distribution date, you also will be selling your right to receive shares of CRC common stock in connection with the spin-off. If you sell your Occidental common stock in the "ex-distribution" market after the record date and before the distribution date, you will still receive shares of our common stock in the spin-off. The distribution will be effective as of 11:59 p.m., Eastern Time, on November 30, 2014. Immediately after the distribution becomes effective, CRC will be an independent, publicly traded company.

No vote or further action of Occidental stockholders is required in connection with the spin-off. We are not asking you for a proxy . Occidental stockholders will not be required to pay any consideration for the shares of CRC common stock they receive in the spin-off, and they will not be required to surrender or exchange shares of their Occidental common stock or take any other action in connection with the spin-off.

All of the outstanding shares of CRC common stock are currently owned by Occidental. Accordingly, there currently is no public trading market for CRC common stock. We expect, however, that a limited trading market for CRC common stock, commonly known as a "when-issued" trading market, will develop on or shortly before the record date for the distribution, and we expect "regular-way" trading of CRC common stock will begin the first trading day after the distribution date. CRC's common stock has been approved for listing on the New York Stock Exchange under the ticker symbol "CRC."

In reviewing this information statement, you should carefully consider the matters described under the caption "Risk Factors" beginning on page 29 of this information statement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement is not an offer to sell, or a solicitation of an offer to buy, any securities.

The date of this information statement is , 2014.

This information statement, or a Notice of Internet Availability of Information Statement Materials, was first mailed to Occidental stockholders on or about , 2014.

Table of Contents

TABLE OF CONTENTS

		Page

SUMMARY			1
RISK FACTORS			29
FORWARD-LOOKING STATEMENTS			46
THE SPIN-OFF			48
TRADING MARKET			59
DIVIDEND POLICY			61
CAPITALIZATION			61
SELECTED HISTORICAL COMBINED FINANCIAL DATA			62
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA			63
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			70
BUSINESS			88
MANAGEMENT			127
EXECUTIVE COMPENSATION			134
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			166
ARRANGEMENTS BETWEEN OCCIDENTAL AND OUR COMPANY			168
OTHER RELATED PARTY TRANSACTIONS			175
DESCRIPTION OF MATERIAL INDEBTEDNESS			176
DESCRIPTION OF CAPITAL STOCK			177
WHERE YOU CAN FIND MORE INFORMATION			182
GLOSSARY OF TECHNICAL TERMS			183
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION			F-1

This information statement is being furnished solely to provide information to Occidental stockholders who will receive shares of CRC common stock in connection with the spin-off. It is not provided as an inducement or encouragement to buy or sell any securities. You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information contained in this information statement, unless we are required by applicable securities laws to do so.

INDUSTRY AND MARKET DATA

The market data and certain other statistical information used throughout this information statement includes industry data and forecasts that are based on independent industry publications, government publications or other published independent sources. Some data is also based on our good faith estimates. Although we believe these third-party sources are reliable as of their respective dates, we have not independently verified the accuracy or completeness of this information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section of this information statement entitled "Risk Factors." These and other factors could cause results to differ materially from those expressed in these publications.

Table of Contents

SUMMARY

This summary highlights information contained in this information statement and provides an overview of our company, our separation from Occidental and the distribution of our common stock by Occidental to its stockholders. You should read this entire information statement carefully, including the risks discussed under "Risk Factors," our audited and unaudited historical combined financial statements and the notes thereto and our unaudited pro forma combined financial statements and the notes thereto included elsewhere in this information statement. Some of the statements in this summary constitute forward-looking statements. See "Forward-Looking Statements."

Except when the context otherwise requires or where otherwise indicated, (1) all references to "CRC," the "Company," "we," "us" and "our" refer to California Resources Corporation and its subsidiaries or, as the context requires, the California business, (2) all references to the "California business" refer to Occidental's California oil and gas exploration and production operations and related assets, liabilities and obligations, which we will assume in connection with the spin-off and (3) all references to "Occidental" refer to Occidental Petroleum Corporation, our parent company, and its subsidiaries, other than us. Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement assumes the completion of certain internal restructuring transactions and the spin-off and distribution described below. Except as otherwise indicated or unless the context otherwise requires, references in this information statement to drilling locations are to "gross" drilling locations and exclude our prospective resource drilling locations.

Overview

California Resources Corporation will, following its spin-off from Occidental, be an independent oil and natural gas exploration and production company focused on high-growth, high-return assets exclusively in California, including unconventional growth opportunities and lower-risk, conventional assets. California is one of the most prolific oil and natural gas producing regions in the world and is the third largest oil producing state in the nation. It has five of the 12 largest fields in the lower 48 states based on estimated proved reserves as of 2009, and our portfolio includes interests in four of these fields. We are the largest producer in California on a gross operated basis and we believe we have established the largest privately-held mineral acreage position in the state, consisting of approximately 2.3 million net acres spanning the state's four major oil and gas basins. We have developed a sizable inventory of over 17,500 identified drilling locations and, as an independent company, we intend to exploit our significant portfolio of conventional and unconventional opportunities to generate double-digit production growth in the longer term. We produced on average approximately 154,000 Boe/d net in 2013 and, as of December 31, 2013, we had proved reserves of 744 MMBoe, with approximately 69% proved developed and 72% proved oil reserves and an aggregate PV-10 value of $14.0 billion. For an explanation of the non-GAAP financial measure PV-10 and a reconciliation of PV-10 to Standardized Measure, the most directly comparable GAAP financial measure, see "—Summary Combined Historical Operating and Reserve Data—Non-GAAP Financial Measure and Reconciliations."

California oil and gas development began in 1876, and oil-in-place estimates have generally increased throughout the ensuing decades, with over 29 billion Bbls of oil and 40 Tcf of natural gas produced as of 2009 (according to California's Division of Oil, Gas and Geothermal Resources ("DOGGR")). We began our operations in California in the 1950s and have accumulated extensive, proprietary knowledge and experience in developing this world-class resource base. Over the past decade, we have also built an exceptional 3D seismic library, which covers over 4,250 square miles, representing approximately 90% of the 3D seismic data available for California, and we have developed unique and proprietary stratigraphic and structural models of the subsurface geology and hydrocarbon potential in each of the four basins in which we operate. As a result of our long, successful operating history, our extensive exploration programs, our exceptional 3D seismic library and proprietary subsurface geologic models, we have tested and successfully implemented in recent years various exploration, drilling, completion and enhanced recovery technologies to enhance and increase recoveries, growth and returns from our portfolio.

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We believe that over the last several decades the oil and gas industry has focused significantly less effort on utilizing modern development and exploration processes and technologies in California relative to other prolific U.S. basins. We believe this is largely due to other oil companies' limited capital spending in California, focus on shallow zone thermal projects or investments in other assets within their global portfolios. As an independent company focused exclusively on California, we expect to drive strong production growth through increased application of modern technologies and increased capital spending on development of the significant potential in our portfolio.

Our large acreage position contains numerous growth opportunities due to its varied geologic characteristics and multiple stacked pay reservoirs that, in most cases, are thousands of feet thick. We have a significant portfolio of unconventional growth opportunities, with in excess of 4,500 identified drilling locations targeting unconventional reservoirs primarily in the San Joaquin basin. Over the last few years, we have increased our production by exploiting seven discrete stacked pay horizons within the Monterey formation, primarily within the upper Monterey. We continue to drill unconventional wells within these intervals and are also applying the knowledge acquired from these successes to the Kreyenhagen and Moreno shales, which we believe offer significant development opportunities as well. We also intend to pursue development opportunities in the lower Monterey shale, which contains a variety of reservoir lithologies and is the principal hydrocarbon source rock within the overall Monterey formation. The lower Monterey has a more limited production history than the upper Monterey, and therefore limited knowledge exists regarding its potential. However, we believe it will be productive over time. Over the last five years, we have drilled and completed over 570 development wells in unconventional reservoirs, primarily in the upper Monterey formation, with a nearly 100% commercial success rate.

We also have a large portfolio of lower-risk, high-growth conventional opportunities in each of California's four major oil and gas basins with approximately 71% of our proved reserves associated with conventional opportunities. We have a proven track record of successful exploration and development using primary, waterflood and steamflood recovery methods. In 2014, we anticipate that 75% of our capital expenditures will target conventional development, primarily low-risk waterflood and steamflood projects that we expect to generate significant near-term production and cash flow growth. For example, our Lost Hills and Kern Front steamflood projects and our Huntington field waterflood project are expected to deliver combined production growth of over 35% compounded annually through 2016 from their combined 2013 average production of 15,000 Boe/d.

The following table summarizes certain information concerning our acreage and drilling activities (as of December 31, 2013, unless otherwise stated):

																		2014 Projected Development Drilling Capital ($MM)(3)

	Acreage (in millions)												Identified Drilling Locations(1)
					Gross Acreage Held in Fee (%)					Average Working Interest (%)
								Producing Wells, gross
	Gross		Net					Producing Wells, gross					Gross		Net
San Joaquin basin(4)		1.8		1.5		59	%		5,764		90	%		12,836		11,127	969	$	942
Los Angeles basin(5)		<0.1		<0.1		50	%		1,382		95	%		1,537		1,478	201		384
Ventura basin		0.3		0.3		77	%		780		98	%		2,310		1,716	32		56
Sacramento basin		0.6		0.5		36	%		729		100	%		1,008		864	3		8


Total		2.7		2.3		55	%		8,655		92	%		17,691		15,185	1,205	$	1,390

(1): Our total identified drilling locations include 2,141 gross (2,024 net) locations associated with proved undeveloped reserves as of December 31, 2013 and 2,344 gross (2,251 net) injection well locations associated with our waterflood and steamflood projects. Our total identified drilling locations exclude 6,400 gross (5,300 net) prospective resource drilling locations. Please see "Business—Our Reserves and Production Information—Determination of Identified Drilling Locations" for more information regarding the processes and criteria through which we identified our drilling locations. Of our total identified drilling locations, we believe approximately 75% are attributable to acreage owned or held by production.
(2): Includes 207 injection wells expected to be drilled in connection with our waterflood and steamflood projects.

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(3): Includes drilling and completion expenditures of $173 million associated with injection wells. Our 2014 capital budget of $2.1 billion also includes spending on support equipment, facilities, workovers and exploration.
(4): Excluding Elk Hills, our average working interest in the San Joaquin basin is 97%.
(5): We currently hold approximately 39,859 gross (29,881 net) acres in the Los Angeles basin. Our Los Angeles basin operations are concentrated with pad drilling.

We currently have 26 drilling rigs employed in California with 17 drilling in the San Joaquin basin, eight in the Los Angeles basin, and one rig in the Ventura basin. During the first half of the year, we drilled over 700 gross development wells with roughly 583 in the San Joaquin basin, 114 in the Los Angeles basin, 11 in the Ventura basin and three in the Sacramento basin. We expect our pace of drilling to increase slightly in the second half of the year as we receive additional permits.

In 2013, oil represented 58% of our net production. We expect the percentage of oil production to continue to increase over time and favorably impact our overall margins as we anticipate directing virtually all of our capital expenditures towards oil-weighted opportunities in 2014 and beyond to the extent the current oil to gas price relationship continues. Approximately 42% of our 2013 production was generated from our growth-oriented fields through a combination of unconventional and conventional primary, waterflood and steamflood projects with attractive returns. The remaining 58% was generated by our world-class Elk Hills and Wilmington fields, each of which is ranked in the top 20 onshore fields in the lower 48 states based on 2009 proved reserves. Over the last three years, we grew our total production 6% on a compound annual basis, from an average of 138 MBoe/d in 2011 to 154 MBoe/d in 2013, while the proportionate share of liquids production grew from 69% to 71%. We intend to accelerate our production growth by significantly increasing our capital investments and focusing on higher-growth opportunities in our extensive drilling inventory. Our 2014 capital budget of $2.1 billion represents an increase of approximately 26% over the $1.7 billion we spent in 2013. After the spin-off, we intend to reinvest substantially all of our operating cash flow in our capital program for the foreseeable future as we will no longer be required to distribute cash to Occidental. We expect to increase our production by 6-9% on a compound annual basis in 2015 and 2016 with a 15% compound annual increase in our oil production for the same period. Over 90% of our expected production for this period is from currently producing fields where we have existing or permitted capacity in our production facilities.

We believe our total annual production growth will increase to over 10% after 2016 as we continue to reinvest cash flow from operations in our capital program and accelerate our unconventional development program. We expect to achieve this growth by developing our current inventory of over 17,500 identified drilling locations and increasing our inventory over time. Our current inventory consists largely of vertical opportunities in thousands of feet of stacked pay as well as opportunities to use horizontal drilling techniques.

The table below summarizes our proved reserves as of December 31, 2013 and average production for the six months ended June 30, 2014 in each of California's four major oil and gas basins.

															Average Net Daily Production for the six months ended June 30, 2014

	Proved Reserves as of December 31, 2013
	Oil (MMBbl)		NGLs (MMBbl)		Natural Gas (Bcf)		Total (MMBoe)		Oil (%)			Proved Developed (%)								R/P Ratio (Years)(1)
	Oil (MMBbl)		NGLs (MMBbl)		Natural Gas (Bcf)		Total (MMBoe)		Oil (%)			Proved Developed (%)			(MBoe/d)		Oil (%)			R/P Ratio (Years)(1)
San Joaquin basin		331		68		669		511		65	%		68	%		109		57	%		12.9
Los Angeles basin		156		—		17		159		98	%		70	%		28		100	%		15.5
Ventura basin		45		4		35		55		82	%		64	%		9		67	%		16.4
Sacramento basin		—		—		117		19		—	%		100	%		9		—	%		6.4


Total operations		532		72		838		744		72	%		69	%		155		62	%		13.2

(1): Calculated as total proved reserves as of December 31, 2013 divided by annualized Average Net Daily Production for the six months ended June 30, 2014.

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Portfolio Management and 2014 Capital Budget

We develop our capital programs by prioritizing rates of return and balancing the short- and long-term growth potential of each of our assets. The diversity of our portfolio allows us to generate attractive investment opportunities in a variety of operating and commodity price environments. We regularly monitor internal performance and external factors and adjust our capital program with the objective of achieving the highest total returns on our portfolio of drilling opportunities.

We have a 2014 capital expenditure budget of $2.1 billion for projects targeting investments in the San Joaquin, Los Angeles and Ventura basins, as compared to $1.7 billion in 2013. Virtually all of our 2014 capital budget is being directed towards oil-weighted production consistent with 2013. Of the total 2014 capital budget, approximately $1.4 billion is allocated to well drilling and completions, $200 million to workovers, $180 million to surface support equipment to handle higher production, $100 million to additional steam generation capacity expansion, $95 million to exploration and the rest to maintenance capital, health, safety and environmental projects and other items. As a result of recent investments in infrastructure, we do not anticipate any substantial spending on new infrastructure during the next several years. We believe the absence of such significant expenditures should further support strong cash flows. The table below sets forth the expected allocation of our 2014 capital expenditure budget as compared to the allocation of our 2013 capital expenditures and actual 2014 capital expenditures through June 30, 2014.

	2014 Capital Expenditures through June 30, 2014		Total 2014 Capital Expenditure Budget		2013 Capital Expenditures

	(in millions)
Conventional:
Primary recovery	$	157	$	342	$	266
Waterfloods		298		787		480
Steamfloods		219		343		375


Total conventional		674		1,472		1,121


Unconventional		272		543		457
Exploration		57		95		91


Total	$	1,003	$	2,110	$	1,669

Assuming current market conditions and a drilling success rate comparable to our historical performance, we believe we will be able to fund our entire 2014 capital program with our cash flow from operations. We have a significant inventory of high-quality drilling locations to support higher spending. We expect our 2015 capital budget to increase further from 2014 levels to a range of $2.3 billion to $2.5 billion as we reinvest substantially all of our increased cash flow in our capital program.

Our Business Strategy

We plan to maximize shareholder returns by accelerating production growth profitably through the development of our high-growth unconventional assets and high-growth low-risk conventional assets. The principal elements of our business strategy include the following:

•: Accelerate development of high-growth unconventional drilling opportunities. Over the longer term, we expect substantial production growth to come from unconventional reservoirs such as tight sandstones and shales. We hold mineral interests in approximately 1.1 million net acres with unconventional potential and have identified 4,682 drilling locations on this acreage. As a result of our increased focus on these reservoirs over the past few years, more than one third of our production now comes from unconventional assets, an increase of approximately 160% since the acquisition of our Elk Hills field properties in 1998. As of December 31, 2013, we had proved reserves of 217 MMBoe associated with our unconventional properties, of which approximately 30% was proved undeveloped. We have been building a growing technical understanding of these

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reservoirs through our successful development of portions of our acreage. For example, we have developed seven discrete, productive intervals within the Monterey formation, primarily within the upper Monterey, with a nearly 100% commercial success rate on our development wells. We are now applying the knowledge acquired from these successes to operations in other unconventional reservoirs, such as the Kreyenhagen and Moreno shale formations, which we believe offer significant development opportunities due to similar reservoir characteristics with multiple potentially productive zones in each well bore.

•: Drive significant production growth from high-return, low-risk conventional assets. In the near term, we intend to increase our capital spending and generate significant production and cash flow growth from proven IOR methods, such as waterflooding, and EOR methods, such as steamflooding. The oil and gas industry has observed that primary recovery methods typically produce less than 10% of the oil volume initially in place and that subsequent waterfloods and steamfloods typically increase recovery to a range of 20% to 60%. Our Lost Hills and Kern Front steamflood projects and our Huntington field waterflood project are expected to deliver combined production growth of over 35% compounded annually through 2016 and together account for approximately 60% of our projected 6-9% annual production growth through 2016. We believe these projects are substantially derisked as they are currently producing and we have existing or permitted capacity in our production facilities sufficient to develop these projects through 2016. We have significant additional low-risk conventional opportunities like these with over 13,009 identified drilling locations, 52% of which are associated with IOR and EOR projects. The remaining 48% are associated with primary recovery methods, many of which we expect will develop into IOR and EOR projects in the future.
•: Aggressively apply modern technologies to enhance production growth. We believe that over the last several decades the oil and gas industry has focused significantly less effort on utilizing modern development and exploration processes and technologies in California relative to other prolific U.S. basins. We believe this is largely due to other oil companies' limited capital spending in California, focus on shallow zone thermal projects or investments in other assets within their global portfolios. As an independent company focused exclusively on California, we intend to make significant use of modern technologies in drilling and completing wells, which we expect will substantially increase both our cost-efficiency and production growth over time. We are well positioned to execute on this strategy as we have developed an extensive 3D seismic library, which covers over 4,250 square miles, representing approximately 90% of the 3D seismic data available for California, and have tested and successfully implemented various exploration, drilling, completion and IOR and EOR technologies in the state. As a result of our long, successful operating history, our geographically broad exploration drilling programs and exceptional 3D seismic library, we believe we have developed a leading understanding of the geology, petroleum systems and hydrocarbon potential in the basins in which we operate. Our unique and proprietary stratigraphic and structural models of the subsurface geology allow us to recognize new development and exploration areas in each of our basins, and identify the applicable modern drilling and completion technologies needed to enhance recoveries and returns. For example, we recently applied rigorous seismic, stratigraphic and reservoir analyses to discover unconventional resources in a new field in the Monterey zone in the San Joaquin basin. This area was previously tested from the 1940s to the 1970s with six wells drilled by major oil companies, but hydrocarbon resources were not recognized until our 2012 discovery, following our seismic evaluation and application of our unique and proprietary subsurface models. We have already increased production five-fold to over 1,400 Bbls/d from first quarter production in 2012 and have identified an additional 150 drilling locations in the field.
•: Generate strong cash flows through a focus on high-margin crude oil in order to internally fund our capital budget . We intend to focus on increasing cost-efficiency and developing profitable opportunities in our portfolio in order to achieve self-funded growth in any foreseeable market or regulatory environment. We intend to reinvest substantially all of our operating cash flow in our capital

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program for the foreseeable future as we will no longer be required to distribute cash to Occidental. In 2013, we generated cash flow from operations of approximately $763 million after capital spending of approximately $1.7 billion. We believe we will continue to generate a substantial amount of free cash flow in 2014 after planned capital spending of $2.1 billion. Almost all our 2014 capital budget will be focused on oil producing projects and we expect this emphasis to continue in a high oil price environment. As of December 31, 2013, crude oil represented 72% and 58%, respectively, of our total reserves and production, which positions us well to grow our oil production. In addition, we believe we have significant potential upside in a more favorable natural gas price environment, particularly with respect to our Sacramento basin acreage, where we have identified 1,008 gross (864 net) drilling locations as of December 31, 2013. Given our large acreage position and drilling inventory across both oil and natural gas opportunities, we expect to generate strong production and cash flow growth in different commodity price environments.

•: Proactive and collaborative approach to safety, environmental protection and community relations. We are committed to developing our assets in a manner that safeguards people and protects the environment. We seek to proactively engage with regulatory agencies, communities, other stakeholders and our workforce to pursue mutually beneficial outcomes. To further implement this strategy and commitment, we have recently appointed a senior manager whose primary duty is to collaborate with the regulatory agencies and other stakeholders to address their questions and obtain required approvals in a timely fashion. One recent example of our proactive approach is our development of a regional water mapping tool based on existing public data from the San Joaquin Valley, which we have shared with state and local agencies. Our multidisciplinary team worked with regulatory agencies to integrate those data sets with computer modeling and field validation, which allowed us to obtain new well stimulation permits for key operating areas at Elk Hills and elsewhere. This strategy also applies directly to our protection of the environments in which we operate. For example, we actively promote biodiversity, having set aside approximately 8,000 acres of certified habitat conservation areas at our Elk Hills and Long Beach field operations. To reduce our use of fresh water, we employ water recycling and treatment extensively in our operations, such as our use of reclaimed municipal wastewater in Long Beach for pressure maintenance and waterflooding.

As a result of these water management projects, our oil and gas operations supply more fresh water than we use, providing the surplus to agriculture. We believe our commitment to safety and the environment and our proactive and collaborative approach benefit both the company and our stakeholders and enhance our ability to obtain required approvals for our development and exploration projects.

•: Significantly increase our successful exploration program. We intend to significantly increase our investment in exploration over the next several years, focusing on both unconventional and conventional opportunities, primarily in areas that we believe can be quickly developed, such as those adjacent to our existing properties. In addition, we plan to explore and test new unconventional resource areas, which, if successful, could result in significant longer-term production growth. We believe our exceptional 3D seismic library, which covers over 4,250 square miles, or 2.7 million acres, including 47% of our current acreage, and our experience in drilling deep wells, provide us a significant competitive advantage in our exploration program. Our technical staff has analyzed this extensive 3D seismic data along with modern well-log data, and mapped multiple exploration plays and drilling prospects across our key basins. From 2007 to 2013, we drilled more than 100 exploration wells targeting both conventional and unconventional reservoirs and substantially all of these wells encountered strong indications of hydrocarbons. Our two most significant exploration discoveries over the past five years were the result of employing our unique and proprietary stratigraphic and structural models of the subsurface geology, proprietary 3D seismic data and understanding of the petroleum systems and hydrocarbon potential. Together, they now contribute on average approximately 18,000 Boe/d to our production.

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Our current drilling inventory includes 7,237 gross (5,117 net) exploration drilling locations that are located in proven formations, the majority of which are located near existing producing fields. Additionally, we have identified 6,400 gross (5,300 net) prospective resource drilling locations in the lower Monterey, Kreyenhagen, and Moreno resource plays. We expect that these exploration drilling locations, together with additional prospects within our current large acreage holdings, will drive significant growth in our successful exploration program for many years.

Our Competitive Strengths

We believe we are well-positioned to successfully execute our business strategies because of the following competitive strengths:

•: Largest acreage position in a world-class oil province. California is one of the most prolific oil and natural gas producing regions in the world and is the third largest oil producing state in the nation. It has five of the top 12 largest fields in the lower 48 states based on estimated proved reserves as of 2009, and our portfolio includes interests in four of these fields. We believe we are the largest private oil and natural gas mineral acreage holder in California, with interests in approximately 2.3 million net acres that contain attractive conventional and unconventional drilling opportunities using primary, IOR and EOR methods. Our large and diverse acreage position, approximately 60% of which we hold in fee, allows us to prioritize projects by value and risk to achieve strong returns and maintain strong reserve replacement and production growth rather than drill simply to hold leases. A significant percentage of our opportunities are oil-weighted, with approximately 90% of our identified drilling locations associated with oil production. For the year ended December 31, 2013, we were the largest producer in the state on a combined gross operated basis with on average approximately 188,000 Boe/d of production, 59% of which was oil. As of December 31, 2013, we had total combined reserves of over 744 MMBoe, of which approximately 72% was oil and 81% was liquids.
•: Significant growth potential from opportunity-rich drilling portfolio. Our drilling inventory at December 31, 2013 consisted of 17,691 identified well locations, including 4,682 gross (4,264 net) unconventional drilling locations and 13,009 gross (10,921 net) conventional drilling locations. We believe we can achieve significant production growth through the development of unconventional reservoirs. Over the last five years, we have drilled and completed over 570 unconventional development wells, primarily in the upper Monterey formation, with an almost 100% commercial success rate. Our successful unconventional drilling program has demonstrated the productive potential of seven stacked pay zones within the Monterey formation, primarily within the upper Monterey, and we believe that these successes are repeatable in other formations such as the Kreyenhagen formation, which has similar geologic attributes. We also have a large inventory of conventional development opportunities that will provide low-risk, near-term production growth with attractive returns. We believe that a significant portion of our production growth over the next two to three years will be driven by IOR and EOR projects, many of which are already being implemented. Over 90% of our expected 6-9% production growth through 2016 is expected to come from currently producing fields. As we develop our sizable inventory of drilling locations, the majority of which are vertical drilling locations with thousands of feet of stacked pay, and utilize horizontal drilling techniques, we expect that we will achieve double-digit production growth in the longer term.
•: Unique ability to drive high returns and growth in different commodity price environments. Our current drilling inventory comprises a diversified portfolio of oil and natural gas locations, which allows us to target drilling projects that are the most economically compelling depending on the prevailing commodity price outlook. Approximately 90% of our drilling inventory is associated with oil-rich projects, primarily located in the San Joaquin, Los Angeles and Ventura basins, and the remaining inventory is associated with natural gas properties in the Sacramento, San Joaquin and Ventura basins. We have operating control over 97% of our properties, enabling us to determine all aspects

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of our development program, including the selection of specific drilling locations, the timing of the development and the drilling and completion techniques used. Our retention of operating control coupled with our diversified portfolio provides us with the flexibility to invest our capital in the highest return projects and control operating costs to drive strong production and cash flow growth in different commodity price environments as well as to adapt to any changes in regulatory and market conditions. Approximately 26% of our production for the six months ended June 30, 2014 was natural gas. If conditions change and gas prices become more favorable, we believe that we have the ability to significantly increase our gas production within a few years through accelerated capital investment in gas projects currently in our portfolio. In addition to our drilling opportunities, we have made significant investments in infrastructure, including our state-of-the-art Elk Hills cryogenic gas plant and our 550 megawatt Elk Hills power plant, which increase our operational flexibility and ability to maximize returns in any commodity price environment.

•: Strong free cash flow and premium margins driven by deficit California energy market. We sell almost all of our crude oil into the California refining markets at prices we believe are among the most favorable in the United States. California, the largest state economy in the United States, imports approximately 62% of its oil and approximately 90% of its natural gas. Oil is imported via rail or supertanker. As a result, California refiners have typically purchased crude oil at international waterborne-based prices that exceed WTI-based prices for comparable grades. Our 2013 realized price averaged across all grades of crude oil reflected a 6% premium to WTI index prices. We believe that the limited crude transportation infrastructure from other parts of the country to California will allow us to continue to realize strong cash margins. In addition, we own the fee minerals on approximately 60% of our net acreage position. The returns on developed mineral fee acreage are greatly enhanced because we do not pay royalties and other lease payments. We expect the resulting substantial operating cash flow to fund our growth while allowing us to maintain ample liquidity.
•: Proven operational management and technical teams with extensive experience operating in California. Our experienced operational management team and technical staff have a proven track record of applying the leading technologies and operating methods to develop our assets. The members of our operational management and technical teams have an average of over 26 years' experience in the oil and natural gas industry, with an average of 17 years focused on California oil and gas operations. We believe this focused experience gives us an inherent competitive advantage. As a result of our long operating history in the state, our team of geoscientists and engineers has developed a growing understanding of the geology and can quickly identify and apply suitable recovery methods, as well as drilling, completion and other relevant technologies, to increase production and reserves. For example, our technical team has extensive experience developing unconventional opportunities and growing large, world-class fields, such as Elk Hills and Wilmington. Our cumulative production and year-end proved reserves from these fields are twice the proved reserves originally purchased and we continue to find additional reserves in these fields. In addition, production from unconventional reservoirs within these fields accounted for over 50% of our 2013 daily combined production for these fields. We are applying the expertise gained through re-developing Elk Hills and Wilmington to many of the other fields we operate. In addition, we believe that our team has established a favorable reputation among regulators and other stakeholders for our commitment to safety and demonstrated sensitivity to the environment. We believe that our favorable record and reputation with communities and regulators sustains our operations, and gives us an important advantage when we seek to acquire and develop opportunities throughout California.

Other Information

We were incorporated under the laws of the State of Delaware on April 23, 2014. Our principal executive offices are located at 10889 Wilshire Boulevard, Los Angeles, California, 90024. Our telephone

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number is (888) 848-4754. Our website address is www.crc.com, and it will become functional in connection with the completion of the spin-off. Information contained on our website is not incorporated by reference into this information statement or the registration statement on Form 10 of which this information statement is a part, and you should not consider information on our website as part of this information statement or such registration statement on Form 10.

The Spin-Off

On October 2, 2014, the board of directors of Occidental approved the distribution to Occidental stockholders of 0.4 shares of our common stock for each share of Occidental common stock outstanding as of the record date. Immediately following the distribution, Occidental stockholders as of the record date will own at least 80.1% of the outstanding shares of our common stock.

Before our separation from Occidental, we and Occidental will enter into a Separation and Distribution Agreement and several other agreements to effect the spin-off. These agreements will provide for the allocation between us and Occidental of Occidental's assets, liabilities and obligations, and we will generally be allocated those assets, liabilities and obligations relating to the California business. These agreements will also govern certain interactions between us and Occidental after the separation (including with respect to employee matters, tax matters and intellectual property matters). We and Occidental will also enter into a Transition Services Agreement which will provide for, among other matters, assistance to us or Occidental as needed. For more information regarding these agreements, see "Arrangements Between Occidental and Our Company" and the historical and pro forma financial statements and the notes thereto included elsewhere in this information statement. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties. See "Risk Factors—Risks Related to the Spin-Off." Our entry into the Separation and Distribution Agreement and the several ancillary agreements, our amendment and restatement of our certificate of incorporation and bylaws and other related transactions are collectively referred to as our "restructuring transactions" throughout this information statement.

The spin-off is expected to provide each company with a number of material opportunities and benefits, including the following:

•: creating two independent businesses that will be competitive industry leaders in their respective areas of operations;
•: allowing each business to pursue strategies tailored to its needs, including enabling CRC to reinvest substantially all of its cash flow in growing its business;
•: focusing each management team on the development and execution of its business in its areas of operation;
•: enabling each business to focus on and accelerate its technical expertise in specific reservoirs and fields; and
•: enhancing each company's market recognition with investors because of its status as an industry leader in its geographic areas of focus.

The distribution of our common stock as described in this information statement is subject to the satisfaction or waiver, in the sole discretion of Occidental, of certain conditions. In addition, Occidental has the right not to complete the spin-off if, at any time prior to the distribution, the board of directors of Occidental determines, in its sole discretion, that the spin-off is not in the best interests of Occidental or its stockholders or market conditions do not warrant completing the separation at that time. See "The Spin-Off—Conditions to the Spin-Off."

Questions and Answers About the Spin-Off

The following provides answers only to certain key questions we expect you may have regarding the spin-off. For a more detailed description of the terms of the spin-off, see "The Spin-Off."

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Q:: What is the spin-off?
A:: In this information statement, when we refer to the "spin-off," we are referring to the separation of Occidental's California business from the remaining business of Occidental through a series of transactions, including the restructuring transactions, that will result in the California business being owned by us, and Occidental's pro rata distribution of at least 80.1% of our outstanding shares to its stockholders. Following the spin-off, we will be a separate and independent company from Occidental. The number of shares of Occidental common stock you own will not change as a result of the spin-off. Your proportionate direct interest in CRC, however, will be lower than your proportionate direct interest in Occidental, due to the fact that Occidental will continue to hold up to 19.9% of our outstanding shares (the "Retained Securities") for up to 18 months following the spin-off.
Q:: What will I receive in the spin-off?
A:: As a holder of Occidental stock, you will retain your Occidental shares and will receive 0.4 shares of our common stock for each share of Occidental common stock you hold as of the record date. Your proportionate interest in Occidental will not change as a result of the spin-off.
Q:: What is CRC?
A:: CRC is currently a wholly-owned subsidiary of Occidental whose shares will be distributed to Occidental stockholders if the spin-off is completed. After the spin-off is completed, CRC will be an independent publicly traded company and will own and operate the California business.
Q:: When is the record date for the distribution, and when will the distribution occur?
A:: The record date for determining Occidental stockholders entitled to receive our shares in the distribution will be the close of business of the New York Stock Exchange (the "NYSE") on November 17, 2014. The distribution will occur on November 30, 2014.
Q:: What are the reasons for and benefits of separating us from Occidental?
A:: Our separation from Occidental and the distribution of our common stock will provide you with equity investments in two separate companies that are intended to be more focused and competitive industry leaders. The spin-off will enable each company to pursue strategies tailored to the respective needs of their businesses. For a more detailed discussion of the reasons for and benefits of the spin-off, see "The Spin-Off—Reasons for the Spin-Off."
Q:: What are the risks associated with the spin-off?
A:: There are a number of risks associated with the spin-off and resultant ownership of our common stock. These risks are discussed under "Risk Factors" beginning on page 29.
Q:: Why is the separation of CRC structured as a spin-off as opposed to a sale?
A:: Occidental believes that a tax-free distribution of our common stock is an efficient way to separate us from Occidental in a manner that will improve flexibility, benefit both Occidental and CRC and create long-term value for stockholders of both Occidental and CRC.
Q:: What is being distributed in the spin-off?
A:: Upon completion of the spin-off, we estimate that we will have an aggregate of no more than approximately 387 million shares of our common stock outstanding based on approximately 775 million shares of Occidental common stock outstanding as of September 30, 2014, assuming distribution of at least 80.1% of our common stock to shareholders of Occidental and that each Occidental shareholder will receive 0.4 shares of our common stock for each share of Occidental

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common stock. As a result, we expect to distribute approximately 310 million shares to Occidental shareholders, and the remaining outstanding shares will be held by Occidental. The actual number of shares of our common stock to be distributed will be calculated on November 17, 2014, the record date. The shares of our common stock to be distributed by Occidental will constitute at least 80.1% of the issued and outstanding shares of our common stock immediately prior to the distribution. For more information on the shares being distributed in the spin-off, see "Description of Capital Stock—Common Stock."

Q:: What will the relationship be between Occidental and CRC after the spin-off?
A:: Following the spin-off, CRC will be an independent, publicly traded company and Occidental will hold the Retained Securities for a maximum of 18 months. In connection with the spin-off, we will enter into a Separation and Distribution Agreement and several other agreements with Occidental for the purpose of allocating between us and Occidental various assets, liabilities and obligations relating to the California business. These agreements will also provide arrangements for employee matters, tax matters and some other liabilities and obligations attributable to periods before and, in some cases, after the spin-off. These agreements will also include arrangements with respect to transition services. We will also have an Area of Mutual Interest Agreement with Occidental that provides Occidental the right to acquire 51% of certain oil and gas properties we acquire in the United States outside of the state of California. Occidental will determine the principal terms of these agreements and the allocation between us and Occidental of Occidental's assets, liabilities and obligations, with the assets, liabilities and obligations relating to the California business generally allocated to us.
Q:: What will Occidental do with the Retained Securities?
A:: Occidental expects to dispose of all of the Retained Securities by making one or more offers to exchange such Retained Securities for outstanding shares of Occidental common stock. For each share of Occidental common stock tendered for exchange, the holder of such Occidental common stock will receive a number of shares of CRC common stock based on an exchange ratio to be determined by Occidental. We expect that any Retained Securities Occidental does not dispose of through such exchanges will be distributed pro rata to Occidental shareholders no later than 18 months after the spin-off.
Q:: How will equity-based and other long-term incentive compensation awards held by Occidental employees be affected as a result of the spin-off?
A:: We currently anticipate that equity-based and long-term incentive compensation awards from Occidental held by individuals who will be employed by us and our subsidiaries following the spin-off will be converted into awards under our equity and long-term incentive compensation programs and that such awards held by others who do not transfer will remain outstanding pursuant to the applicable plans maintained by Occidental, with corresponding adjustments made to the number of shares of Occidental common stock subject to such awards and the reference price of such awards. For additional information regarding the expected treatment of equity-based and long-term incentive compensation awards, see "Treatment of Long-Term Incentive Awards for Current and Former Employees."
Q:: What do I have to do to participate in the spin-off?
A:: You are not required to take any action, although you are urged to read this entire document carefully. No stockholder approval of the spin-off is required and none is being sought. You are not being asked for a proxy. No action is required on your part to receive your shares of our common stock. You will neither be required to pay anything for the new shares nor to surrender any shares of Occidental common stock to participate in the spin-off.

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Q:: How will fractional shares be treated in the spin-off?
A:: Fractional shares of our common stock will not be distributed. Fractional shares of our common stock to which Occidental stockholders of record would otherwise be entitled will be aggregated and sold in the public market by the distribution agent. The aggregate net cash proceeds of the sales will be distributed ratably to those stockholders who would otherwise have received fractional shares of our common stock. Proceeds from these sales will generally result in a taxable gain or loss to those stockholders. Each stockholder entitled to receive cash proceeds from these shares should consult his, her or its own tax advisor as to the stockholder's particular circumstances. The tax consequences of the distribution are described in more detail under "The Spin-Off—U.S. Federal Income Tax Consequences of the Spin-Off."
Q:: What are the U.S. federal income tax consequences of the spin-off?
A:: The spin-off is conditioned on the receipt by Occidental of a private letter ruling (which has been received) from the Internal Revenue Service (the "IRS") substantially to the effect that certain aspects of the transactions that will be undertaken in preparation for, or in connection with, the spin-off will not cause the distribution to be taxable to Occidental or its affiliates. The distribution is further conditioned on Occidental's tax counsel issuing an opinion in form and substance acceptable to Occidental, which may rely on the effectiveness of the private letter ruling with respect to certain issues, that (i) certain transactions that will be undertaken in preparation for, or in connection with, the spin-off will not be taxable to Occidental or its affiliates for federal income tax purposes and (ii) the spin-off qualifies generally as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code"). See "The Spin-Off—Conditions to the Spin-Off." Assuming that the spin-off will qualify as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code, for U.S. federal income tax purposes, except for gain realized on the receipt of cash paid in lieu of fractional shares, no gain or loss will generally be recognized by an Occidental shareholder, and no amount generally will be included in such Occidental shareholder's taxable income, as a result of the spin-off. You should, however, consult your own tax advisor as to the particular consequences to you. The U.S. federal income tax consequences of the distribution are described in more detail under "The Spin-Off—U.S. Federal Income Tax Consequences of the Spin-Off."
Q:: Will our common stock be listed on a stock exchange?
A:: Yes. Although there is currently no public market for our common stock, we have been approved to list our common stock on the NYSE under the symbol "CRC."

It is anticipated that trading of our common stock will commence on a "when-issued" basis on or shortly before the record date. When-issued trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. When-issued trades generally settle within four trading days after the distribution date. On the first trading day following the distribution date, any when-issued trading with respect to our common stock will end and "regular-way" trading will begin. "Regular-way" trading refers to trading after a security has been issued and typically involves a transaction that settles on the third full trading day following the date of the transaction. See "Trading Market."
Q:: Will my shares of Occidental common stock continue to trade?
A:: Yes. Occidental common stock will continue to be listed and traded on the NYSE under the symbol "OXY."

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Q:: If I sell, on or before the distribution date, shares of Occidental common stock that I held on the record date, am I still entitled to receive shares of CRC common stock distributable with respect to the shares of Occidental common stock I sold?
A:: Beginning on or shortly before the record date and continuing through the distribution date for the spin-off, Occidental's common stock will begin to trade in two markets on the NYSE: a "regular-way" market and an "ex-distribution" market. If you are a holder of record of shares of Occidental common stock as of the record date for the distribution and choose to sell those shares in the regular-way market after the record date for the distribution and before the distribution date, you also will be selling the right to receive the shares of our common stock in connection with the spin-off. However, if you are a holder of record of shares of Occidental common stock as of the record date for the distribution and choose to sell those shares in the ex-distribution market after the record date for the distribution and before the distribution date, you will still receive shares of our common stock in the spin-off.
Q:: Will the spin-off affect the trading price of my Occidental stock?
A:: Yes, the trading price of shares of Occidental common stock immediately following the distribution is expected to be lower than immediately prior to the distribution because of the dividend to Occidental common stockholders in the form of our common stock and the fact that the Occidental common stock trading price will no longer reflect the value of the California business, partially offset by the value of the cash we will distribute to Occidental. We cannot provide you with any assurance as to the price at which shares of Occidental common stock will trade following the spin-off.
Q:: What indebtedness will CRC have following the spin-off?
A:: We have entered into new financing arrangements in anticipation of the spin-off. We expect to incur up to $6.065 billion in new debt to fund aggregate cash distributions of approximately $6.0 billion to Occidental. On October 1, 2014, we issued $5.0 billion in aggregate principal amount of our senior notes, including $1.00 billion of 5.00% senior notes due 2020 (the "2020 Notes"), $1.75 billion of 5.50% senior notes due 2021 (the "2021 Notes") and $2.25 billion of 6.00% senior notes due 2024 (the "2024 Notes" and, together with the 2020 Notes and 2021 Notes, the "notes"), in a private placement. The net proceeds will be used to make a distribution to Occidental. We also intend to borrow $1.0 billion under a new $1.0 billion Term Loan Facility and $65 million under a new $2.0 billion Revolving Credit Facility to fund the remaining distribution to Occidental and the fees associated with the financing arrangements. For more information regarding the terms of our indebtedness, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources." The amount of the cash distribution to be paid by us to Occidental will be determined by Occidental after consideration of several factors, including our resulting capital structure and credit ratings. Our capital structure will be designed to provide us with the financial flexibility to maintain our current level of operations and the ability to invest substantially all of our future cash flow in growing our California oil and gas operations. Our Revolving Credit Facility will be available for our immediate working capital needs and for general corporate purposes. We expect to borrow an additional $300 million to $350 million under our Revolving Credit Facility, including borrowings of approximately $200 million we expect to incur prior to the spin-off to repay a short term loan from Occidental used to fund the acquisition of oil and gas properties and between $100 million and $150 million of borrowings that we expect to incur concurrently with, or shortly after, the spin-off to fund our working capital requirements as a stand-alone company. See "Description of Material Indebtedness" included elsewhere in this information statement.

Following the spin-off, our debt obligations could restrict our business and may adversely impact our financial condition, results of operations or cash flows. In addition, our separation from Occidental's other businesses may increase the overall cost of debt funding and decrease the overall debt capacity and commercial credit available to us. Our business, financial condition, results of operations and cash

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flows could be harmed by a deterioration of our credit profile or by factors adversely affecting the credit markets generally. See "Risk Factors—Risks Related to the Spin-Off—We will have significant indebtedness and may incur more debt. Higher levels of indebtedness could make us more vulnerable to economic downturns and adverse developments in our business."

Q:: What will our dividend and share repurchase policy be after the spin-off?
A:: We intend to pay a cash dividend of $0.01 per share per quarter, or $0.04 per share per year, beginning with the first quarter of 2015. We do not anticipate increasing the dividend on our common stock in the foreseeable future as we currently intend to retain the remainder of our future earnings to support the growth and development of our business. In addition, we will be authorized to implement a share repurchase program if circumstances warrant. The payment of future cash dividends, if any, will be at the discretion of our board of directors and will depend upon, among other things, our capital investment program, financial condition, results of operations, capital requirements and development expenditures, future business prospects and any restrictions imposed by future debt instruments. For more information, see "Dividend Policy."
Q:: If I was enrolled in an Occidental dividend reinvestment plan, will I automatically be enrolled in the CRC dividend reinvestment plan?
A:: No, however, we are authorized to implement a dividend reinvestment plan in the future.
Q:: What are the anti-takeover effects of the spin-off?
A:: Some provisions of our amended and restated certificate of incorporation, our amended and restated bylaws and Delaware law may have the effect of making more difficult an acquisition of control of us in a transaction not approved by our board of directors. For example, our amended and restated certificate of incorporation and amended and restated bylaws will require advance notice for shareholder proposals and nominations, place limitations on convening shareholder meetings and authorize our board of directors to issue one or more series of preferred stock. See "Description of Capital Stock—Anti-Takeover Effects of Provisions of our Amended and Restated Certificate of Incorporation, our Amended and Restated Bylaws and Delaware Law" for more information.

In addition, under the Tax Sharing Agreement we will enter into with Occidental in connection with the spin-off, we will agree to take certain actions and refrain from taking certain actions, including agreeing to refrain from entering into certain strategic and corporate transactions. The purpose of these covenants is to help ensure the tax free status of the spin-off. These restrictions and our related tax indemnification obligations in the Tax Sharing Agreement may have the effect, for a period of time following the spin-off, of making it more difficult and less desirable for us to enter into certain transactions, including those that may result in a change of control. See "Arrangements Between Occidental and Our Company—Tax Sharing Agreement" for more information.

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Q:

Where can I get more information?

A:

If you have any questions relating to the mechanics of the distribution, you should contact the distribution agent at:

American Stock Transfer & Trust Company, LLC
6201 15 ^th Avenue
Brooklyn, NY 11219
Phone: (800) 937-5449

Before the spin-off, if you have any questions relating to the spin-off, you should contact Occidental at:

Occidental Petroleum Corporation
Attn: Investor Relations
1230 Avenue of the Americas
New York, New York 10020
Phone: (212) 603-8111
www.oxy.com

After the spin-off, if you have any questions relating to CRC, you should contact CRC at:

California Resources Corporation
Attn: Investor Relations
10889 Wilshire Boulevard
Los Angeles, California 90024
Phone: (888) 848-4754
www.crc.com

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Summary of the Spin-Off


Distributing Company		Occidental Petroleum Corporation, a Delaware corporation. After the distribution, Occidental will hold the Retained Securities for up to 18 months.
Distributed Company		California Resources Corporation, a Delaware corporation and a wholly-owned subsidiary of Occidental. After the spin-off, we will be an independent, publicly owned company.
Distributed Securities		Occidental will distribute at least 80.1% of the outstanding shares of CRC common stock. Upon completion of the spin-off, we estimate that we will have an aggregate of no more than approximately 387 million shares of our common stock outstanding based on approximately 775 million shares of Occidental common stock outstanding as of September 30, 2014, assuming distribution of at least 80.1% of our common stock to shareholders of Occidental and that each Occidental shareholder will receive 0.4 shares of our common stock for each share of Occidental common stock. As a result, we expect to distribute approximately 310 million shares to Occidental shareholders, and the remaining outstanding shares will be held by Occidental.
Retained Securities		Occidental expects to dispose of all of the Retained Securities by making one or more offers to exchange such Retained Securities for outstanding shares of Occidental common stock. For each share of Occidental common stock tendered for exchange, the holder of such Occidental common stock will receive a number of shares of CRC common stock based on an exchange ratio to be determined by Occidental. We expect that any Retained Securities Occidental does not dispose of through such exchanges will be distributed pro rata to Occidental shareholders no later than 18 months after the spin-off.
Record Date		The record date for the distribution is the close of business of the NYSE on November 17, 2014.
Distribution Date		The distribution date is November 30, 2014.
Restructuring Transactions		As part of the spin-off, Occidental will generally contribute and transfer to us the assets, liabilities and obligations related to the California business and we will amend and restate our certificate of incorporation and bylaws.
Distribution Ratio		Each Occidental stockholder will receive 0.4 shares of our common stock for each share of Occidental common stock held by such stockholder on the record date.
Distribution Method		Our common stock will be issued only by direct registration in book-entry form. Registration in book-entry form is a method of recording stock ownership when no physical paper certificates are issued to stockholders, as is the case in this distribution.

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Fractional Shares		The distribution agent will not distribute any fractional shares of our common stock to Occidental stockholders. Fractional shares of our common stock to which Occidental stockholders of record would otherwise be entitled will be aggregated and sold in the public market by the distribution agent. The aggregate net cash proceeds of the sales will be distributed ratably to those stockholders who would otherwise have received fractional shares of our common stock. Proceeds from these sales will generally result in a taxable gain or loss to those stockholders. Each stockholder entitled to receive cash proceeds from these shares should consult his, her or its own tax advisor as to the stockholder's particular circumstances. The tax consequences of the distribution are described in more detail under "The Spin-Off—U.S. Federal Income Tax Consequences of the Spin-Off."
Conditions to the Spin-Off		The spin-off is subject to the satisfaction or waiver by Occidental, in its sole discretion, of the following conditions, as well as other conditions described in this information statement in "The Spin-Off—Conditions to the Spin-Off":
		• the Securities and Exchange Commission ("SEC") shall have declared effective our registration statement on Form 10, of which this information statement is a part, under the Exchange Act of 1934, as amended (the "Exchange Act"); no stop order suspending the effectiveness of the registration statement shall be in effect; and no proceedings for such purpose shall be pending before or threatened by the SEC;
		• any required actions and filings with regard to state securities and blue sky laws of the U.S. (and any comparable laws under any foreign jurisdictions) shall have been taken and, where applicable, have become effective or been accepted;
		• our common stock shall have been authorized for listing on the NYSE, or another national securities exchange approved by Occidental, subject to official notice of issuance (which authorization has been received);
		• Occidental shall have received a private letter ruling (which has been received) from the IRS to the effect that certain aspects of the transactions that will be undertaken in preparation for, or in connection with, the spin-off will not cause the distribution to be taxable to Occidental or its affiliates, and such private letter ruling shall not have been revoked or modified in any material respect;

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		• Occidental shall have received an opinion of its tax counsel, in form and substance acceptable to Occidental and which shall remain in full force and effect, that (i) certain transactions that will be undertaken in preparation for, or in connection with, the spin-off will not be taxable to Occidental or its affiliates for federal income tax purposes and (ii) the spin-off generally qualifies as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code;
		• no order, injunction, decree or regulation issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution will be in effect;
		• the completion of our new financing arrangements;
		• no other events or developments shall have occurred or exist that, in the judgment of the board of directors of Occidental, in its sole discretion, makes it inadvisable to effect the distribution or other transactions contemplated by the Separation and Distribution Agreement;
		• each of the ancillary agreements contemplated by the Separation and Distribution Agreement shall have been executed by each party thereto; and
		• any government approvals and other material consents necessary to consummate the distribution will have been obtained and remain in full force and effect.
		The fulfillment of the foregoing conditions does not create any obligations on Occidental's part to effect the spin-off, and the Occidental board of directors has reserved the right, in its sole discretion, to abandon, modify or change the terms of the spin-off, including by waiving any conditions to the spin-off or accelerating or delaying the timing of the consummation of all or part of the spin-off, at any time prior to the distribution date.
Trading Market and Symbol		Our common stock has been approved for listing on the NYSE under the ticker symbol "CRC," subject to official notice of issuance. We anticipate that, on or shortly before the record date, trading of shares of our common stock will begin on a "when-issued" basis and will continue up to and including the distribution date, and we expect "regular-way" trading of our common stock will begin the first trading day after the distribution date. We also anticipate that, on or shortly before the record date, there will be two markets in Occidental common stock: a "regular-way" market on which shares of Occidental common stock will trade with an entitlement to shares of our common stock to be distributed pursuant to the distribution, and an "ex-distribution" market on which shares of Occidental common stock will trade without an entitlement to shares of our common stock. For more information, see "Trading Market."

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Tax Consequences		The distribution is conditioned on the receipt by Occidental of a private letter ruling (which has been received) from the IRS substantially to the effect that certain aspects of the transactions that will be undertaken in preparation for, or in connection with, the spin-off will not cause the distribution to be taxable to Occidental or its affiliates. The distribution is further conditioned on Occidental's tax counsel issuing an opinion in form and substance acceptable to Occidental, which may rely on the effectiveness of the private letter ruling with respect to certain issues, that for U.S. federal income tax purposes, (i) certain transactions that will be undertaken in preparation for, or in connection with, the spin-off will not be taxable to Occidental or its affiliates for federal income tax purposes and (ii) the spin-off generally qualifies as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code.
		Assuming that the spin-off will qualify as a tax-free transaction for U.S. federal income tax purposes, except for gain realized on the receipt of cash paid in lieu of fractional shares, no gain or loss will generally be recognized by an Occidental stockholder, and no amount generally will be included in such Occidental stockholder's taxable income, as a result of the spin-off.
		For a more detailed description of the U.S. federal income tax consequences of the spin-off, see "The Spin-Off—U.S. Federal Income Tax Consequences of the Spin-Off."
		Each stockholder is urged to consult his, her or its tax advisor as to the specific tax consequences of the spin-off to such stockholder, including the effect of any state, local or non-U.S. tax laws and of changes in applicable tax laws.

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Relationship with Occidental after the Spin-Off		We will enter into a Separation and Distribution Agreement and other ancillary agreements with Occidental related to the spin-off. These agreements will provide for the allocation between us and Occidental of Occidental's assets, liabilities and obligations, and we will generally be allocated those assets, liabilities and obligations relating to the California business. These agreements will also govern certain interactions between us and Occidental after the separation (including with respect to employee matters, tax matters and intellectual property matters). We and Occidental will also enter into a Transition Services Agreement that will provide for, among other matters, assistance to us or Occidental as needed. We also intend to enter into an Employee Matters Agreement that will set forth the agreements between Occidental and us concerning certain employee compensation and benefit matters. Further, we intend to enter into a Tax Sharing Agreement with Occidental regarding the respective rights, responsibilities, and obligations of Occidental and us with respect to the payment of taxes, filing of tax returns, reimbursements of taxes, control of audits and other tax proceedings, liability for taxes that may be triggered as a result of the spin-off and other matters regarding taxes. We will also enter into an Area of Mutual Interest Agreement with Occidental, which will provide Occidental with the right to acquire an interest in and rights with respect to certain oil and gas properties in the United States (excluding the state of California). Occidental will determine the principal terms of these agreements. We describe these and other arrangements in greater detail under "Arrangements Between Occidental and Our Company," and describe some of the risks of these arrangements under "Risk Factors—Risks Related to the Spin-Off."

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Indemnities		We will indemnify Occidental under the Tax Sharing Agreement for taxes incurred as a result of the failure of the spin-off or certain transactions undertaken in preparation for, or in connection with, the spin-off, to qualify as tax-free transactions under the relevant provisions of the Code, to the extent caused by our breach of any representations or covenants made in the Tax Sharing Agreement or made in connection with the private letter ruling or the tax opinion or by certain other actions taken by us. We also have agreed to pay 50% of any taxes arising from the spin-off or related transactions to the extent that the tax is not attributable to the fault of either party; however, if we receive an increase in the tax basis of our depletable, depreciable or amortizable assets as a result of any such tax being imposed, we will pay to Occidental an amount equal to any reduction in our tax liability attributable to such basis increase when such reduction in tax liability arises. See "Arrangements Between Occidental and Our Company—Tax Sharing Agreement." In addition, under the Separation and Distribution Agreement, we and Occidental will indemnify each other and certain of our respective subsidiaries against claims and liabilities relating to the past operation of our business. See "Arrangements Between Occidental and Our Company."
Dividend Policy		We intend to pay a cash dividend of $0.01 per share per quarter, or $0.04 per share per year, beginning with the first quarter of 2015. We do not anticipate increasing the dividend on our common stock in the foreseeable future as we currently intend to retain the remainder of our future earnings to support the growth and development of our business. In addition, we will be authorized to implement a share repurchase program if circumstances warrant. See "Dividend Policy."
Transfer Agent		American Stock Transfer & Trust Company, LLC will be the transfer agent and registrar for the shares of our common stock.

Summary Risk Factors

We face both general and specific risks and uncertainties relating to our business and our being an independent, publicly owned company. We also are subject to risks related to the spin-off. Below is a summary of certain key risk factors that you should consider. Please read the full discussion of these risks and the other risks described under "Risk Factors" beginning on page 29 of this information statement and "Forward-Looking Statements."

Risks Related to our Business

•: Our business is highly regulated and governmental authorities can delay or deny permits and approvals or change legal requirements governing our operations.
•: Commodity pricing can fluctuate widely and strongly affects our results of operations, financial condition, cash flow and ability to grow.
•: Part of our strategy involves exploratory drilling, including drilling in new or emerging plays. Our drilling results are uncertain, and the value of our undeveloped acreage may decline if drilling is unsuccessful.

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•: Federal, state and local legislation and regulatory initiatives relating to hydraulic fracturing and other well stimulation techniques could result in increased costs and additional operating restrictions or delay our implementation of, or cause us to change, our business strategy.
•: Tax law changes may adversely affect our operations.
•: Drilling for and producing oil and gas are high-risk activities with many uncertainties.
•: We operate in a highly competitive environment for oilfield equipment, services, qualified personnel and acquisitions.
•: Estimates of proved reserves and related future net cash flows are not precise. The actual quantities of our proved reserves and future net cash flows may prove to be lower than estimated.
•: We will have significant indebtedness and may incur more debt. Higher levels of indebtedness could make us more vulnerable to economic downturns and adverse developments in our business.
•: Our business requires substantial capital expenditures. We may be unable to fund these expenditures through operating cash flow or obtain any needed additional capital on satisfactory terms or at all, which could lead to a decline in our oil and gas reserves or production. Our capital investment program is susceptible to risks that could materially affect its implementation.
•: Our producing properties are located exclusively in California, making us vulnerable to risks associated with having operations concentrated in this geographic area.
•: We periodically evaluate our unproved oil and natural gas properties for impairment, and could be required to recognize noncash charges to earnings of future periods.
•: Laws and regulations, including those pertaining to land use and environmental protection, could delay or restrict our operations and cause us to incur substantial costs.
•: Restrictions on our ability to obtain, use, manage or dispose of water may have an adverse effect on our operations.
•: Our AMI Agreement may adversely affect our ability to operate outside of California.
•: We may not drill our identified sites at the times we have scheduled or at all and sites we decide to drill may not yield crude oil or natural gas in economically producible quantities.
•: Concerns about climate change and other air quality issues may affect our operations or results.
•: Risks related to our acquisition activities could negatively impact our financial condition and results of operations.
•: We may incur substantial losses and be subject to substantial liability claims as a result of catastrophic events. We may not be insured for, or our insurance may be inadequate to protect us against, these risks.
•: Cyber attacks could significantly affect us.
•: Operational issues could restrict access to markets for the commodities we produce.

Risks Related to the Spin-Off

•: We may not realize the anticipated benefits from our separation from Occidental.
•: The combined value of Occidental and our shares after the spin-off may not equal or exceed the value of Occidental shares prior to the spin-off.

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•: Our historical and pro forma financial information may not be representative of the results we would have achieved as a stand-alone public company and may not be a reliable indicator of our future results.
•: A large number of our shares are or will be eligible for future sale, which may cause the market price for our common stock to decline.
•: In connection with our separation from Occidental, we will indemnify Occidental for certain liabilities, including those related to the operation of our business while it was still owned by Occidental, and Occidental will indemnify us for certain liabilities, and such indemnities may not be adequate.
•: Our costs may increase as a result of operating as a stand-alone public company, and our management will be required to devote substantial time to complying with public company regulations.
•: Following the separation, Occidental will provide us with certain transitional services that may not be sufficient to meet our needs. We may have difficulty finding supplemental or, ultimately, replacement services or be required to pay increased costs to supplement or, ultimately, replace these services.
•: The agreements between us and Occidental will not be made on an arm's length basis.
•: Our Tax Sharing Agreement with Occidental may limit our ability to take certain actions, including strategic transactions, and may require us to indemnify Occidental for significant tax liabilities.
•: We could have significant tax liabilities for periods during which Occidental operated our business.
•: The amount of tax for which we are liable for taxable periods preceding the spin-off may be impacted by elections or decisions Occidental makes on our behalf.
•: Occidental, its stockholders, or we could have significant tax liabilities if the separation, and certain transactions in preparation therefore, are not tax-free.
•: Following the spin-off, several members of our board of directors and management may have actual or potential conflicts of interest because of their ownership of shares of common stock of Occidental and the overlap of one member of our Board with the board of directors of Occidental.
•: The spin-off may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements.

Risks Related to our Common Stock

•: No market currently exists for our common stock. We cannot assure you that an active trading market will develop for our common stock.
•: The market price and trading volume of our common stock may be volatile and you may not be able to resell your shares at or above the initial market price of our common stock following the spin-off.
•: We do not anticipate paying significant dividends on our common stock in the foreseeable future. As a result, you will need to sell your shares of common stock to receive any significant income.
•: Provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws could discourage a takeover attempt, which may reduce or eliminate the likelihood of a change of control transaction and, therefore, the ability of our stockholders to sell their shares for a premium.
•: Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain an alternative judicial forum for disputes with us or our directors, officers, employees or agents.

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SUMMARY COMBINED HISTORICAL AND PRO FORMA FINANCIAL DATA

Set forth below is a summary of our combined historical and pro forma financial data for the periods indicated. The historical unaudited combined financial data for the six months ended June 30, 2014 and 2013 and the balance sheet data as of June 30, 2014 have been derived from our unaudited condensed combined financial statements included elsewhere in this information statement. The unaudited condensed combined financial statements have been prepared on the same basis as our audited combined financial statements, except as stated in the related notes thereto, and include all normal recurring adjustments that, in the opinion of management, are necessary to present fairly our financial condition and results of operations for such periods. The results of operations for the six months ended June 30, 2014 presented below are not necessarily indicative of results for the entire fiscal year. The historical financial data for the years ended December 31, 2013, 2012 and 2011 and the balance sheet data as of December 31, 2013 and 2012 have been derived from our audited combined financial statements included elsewhere in this information statement.

The unaudited pro forma financial data have been derived from our historical combined financial statements included in this information statement. While the historical combined financial statements reflect the past financial results of the California business, these pro forma statements give effect to the separation of those operations into a stand-alone, publicly traded company in the spin-off. The pro forma adjustments are based on available information and assumptions that we believe are reasonable. We have attempted to include recurring costs of operating as a stand-alone company, although only the additional costs we have determined to be factually supportable are included as pro forma adjustments, and there could be incremental costs not reflected in the unaudited pro forma combined financial statements. However, we expect the costs of operating as a stand-alone public company, other than the debt-related costs, will be generally comparable to the costs reported in the historical combined financial statements. Additionally, such adjustments are estimates and may not prove to be accurate. The adjustments include certain costs associated with the spin-off related to certain management actions which are either in the balance sheet or income statement, as appropriate. Subject to the terms of the Separation and Distribution Agreement, nonrecurring third-party costs and expenses that are related to the separation, other than the debt-related costs, and incurred prior to the separation date will generally be paid by Occidental. We expect such nonrecurring amounts to include costs to separate and/or duplicate information technology systems, outside legal and accounting fees, and similar costs. The pro forma adjustments, including related tax effects, to reflect the spin-off include the following:

•: the issuance of $5.0 billion of notes (which occurred October 1, 2014) and borrowings of approximately $1.0 billion under our Term Loan Facility and $65 million under our Revolving Credit Facility;
•: distributions of approximately $6.0 billion to Occidental from the net proceeds from our new debt;
•: the issuance of approximately 387 million shares of our common stock; and
•: the trade receivables CRC would carry as it starts marketing its own products and the assumption of certain liabilities in connection with the spin-off.

The historical and pro forma financial statements exclude recently entered into agreements with third party sellers to purchase approximately $240 million of oil and gas properties. We expect to fund approximately $200 million of these acquisitions with a short term loan from Occidental that will be repaid with borrowings under our new Revolving Credit Facility prior to the separation. They also exclude borrowings of between $100 million and $150 million under our new Revolving Credit Facility expected to be made concurrently with, or shortly after, the separation to fund our working capital requirements as a stand-alone company.

You should read the following summary financial data in conjunction with "Selected Historical Combined Financial Data," "Unaudited Pro Forma Financial Data," "Management's Discussion and

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Analysis of Financial Condition and Results of Operations" and our audited combined financial statements, unaudited interim combined condensed financial statements and the notes to those statements included in this information statement.

The financial information presented below is not necessarily indicative of our future performance or what our financial position and results of operations would have been had we operated as a stand-alone public company during the periods presented, or in the case of the unaudited pro forma information, had the transactions reflected in the pro forma adjustments actually occurred as of the dates assumed. The unaudited pro forma combined financial data are for illustrative purposes only. The unaudited pro forma combined financial data constitute forward-looking information and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. See "Forward-Looking Statements" in this information statement.

											Pro Forma

	Six Months Ended June 30,										Pro Forma
					Year Ended December 31,						Six Months Ended June 30, 2014
					Year Ended December 31,								Year Ended December 31, 2013
	2014		2013		2013		2012		2011				Year Ended December 31, 2013
	(in millions)
Statement of Income Data:
Net sales, including to related parties	$	2,262	$	2,098	$	4,285	$	4,072	$	3,938	$	2,262	$	4,285
Income before income taxes	$	782	$	703	$	1,447	$	1,181	$	1,641	$	621	$	1,124
Net income	$	469	$	422	$	869	$	699	$	971	$	372	$	675
Other Financial Data:
EBITDAX(1)	$	1,410	$	1,308	$	2,707	$	2,255	$	2,430	$	1,410	$	2,707

(1): For more information, please read "—Non-GAAP Financial Measures and Reconciliations" below.

							Pro Forma

			December 31,				Pro Forma
	June 30, 2014		December 31,				June 30, 2014
	June 30, 2014		2013		2012		June 30, 2014
	(in millions)
Balance Sheet Data:
Property, plant and equipment, net	$	14,434	$	14,008	$	13,499	$	14,434
Net investment	$	10,274	$	9,989	$	9,860	$	4,657

	Six Months Ended June 30,						Year Ended December 31,

	2014			2013			2013			2012			2011
	(in millions)
Statement of Cash Flows Data:
Net cash provided by operating activities	$	1,234		$	1,177		$	2,476		$	2,223		$	2,456
Net cash used by investing activities	$	(1,038	)	$	(768	)	$	(1,713	)	$	(2,755	)	$	(3,565	)
Net cash (used) provided by financing activities	$	(196	)	$	(409	)	$	(763	)	$	532		$	1,106
Capital expenditures	$	(1,003	)	$	(737	)	$	(1,669	)	$	(2,331	)	$	(2,164	)
Payments for purchases of assets and businesses, and other	$	(35	)	$	(31	)	$	(48	)	$	(427	)	$	(1,405	)

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SUMMARY COMBINED HISTORICAL OPERATING AND RESERVE DATA

The following table presents a summary of our estimated net proved oil and gas reserves as of the dates indicated. In 2013, Ryder Scott Company, L.P. ("Ryder Scott") reviewed the specific application of reserve estimation methods and procedures for approximately 37% of our proved oil and gas reserves. Since being engaged by Occidental in 2003, Ryder Scott has reviewed the specific application of reserve estimation methods and procedures for approximately 79% of our proved reserves that existed at December 31, 2013. Based on its reviews, including the data, technical processes and interpretations presented with respect to our oil and gas reserves, Ryder Scott concluded that the overall procedures and methodologies utilized in estimating the proved reserves volumes, documenting the changes in reserves from prior estimates, preparing the economic evaluations and determining the reserves classifications for the reviewed properties were appropriate for the purpose thereof and complied with SEC regulations as of December 31, 2013. The reserve estimates mentioned here were prepared in a manner consistent with SEC rules regarding oil and gas reserves reporting currently in effect. You should refer to "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business" when evaluating the material presented below.

	At December 31,

	2013		2012
Estimated Proved Reserves and Other Information:
Oil (MMBbl)		532		497
NGLs (MMBbl)		72		62
Natural Gas (Bcf)		838		928
Total (MMBoe)		744		714
PV-10 (in millions)(1)	$	14,018	$	13,773
Standardized Measure of Discounted Future Net Cash Flows (in millions)(1)	$	9,223	$	9,073

(1): For an explanation of the non-GAAP financial measure PV-10 and a reconciliation of PV-10 to Standardized Measure, the most directly comparable GAAP financial measure, see "—Non-GAAP Financial Measure and Reconciliations" below.

The following table summarizes our net production, average realized prices and average costs for the periods indicated.

	Six Months Ended June 30,				Year Ended December 31,

	2014		2013		2013		2012		2011
Production Data:
Oil (MBbl/d)		96		88		90		88		80
NGLs (MBbl/d)		18		20		20		17		15
Natural gas (MMcf/d)		243		262		260		256		260
Average daily combined production (MBoe/d)(1)		155		152		154		148		138
Total combined production (MMBoe)(1)		28		28		56		54		50
Average realized prices:
Oil (per Bbl)	$	103.43	$	105.21	$	104.16	$	104.02	$	103.80
NGLs (per Bbl)	$	54.86	$	47.90	$	50.43	$	52.76	$	70.03
Natural gas (per Mcf)	$	4.67	$	3.82	$	3.73	$	2.94	$	4.31
Average costs per Boe:
Production costs	$	18.45	$	17.16	$	17.10	$	22.58	$	19.09
Other operating expenses	$	4.80	$	4.15	$	4.38	$	4.04	$	3.87
Depreciation, depletion and amortization	$	20.48	$	20.22	$	20.11	$	16.82	$	13.01
Taxes other than on income	$	3.56	$	3.71	$	3.05	$	3.09	$	2.84

(1): Natural gas volumes have been converted to Boe based on energy content of six Mcf of gas to one barrel of oil. Barrels of oil equivalence does not necessarily result in price equivalence. The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in 2013, the average prices of WTI oil and NYMEX natural gas were $97.97 per Bbl and $3.66 per Mcf, respectively, resulting in an oil-to-gas ratio of over 25 to 1.

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Non-GAAP Financial Measures and Reconciliations

EBITDAX

We define EBITDAX as earnings before interest expense; income taxes; depreciation, depletion and amortization; and exploration expense. Our management believes EBITDAX provides useful information in assessing our financial condition, results of operations and cash flows and is widely used by the industry and investment community. The amounts included in the calculation of EBITDAX were computed in accordance with GAAP. This measure is provided in addition to, and not as an alternative for income and liquidity measures calculated in accordance with GAAP, and should be read in conjunction with the information contained in our financial statements prepared in accordance with GAAP.

The following table presents a reconciliation of the non-GAAP financial measure of EBITDAX to the GAAP financial measure of net income:

											Pro Forma

	Six Months Ended June 30,										Pro Forma
					Year Ended December 31,						Six Months Ended June 30, 2014
					Year Ended December 31,								Year Ended December 31, 2013
	2014		2013		2013		2012		2011				Year Ended December 31, 2013
	(in millions)
Net income	$	469	$	422	$	869	$	699	$	971	$	372	$	675
Interest expense	$	—	$	—	$	—	$	—	$	—	$	161	$	323
Provision for income taxes	$	313	$	281	$	578	$	482	$	670	$	249	$	449
Depreciation, depletion and amortization	$	582	$	565	$	1,144	$	926	$	675	$	582	$	1,144
Exploration expense	$	46	$	40	$	116	$	148	$	114	$	46	$	116


EBITDAX	$	1,410	$	1,308	$	2,707	$	2,255	$	2,430	$	1,410	$	2,707

The following table sets forth a reconciliation of the non-GAAP financial measure of EBITDAX to the GAAP measure of net cash provided by operating activities:

	Six Months Ended June 30,						Year Ended December 31,

	2014			2013			2013			2012			2011
Net cash provided by operating activities	$	1,234		$	1,177		$	2,476		$	2,223		$	2,456
Interest expense		—			—			—			—			—
Cash income taxes		135			155			318			(121	)		84
Cash exploration expenses		14			16			44			20			40
Changes in operating assets and liabilities		48			(13	)		(102	)		202			(123	)
Asset impairments and related items		—			—			—			(41	)		—
Other, net		(21	)		(27	)		(29	)		(28	)		(27	)


EBITDAX	$	1,410		$	1,308		$	2,707		$	2,255		$	2,430




Net cash used by investing activities	$	(1,038	)	$	(768	)	$	(1,713	)	$	(2,755	)	$	(3,565	)




Net cash (used) provided by financing activities	$	(196	)	$	(409	)	$	(763	)	$	532		$	1,106

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PV-10

PV-10 is a non-GAAP financial measure and represents the year-end present value of estimated future cash inflows from proved oil and gas reserves, less future development and production costs, discounted at 10% per annum to reflect the timing of future cash flows and using SEC prescribed pricing assumptions for the period. PV-10 differs from Standardized Measure because Standardized Measure includes the effects of future income taxes on future income. Neither PV-10 nor Standardized Measure should be construed as the fair value of our oil and gas reserves. PV-10 and Standardized Measure are used by the industry and by our management as an asset value measure to compare against our past reserve bases and the reserve bases of other business entities because the pricing, cost environment and discount assumptions are prescribed by the SEC and are comparable. PV-10 further facilitates the comparisons to other companies as it is not dependent on the taxpaying status of the entity.

The following table provides a reconciliation of our Standardized Measure to PV-10.

	At December 31,

	2013			2012
	(in millions)
PV-10	$	14,018		$	13,773
Present value of future income tax discounted at 10%		(4,795	)		(4,700	)


Standardized Measure of Discounted Future Net Cash Flows	$	9,223		$	9,073

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RISK FACTORS

You should carefully consider the information included in this information statement, including the matters addressed under "Forward-Looking Statements," and the following risks.

We are subject to certain risks and hazards due to the nature of the business activities we conduct. The risks discussed below, any of which could materially and adversely affect our business, financial condition, cash flows, results of operations and stock price, are not the only risks we face. We may experience additional risks and uncertainties not currently known to us or, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may ultimately materially and adversely affect our business, financial condition, cash flows, results of operations and stock price.

Risks Related to Our Business

Our business is highly regulated and governmental authorities can delay or deny permits and approvals or change legal requirements governing our operations.

Our operations are subject to complex and stringent federal, state and local laws and regulations. See "Business—Regulation of the Oil and Natural Gas Industry" for a description of the laws and regulations that affect our business. In order to conduct operations in compliance with these laws and regulations, we must obtain and maintain permits, approvals and certificates from federal, state and local governmental authorities. Costs of compliance may increase or operational delays may occur if existing laws and regulations are revised or reinterpreted, or if new laws and regulations become applicable to our operations. New or additional permitting requirements, new interpretations of requirements or changes in our operations could also trigger the need for Environmental Assessments or more detailed Environmental Impact Statements under the National Environmental Policy Act ("NEPA") or Environmental Impact Reviews under the California Environmental Quality Act ("CEQA"), as well as litigation over the adequacy of those reviews, which could result in increased costs or delays of, or denial of rights to conduct, our development programs.

For example, in 2011 changes in the implementation of the permitting process of DOGGR depressed our capital spending in California for the year and slowed our development program. DOGGR is currently implementing additional changes, such as new hydraulic fracturing and well stimulation regulations pursuant to California Senate Bill ("SB") 4 that are causing, and may cause additional, costs, delays and uncertainty.

Commodity pricing can fluctuate widely and strongly affects our results of operations, financial condition, cash flow and ability to grow.

Our financial results, financial condition, cash flow and rate of growth correlate closely to the prices we obtain for our products. Product prices can fluctuate widely and are affected by a variety of factors, including changes in consumption patterns, global and local (particularly for gas) economic conditions, inventory levels, actual or threatened production disruptions, the actions of OPEC and other oil and natural gas producing countries, currency exchange rates, worldwide drilling and exploration activities, the effects of conservation, weather, geophysical and technical limitations, refining and processing disruptions, transportation bottlenecks and other matters affecting the supply and demand dynamics of oil, gas and NGLs, and the effect of changes in market perceptions. These and other factors make it impossible to predict realized prices reliably. Occidental typically has not hedged commodity price risk and we do not expect to have a hedging program in the future. In addition, any significant increase in transportation infrastructure that increases the importation of crude oil to California from other parts of the country could negatively impact the price we receive for our crude oil.

Significant and sustained declines in oil and gas prices could require substantial downward adjustments to our estimated proved reserves. If this occurs, accounting rules may require us to write-down, as a noncash charge to earnings, part of the carrying value of our oil and gas properties.

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Part of our strategy involves exploratory drilling, including drilling in new or emerging plays. Our drilling results are uncertain, and the value of our undeveloped acreage may decline if drilling is unsuccessful.

Exploration is inherently risky and its results are unpredictable. The results of our exploratory drilling in new or emerging plays are more uncertain than drilling results in areas that are developed and have established production, and we may increase the proportion of our drilling in new or emerging plays over time. We may not find commercial amounts of oil or gas, in which case the value of our undeveloped acreage may decline and could be impaired.

One of our important assets is our acreage in the Monterey shale play in the San Joaquin, Los Angeles and Ventura basins. The geology of the Monterey shale is highly complex and not uniform due to localized and varied faulting and changes in structure and rock characteristics. As a result, it differs from other shale plays that can be developed in part on the basis of their uniformity. Instead, individual Monterey shale drilling sites may need to be more fully understood and may require a more precise development approach, which could affect our ability, the timing or the cost to develop this asset.

Federal, state and local legislation and regulatory initiatives relating to hydraulic fracturing and other enhanced production techniques or fluid disposal could result in increased costs and additional operating restrictions or delay our implementation of, or cause us to change, our business strategy.

Well stimulation techniques like hydraulic fracturing and acid well stimulation are important and common practices used in our operations to increase the flow of fluids to production wells. These techniques have been regulated by DOGGR for decades; however, several federal, state and local agencies have recently proposed to further regulate them.

For example, in 2013, California adopted SB 4, which mandates further regulation of certain well stimulation techniques. Among other things, SB 4 requires:

•: new permitting of defined well stimulation treatments;
•: prior notification to proximate property owners or lessees of proposed stimulation treatments, and pre- and post-stimulation groundwater sampling as requested by the owner or lessee;
•: monitoring of groundwater quality in areas where well stimulation treatments occur; and
•: public disclosure of stimulation data, including data that may be considered proprietary or a trade secret.

The federal, state, and local governments could continue to seek to impose new or more stringent requirements for permitting, well construction, public disclosure or environmental review, seek to impose land use or other restrictions on hydraulic fracturing and other enhanced production techniques or fluid disposal, or otherwise seek to ban some or all of these activities. Some local governments have proposed or adopted ordinances within their jurisdictions that purport to restrict hydraulic fracturing and other stimulation and completion activities or to ban such activities outright. In addition, government agencies have investigated and continue to study whether injection activity can induce ground movement or seismicity. Our enhanced production operations or fluid disposal could give rise to litigation over claims related to alleged damage to the environment. Such new requirements, restrictions or litigation could result in potentially significant added costs to comply, delay or curtail our exploration, development, or production activities, and preclude us from drilling or stimulating wells, which could impair our expected production growth over the longer term.

Tax law changes may adversely affect our operations.

In California, there have been proposals for tax increases for the past several years including a severance tax as high as 12.5% on all oil, gas and NGLs production in California. Although the proposals have not become law, well-funded campaigns by various interest groups could lead to future oil and gas severance taxes. The imposition of such a tax could severely reduce our profit margins and cash flow and

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could ultimately result in lower oil production, which may reduce our capital expenditures and growth plans in California.

In addition, President Obama's budget proposal for the fiscal year 2015 recommended the elimination of certain federal income tax preferences currently available to oil and gas exploration and production companies. These changes include (i) the repeal of the percentage depletion allowance for oil and gas properties, (ii) the elimination of current deductions for intangible drilling and development costs and (iii) an increase in the amortization period from two years to seven years for geophysical costs paid or incurred by independent producers in connection with the exploration for, or development of, oil or gas, all of which could potentially harm us.

Drilling for and producing oil and gas are high-risk activities with many uncertainties.

Unless we conduct successful development and exploration activities or acquire properties containing proved reserves, our proved reserves will decline as those reserves are produced. Our decisions to explore, develop, purchase or otherwise exploit prospects or properties will depend in part on the evaluation of geophysical, geologic, engineering, production and other technical data, the analysis of which is often inconclusive or subject to varying interpretations. Our cost of drilling, completing, equipping and operating wells is also often uncertain. Overruns in budgeted expenditures are a common risk that can make a particular project uneconomical or less economical than forecast. We bear the risks of equipment failures, accidents, environmental hazards, adverse weather conditions, permitting or construction delays, title disputes, surface access disputes, disappointing drilling results or reservoir performance, including response to IOR or EOR efforts, and other associated risks.

We operate in a highly competitive environment for oilfield equipment, services, qualified personnel and acquisitions.

We compete for services to profitably develop our assets, to find or acquire additional reserves and to attract and retain qualified personnel. We have many competitors, some of which: (i) are larger and better funded, (ii) may be willing to accept greater risks or (iii) have special competencies. Historically, there have been periodic shortages of drilling and workover rigs, pipe and other oilfield equipment as demand for rigs and equipment has increased along with the number of wells being drilled. The demand for qualified and experienced field personnel to drill wells and conduct field operations, geologists, geophysicists, engineers and other professionals in the oil and gas industry can fluctuate significantly, often in correlation with commodity prices, causing periodic shortages. Finally, competition for reserves can make it more difficult to find attractive investment opportunities or require delay of reserve replacement efforts.

Estimates of proved reserves and related future net cash flows are not precise. The actual quantities of our proved reserves and future net cash flows may prove to be lower than estimated.

Many uncertainties exist in estimating quantities of proved reserves and related future net cash flows. Our estimates are based on various assumptions, which may ultimately prove to be inaccurate.

The reserves information included in this information statement represents estimates prepared by Occidental's internal engineers, including some who will continue to work for us following the spin-off. The procedures and methods used to estimate our reserves by these internal engineers were reviewed by independent petroleum consultants; however, no audit of estimated reserve volumes was conducted by these consultants. Reserves estimation is a partially subjective process of estimating accumulations of oil and gas. Estimates of economically recoverable oil and gas reserves and of future net cash flows depend upon a number of variables and assumptions, including:

•: historical production from the area compared with production from similar areas;
•: the quality, quantity and interpretation of available relevant data;

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•: commodity prices;
•: production costs;
•: ad valorem, excise and income taxes;
•: development costs;
•: the effects of government regulations; and
•: future workover and remedial costs.

Misunderstanding of the variables, inaccurate assumptions, changed circumstances or new information could require us to make significant negative reserve revisions.

We currently expect improved recovery, extensions and discoveries to be our main sources for reserve additions, but factors such as geology, government regulations and permits and the effectiveness of development plans are partially or fully outside management's control and could cause unforeseen results.

We will have significant indebtedness and may incur more debt. Higher levels of indebtedness could make us more vulnerable to economic downturns and adverse developments in our business.

Following our separation from Occidental and related distributions to Occidental, we expect to have total outstanding debt of approximately $6.065 billion of long-term indebtedness, including $5.0 billion in senior notes, borrowings under our Term Loan Facility of $1.0 billion and borrowings under our Revolving Credit Facility of $65 million. Our Revolving Credit Facility initially provides for borrowings of up to approximately $2.0 billion total. Immediately following the distributions to Occidental, we expect to have the ability to incur an additional $1.935 billion of borrowings under our Revolving Credit Facility. We expect to borrow an additional $300 million to $350 million under our Revolving Credit Facility, including borrowings of approximately $200 million we expect to incur prior to the separation to repay a short term loan from Occidental used to fund the acquisition of oil and gas properties and between $100 million and $150 million of borrowings that we expect to incur concurrently with, or shortly after, the separation to fund our working capital requirements as a stand-alone company. In addition, we expect to enter into letters of credit in an aggregate amount ranging from $65 million to $75 million under uncommitted lines of credit at or shortly after the separation to support ordinary course marketing, regulatory and other matters.

Indebtedness outstanding under our Credit Facilities (as defined in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facilities") will bear interest at a variable rate, so a rise in interest rates will generate greater interest expense to the extent we do not purchase interest rate hedges. The amount of our debt may also cause us to be more vulnerable to economic downturns and adverse developments in our business because we would be required to use a greater proportion of our cash flow to pay interest and principal. In addition, we can incur obligations that do not constitute indebtedness under the indenture or the Credit Agreement (as defined in "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Credit Facilities") governing the Credit Facilities.

Our level of indebtedness will have several important effects on our future operations, including, without limitation:

•: increasing risk of our vulnerability to adverse changes in general economic and industry conditions, and putting us at a competitive disadvantage against other competitors that have less fixed obligations and more cash flow to devote to their businesses;
•: limiting our ability to obtain additional financing for working capital, capital expenditures, general corporate and other purposes; and
•: limiting our flexibility in operating our business and preventing us from engaging in certain transactions that might otherwise be beneficial to us.

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Our ability to meet our debt obligations and other expenses will depend on our future performance, which will be affected by financial, business, economic, regulatory and other factors. If our cash flow is not sufficient to service our debt, we may be required to refinance debt, sell assets or sell additional equity on terms that we may not find attractive if it may be done at all. Further, our failure to comply with the financial and other restrictive covenants relating to our indebtedness could result in a default under that indebtedness. Any of these factors could result in a material adverse effect on our business, financial condition, results of operations and cash flow.

Our business requires substantial capital expenditures. We may be unable to fund these expenditures through operating cash flow or obtain any needed additional capital on satisfactory terms or at all, which could lead to a decline in our oil and gas reserves or production. Our capital investment program is also susceptible to risks that could materially affect its implementation.

The oil and gas industry is capital intensive. We make and expect to continue to make substantial capital expenditures for the development and exploration of oil and gas reserves. We have developed a multi-year capital investment program to execute our growth strategy. We spent approximately $1.7 billion of capital on development and exploration expenses during the year ended December 31, 2013, funded by our operating cash flow of $2.5 billion. Under our 2014 capital budget, we currently intend to invest approximately $2.1 billion for development and exploration activities this year. In addition, we recently entered into agreements with third-party sellers to purchase approximately $240 million of oil and gas properties.

Our ability to deploy capital as planned depends on a number of uncertainties, including: (i) regulatory and third-party approvals; (ii) our inability to timely drill wells due to technical factors and contract terms; (iii) the availability of capital, equipment, services and personnel; (iv) commodity prices and sales point disruptions; and (v) drilling and completion costs and results. Because of these and other potential uncertainties, we may be unable to deploy capital in the manner planned and actual development activities may materially differ from those presently anticipated.

We intend to finance our future capital expenditures, other than any significant acquisitions, primarily through cash flow from operations and, if necessary, through borrowings under our Revolving Credit Facility or the issuance of debt or equity securities. We may not generate sufficient cash flow to fund our growth plans or to generate acceptable returns. Additional financing may not be available on acceptable terms or at all if there is not market demand or if our lenders refuse to expand our existing credit as they may do at their discretion. In the event additional capital is needed and unavailable, we may curtail drilling, development and other activities or be forced to sell assets on an unfavorable basis.

Our producing properties are located exclusively in California, making us vulnerable to risks associated with having operations concentrated in this geographic area.

Our operations are geographically concentrated exclusively in California. Because of this geographic concentration, the success and profitability of our operations may be disproportionately exposed to the effect of regional events. These include, among others, fluctuations in the prices of crude oil and natural gas produced from wells in the region, changes in state or regional laws and regulations affecting our operations, and other regional supply and demand factors, including gathering, pipeline and rail transportation capacity constraints, available rigs, equipment, oil field services, supplies, labor and infrastructure capacity. The concentration of our operations in California also increases exposure to unexpected events that may occur in this region such as natural disasters, industrial accidents or labor difficulties. Any one of these events has the potential to cause producing wells to be shut-in, delay operations and growth plans, decrease cash flows, increase operating and capital costs and prevent development of lease inventory before expiration. Any of the risks described above could have a material adverse effect on our financial condition, results of operations and cash flows.

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We periodically evaluate our unproved oil and natural gas properties for impairment, and could be required to recognize noncash charges to earnings of future periods.

At December 31, 2013, we carried unproved property costs of $0.9 billion. GAAP requires periodic evaluation of these costs to assess realizability. These evaluations will be affected by management's development plans, the results of exploration activities, commodity prices, planned future sales and expiration of all or a portion of the leases, contracts and permits appurtenant to such properties. If the quantity of potential reserves is not sufficient to fully recover the cost invested in or management's plans change with respect to such properties, we will recognize noncash charges to earnings of future periods.

Laws and regulations, including those pertaining to land use and environmental protection, could delay or restrict our operations and cause us to incur substantial costs.

Our operations are subject to numerous federal, state, local and other laws and regulations governing health and safety or the release or discharge of materials into the environment or otherwise relating to land use or environmental protection. These laws and regulations:

•: require various permits and approvals before drilling, workovers, production, or underground fluid injection commences, or before facilities are constructed or put into operation;
•: require the installation of sophisticated safety and pollution control equipment;
•: restrict the types, quantities, and concentration of various materials, including, oil, natural gas and water, that can be released or discharged into the environment in connection with drilling, production, processing or transportation activities;
•: limit or prohibit operations on lands lying within coastal, wilderness, wetlands, endangered species habitat, and other protected areas;
•: establish standards for the closure, abandonment, cleanup or restoration of former operations, such as plugging of abandoned wells;
•: impose substantial liabilities for unauthorized releases or discharges of regulated materials into the environment;
•: require comprehensive environmental analyses; and
•: may expose us to litigation by governmental authorities, special interest groups and other claimants.

These laws and regulations may have the effect of restricting the amount of oil, NGLs and natural gas that we produce. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and/or criminal fines and penalties and liability for non-compliance, costs of corrective action, cleanup or restoration, compensation for personal injury, property damage or other losses, and the imposition of injunctive or declaratory relief restricting or limiting our operations. Under certain environmental laws and regulations, we could be subject to strict or joint and several liability for the removal or remediation of previously released materials or property contamination.

Restrictions on our ability to obtain, use, manage or dispose of water may have an adverse effect on our operations.

Water is an essential component of our operations. Approximately 95% of the fluids we produce are brackish waters, not suitable for agricultural use, that need to be managed, recycled or disposed of, and we treat and re-use substantial volumes of this water for activities such as waterflooding, steamflooding, pressure management, well completion and stimulation, including hydraulic fracturing. Although we have been able to use recycled and produced water from our operations for a substantial portion of our water needs and to provide water to local agricultural users in certain basins, we also use supplied water from various local and regional sources. Some of our fields are more dependent on supplied water to support operations like pressure maintenance or steam injection. Due to severe drought in California, some local

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and regional water districts and the state government have begun implementing regulations that restrict water usage and increase the cost of water.

Existing regulations restrict our ability and increase our cost to manage and dispose of wastewater. The federal Clean Water Act ("CWA") and similar state laws impose restrictions and strict controls on the discharge of produced waters and waste where such discharges could affect surface or ground waters. We must obtain permits or waivers for certain discharges into waters and wetlands and for construction activities that may affect regulated water resources. For example, our operating costs have increased due to policy changes in December 2013 by California state and regional water quality agencies that restrict or prohibit discharges that were formerly permitted. These regulations and attendant liabilities relating to wastewater disposal may increase our costs of operations. Future federal, state, local and other regulations could impose additional restrictions and costs on our ability to obtain and use water for our operations.

Our AMI Agreement may adversely affect our ability to operate outside of California.

In connection with the spin-off, we intend to enter into an AMI Agreement, which provides Occidental with the right to acquire a 51% interest in and rights with respect to certain oil and gas properties we acquire in the United States, other than oil and gas properties in the State of California, for five years following the completion of the spin-off. Our ability to own and operate oil and gas properties outside the State of California may be limited for the five-year term of the AMI Agreement to the extent that doing so would violate the terms of this agreement. If we were to change our current strategy of focusing exclusively on opportunities in California, the AMI Agreement could adversely affect our ability to pursue opportunities outside of California during the five years following the spin-off. See "Arrangements Between Occidental and Our Company—AMI Agreement."

We may not drill our identified sites at the times we scheduled or at all and sites we decide to drill may not yield crude oil or natural gas in economically producible quantities.

We have specifically identified and scheduled drilling locations over the next several years. These drilling locations represent a significant part of our growth strategy. Our ability to profitably drill and develop these locations depends on a number of variables, including crude oil and natural gas prices, the availability of capital, costs, drilling results, regulatory approvals, available transportation capacity and other factors. If future drilling results in these projects do not establish sufficient reserves to achieve an economic return, we may curtail drilling or development of these projects. We view the risk profile for our exploration drilling locations and our prospective resource drilling locations as being higher than for our other drilling locations due to relatively less available geologic and production data and drilling history, in particular with respect to our prospective resource locations, which are in unproven geologic plays. We make assumptions about the consistency and accuracy of data when we identify these locations that may prove inaccurate. We cannot guarantee that these prospective drilling locations or any other drilling locations we have identified will ever be drilled or if we will be able to produce crude oil or natural gas from these drilling locations. In addition, some of our leases could expire if we do not establish production in the leased acreage. The combined net acreage expiring in the next three years represents 12% of our total net undeveloped acreage at December 31, 2013. Our actual drilling activities may materially differ from those presently identified.

Concerns about climate change and other air quality issues may affect our operations or results.

Climate change, the costs that may be associated with its effects and the regulation of greenhouse gases ("GHGs") may affect our business in many ways, including increasing the costs to provide our products and services, and reducing demand for, and consumption of, our products and services. In addition, legislative and regulatory responses to climate change may increase our operating costs. In 2006, California adopted Assembly Bill ("AB") 32, known as the "California Global Warming Solutions Act of 2006," which establishes a statewide cap on GHG emissions, including on the oil and natural gas production industry, and a "cap-and-trade" program. In December 2010, the California Air Resources

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Board adopted regulations to implement AB 32 that commenced on January 1, 2012, and require us to obtain GHG emissions allowances corresponding to our reported GHG emissions. In 2013, we incurred approximately $34 million of costs for GHG emissions allowances in California. We estimate costs for GHG emissions allowances in 2014 to be consistent with 2013, at approximately $34 million.

Federal and state regulatory agencies can impose administrative, civil and/or criminal penalties for non-compliance with air permits or other requirements of the federal Clean Air Act ("CAA") and associated state laws and regulations. In addition, California air quality laws and regulations are in many instances more stringent than comparable federal laws and regulations. Regulatory requirements relating to air emissions are particularly stringent in Southern and Central California, where most of our operations are located. As these requirements become more stringent, we cannot assure you that we will continue to be able to implement them in a cost-effective manner. Also, as a result of existing and future air quality initiatives, we could face risks of increased costs and taxes, an inability to execute projects and reduced demand for our products and services.

Risks related to our acquisition activities could negatively impact our financial condition and results of operations.

Our acquisition activities carry risks that we may: (i) not fully realize anticipated benefits due to less-than-expected reserves or production or changed circumstances, such as the deterioration of gas prices in recent years; (ii) bear unexpected integration costs or experience other integration difficulties; (iii) experience share price declines based on the market's evaluation of the activity or (iv) assume liabilities that are greater than anticipated.

In connection with our acquisitions, we are often only able to perform limited due diligence. Successful acquisitions of oil and gas properties require an assessment of a number of factors, including estimates of recoverable reserves, the timing for recovering the reserves, exploration potential, future commodity prices, operating costs and potential environmental, regulatory and other liabilities. Such assessments are inexact and incomplete, and we may be unable to make these assessments with a high degree of accuracy.

There may be threatened, contemplated, asserted or other claims against the acquired assets related to environmental, title, regulatory, tax, contract, litigation or other matters of which we are unaware or for which we are unable to obtain indemnity.

Also, we may issue our securities in connection with acquisitions. The amount of common stock issued in connection with an acquisition could constitute a material portion of our then outstanding common stock, which could significantly dilute existing shareholders and depress our share price.

We may incur substantial losses and be subject to substantial liability claims as a result of catastrophic events. We may not be insured for, or our insurance may be inadequate to protect us against, these risks.

We are not fully insured against all risks. Our oil and gas exploration and production activities, including well stimulation and completion activities, are subject to operating risks associated with drilling for and producing oil and gas, such as well blowouts, fires, explosions, releases or discharges of hazardous or toxic materials and industrial accidents. Other catastrophic events such as earthquakes, floods, mudslides, droughts, terrorist attacks and other events that cause operations to cease or be curtailed may negatively affect our business and the communities in which we operate. We may be unable to obtain, or may elect not to obtain, insurance for certain risks if we believe that the cost of available insurance is excessive relative to the risks presented.

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Cyber attacks could significantly affect us.

Cyber attacks on businesses have escalated in recent years. We rely on electronic systems and networks to control and manage our operations. If we were to experience an attack and our security measures failed, the potential consequences to our business and the communities in which we operate could be significant.

Operational issues could restrict access to markets for the commodities we produce.

Our ability to market our production of oil, gas and NGLs depends on a number of factors, including the proximity of production fields to pipelines and terminal facilities, competition for capacity on such facilities and the ability of such facilities to gather, transport or process our commodities. If our access to markets for commodities we produce is restricted, our costs could increase and our expected production growth may be impaired.

Risks Related to the Spin-Off

We may not realize the anticipated benefits from our separation from Occidental.

We may not realize the benefits that we anticipate from our separation from Occidental. These benefits include the following:

•: enhancing our ability to grow by reinvesting substantially all of our cash flow in our business;
•: enhancing growth and efficiency by enabling our management team to focus its attention on the development and execution of our business in a single state;
•: enhancing our focus on, and accelerating our technical expertise in, specific reservoirs and fields in California; and
•: enhancing our market recognition with investors because of our status as an industry leader in California.

We may not achieve the anticipated benefits from our separation for a variety of reasons. For example, the process of separating our business from Occidental and operating as an independent public company may distract our management from focusing on our business and strategic priorities. We may not generate sufficient cash flow to fund our growth plans and to generate acceptable returns. Moreover, even with equity compensation tied to our business, we may not be able to attract and retain employees as desired. We also may not fully realize the anticipated benefits from our separation if any of the other matters identified as risks in this "Risk Factors" section were to occur.

The combined value of Occidental and our shares after the spin-off may not equal or exceed the value of Occidental shares prior to the spin-off.

We cannot assure you that the combined trading prices of Occidental's common stock and our common stock after the spin-off, as adjusted for any changes in the combined capitalization of these companies, will be equal to or greater than the trading price of Occidental common stock prior to the spin-off. Until the market has fully evaluated the business of Occidental without the California business, the price at which Occidental common stock trades may fluctuate significantly. Similarly, until the market has fully evaluated our company, the price at which our common stock trades may fluctuate significantly.

Our historical and pro forma financial information may not be representative of the results we would have achieved as a stand-alone public company and may not be a reliable indicator of our future results.

The historical and pro forma financial information included in this information statement has been derived from Occidental's accounting records and may not reflect what our financial position, results of operations or cash flows would have been had we been an independent, stand-alone entity during the periods presented or those that we will achieve in the future. Occidental did not account for us, and we

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were not operated, as a separate, stand-alone company or as a separate segment for the historical periods presented. The costs and expenses reflected in our historical financial information include an allocation for certain corporate functions historically provided by Occidental, including expense allocations for: (1) executive oversight, accounting, procurement, engineering, drilling, exploration, finance, internal audit, legal, risk management, tax, treasury, information technology, government relations, investor relations, public relations, financial reporting, human resources, marketing, ethics and compliance, and certain other shared services; (2) certain employee benefits and incentives; and (3) share-based compensation, that may be different from the comparable expenses that we would have incurred had we operated as a stand-alone company. We have allocated these expenses in our historical financial information on the basis of direct usage when identifiable, with the remainder allocated based on estimated time spent by Occidental personnel, headcount or our relative size compared to Occidental and its subsidiaries. In addition, we have attempted to include recurring costs of operating as a stand-alone company in our pro forma financial statements, although only the additional costs we have determined to be factually supportable are included as pro forma adjustments. We expect the costs of operating as a stand-alone public company, other than the debt-related costs, will be comparable to the costs reported in the historical combined financial statements. These estimates may not prove to be accurate. Our capital expenditure requirements, including acquisitions, historically have been satisfied as part of the companywide cash management practices of Occidental. Following the spin-off, we will no longer have access to Occidental's working capital, and we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities or other arrangements if our cash flow from operations is not sufficient to fund our capital expenditure requirements.

In addition, the pro forma results do not reflect an additional $300 million to $350 million of borrowings that we expect to incur under our Revolving Credit Facility, including borrowings of $200 million we expect to incur prior to the separation to repay a short term loan from Occidental used to fund the acquisition of oil and gas properties and between $100 million and $150 million of borrowings that we expect to incur concurrently with, or shortly after, the separation to fund our working capital requirements as a stand-alone company.

In addition, if we fail to implement the requirements with respect to our internal accounting and audit functions, our ability to report our operating results on a timely and accurate basis could be impaired and we might be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NYSE. Any such action could harm our reputation and the confidence of investors in our company. For additional information, see "Selected Historical Combined Financial Data," "Unaudited Pro Forma Combined Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes included elsewhere in this information statement.

A large number of our shares are or will be eligible for future sale, which may cause the market price for our common stock to decline.

Upon completion of the spin-off, we estimate that we will have an aggregate of no more than approximately 387 million shares of our common stock outstanding based on approximately 775 million shares of Occidental common stock outstanding as of September 30, 2014, assuming distribution of at least 80.1% of our common stock to shareholders of Occidental and that each Occidental shareholder will receive 0.4 shares of our common stock for each share of Occidental common stock. As a result, we expect to distribute approximately 310 million shares to Occidental shareholders, and the remaining outstanding shares will be held by Occidental. All of those shares (other than those held by our "affiliates") will be freely tradable without restriction. Shares held by our affiliates, which include our directors and executive officers, can be sold subject to volume, manner of sale and notice provisions. We estimate that our affected directors and executive officers will beneficially own approximately 63,583 shares of our common stock (excluding restricted stock) immediately following the distribution. We are unable to predict whether large amounts of our common stock will be sold in the open market following the spin-off. We are also unable to

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predict whether a sufficient number of buyers will be in the market at that time. Occidental stockholders may sell the shares of our common stock they receive in the distribution for various reasons. For example, such stockholders may not believe our business profile or level of market capitalization as an independent company fits their investment objectives. A change in the level of analyst coverage following the spin-off could also negatively impact demand for our shares. In addition, following the distribution, Occidental will retain ownership of up to 19.9% of our common stock. Occidental expects to dispose of all of the Retained Securities by making one or more offers to exchange such Retained Securities for outstanding shares of Occidental common stock. For each share of Occidental common stock tendered for exchange, the holder of such Occidental common stock will receive a number of shares of CRC common stock based on an exchange ratio to be determined by Occidental. We expect that any Retained Securities Occidental does not dispose of through such exchanges will be distributed pro rata to Occidental shareholders no later than 18 months after the spin-off. In connection with the spin-off, we are entering into a Stockholder's and Registration Rights Agreement with Occidental, pursuant to which we will agree that, upon the request of Occidental, we will use our best efforts to effect the registration under applicable securities laws of the disposition of shares of common stock retained by Occidental and to cooperate with Occidental to facilitate its disposition of the Retained Securities through one or more exchanges for Occidental common stock. Any disposition by Occidental, or any other significant shareholder, of our common stock in the public market, or the perception that such dispositions may occur, could adversely affect prevailing market prices for our common stock.

In connection with our separation from Occidental, we will indemnify Occidental for certain liabilities, including those related to the operation of our business while it was still owned by Occidental, and Occidental will indemnify us for certain liabilities, and such indemnities may not be adequate.

Pursuant to the Separation and Distribution Agreement and other agreements with Occidental, Occidental will agree to indemnify us for certain liabilities, and we will agree to indemnify Occidental for certain liabilities, in each case for uncapped amounts, as discussed further in "Arrangements Between Occidental and Our Company." Indemnity payments that we may be required to provide Occidental may be significant and could negatively impact our business, particularly indemnity payments relating to our actions that could impact the tax-free nature of the distribution. Third parties could also seek to hold us responsible for liabilities that Occidental has agreed to retain. Further, there can be no assurance that the indemnity from Occidental will be sufficient to protect us against the full amount of such liabilities, or that Occidental will be able to fully satisfy its indemnification obligations. Moreover, even if we ultimately succeed in recovering from Occidental any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves.

Our costs may increase as a result of operating as a stand-alone public company, and our management will be required to devote substantial time to complying with public company regulations.

Historically, our operations have been fully integrated within Occidental, and we have relied on Occidental to provide certain corporate functions. As a stand-alone public company, we may incur additional expenses for executive oversight, accounting, finance, risk management, treasury, tax, financial reporting, internal audit, legal, information technology, governmental relations, public relations, investor relations, human resources, procurement, engineering, drilling, exploration, ethics and compliance, marketing and certain other services that we have not incurred historically. As part of Occidental, we have been able to enjoy certain benefits from Occidental's scale and purchasing power. As an independent, publicly traded company, we will not have similar negotiating leverage.

In addition, after the spin-off, we will become obligated to file with the SEC annual and quarterly information and other reports. We will also be required to ensure that we have the ability to prepare financial statements that are fully compliant with all SEC reporting requirements on a timely basis. In addition, we will become subject to other reporting and corporate governance requirements, including certain requirements of the NYSE, and certain provisions of the Sarbanes-Oxley Act of 2002, and the

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regulations promulgated thereunder, which will impose significant compliance obligations and costs upon us.

Following the separation, Occidental will provide us with certain transitional services that may not be sufficient to meet our needs. We may have difficulty finding supplemental or, ultimately, replacement services or be required to pay increased costs to supplement or, ultimately, replace these services.

Certain administrative services required by us for the operation of our business are currently provided by Occidental and its subsidiaries, including, executive oversight, accounting, procurement, engineering, drilling, exploration, finance, internal audit, legal, risk management, tax, treasury, information technology, government relations, investor relations, public relations, financial reporting, human resources, ethics and compliance, marketing and certain other shared services. Prior to the completion of the separation, we will enter into agreements with Occidental related to the separation of our business operations from Occidental, including a Transition Services Agreement. We believe it is helpful for Occidental to provide transitional assistance for us under the Transition Services Agreement to facilitate the efficient operation of our business as we transition to becoming a stand-alone public company. While these services are being provided to us by Occidental, our operational flexibility to modify or implement changes with respect to such services or the amounts we pay for them will be limited. After the expiration or termination of the Transition Services Agreement, we may not be able to replace these services or enter into appropriate third-party agreements on terms and conditions, including cost, comparable to those that we will receive from Occidental under the Transition Services Agreement. Although we intend to replace portions of the services currently provided by Occidental, we may encounter difficulties replacing certain services or be unable to negotiate pricing or other terms as favorable as those we currently have in effect. See "Arrangements Between Occidental and Our Company—Transition Services Agreement."

The agreements between us and Occidental will not be made on an arm's length basis.

The agreements we will enter into with Occidental in connection with the spin-off, including, but not limited to, the Separation and Distribution Agreement, Tax Sharing Agreement, Employee Matters Agreement, and Transition Services Agreement, will have been negotiated in the context of the spin-off while we were still a wholly-owned subsidiary of Occidental. Accordingly, during the period in which the terms of those agreements will have been negotiated, we will not have had an independent board of directors or a management team independent of Occidental. As a result, the terms of those agreements may not reflect terms that would have resulted from arm's-length negotiations between unaffiliated third parties. The terms relate to, among other things, the allocation of assets, liabilities, rights and other obligations between Occidental and us. See "Arrangements Between Occidental and Our Company" for a description of these obligations and the allocation of liabilities between Occidental and us.

Our Tax Sharing Agreement with Occidental may limit our ability to take certain actions, including strategic transactions, and may require us to indemnify Occidental for significant tax liabilities.

Under the Tax Sharing Agreement, we will agree to take certain actions or refrain from taking certain actions to ensure that the separation and certain transactions taken in preparation for, or in connection with, the separation, qualify for tax-free status under the relevant provisions of the Code. We will also make various other covenants in the Tax Sharing Agreement intended to ensure the tax-free status of the separation. These covenants restrict our ability to sell assets outside the ordinary course of business, to issue or sell additional common stock or other securities (including securities convertible into our common stock), or to enter into certain other corporate transactions. For example, for a period of two years after the final disposition of the Retained Securities by Occidental, absent approval by Occidental, we may not enter into any transaction that would be reasonably likely to cause us to undergo either a 30% or greater change in the ownership of our voting stock or a 30% or greater change in the ownership (measured by value) of all classes of our stock. See "Arrangements Between Occidental and Our Company—Tax Sharing Agreement."

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Further, under the Tax Sharing Agreement, we are required to indemnify Occidental against certain tax-related liabilities incurred by Occidental (including any of its subsidiaries) relating to the separation, to the extent caused by our breach of any representations or covenants made in the Tax Sharing Agreement or made in connection with the private letter ruling (which has been received) or the tax opinion. These liabilities include the substantial tax-related liability (calculated without regard to any net operating loss or other tax attribute of Occidental) that would result if the distribution of our stock to Occidental stockholders failed to qualify as a tax-free transaction. In addition, we have agreed to pay 50% of any taxes arising from the separation or related transactions to the extent that the tax is not attributable to the fault of either party; however, if we receive an increase in the tax basis of our depletable, depreciable or amortizable assets as a result of any such tax being imposed, we will pay to Occidental an amount equal to any reduction in our tax liability attributable to such basis increase when such reduction in tax liability arises.

We could have significant tax liabilities for periods during which Occidental operated our business.

For any tax periods (or portion thereof) in which Occidental owns at least 80% of the total voting power and value of our common stock, we and our subsidiaries will be included in Occidental's consolidated group for federal income tax purposes. In addition, we or one or more of our U.S. subsidiaries may be included in the combined, consolidated or unitary tax returns of Occidental or one or more of its subsidiaries for state or local income tax purposes. Under the Tax Sharing Agreement, for each period in which we or any of our subsidiaries are consolidated or combined with Occidental for purposes of any tax return, and with respect to which such tax return has not yet been filed, we will pay Occidental for any additional taxes payable by Occidental resulting from Occidental's election to capitalize some or all of certain CRC intangible drilling costs. We will also be responsible for any increase in Occidental's federal or state tax liability for any period in which we or any of our subsidiaries are combined or consolidated with Occidental if such increase results from audit adjustments attributable to our business. In addition, by virtue of Occidental's controlling ownership and the Tax Sharing Agreement, Occidental will effectively control all of our tax decisions in connection with any consolidated, combined or unitary income tax returns in which we (or any of our subsidiaries) are included. The Tax Sharing Agreement provides that Occidental will have sole authority to respond to and conduct all tax proceedings (including tax audits) relating to us, to prepare and file all consolidated, combined or unitary income tax returns in which we are included on our behalf (including the making of any tax elections). This arrangement may result in conflicts of interest between Occidental and us. For example, under the Tax Sharing Agreement, Occidental will be able to choose to contest, compromise or settle any adjustment or deficiency proposed by the relevant taxing authority in a manner that may be beneficial to Occidental and detrimental to us. See "Arrangements Between Occidental and Our Company—Tax Sharing Agreement."

Moreover, notwithstanding the Tax Sharing Agreement, federal law provides that each member of a consolidated group is liable for the group's entire tax obligation. Thus, to the extent Occidental or other members of Occidental's consolidated group fail to make any federal income tax payments required by law, we could be liable for the shortfall with respect to periods in which we were a member of Occidental's consolidated group. Similar principles may apply for state or local income tax purposes where we file combined, consolidated or unitary returns with Occidental or its subsidiaries for federal, foreign, state or local income tax purposes. Pursuant to the Tax Sharing Agreement, Occidental has agreed to indemnify us for any taxes attributable to Occidental that we are required to pay as a result of our membership in the Occidental consolidated group during such period.

The amount of tax for which we are liable for taxable periods preceding the spin-off may be impacted by elections Occidental makes on our behalf.

Under the Tax Sharing Agreement, Occidental will have the right to make all elections, including elections to capitalize intangible drilling costs, relevant to the determination of our tax liability for periods while we, or any of our subsidiaries, are required to file tax returns with Occidental on a consolidated or

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combined basis or which include pre-spin-off periods. As a result, the amount of tax for which we are liable for taxable periods preceding the spin-off may be impacted by elections Occidental makes on our behalf.

Occidental, its stockholders, or we could have significant tax liabilities if the separation, and certain transactions in preparation therefore, are not tax-free.

The separation is conditioned on Occidental's receipt of a private letter ruling (which has been received) from the IRS substantially to the effect that certain aspects of the transactions that will be undertaken in preparation for, or in connection with, the separation will not cause the distribution to be taxable to Occidental or its affiliates. The separation is further conditioned on Occidental's tax counsel issuing an opinion in form and substance acceptable to Occidental that (i) certain transactions that will be undertaken in preparation for, or in connection with, the spin-off will not be taxable to Occidental or its affiliates for federal income tax purposes and (ii) the spin-off generally qualifies as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code. The private letter ruling has relied and the opinion will rely on facts, assumptions, representations and undertakings from Occidental and us regarding the past and future conduct of the companies' respective businesses and other matters. If any of these facts, assumptions, representations, or undertakings are, or become, incorrect or not otherwise satisfied, Occidental may not be able to rely on the private letter ruling or the opinion of its tax advisor and could be subject to significant tax liabilities. In addition, an opinion of counsel is not binding upon the IRS, so, notwithstanding the opinion of Occidental's tax advisor, the IRS could conclude upon audit that the separation is taxable in full or in part. The IRS may determine that the separation is taxable for other reasons, including as a result of certain significant changes in the stock ownership of Occidental or us after the separation. If the separation is determined to be taxable for U.S. federal income tax purposes, Occidental or its stockholders could incur significant income tax liabilities, and we could incur significant liabilities. For a discussion of the potential tax consequences to Occidental stockholders if the separation is determined to be taxable, see "The Spin-Off—U.S. Federal Income Tax Consequences of the Spin-Off." For a description of the sharing of such liabilities between Occidental and us, see "Arrangements Between Occidental and Our Company—Tax Sharing Agreement."

Following the spin-off, several members of our board of directors and management may have actual or potential conflicts of interest because of their ownership of shares of common stock of Occidental and the overlap of one member of our Board with the board of directors of Occidental.

Following the spin-off, several members of our board of directors and management will initially own common stock of Occidental or options to purchase common stock of Occidental because of their current or prior relationships with Occidental, which could create, or appear to create, potential conflicts of interest when our directors and executive officers are faced with decisions that could have different implications for Occidental and us. In addition, the board of directors of each of CRC and Occidental will have one member in common after the separation, which could create actual or potential conflicts of interest.

The spin-off may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal dividend requirements.

The separation is subject to review under various state and federal fraudulent conveyance laws. Under these laws, if a court in a lawsuit by an unpaid creditor or an entity vested with the power of such creditor (including a trustee or debtor-in-possession in a bankruptcy by us or Occidental or any of our respective subsidiaries) were to determine that Occidental or any of its subsidiaries did not receive fair consideration or reasonably equivalent value for distributing our common stock or taking other action as part of the separation, or that we or any of our subsidiaries did not receive fair consideration or reasonably equivalent value for incurring indebtedness, including the new debt incurred by us in connection with the separation, transferring assets or taking other action as part of the separation and, at the time of such action, we, Occidental or any of our respective subsidiaries (i) was insolvent or would be rendered insolvent, (ii) had

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reasonably small capital with which to carry on its business and all business in which it intended to engage or (iii) intended to incur, or believed it would incur, debts beyond its ability to repay such debts as they would mature, then such court could void the separation as a constructive fraudulent transfer. The court could impose a number of different remedies, including voiding our liens and claims against Occidental, or providing Occidental with a claim for money damages against us in an amount equal to the difference between the consideration received by Occidental and the fair market value of our company at the time of the separation.

The measure of insolvency for purposes of the fraudulent conveyance laws will vary depending on which jurisdiction's law is applied. Generally, however, an entity would be considered insolvent if the present fair saleable value of its assets is less than (i) the amount of its liabilities (including contingent liabilities) or (ii) the amount that will be required to pay its probable liabilities on its existing debts as they become absolute and mature. No assurance can be given as to what standard a court would apply to determine insolvency or that a court would determine that we, Occidental or any of our respective subsidiaries were solvent at the time of or after giving effect to the spin-off, including the distribution of our common stock.

Under the Separation and Distribution Agreement, from and after the separation, each of Occidental and we will be responsible for the debts, liabilities and other obligations related to the business or businesses which it owns and operates following the consummation of the separation, and each of Occidental and we will assume or retain certain liabilities for the operation of our respective businesses prior to the spin-off and certain liabilities related to the spin-off. Although we do not expect to be liable for any such obligations not expressly assumed by us pursuant to the Separation and Distribution Agreement, it is possible that a court would disregard the allocation agreed to between the parties, and require that we assume responsibility for obligations allocated to Occidental, particularly if Occidental were to refuse or were unable to pay or perform the subject allocated obligations. See "Arrangements Between Occidental and Our Company—Separation and Distribution Agreement."

Risks Related to Our Common Stock

No market currently exists for our common stock. We cannot assure you that an active trading market will develop for our common stock.

Prior to the completion of the separation, there has been no public market for shares of our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of a trading market on the NYSE or otherwise, or how liquid that market might become. If an active market does not develop, you may have difficulty selling any shares of our common stock that you receive in the separation.

The market price and trading volume of our common stock may be volatile and you may not be able to resell your shares at or above the initial market price of our common stock following the spin-off.

The market price of our stock may be influenced by many factors, some of which are beyond our control, including those described above in "—Risks Related to Our Business" and the following:

•: the failure of securities analysts to cover our common stock after the separation or changes in financial estimates by analysts;
•: our inability to meet the financial estimates of analysts who follow our common stock;
•: our strategic actions;
•: our announcements of significant contracts, acquisitions, joint ventures or capital commitments;
•: general economic and stock market conditions;
•: changes in conditions or trends in our industry, markets or customers;

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•: future sales of our common stock or other securities; and
•: investor perceptions of the investment opportunity associated with our common stock relative to other investment alternatives.

As a result of these factors, holders of our common stock may not be able to resell their shares at or above the initial market price following the separation or may not be able to resell them at all. In addition, price volatility may be greater if trading volume of our common stock is low.

We do not anticipate paying significant dividends on our common stock in the foreseeable future. As a result, you will need to sell your shares of common stock to receive any significant income.

We intend to pay a cash dividend of $0.01 per share per quarter, or $0.04 per share per year, beginning with the first quarter of 2015. We currently intend to retain the remainder of our future earnings to support the growth and development of our business and do not anticipate increasing the dividend on our common stock in the foreseeable future. The future payment of any dividends will be at the sole discretion of our board of directors and will depend on many factors, including our earnings, capital requirements, financial condition, the limitations imposed by the Delaware General Corporation Law (the "DGCL") and other considerations that our board of directors deems relevant. As a result, to receive significant income, you will need to sell your shares of common stock. You may not be able to sell your shares of common stock at or above the price you paid for them or at all.

Pursuant to the terms of our certificate of incorporation, Occidental is not required to offer corporate opportunities to us, and certain of our directors are permitted to offer certain corporate opportunities to Occidental before us.

Our certificate of incorporation provides that, until the earlier of the date that (1) no person who is a director of CRC is also a director of Occidental or (2) Occidental no longer owns any of our common stock:

•: Occidental shall have no duty to us or our stockholders to refrain from engaging in the same or similar activities or lines of business as us, except as provided in the Separation and Distribution Agreement, the AMI Agreement or other written agreement between us and Occidental;
•: we do not have any interest or expectancy in any business opportunity, transaction, or other matter in which Occidental engages or seeks to engage merely because we engage in the same or similar lines of business;
•: to the fullest extent permitted by law, Occidental will have no duty to communicate its knowledge of, or offer, any potential business opportunity, transaction, or other matter to us, and Occidental is free to pursue or acquire such business opportunity, transaction, or other matter for itself or direct the business opportunity, transaction, or other matter to its affiliates and Occidental will not, to the fullest extent permitted by law, be deemed to have (1) breached or acted in a manner inconsistent with any of its duties to us and our stockholders with respect to such business opportunity or (2) acted in bad faith or in a manner inconsistent with the best interests of our company or our stockholders; and
•: to the fullest extent permitted by law, if any director of Occidental who is also one of our directors becomes aware of a potential business opportunity, transaction, or other matter (other than one expressly offered to that director in writing solely in his or her capacity as our director), that director will have no duty to communicate or offer that business opportunity to us, and will be permitted to communicate or offer that business opportunity to Occidental (or its affiliates) and that director will not, to the fullest extent permitted by law, be deemed to have (1) breached or acted in a manner inconsistent with any of his or her duties to us and our stockholders with respect to such business opportunity or (2) acted in bad faith or in a manner inconsistent with the best interests of our company or our stockholders.

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After the completion of the spin-off, we expect that our board of directors will include one person, Avedick Poladian, who is also a director of Occidental. As a result, Occidental may gain the benefit of business opportunities that are presented to this director.

Provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws could discourage a takeover attempt, which may reduce or eliminate the likelihood of a change of control transaction and, therefore, the ability of our stockholders to sell their shares for a premium.

Provisions contained in our certificate of incorporation and bylaws provide for limitations on the removal and replacement of directors, a classified board through 2018, limitations on stockholder proposals at meetings of stockholders and limitations on stockholder action by written consent and the inability of stockholders to call special meetings. These provisions could make it more difficult for a third party to acquire control of our company. Our certificate of incorporation also authorizes our board of directors to issue preferred stock without stockholder approval. If our board of directors elects to issue preferred stock, it could increase the difficulty for a third party to acquire control of our company, which may reduce or eliminate our stockholders' ability to sell their shares of our common stock at a premium. See "Description of Capital Stock—Anti-Takeover Effects of Provisions of our Amended and Restated Certificate of Incorporation, our Amended and Restated Bylaws and Delaware Law."

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain an alternative judicial forum for disputes with us or our directors, officers, employees or agents.

Our amended and restated certificate of incorporation will provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for:

•: any derivative action or proceeding brought on our behalf;
•: any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our shareholders;
•: any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our bylaws; or
•: any action asserting a claim that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.

Any person or entity purchasing or otherwise holding any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our amended and restated certificate of incorporation described in the preceding sentence. This choice of forum provision may limit a shareholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions.

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FORWARD-LOOKING STATEMENTS

The information in this information statement includes "forward-looking statements." The factors identified in this cautionary statement are important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by us, or on our behalf. You can typically identify "forward-looking statements" by the use of forward-looking words such as "aim," "anticipate," "believe," "budget," "continue," "could," "effort," "estimate," "expect," "forecast," "goal," "guidance," "intend," "likely," "may," "might," "objective," "outlook," "plan," "potential," "predict," "project," "seek," "should," "target, "will" or "would" and other similar words. Such statements may include statements regarding our future financial position, budgets, capital expenditures, projected production growth, projected costs, plans and objectives of management for future operations and possible future strategic transactions. Where any such forward-looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that, while we believe such assumptions or bases to be reasonable and make them in good faith, assumed facts or bases almost always vary from actual results. The differences between assumed facts or bases and actual results can be material, depending upon the circumstances. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading "Risk Factors" included in this information statement.

Any forward-looking statement in which we, or our management, express an expectation or belief as to future results, is made in good faith and believed to have a reasonable basis. However, there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. Taking this into account, the following are identified as important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, our company:

•: compliance with regulations or changes in regulations and the ability to get government permits and approvals;
•: commodity pricing;
•: risks of drilling;
•: regulatory initiatives relating to hydraulic fracturing and other well stimulation techniques;
•: tax law changes;
•: uncertainties associated with drilling for and producing oil and gas;
•: competition for oilfield equipment, services, qualified personnel and acquisitions;
•: risks related to our acquisition activities;
•: the subjective nature of estimates of proved reserves and related future net cash flows;
•: vulnerability to economic downturns and adverse developments in our business due to our debt;
•: insufficiency of our operating cash flow to fund planned capital expenditures;
•: inability to implement our capital investment program profitably or at all;
•: concentration of operations in single geographic area;
•: impairment of the value of our oil and natural gas properties;
•: compliance with laws and regulations, including those pertaining to land use and environmental protection;
•: restrictions on our ability to obtain, use, manage or dispose of water;
•: our inability to operate outside of California;

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•: inability to drill identified locations when planned or at all;
•: concerns about climate change and other air quality issues;
•: catastrophic events for which we may be uninsured or underinsured;
•: cyber attacks;
•: operational issues that restrict market access; and
•: uncertainties related to the spin-off, the agreements related thereto and the anticipated effects of restructuring or reorganizing our business.

Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility to publicly release the result of any revision of our forward-looking statements after the date they are made.

Should one or more of the risks or uncertainties described in this prospectus occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this prospectus are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

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THE SPIN-OFF

Background

As part of a strategic review to streamline and focus operations, Occidental's board of directors reviewed the possibility and advisability of separating its California business from Occidental's other businesses. On February 14, 2014, Occidental announced that its board of directors had authorized management to pursue the spin-off of its California business into a standalone, publicly traded company. On October 2, 2014, Occidental announced that its board of directors had unanimously approved the spin-off and the distribution of at least 80.1% of the stock of the new company to Occidental's shareholders as of the record date of November 17, 2014. This authorization is subject to the satisfaction or waiver by Occidental, in its sole discretion, of the conditions described below under "—Conditions to the Spin-Off." Following our spin-off from Occidental, we will be an independent, publicly owned company.

To complete the spin-off on the Closing Date, Occidental will, following the restructuring transactions, distribute to its stockholders at least 80.1% of the shares of our common stock. The distribution will occur on the distribution date, which is November 30, 2014. Each holder of Occidental common stock will receive 0.4 shares of our common stock for each share of Occidental common stock held by such stockholder at the close of business on November 17, 2014, the record date. After completion of the spin-off, we will own and operate the California business as an independent publicly traded company.

Each holder of Occidental common stock will continue to hold his, her or its shares in Occidental. No vote of Occidental stockholders is required or is being sought in connection with the spin-off, and Occidental stockholders will not have any appraisal rights in connection with the spin-off.

The distribution of our common stock as described in this information statement is subject to the satisfaction, or waiver by the board of directors of Occidental, of certain conditions. In addition, Occidental has the right not to complete the spin-off if, at any time prior to the distribution, the board of directors of Occidental determines, in its sole discretion, that the spin-off is not in the best interests of Occidental or its stockholders or market conditions do not warrant completing the separation at that time. For a more detailed description, see "—Conditions to the Spin-Off."

Reasons for the Spin-Off

The spin-off is expected to provide each company with a number of material opportunities and benefits, including the following:

•: creating two independent businesses that will be competitive industry leaders in their respective areas of operations;
•: allowing each business to pursue strategies tailored to its needs, including enabling CRC to reinvest substantially all of its cash flow in growing its business;
•: focusing each management team on the development and execution of its business in its areas of operation;
•: enabling each business to focus on, and accelerate its technical expertise in, specific reservoirs and fields; and
•: enhancing each company's market recognition with investors because of its status as an industry leader in its geographic areas of focus.

Manner of Effecting the Spin-Off

The general terms and conditions relating to the spin-off will be set forth in a Separation and Distribution Agreement between us and Occidental. Under the Separation and Distribution Agreement, the distribution will be effective as of 11:59 p.m., Eastern Time, on November 30, 2014, the distribution

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date. As a result of the spin-off, on the distribution date, each holder of Occidental common stock will receive 0.4 shares of our common stock for each share of Occidental common stock owned. In order to receive shares of our common stock in the spin-off, an Occidental stockholder must be a stockholder at the close of business of the NYSE on November 17, 2014, the record date.

On the distribution date, Occidental will release the shares of our common stock to our distribution agent to distribute to Occidental stockholders. For Occidental stockholders of record, our distribution agent will credit their shares of our common stock to book-entry accounts established to hold their shares of our common stock. Our distribution agent will send these stockholders, including any Occidental stockholder that holds physical share certificates of Occidental common stock and is the registered holder of such shares of Occidental common stock represented by those certificates on the record date, a statement reflecting their ownership of our common stock. Book-entry refers to a method of recording stock ownership in records in which no physical certificates are used. Shares of our common stock will be credited by the broker or other nominee for stockholders who own Occidental common stock through a broker or other nominee. We expect that it will take the distribution agent one to two weeks to electronically issue shares of our common stock to Occidental stockholders or their bank or brokerage firm by way of direct registration in book-entry form. Trading of our stock will not be affected by this delay in issuance by the distribution agent. As further discussed below, we will not issue fractional shares of our common stock in the distribution. Following the spin-off, stockholders whose shares are held in book-entry form may request that their shares of our common stock be transferred to a brokerage or other account at any time.

Occidental stockholders will not be required to make any payment or surrender or exchange their shares of Occidental common stock or take any other action to receive their shares of our common stock. No vote of Occidental stockholders is required or sought in connection with the spin-off, including the restructuring transactions, and Occidental stockholders have no appraisal rights in connection with the spin-off.

Occidental Retained Shares of CRC Common Stock

Occidental expects to dispose of all of the Retained Securities by making one or more offers to exchange such Retained Securities for outstanding shares of Occidental common stock. For each share of Occidental common stock tendered for exchange, the holder of such Occidental common stock will receive a number of shares of CRC common stock based on an exchange ratio to be determined by Occidental. We expect that any Retained Securities Occidental does not dispose of through such exchanges will be distributed pro rata to Occidental shareholders no later than 18 months after the spin-off.

Treatment of Fractional Shares

The distribution agent will not distribute any fractional shares of our common stock to Occidental stockholders. Instead, as soon as practicable on or after the distribution date, the distribution agent will aggregate fractional shares of our common stock held by holders of record into whole shares, sell them in the open market at the prevailing market prices and then distribute the aggregate net sale proceeds ratably to Occidental stockholders who would otherwise have been entitled to receive fractional shares of our common stock. The amount of this payment will depend on the prices at which the distribution agent sells the aggregated fractional shares of our common stock in the open market shortly after the distribution date. We will be responsible for paying any brokerage fees, which we do not expect to be material. The receipt of cash in lieu of fractional shares of our common stock will generally result in a taxable gain or loss to the recipient stockholder. Each stockholder entitled to receive cash proceeds from these shares should consult his, her or its own tax advisor as to the stockholder's particular circumstances. The tax consequences of the distribution are described in more detail under "—U.S. Federal Income Tax Consequences of the Spin-Off."

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U.S. Federal Income Tax Consequences of the Spin-Off

The following is a summary of the material U.S. federal income tax considerations relating to holders of Occidental common stock as a result of the distribution. This summary is based on the Code, the Treasury Regulations promulgated thereunder and judicial and administrative interpretations thereof, in each case as in effect and available as of the date of this information statement and all of which are subject to differing interpretations that may change at any time, possibly with retroactive effect. Any such change could affect the tax consequences described below.

Except as specifically described below, this summary is limited to holders of Occidental common stock that are U.S. holders (as described below). For purposes of this summary, a U.S. holder is a beneficial owner of Occidental common stock that is, for U.S. federal income tax purposes:

•: an individual who is a citizen or resident of the United States;
•: a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
•: an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
•: a trust, if (1) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of the substantial decisions of such trust or (2) it has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes.

A non-U.S. holder is a beneficial owner (other than an entity treated as a partnership or other pass-through entity for U.S. federal income tax purposes) of shares of Occidental common stock who is not a U.S. holder.

This summary does not discuss all tax considerations that may be relevant to Occidental shareholders in light of their particular circumstances, nor does it address the consequences to Occidental shareholders subject to special treatment under the U.S. federal income tax laws, such as:

•: dealers or traders in securities or currencies;
•: banks, financial institutions, or insurance companies;
•: regulated investment companies, real estate investment trusts, or grantor trusts;
•: former U.S. citizens or long-term residents of the United States;
•: entities that are tax-exempt for U.S. federal income tax purposes;
•: traders in securities that elect to use a mark-to-market method of accounting for their securities;
•: holders who own shares of our common stock as part of a hedging, integrated, or conversion transaction or a straddle or holders deemed to sell shares of our common stock under the constructive sale provisions of the Code;
•: holders who acquired our common stock pursuant to the exercise of employee stock options or otherwise as compensation;
•: U.S. holders whose "functional currency" is not the U.S. dollar;
•: holders subject to the alternative minimum tax; or
•: partnerships or other pass-through entities and investors in such entities.

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This summary does not address the U.S. federal income tax consequences to Occidental shareholders who do not hold Occidental common stock as capital assets. Moreover, this summary does not address any state, local or non-U.S. tax consequences or any estate, gift or other non-income tax consequences.

If a partnership (including an entity treated as a partnership for U.S. federal income tax purposes) holds shares of Occidental common stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding shares of Occidental common stock, you should consult your tax advisor.

HOLDERS OF OCCIDENTAL COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC U.S. FEDERAL, STATE AND LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE DISTRIBUTION IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES AND THE EFFECT OF POSSIBLE CHANGES IN LAW THAT MIGHT AFFECT THE TAX CONSEQUENCES DESCRIBED HEREIN.

Tax-free Status of the Distribution

Occidental (i) has received a private letter ruling substantially to the effect that certain aspects of the transactions that will be undertaken in preparation for, or in connection with, the spin-off will not cause the distribution to be taxable to Occidental or its affiliates and (ii) has requested an opinion from its tax counsel regarding, among other things, that the spin-off generally qualifies as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code. Assuming that the distribution qualifies as a tax-free distribution,

•: no gain or loss will be recognized by, and no amount will be included in the income of, Occidental stockholders upon their receipt of shares of our common stock in the distribution;
•: the basis of an Occidental stockholder in Occidental common stock immediately before the distribution will be allocated between the Occidental common stock held by such holder and our common stock received by such holder in the distribution, in proportion to their relative fair market values at the time of the distribution;
•: the holding period of our common stock received by each Occidental stockholder will include the period during which the stockholder held the Occidental common stock on which the distribution is made, provided that the Occidental common stock is held as a capital asset on the distribution date;
•: an Occidental stockholder that receives cash in lieu of a fractional share of our common stock generally should recognize taxable gain or loss equal to the difference between the amount of cash received for such fractional share of our common stock and the tax basis allocable to such fractional share interests in our common stock (determined as described above) and such gain will be capital gain or loss if the Occidental common stock on which the distribution is made is held as a capital asset on the distribution date; and
•: no gain or loss will be recognized by Occidental upon the distribution of our common stock.

The private letter ruling has relied and the opinion of counsel will rely on certain facts, assumptions, representations and undertakings from Occidental and us regarding the past and future conduct of the companies' respective businesses and other matters. If any of these facts, assumptions, representations, or undertakings are, or become, incorrect or not otherwise satisfied, Occidental may not be able to rely on the private letter ruling or the opinion of its tax advisor. In addition, an opinion of counsel is not binding on the IRS, so, notwithstanding the opinion of Occidental's tax advisor, the IRS could conclude upon audit that the distribution is taxable if it disagrees with the conclusions in the opinion or for other reasons. There can be no assurance that the IRS or the courts will not challenge the qualification of the distribution as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code or that such challenge would not prevail.

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Even if the distribution otherwise qualifies as tax-free, Occidental or its affiliates may recognize taxable gain under Section 355(e) of the Code if there are one or more acquisitions (including issuances) of either our stock or the stock of Occidental, representing 50% or more, measured by vote or value, of the then-outstanding stock of either corporation, and the acquisition or acquisitions are deemed to be part of a plan or series of related transactions that include the distribution. Any such acquisition of our stock within two years before the initial distribution or two years after the final disposition of the Retained Securities (with exceptions, including public trading by less-than 5% stockholders and certain compensatory stock issuances) generally will be presumed to be part of such a plan unless Occidental can rebut that presumption. If Occidental recognizes gain under Section 355(e), it would result in a significant U.S. federal income tax liability to Occidental (although the distribution would generally be tax-free to Occidental stockholders), and, under some circumstances, the Tax Sharing Agreement would require us to indemnify Occidental for such tax liability. See "—Indemnification" and "Arrangements Between Occidental and Our Company—Tax Sharing Agreement."

Material U.S. Federal Income Tax Consequences of the Distribution to U.S. Holders

Distribution of CRC Stock

The discussion above under "—Tax-free Status of the Distribution" applies to U.S. holders if the distribution qualifies as tax-free under Section 355 of the Code.

If the distribution of shares of our common stock does not qualify under Section 355, then each U.S. holder of Occidental receiving shares of our common stock in the distribution generally would be treated as receiving a distribution in an amount equal to the fair market value of such shares (including fractional shares in lieu of which such holder receives cash) of our common stock. This generally would result in the following consequences to the U.S. holder:

•: first, a taxable dividend to the extent of such U.S. holder's pro rata share of Occidental's current and accumulated earnings and profits;
•: second, any amount that exceeds Occidental's earnings and profits would be treated as a nontaxable return of capital to the extent of such U.S. holder's tax basis in its shares of Occidental's common stock; and
•: third, any remaining amount would be taxed as capital gain.

In addition, Occidental would recognize a taxable gain equal to the excess of the fair market value of our common stock distributed over Occidental's adjusted tax basis in such stock, and, under certain circumstances, the Tax Sharing Agreement would require us to indemnify Occidental for such tax liability. See "—Indemnification" and "Arrangements Between Occidental and Our Company—Tax Sharing Agreement."

Cash in Lieu of Fractional Shares

Assuming the distribution qualifies as a tax-free distribution for U.S. federal income tax purposes, a U.S. holder who receives cash in lieu of our common stock in connection with the distribution generally will recognize capital gain or loss measured by the difference between the cash received for such fractional share of our common stock and the holder's tax basis that would be allocated to such fractional share. Any such capital gain would be long term capital gain, assuming that the U.S. holder has held all of its Occidental common stock for more than one year. If the distribution does not qualify as a tax-free distribution, then the same rule will apply, but the U.S. holder's basis in the fractional share of our stock will be its fair market value at the time of the distribution.

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Information Reporting and Backup Withholding

A U.S. holder that receives a taxable distribution of our common stock or payment of cash in lieu of a fractional share of our common stock made in connection with the distribution may be subject to information reporting and backup withholding. A U.S. holder may avoid backup withholding if such holder provides proof of an applicable exemption or a correct taxpayer identification number, and otherwise complies with the requirements of the backup withholding rules. Backup withholding does not constitute an additional tax, but is merely an advance payment that may be refunded or credited against a holder's U.S. federal income tax liability, provided the required information is timely supplied to the IRS.

Material U.S. Federal Income Tax Consequences of the Distribution to Non-U.S. Holders

Distribution of CRC Stock

Provided that the distribution qualifies as a tax-free distribution for U.S. federal income tax purposes, non-U.S. holders receiving stock in the distribution will not be subject to U.S. federal income tax on any gain realized on the receipt of our common stock so long as (1) Occidental's common stock is considered regularly traded on an established securities market and (2) such non-U.S. holder beneficially owns 5% or less of Occidental's common stock at all times during the shorter of the five-year period ending on the distribution date or the non-U.S. holder's holding period, taking into account both actual and constructive ownership under the applicable ownership attribution rules of the Code. Occidental believes that its common stock has been and is regularly traded on an established securities market for U.S. federal income tax purposes.

Any non-U.S. holder that beneficially owns more than 5% of Occidental common stock under the rules described above and receives our common stock will be subject to U.S. federal income tax on any gain realized with respect to its existing Occidental common stock as a result of the distribution if (1) Occidental is treated as a "United States real property holding corporation" ("USRPHC") for U.S. federal income tax purposes at any time during the shorter of the five year period ending on the distribution date or the period during which the non-U.S. holder held such Occidental common stock and (2) we are not a USRPHC immediately following the distribution. In general, either Occidental or we will be a USRPHC at any relevant time described above if 50% or more of the fair market value of the respective company's assets constitute "United States real property interests" within the meaning of the Code. We expect to be a USRPHC immediately after the distribution. However, because the determination of whether we are a USRPHC turns on the relative fair market value of our United States real property interests and our other assets, and because the USRPHC rules are complex, we can give no assurance that we will be a USRPHC after the distribution. Any non-U.S. holder that beneficially owns more than 5% of Occidental common stock under the rules described above and receives our common stock will not be subject to U.S. federal income tax on any gain realized with respect to its existing Occidental common stock as a result of the distribution if (a) we are a USRPHC and (b) such non-U.S. holders meet certain procedural and substantive requirements described in Treasury regulations. Non-U.S. holders should consult their tax advisors to determine if they are more than 5% beneficial owners of Occidental's common stock, or may be more than 5% owners of our common stock under the applicable rules.

If the distribution does not qualify as a tax-free distribution for U.S. federal income tax purposes, then each non-U.S. holder receiving shares of our common stock in the distribution (including fractional shares in lieu of which such holder receives cash) would be subject to U.S. federal income tax at a rate of 30% of the gross amount of any such distribution that is treated as a dividend, unless:

(1) such dividend was effectively connected with the conduct of a U.S. trade or business, and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder within the United States; or

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(2) the non-U.S. holder is entitled to a reduced tax rate with respect to dividends pursuant to an applicable income tax treaty.

Under the first exception, regular graduated federal income tax rates applicable to U.S. persons would apply to the dividend, and, in the case of a corporate non-U.S. holder, a branch profits tax may also apply, as described below. Unless one of these exceptions applies and the non-U.S. holder provides Occidental with an appropriate IRS Form (or Forms) W-8 to claim an exemption from or reduction in the rate of withholding under such exception, Occidental may be required to withhold 30% of any distribution of our common stock treated as a dividend to satisfy the non-U.S. holder's U.S. federal income tax liability.

A distribution of our common stock that is not tax-free for U.S. federal income tax purposes could also be treated as a nontaxable return of capital or could trigger capital gain for U.S. federal income tax purposes. A distribution of our common stock that is treated as a nontaxable return of capital is generally not subject to U.S. income tax. Furthermore, such distribution generally is not subject to U.S. withholding tax so long as the common stock of Occidental is regularly traded on an established securities market, which Occidental believes to be the case, and the non-U.S. holder does not beneficially own more than 5% of Occidental's common stock at any time during the shorter of the five year period ending on the distribution date or the period during which the non-U.S. Holder held such Occidental common stock, taking into account the attribution rules described above. A distribution of our common stock triggering capital gain is generally not subject to U.S. federal income taxation subject to the same exceptions described below under "—Cash In Lieu of Fractional Shares," and generally is not subject to U.S. withholding tax subject to the same exception described above for a nontaxable return of capital.

Cash In Lieu of Fractional Shares

Assuming the distribution qualifies as a tax-free distribution, non-U.S. holders generally will not be subject to regular U.S. federal income or withholding tax on gain realized on the receipt of cash in lieu of fractional shares of our common stock received in the distribution, unless:

(1) the gain is effectively connected with a United States trade or business of the non-U.S. holder and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by the non-U.S. holder within the United States;

(2) the non-U.S. holder is a nonresident alien individual who is present in the United States for a period or periods aggregating 183 days or more during the taxable year in which the distribution occurs and certain other conditions are met; or

(3) we are treated as a USRPHC immediately after the distribution, and (i) our common stock is not regularly traded on an established securities market (which we do not believe will be the case), or (ii) if our common stock were regularly traded on an established securities market, the non-U.S. holder beneficially owned more than 5% of our common stock under the rules described above.

If one of the above clauses (1) through (3) applies, the non-U.S. holder generally will recognize capital gain or loss measured by the difference between the cash received for the fractional share of our common stock and the holder's tax basis that would be allocated to such fractional share. Gains realized by a non-U.S. holder described in clause (1) above that are effectively connected with the conduct of a trade or business, and, if required by an applicable income tax treaty, are attributable to a permanent establishment or a fixed base maintained by the non-U.S. holder within the United States generally will be taxed on a net income basis at the graduated rates that are applicable to U.S. persons. In the case of a non-U.S. holder that is a corporation, such income may also be subject to the U.S. federal branch profits tax, which generally is imposed on a foreign corporation upon the deemed repatriation from the United States of effectively connected earnings and profits, currently at a 30% rate, unless the rate is reduced or eliminated by an applicable income tax treaty and the non-U.S. holder is a qualified resident of the treaty country. Gains realized by a non-U.S. holder described in clause (2) above generally will be subject to a 30% tax

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from the receipt of cash in lieu of fractional shares (or a lower treaty rate, if applicable), with such gains eligible to be offset by certain U.S.-source capital losses recognized in the same taxable year of the distribution. Non-U.S. holders that meet the circumstances in clause (3) should consult their tax advisors regarding the determination of the amount of gain (if any) that would be subject to U.S. federal income tax. If the distribution does not qualify as a tax-free distribution, then the same rule will apply, but the non-U.S. holder's basis in the fractional share of our stock will be its fair market value at the time of the distribution.

Information Reporting and Backup Withholding

Payments made to non-U.S. holders in the distribution may be subject to information reporting and backup withholding. Non-U.S. holders generally may avoid backup withholding by furnishing a properly executed IRS Form W-8BEN (or other applicable IRS Form W-8) certifying the non-U.S. holder's non-U.S. status or by otherwise establishing an exemption. Backup withholding is not an additional tax. Rather, non-U.S. holders may use amounts withheld as a credit against their U.S. federal income tax liability or may claim a refund of any excess amounts withheld by timely and duly filing a claim for refund with the IRS.

Information Reporting for Significant Stockholders

Current Treasury regulations require a "significant" stockholder (one who immediately before the distribution owns 5% or more (by vote or value) of the total outstanding Occidental common stock) who receives our common stock pursuant to the distribution to attach to such stockholder's U.S. federal income tax return for the year in which the distribution occurs a detailed statement setting forth such data as may be appropriate in order to show the applicability to the distribution of Section 355 of the Code.

Indemnification

Under the Tax Sharing Agreement, we have agreed to indemnify Occidental from liability for any taxes arising from the spin-off to the extent attributable to a breach by us (or any of our subsidiaries) of any of our representations or covenants in the Tax Sharing Agreement or made in connection with the private letter ruling or opinion of counsel. We also have agreed to pay 50% of any taxes arising from the spin-off or related transactions to the extent that the tax is not attributable to the fault of either party; however, if CRC receives an increase in the tax basis of its depletable, depreciable or amortizable assets as a result of any such tax being imposed, CRC will pay to Occidental an amount equal to any reduction in its tax liability attributable to such basis increase when such reduction in tax liability arises. See "Arrangements Between Occidental and Our Company—Tax Sharing Agreement."

Results of the Spin-Off

After the spin-off, we will be an independent, publicly traded company. Immediately following the spin-off, we expect to have approximately 29,000 registered holders of our common stock, based on the number of registered holders of Occidental common stock as of September 30, 2014. Upon completion of the spin-off, we estimate that we will have an aggregate of no more than approximately 387 million shares of our common stock outstanding based on approximately 775 million shares of Occidental common stock outstanding as of September 30, 2014, assuming distribution of at least 80.1% of our common stock to shareholders of Occidental and that each Occidental shareholder will receive 0.4 shares of our common stock for each share of Occidental common stock. As a result, we expect to distribute approximately 310 million shares to Occidental shareholders, and the remaining outstanding shares will be held by Occidental. These figures assume no exercise of outstanding options or issuance of other stock awards and exclude shares of Occidental common stock held directly or indirectly by Occidental, if any. The actual number of shares to be distributed will be determined on the record date and will reflect any exercise of Occidental options or issuance of other stock awards between the date the Occidental board of directors declares the dividend for the distribution and the record date for the distribution.

For information regarding options to purchase shares of our common stock or issuance of other stock awards that will be outstanding after the distribution, see "Capitalization," "Management" and "Arrangements Between Occidental and Our Company—Employee Matters Agreement."

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Trading Prior to the Distribution Date

It is anticipated that, on or shortly before the record date and continuing up to and including the distribution date, there will be a "when-issued" market in our common stock. When-issued trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. The when-issued trading market will be a market for shares of our common stock that will be distributed to Occidental stockholders on the distribution date. Any Occidental stockholder that owns shares of Occidental common stock at the close of business on the record date will be entitled to shares of our common stock distributed in the spin-off. Occidental stockholders may trade this entitlement to shares of our common stock, without the shares of Occidental common stock they own, on the when-issued market. On the first trading day following the distribution date, we expect when-issued trading with respect to our common stock will end and "regular-way" trading will begin. See "Trading Market."

Following the distribution date, shares of our common stock will trade on the NYSE under the ticker symbol "CRC." We will announce the when-issued ticker symbol when and if it becomes available.

It is also anticipated that, on or shortly before the record date and continuing up to and including the distribution date, there will be two markets in Occidental common stock: a "regular-way" market and an "ex-distribution" market. Shares of Occidental common stock that trade on the regular-way market will trade with an entitlement to shares of our common stock distributed pursuant to the distribution. Shares that trade on the ex-distribution market will trade without an entitlement to shares of our common stock distributed pursuant to the distribution. Therefore, if shares of Occidental common stock are sold in the regular-way market up to and including the distribution date, the selling stockholder's right to receive shares of our common stock in the distribution will be sold as well. However, if Occidental stockholders own shares of Occidental common stock at the close of business on the record date and sell those shares on the ex-distribution market up to and including the distribution date, the selling stockholders will still receive the shares of our common stock that they would otherwise receive pursuant to the distribution. See "Trading Market."

Treatment of Long-Term Incentive Awards for Current and Former Employees

We currently anticipate that equity-based and long-term incentive compensation awards from Occidental held by individuals who will be employed by us and our subsidiaries following the spin-off ("transferred employees") will be converted into awards with respect to our common stock under our equity and long-term incentive compensation programs, with the number of such awards determined based upon the relative trading prices of our common stock and Occidental common stock in a manner intended to preserve the value of such awards. Generally, the corresponding award granted under our long-term incentive plan will be similar to the award the transferred employee held under Occidental's long-term incentive plan, except that restricted stock units and cash-based long-term incentive awards will be converted instead into awards of restricted shares of our common stock. In addition, the converted awards will cease to be subject to the prior-established performance-based vesting requirements and will instead vest based upon the same service-based vesting requirements and, in the case of performance-based

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awards held by individuals with a title of executive vice president or above, performance-based vesting requirements established by the Occidental Compensation Committee as of the spin-off.

Equity-based and long-term incentive compensation awards from Occidental that are held by employees who will stay with Occidental will remain outstanding pursuant to the applicable plans maintained by Occidental, with corresponding adjustments made to the number of shares of Occidental common stock subject to such awards and the reference price of such awards based upon the relative pre-spin-off and post-spin-off trading prices of Occidental common stock in a manner intended to preserve the value of such awards.

Conditions to the Spin-Off

Occidental expects that the spin-off will be effective as of 11:59 p.m., Eastern Time, on November 30, 2014, the distribution date, provided that the following conditions shall have been satisfied or waived by Occidental in its sole discretion:

•: the SEC will have declared effective our registration statement on Form 10, of which this information statement is a part, under the Exchange Act; no stop order suspending the effectiveness of the registration statement shall be in effect; and no proceedings for such purpose shall be pending before or threatened by the SEC;
•: any required actions and filings with regard to state securities and blue sky laws of the U.S. (and any comparable laws under any foreign jurisdictions) will have been taken and, where applicable, have become effective or been accepted;
•: our common stock will have been authorized for listing on the NYSE, or another national securities exchange approved by Occidental, subject to official notice of issuance (which authorization has been received);
•: Occidental shall have received a private letter ruling (which has been received) from the IRS to the effect that certain aspects of the transactions that will be undertaken in preparation for, or in connection with, the spin-off will not cause the distribution to be taxable to Occidental or its affiliates, and such private letter ruling shall not have been revoked or modified in any material respect;
•: Occidental shall have received an opinion of its tax counsel, in form and substance acceptable to Occidental and which shall remain in full force and effect, that (i) certain transactions that will be undertaken in preparation for, or in connection with, the spin-off will not be taxable to Occidental or its affiliates for federal income tax purposes and (ii) the spin-off generally qualifies as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code;
•: no order, injunction, decree or regulation issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution will be in effect;
•: the completion of our new financing arrangements;
•: no other events or developments shall have occurred or exist that, in the judgment of the board of directors of Occidental, in its sole discretion, makes it inadvisable to effect the distribution or other transactions contemplated by the Separation and Distribution Agreement;
•: each of the ancillary agreements contemplated by the Separation and Distribution Agreement shall have been executed by each party thereto; and
•: any government approvals and other material consents necessary to consummate the distribution will have been obtained and remain in full force and effect.

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The fulfillment of the foregoing conditions does not create any obligations on Occidental's part to effect the spin-off, and the Occidental board of directors has reserved the right, in its sole discretion, to abandon, modify or change the terms of the spin-off, including by waiving any conditions to the spin-off or accelerating or delaying the timing of the consummation of all or part of the distribution, at any time prior to the distribution date.

Reasons for Furnishing this Information Statement

This information statement is being furnished solely to provide information to Occidental stockholders who will receive shares of our common stock in the spin-off. It is not to be construed as an inducement or encouragement to buy or sell any of our securities. We believe that the information contained in this information statement is accurate as of the date set forth on the cover. Changes may occur after that date and neither Occidental nor we undertake any obligation to update the information, except to the extent applicable securities laws require us to do so.

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TRADING MARKET

Market for Our Common Stock

There has been no public market for our common stock. An active trading market may not develop or may not be sustained. We anticipate that trading of our common stock will commence on a "when-issued" basis on or shortly before the record date and continue through the distribution date. When-issued trading refers to a sale or purchase made conditionally because the security has been authorized but not yet issued. When-issued trades generally settle within four trading days after the distribution date. If you own shares of Occidental common stock at the close of business on the record date, you will be entitled to shares of our common stock distributed pursuant to the spin-off. You may trade this entitlement to shares of our common stock, without the shares of Occidental common stock you own, on the when-issued market. On the first trading day following the distribution date, any when-issued trading with respect to our common stock will end and "regular-way" trading will begin. Our common stock has been approved for listing on the NYSE under the ticker symbol "CRC." We will announce our when-issued trading symbol when and if it becomes available.

It is also anticipated that, on or shortly before the record date and continuing up to and including the distribution date, there will be two markets in Occidental common stock: a "regular-way" market and an "ex-distribution" market. Shares of Occidental common stock that trade on the regular-way market will trade with an entitlement to shares of our common stock distributed pursuant to the distribution. Shares that trade on the ex-distribution market will trade without an entitlement to shares of our common stock distributed pursuant to the distribution. Therefore, if you sell shares of Occidental common stock in the regular-way market up to and including the distribution date, you will be selling your right to receive shares of our common stock in the distribution. However, if you own shares of Occidental common stock at the close of business on the record date and sell those shares on the ex-distribution market up to and including the distribution date, you will still receive the shares of our common stock that you would otherwise receive pursuant to the distribution.

We cannot predict the prices at which our common stock may trade before the spin-off on a "when-issued" basis or after the spin-off. Those prices will be determined by the marketplace. Prices at which trading in our common stock occurs may fluctuate significantly. Those prices may be influenced by many factors, including anticipated or actual fluctuations in our operating results or those of other companies in our industry, investor perception of our company and the energy industry, market fluctuations and general economic conditions. In addition, the stock market in general has experienced extreme price and volume fluctuations that have affected the performance of many stocks and that have often been unrelated or disproportionate to the operating performance of these companies. These are just some factors that may adversely affect the market price of our common stock. See "Risk Factors—Risks Related to Our Common Stock."

Transferability of Shares of Our Common Stock

The shares of our common stock that you will receive in the distribution will be freely transferable, unless you are considered an "affiliate" of ours under Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"). Persons who can be considered our affiliates after the spin-off generally include individuals or entities that directly, or indirectly through one or more intermediaries, control, are controlled by, or are under common control with, us, and may include certain of our officers and directors. In addition, individuals who are affiliates of Occidental on the distribution date may be deemed to be affiliates of ours. We estimate that our directors and executive officers, who may be considered "affiliates," will beneficially own approximately 63,583 shares of our common stock (excluding restricted stock) immediately following the distribution. Occidental may also be considered our affiliate because immediately following the distribution Occidental may own as much as 19.9% of CRC's outstanding shares of common stock. See "Security Ownership of Certain Beneficial Owners and Management" included

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elsewhere in this information statement for more information. As discussed under "Other Related Party Transactions," we are entering into a Stockholder's and Registration Rights Agreement with Occidental pursuant to which we will be required to use our best efforts to effect the registration under applicable federal and state securities laws of the shares of our common stock retained by Occidental after the distribution. See "Arrangements Between Occidental and Our Company—Stockholder's and Registration Rights Agreement" included elsewhere in this information statement. Our affiliates may sell shares of our common stock received in the distribution only:

•: under a registration statement that the SEC has declared effective under the Securities Act; or
•: under an exemption from registration under the Securities Act, such as the exemption afforded by Rule 144.

In general, under Rule 144 as currently in effect, an affiliate will be entitled to sell, within any three-month period commencing 90 days after the date the registration statement, of which this information statement is a part, is declared effective, a number of shares of our common stock that does not exceed the greater of:

•: 1.0% of our common stock then outstanding; or
•: the average weekly trading volume of our common stock on the NYSE during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Rule 144 also includes notice requirements and restrictions governing the manner of sale. Sales may not be made under Rule 144 unless certain information about us is publicly available.

In the future, we may adopt new stock option and other equity-based award plans and issue options to purchase shares of our common stock and other stock-based awards. We currently expect to file a registration statement under the Securities Act to register shares to be issued under these stock plans. Shares issued pursuant to awards after the effective date of the registration statement, other than shares issued to affiliates, generally will be freely tradable without further registration under the Securities Act.

Except for our common stock distributed in the distribution and the Retained Securities, none of our equity securities will be outstanding on or immediately after the spin-off and, except for the Stockholder's and Registration Rights Agreement with Occidental with respect to the Retained Securities, there are no registration rights agreements existing with respect to our common stock.

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DIVIDEND POLICY

We intend to pay a cash dividend of $0.01 per share per quarter, or $0.04 per share per year, beginning with the first quarter of 2015. We currently intend to retain the remainder of our future earnings to support the growth and development of our business. In addition, we will be authorized to implement a share repurchase program if circumstances warrant. The payment of future cash dividends, if any, will be at the discretion of our board of directors and will depend upon, among other things, our financial condition, results of operations, capital requirements and development expenditures, future business prospects and any restrictions imposed by future debt instruments.

CAPITALIZATION

The following table sets forth (i) our historical capitalization as of June 30, 2014 and (ii) our adjusted capitalization assuming the distribution, the incurrence of debt and other matters (as discussed in "The Spin-Off") were effective as of June 30, 2014. The table below should be read in conjunction with "Summary Combined Historical and Pro Forma Financial Data," "Unaudited Pro Forma Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited combined financial statements, unaudited interim combined condensed financial statements and the notes to those statements included elsewhere in this information statement.

	As of June 30, 2014

	Historical			As Adjusted
	(Unaudited)
	(in millions)
Debt Outstanding
Short-term debt	$	—		$	—
Long-term debt:
Revolving Credit Facility(1)		—			65
Term Loan Facility		—			1,000
5.00% notes due 2020		—			1,000
5.50% notes due 2021		—			1,750
6.00% notes due 2024		—			2,250


Total debt		—			6,065


Net Investment / Stockholders' Equity
Common stock
Par value		—			4
Additional paid-in capital		—			4,675
Net investment		10,296			—
Accumulated other comprehensive income (loss)		(22	)		(22	)


Net Investment/Stockholders' Equity		10,274			4,657


Total Capitalization	$	10,274		$	10,722

(1): We expect to borrow an additional $300 million to $350 million under our Revolving Credit Facility, including borrowings of approximately $200 million we expect to incur prior to the separation to repay a short term loan from Occidental used to fund the acquisition of oil and gas properties and between $100 million and $150 million of borrowings that we expect to incur concurrently with, or shortly after, the separation to fund our working capital requirements as a stand-alone company. As of June 30, 2014, on a pro forma basis giving effect to the incurrence of debt, the spin-off, the $6 billion of distributions to Occidental and these additional $300 million to $350 million of borrowings, we expect to have the ability to incur from $1.585 billion to $1.635 billion of additional borrowings under our Revolving Credit Facility.

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SELECTED HISTORICAL COMBINED FINANCIAL DATA

The following tables set forth selected historical combined financial data for the periods indicated. The historical unaudited combined financial data for the six months ended June 30, 2014 and 2013 and balance sheet data as of June 30, 2014 have been derived from our unaudited condensed combined financial statements included elsewhere in this information statement. The unaudited condensed combined financial statements have been prepared on the same basis as our audited combined financial statements, except as stated in the related notes thereto, and include all normal recurring adjustments that, in the opinion of management, are necessary to present fairly our financial condition and result of operations for such periods. The results of operations for the six months ended June 30, 2014 and 2013 presented below are not necessarily indicative of results for the entire fiscal year. Our selected historical combined financial data as of December 31, 2013 and 2012 and for the fiscal years ended December 31, 2013, 2012 and 2011 have been derived from our audited historical combined financial statements included elsewhere in this information statement. Our historical combined financial data as of December 31, 2011, 2010 and 2009 and for the years ended December 31, 2010 and 2009 have been derived from our unaudited accounting records not included in this information statement.

The financial statements included elsewhere in this information statement may not necessarily reflect our financial position, results of operations and cash flows as if we had operated as a stand-alone public company during all periods presented. Accordingly, our historical results should not be relied upon as an indicator of our future performance.

The following selected historical financial data should be read in conjunction with "Capitalization," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Arrangements Between Occidental and Our Company" and our historical financial statements and related notes thereto appearing elsewhere in this information statement.

	Six Months Ended June 30,				Year Ended December 31,

	2014		2013		2013		2012		2011		2010		2009
	(in millions)
Statement of Income Data:
Net sales, including to related parties	$	2,262	$	2,098	$	4,285	$	4,072	$	3,938	$	2,916	$	2,221
Income before taxes	$	782	$	703	$	1,447	$	1,181	$	1,641	$	1,129	$	659
Net income	$	469	$	422	$	869	$	699	$	971	$	719	$	401

	As of June 30,		As of December 31,

	2014		2013		2012		2011		2010		2009
	(in millions)
Balance Sheet Data:
Property, plant and equipment, net	$	14,434	$	14,008	$	13,499	$	11,778	$	8,823	$	7,832
Net investment	$	10,274	$	9,989	$	9,860	$	8,624	$	6,557	$	6,099

	Six Months Ended June 30,						Year Ended December 31,

	2014			2013			2013			2012			2011			2010			2009
	(in millions)
Statement of Cash Flows Data:
Net cash provided by operating activities	$	1,234		$	1,177		$	2,476		$	2,223		$	2,456		$	1,751		$	1,056
Capital expenditures	$	(1,003	)	$	(737	)	$	(1,669	)	$	(2,331	)	$	(2,164	)	$	(1,056	)	$	(650	)
Payments for purchases of assets and businesses, and other	$	(35	)	$	(31	)	$	(48	)	$	(427	)	$	(1,405	)	$	(448	)	$	(516	)

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UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

The unaudited pro forma combined financial statements presented below have been derived from our historical combined financial statements included elsewhere in this information statement. While the historical combined financial statements reflect the past financial results of the California business, these pro forma statements give effect to the separation of those operations into a standalone, publicly traded company in the spin-off.

The pro forma adjustments, including related tax effects, to reflect the spin-off include the following:

•: the issuance of $5.0 billion of notes (which occurred October 1, 2014) and borrowings of approximately $1.0 billion under our Term Loan Facility and $65 million under our Revolving Credit Facility;
•: distributions of approximately $6.0 billion to Occidental from the net proceeds from our new debt;
•: the issuance of approximately 387 million shares of our common stock; and
•: the trade receivables CRC would carry as it starts marketing its own products and the assumption of certain liabilities in connection with the spin-off.

The unaudited pro forma combined statements of income for the year ended December 31, 2013 and the six months ended June 30, 2014 have been prepared as though the spin-off occurred as of January 1, 2013. The unaudited pro forma combined balance sheet at June 30, 2014 has been prepared as though the spin-off occurred on June 30, 2014. The pro forma adjustments are based on available information and assumptions that we believe are reasonable. Such adjustments are estimates and may not prove to be accurate.

We have attempted to include recurring costs of operating as a stand-alone company, including executive oversight, accounting, procurement, engineering, drilling, exploration, marketing, finance, internal audit, legal, risk management, tax, treasury, information technology, government relations, investor relations, public relations, financial reporting, human resources, ethics and compliance, and certain other shared services related to being a stand-alone company. Only costs we have determined to be factually supportable are included as pro forma adjustments, including the items described above. We expect the costs of operating as a stand-alone public company, other than debt-related costs, will be generally comparable to the costs reported in the historical combined financial statements. Additionally, such costs are estimates and there could be additional incremental costs not reflected in the unaudited pro forma combined financial statements. Subject to the terms of the Separation and Distribution Agreement, nonrecurring third-party costs and expenses that are related to the separation, other than the debt-related costs, and incurred prior to the separation date will generally be paid by Occidental. We expect such nonrecurring amounts to include costs to separate and/or duplicate information technology systems, outside legal and accounting fees, and similar costs.

The financial information presented below is not necessarily indicative of our future performance or what our financial position and results of operations would have been had we operated as a stand-alone public company during the periods presented, or had the transactions reflected in the pro forma adjustments actually occurred as of the dates assumed. The unaudited pro forma combined financial data are for illustrative purposes only. The unaudited pro forma combined financial data constitute forward-looking information and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. See "Forward-Looking Statements" in this information statement.

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be made concurrently with, or shortly after, the separation to fund our working capital requirements as a stand-alone company.

The unaudited pro forma combined financial data should be read in conjunction with "Summary Combined Historical and Pro Forma Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our audited combined financial statements, unaudited interim combined condensed financial statements and the related notes thereto appearing elsewhere in this information statement.

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CALIFORNIA RESOURCES CORPORATION
Unaudited Pro Forma Combined Statements of Income
Six Months Ended June 30, 2014

	Historical			Pro Forma Adjustments				Pro Forma

	(in millions, except per share amounts)
Revenues:
Net sales to related parties	$	2,206		$	(2,206	)	(a)	$	—
Net sales to third parties		56			2,206		(a)		2,262
Other income		(1	)		—				(1	)


		2,261			—				2,261


Costs and expenses:
Production costs		578			—				578
Selling, general and administrative expenses		166			—				166
Depreciation, depletion and amortization		582			—				582
Taxes other than on income		107			—				107
Exploration expense		46			—				46
Interest and debt expense, net		—			161		(b)		161


		1,479			161				1,640


Income before income taxes		782			(161	)			621
Provision for income taxes		(313	)		64		(c)		(249	)


Net income	$	469		$	(97	)		$	372




Pro forma earnings per share(d):
Basic								$	0.96
Diluted								$	0.96
Pro forma shares outstanding(d):
Basic									387
Diluted									387

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CALIFORNIA RESOURCES CORPORATION
Unaudited Pro Forma Combined Statements of Income
Year Ended December 31, 2013

	Historical			Pro Forma Adjustments				Pro Forma

	(in millions, except per share amounts)
Revenues and other income:
Net sales to related parties	$	4,174		$	(4,174	)	(a)	$	—
Net sales to third parties		111			4,174		(a)		4,285
Other income		(1	)		—				(1	)


		4,284			—				4,284


Costs and expenses:
Production costs		1,066			—				1,066
Selling, general and administrative expenses		326			—				326
Depreciation, depletion and amortization		1,144			—				1,144
Taxes other than on income		185			—				185
Exploration expense		116			—				116
Interest and debt expense, net		—			323		(b)		323


		2,837			323				3,160


Income before income taxes		1,447			(323	)			1,124
Provision for income taxes		(578	)		129		(c)		(449	)


Net income	$	869		$	(194	)		$	675




Pro forma earnings per share(d):
Basic								$	1.74
Diluted								$	1.74
Pro forma shares outstanding(d):
Basic									387
Diluted									387

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CALIFORNIA RESOURCES CORPORATION
Unaudited Pro Forma Combined Balance Sheets
As of June 30, 2014

	Historical			Pro Forma Adjustments				Pro Forma

	(in millions)
Current assets:
Cash and cash equivalents	$	—		$	—		(e)	$	—
Trade receivables, net		21			401		(f)		422
Inventories		72			—				72
Other current assets		185			4		(f)		189


Total current assets		278			405				683


Property, plant and equipment, net		14,434			—				14,434
Other assets		34			65		(e)		99


Total assets	$	14,746		$	470			$	15,216




Current liabilities:
Accounts payable	$	504		$	—			$	504
Accrued liabilities		175			12		(f)		187


Total current liabilities		679			12				691


Long-term debt, net		—			6,065		(e)		6,065
Deferred income taxes		3,293			(6	)	(f)		3,287
Deferred credits and other liabilities		500			16		(f)		516
Net Investment/Stockholders' Equity:
Common stock		—			4		(g, h)		4
Additional paid-in capital		—			4,675		(h)		4,675
Net investment		10,296			(6,000	)	(e, h)		—
					383		(f, h)
					(4,679	)	(h)
Accumulated other comprehensive income (loss)		(22	)		—				(22	)


Total net investment/stockholders' equity		10,274			(5,617	)			4,657


Total liabilities and net investment/stockholder's equity	$	14,746		$	470			$	15,216

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CALIFORNIA RESOURCES CORPORATION
Notes to Unaudited Pro Forma Combined Financial Statements

(a) After the spin-off, we do not expect to have sales to Occidental. The adjustment reflects the reclassification of "net sales to related parties" to "net sales to third parties."

(b) Reflects the following adjustments to interest and debt expense resulting from the assumed incurrence of $6.065 billion of indebtedness in connection with the spin-off:

	Six Months Ended June 30, 2014		Year Ended December 31, 2013

	(in millions)
Interest expense on $6.065 billion of newly incurred indebtedness	$	152	$	304
Amortization of debt issuance costs		4		9
Commitment fee on Revolving Credit Facility		5		10


Total pro forma adjustment	$	161	$	323

Pro forma interest expense was calculated based on an assumed borrowing amount of $6.065 billion with an assumed blended interest rate of 5.0% using the actual interest rates for the notes and market rates for the borrowings under our Term Loan Facility and Revolving Credit Facility. Interest expense also includes estimated amortization on approximately $65 million of debt issuance costs related to the notes offering and the debt we intend to incur under the Term Loan Facility and Revolving Credit Facility. Such costs are amortized over the terms of the associated debt. Interest expense also includes an estimated 0.5% commitment fee on the anticipated unused portion of our new Revolving Credit Facility. Actual interest expense may be higher or lower depending on fluctuations in interest rates. A one-eighth percent change in the interest rates on our variable-rate borrowings would result in an approximately $1.4 million change in annual interest expense.

(c) Represents the tax effect of pro forma adjustments to income before income taxes using a statutory tax rate of 40% for both the six months ended June 30, 2014 and the year ended December 31, 2013. Our effective tax rate could be different (either higher or lower) depending on activities subsequent to the spin-off.

(d) The calculations of pro forma basic earnings per share and shares outstanding for the periods presented are based on the most recently available number of Occidental common shares outstanding, approximately 775 million, as of September 30, 2014. It is expected that CRC will issue and have outstanding immediately after the spin no more than 0.4994 shares of CRC stock for each Occidental stock outstanding at the record date. Occidental expects to distribute at least 80.1% of these outstanding shares to its shareholders, which will result in a distribution ratio of 0.4 CRC common share for each Occidental share held by shareholders as of the record date.

We estimate the number of dilutive shares to have a de minimis impact on our diluted shares calculation. However, the actual number of dilutive shares underlying our share-based awards issued in connection with the replacement of outstanding Occidental share-based awards will not be determined until after the spin-off.

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(e) Represents the financing transactions, dividends to be paid to Occidental and their effects on cash, as follows (in millions):


Cash received from borrowings	$	6,065
Debt issuance costs		(65	)
Dividends to Occidental		(6,000	)


Cash pro forma adjustment	$	—

(f) Represents the following adjustments to the respective balance sheet line items (in millions):


Trade receivables, net	$	401
Other current assets		4
Accrued liabilities		(12	)
Deferred income taxes		6
Deferred credits and other liabilities		(16	)


	$	383

The adjustment to trade receivables represents the receivables CRC would carry as it starts marketing its own products as a stand-alone company. Historically, Occidental marketed CRC's products and collected the proceeds. As a result, the historical financial statements do not reflect any receivables. The adjustments to accrued liabilities and deferred credits and other liabilities represent employee-related liabilities that we will assume from Occidental for certain employees and executives who will transfer to CRC. For additional information, see "Arrangements between Occidental and Our Company." The adjustments to other current assets and deferred income taxes represent the tax effects of temporary differences related to the liability adjustments reflected above.

(g) Represents the issuance of approximately 387 million shares of our common stock at a par value of $0.01 per share.

(h) Represents the elimination of Occidental's net investment in us and adjustments to additional paid-in capital resulting from the following (in millions):


Reclassification of Occidental Petroleum Corporation's net investment in us	$	10,296
New liabilities recorded on our books (see note (f))		383
Distributions to Occidental (see note (e))		(6,000	)
Common stock at $0.01 par value		(4	)


Total additional paid-in capital	$	4,675

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of operations (MD&A) should be read in conjunction with the information under the headings "Risk Factors," "Selected Historical Combined Financial Data," "Unaudited Pro Forma Combined Financial Data" and "Business," as well as the audited combined financial statements, unaudited interim combined condensed financial statements and the related notes thereto, all appearing elsewhere in this information statement.

This MD&A contains forward-looking statements concerning trends or events potentially affecting our business or future performance, including, without limitation, statements relating to our plans, strategies, objectives, expectations and intentions. The words "aim," "anticipate," "believe," "budget," "continue," "could," "effort," "estimate," "expect," "forecast," "goal," "guidance," "intend," "likely," "may," "might," "objective," "outlook," "plan," "potential," "predict," "project," "seek," "should," "target, "will" or "would" and similar expressions identify forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information unless required to do so under the federal securities laws. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements contained in this information statement. See "Forward-Looking Statements" and "Risk Factors."

The Separation and Spin-off

On February 14, 2014, Occidental announced that its board of directors had authorized management to pursue the spin-off of the California business into a standalone, publicly traded company. The spin-off is being executed in accordance with a Separation and Distribution Agreement between us and Occidental. The spin-off is intended to be tax-free to the stockholders of Occidental and to Occidental and us for U.S. federal income tax purposes. Occidental intends to distribute, on a pro rata basis, at least 80.1% of our common stock to the Occidental stockholders as of the record date for the spin-off. Upon completion of the spin-off, we and Occidental will each be independent, publicly traded companies and will have separate public ownership, boards of directors and management. The spin-off is, among other things, subject to final approval by Occidental's board of directors and the satisfaction or waiver by Occidental, in its sole discretion, of certain conditions to the spin-off, including the, receipt of a private letter ruling (which has been received) from the IRS and an opinion of tax counsel, with respect to the tax-free nature of the spin-off for federal income tax purposes.

We were incorporated in Delaware as a wholly-owned subsidiary of Occidental on April 23, 2014. We will be an independent oil and natural gas exploration and production company, with operations exclusively in California. See the discussion under the heading "The Spin-Off" included in this information statement for further details.

Basis of Presentation

We are currently a wholly-owned subsidiary of Occidental formed to own and operate the California business. We did not have material assets or liabilities as a separate corporate entity until the contribution to us by Occidental of the California business. Occidental previously conducted the California business through various wholly-owned subsidiaries. The combined financial statements included elsewhere in this information statement were prepared in connection with the spin-off and reflect the combined historical results of operations, financial position and cash flows of the California business, as if we had held the

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California business for all historical periods presented. All significant intercompany transactions and accounts within the California business have been eliminated. The assets and liabilities in the combined financial statements included elsewhere in this information statement have been reflected on a historical basis. The historical results discussed in this MD&A do not consider the transactions to be effected in connection with the spin-off, which will impact our results of operations, financial position and cash flows.

Factors Affecting Comparability of Our Historical Financial Results of Operations to our Future Financial Results of Operations

The combined statements of income also include expense allocations for certain functions and centrally-located activities historically performed by Occidental. These functions include executive oversight, accounting, procurement, engineering, drilling, exploration, marketing, internal audit, legal, risk management, finance, tax, treasury, information technology, government relations, investor relations, public relations, financial reporting, human resources, ethics and compliance, and certain other shared services. These allocations are based primarily on specific identification of time or activities associated with us, employee headcount or our relative size compared to Occidental. Our management believes the assumptions underlying the combined financial statements, including the assumptions regarding allocating expenses from Occidental, are reasonable. However, the combined financial statements may not include all of the actual expenses that would have been incurred, may include duplicative costs and may not reflect our combined results of operations, financial position and cash flows had we operated as a stand-alone public company during the periods presented. We have attempted to include recurring costs of operating as a stand-alone company in our pro forma financial statements, although only the additional costs we have determined to be factually supportable are included as pro forma adjustments, and there could be incremental costs not reflected in the unaudited pro forma combined financial statements. However, we expect the costs of operating as a stand-alone public company, other than debt-related costs, will be generally comparable to the costs reported in the historical combined financial statements. These estimates may not prove to be accurate. Actual costs that would have been incurred if we had been a stand-alone public company would depend on multiple factors, including organizational structure and strategic and operating decisions. Subject to the terms of the Separation and Distribution Agreement, nonrecurring third-party costs and expenses that are related to the separation, other than the debt-related costs, and incurred prior to the separation date will generally be paid by Occidental. We expect such nonrecurring amounts to include costs to separate and/or duplicate information technology systems, outside legal and accounting fees, and similar costs. See "Unaudited Pro Forma Combined Financial Data."

We have historically participated in Occidental's corporate treasury management program and have not incurred any debt. Excess cash generated by our business has been distributed to Occidental, and likewise our cash needs have been provided by Occidental, in the form of an investment. Accordingly, we have not included debt or related interest expense in our combined financial statements because there was no specifically identifiable debt associated with our operations. We have entered into new financing arrangements in connection with the spin-off, including the notes and the Credit Facilities (as defined below). We expect to incur up to $6.065 billion in new debt and make cash distributions of approximately $6.0 billion to Occidental. In addition, we expect to distribute any excess cash generated and accumulated by our business through the separation date to Occidental. We also expect to borrow an additional $300 million to $350 million under our Revolving Credit Facility (as defined below), including borrowings of approximately $200 million we expect to incur prior to the separation to repay a short term loan from Occidental used to fund the acquisition of oil and gas properties and between $100 million and $150 million of borrowings that we expect to incur concurrently with, or shortly after, the separation to fund our working capital requirements as a stand-alone company. In addition, we expect to enter into letters of credit in an aggregate amount ranging from $65 million to $75 million under uncommitted lines of credit at or shortly after the separation to support ordinary course marketing, regulatory and other matters. As a result, the capitalization for our business will be different and we will incur cash interest expenses as well as amortization of financing costs.

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Business Environment and Industry Outlook

Our operating results and those of the oil and gas industry as a whole are heavily influenced by commodity prices. Oil and gas prices and differentials may fluctuate significantly, generally as a result of changes in supply and demand and other market-related uncertainties. These and other factors make it impossible to predict realized prices reliably. We respond to economic conditions primarily by adjusting our capital expenditures to be in line with current economic conditions, including adjusting the size and allocation of our capital program. We have only occasionally hedged our commodity price risk and do not expect to have a significant hedging program in the future. A significant portion of our oil production is typically linked to international waterborne-based prices that in the recent past have been at a premium to in-land U.S. crude prices such as West Texas Intermediate ("WTI") for comparable grades. We believe that the limited crude transportation infrastructure from other parts of the country to California will allow us to continue to realize strong margins as a result. The following table presents the average daily WTI, Brent and NYMEX gas prices for 2013, 2012 and 2011:

	2013		2012		2011

WTI oil ($/Bbl)	$	97.97	$	94.21	$	95.12
Brent oil ($/Bbl)	$	108.76	$	111.70	$	110.90
NYMEX gas ($/Mcf)	$	3.66	$	2.81	$	4.11

The following table presents our average realized prices as a percentage of WTI and NYMEX for 2013, 2012 and 2011:



Oil as a percentage of average WTI	106	%	110	%	109	%
NGLs as a percentage of average WTI	51	%	56	%	74	%
Gas as a percentage of NYMEX	102	%	105	%	105	%

Oil prices will continue to be affected by (i) global supply and demand, which are generally a function of global economic conditions, inventory levels, production disruptions, technological advances, regional market conditions and the actions of OPEC, other significant producers and governments; (ii) transportation capacity and cost in producing areas; (iii) currency exchange rates; and (iv) the effect of changes in these variables on market perceptions.

Prices for natural gas liquids ("NGLs") are related to the supply and demand for the components of products making up these liquids. Some of them more typically correlate to the price of oil while others are affected by gas prices as well as the demand for certain chemical products for which they are used as feedstock. In addition, infrastructure constraints magnify the pricing volatility from region to region.

Gas prices and differentials are strongly affected by local supply and demand fundamentals, as well as availability of transportation capacity from producing areas.

Our earnings are also affected by the performance of our processing and power generation assets. We process our wet gas to extract NGLs and other gas byproducts, and deliver dry gas to pipelines and sell NGLs. The efficiency with which we extract liquids from the wet gas stream affects our operating results. In addition, a portion of the power produced by our Elk Hills power plant is used for certain of our operations while a majority of the output is sold to third parties.

Seasonality

Seasonality is not a primary driver of changes in our quarterly earnings during the year.

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Operations

We conduct our operations based on our subsurface mineral rights, land leases and other contractual arrangements. We believe we are the largest private oil and natural gas mineral acreage holder in California, with interests in approximately 2.3 million net acres, approximately 60% of which we hold in fee. Our oil and gas leases have a primary term ranging from one to ten years, which is extended through the end of production once it commences. We also own a network of strategically placed infrastructure assets, including three gas plants, oil and gas gathering systems, a power plant and other related assets to maximize the value generated from our production.

Our share of production and reserves from operations in Long Beach, California are subject to contractual arrangements similar to production-sharing contracts and are in effect through the economic life of the assets. Under such contracts, we record a share of production and reserves to recover all capital and production costs and an additional share for profit. These contractual arrangements obligate us to fund all capital and production costs and have established base production volumes for each period. The contracts do not differentiate between capital and production costs. In accordance with the terms of these contracts, our portion of the production represents: (1) volumes to recover our partners' share of capital and production costs we incur on their behalf and all costs associated with base production, (2) volumes for our defined share of base production and (3) volumes for our defined share of production in excess of amounts related to base production each period. We recover our share of capital and production costs, and generate returns, through our defined share of production from base and incremental production in (2) and (3) above. These contracts run through the end of the economic lives of the related assets. These contracts do not transfer any right of ownership to us and reserves reported from these arrangements are based on our economic interest as defined in the contracts. Our share of production and reserves from these contracts decreases when product prices rise and increases when prices decline. Overall, our net economic benefit from these contracts is greater when product prices are higher. Production under these contracts represented 19% of our revenues for the year ended December 31, 2013.

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The following table sets forth our average production volumes of oil, NGLs and natural gas per day for the six-month periods ended June 30, 2014 and 2013 and each of the three years in the period ended December 31, 2013.

	Six months ended June 30,				Year ended December 31,

	2014		2013		2013		2012		2011
*Oil (MBbl/d)*
San Joaquin Basin		62		57		58		58		56
Los Angeles Basin		28		25		26		24		19
Ventura Basin		6		6		6		6		5
Sacramento Basin		—		—		—		—		—


Total		96		88		90		88		80




*NGLs (MBbl/d)*
San Joaquin Basin		17		19		19		16		14
Los Angeles Basin		—		—		—		—		—
Ventura Basin		1		1		1		1		1
Sacramento Basin		—		—		—		—		—


Total		18		20		20		17		15




*Natural gas (MMcf/d)*
San Joaquin Basin		177		185		182		204		220
Los Angeles Basin		—		—		2		3		1
Ventura Basin		12		12		11		12		12
Sacramento Basin		54		65		65		37		27


Total		243		262		260		256		260




Total Production (MBoe/d)(a)		155		152		154		148		138

Note:: MBbl/d refers to thousands of barrels per day; MMcf/d refers to millions of cubic feet per day; MBoe/d refers to thousands of barrels of oil equivalent per day.
(a): Natural gas volumes have been converted to Boe based on energy content of six Mcf of gas to one barrel of oil. Barrels of oil equivalence does not necessarily result in price equivalence. The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in 2013, the average prices of WTI oil and NYMEX natural gas were $97.97 per barrel and $3.66 per Mcf, respectively, resulting in an oil-to-gas ratio of over 25 to 1.

The following table sets forth the average realized prices for our products:

	Six months ended June 30,				Year ended December 31,

	2014		2013		2013		2012		2011
Oil Prices ($ per Bbl)	$	103.43	$	105.21	$	104.16	$	104.02	$	103.80
NGLs Prices ($ per Bbl)	$	54.86	$	47.90	$	50.43	$	52.76	$	70.03
Gas Prices ($ per Mcf)	$	4.67	$	3.82	$	3.73	$	2.94	$	4.31

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Income Taxes

The deferred tax liabilities, net of deferred tax assets of approximately $500 million, were approximately $3.1 billion at December 31, 2013. The current portion of total deferred tax assets was $23 million as of December 31, 2013, which was reported in other current assets. We expect to realize the recorded deferred tax assets through future operating income and reversal of temporary differences.

The following table sets forth the calculation of our effective income tax rate:

	Six months ended June 30,						Year ended December 31,

	2014			2013			2013			2012			2011
	(in millions)
Pre-tax income	$	782		$	703		$	1,447		$	1,181		$	1,641
Income tax expense		(313	)		(281	)		(578	)		(482	)		(670	)


Net income	$	469		$	422		$	869		$	699		$	971




Effective tax rate		40	%		40	%		40	%		41	%		41	%

Income Statement Analysis

	Six months ended June 30,						Years ended December 31,

	2014			2013			2013			2012			2011
	(in millions)
Net sales (including related parties)	$	2,262		$	2,098		$	4,285		$	4,072		$	3,938
Other income		(1	)		—			(1	)		1			(4	)
Production costs		(578	)		(527	)		(1,066	)		(1,314	)		(1,074	)
Selling, general and administrative expenses		(166	)		(154	)		(326	)		(296	)		(287	)
Depreciation, depletion and amortization		(582	)		(565	)		(1,144	)		(926	)		(675	)
Asset impairments and related items		—			—			—			(41	)		—
Taxes other than on income		(107	)		(109	)		(185	)		(167	)		(143	)
Exploration expense		(46	)		(40	)		(116	)		(148	)		(114	)
Provision for income taxes		(313	)		(281	)		(578	)		(482	)		(670	)


Net income		469			422			869			699			971




EBITDAX(1)	$	1,410		$	1,308		$	2,707		$	2,255		$	2,430

(1): We define EBITDAX as earnings before interest expense; income taxes; depreciation, depletion and amortization; and exploration expense. Our management believes EBITDAX provides useful information in assessing our financial condition, results of operations and cash flows and is widely used by the industry and investment community. The amounts included in the calculation of EBITDAX were computed in accordance with GAAP. This measure is provided in addition to, and not as an alternative for income and liquidity measures calculated in accordance with GAAP, and should be read in conjunction with the information contained in our financial statements prepared in accordance with GAAP.

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The following table presents a reconciliation of the non-GAAP financial measure of EBITDAX to the GAAP financial measure of net income:

	Six Months Ended June 30,				Year Ended December 31,

	2014		2013		2013		2012		2011
	(in millions)
Net income	$	469	$	422	$	869	$	699	$	971
Interest expense	$	—	$	—	$	—	$	—	$	—
Provision for income taxes	$	313	$	281	$	578	$	482	$	670
Depreciation, depletion and amortization	$	582	$	565	$	1,144	$	926	$	675
Exploration expense	$	46	$	40	$	116	$	148	$	114


EBITDAX	$	1,410	$	1,308	$	2,707	$	2,255	$	2,430

Six Months Ended June 30, 2014 vs. June 30, 2013

Net sales increased 8%, or $164 million, for the six months ended June 30, 2014, compared to the same period of 2013. Of this increase, $144 million was attributable to higher oil volumes and $41 million and $27 million were attributable to higher realized prices for gas and NGLs, respectively. The increase was partially offset by decreases of $23 million and $16 million, respectively, attributable to lower NGLs and gas volumes, and $20 million of lower realized oil prices. Our average daily oil production increased by 8,000 barrels while our average daily NGLs and natural gas production decreased by 2,000 barrels and 19 MMcf (or 3,000 Boe), respectively. The increase in oil production primarily reflected our strategy to increase our overall capital expenditure program with a focus on oil drilling while reducing drilling capital for natural gas in light of higher oil prices and lower gas prices in recent years.

Production costs for the six months ended June 30, 2014 increased 10%, or $51 million, compared to the same period of 2013, mainly due to $41 million in higher costs for natural gas used in our steamflood operations and $7 million in other higher energy costs.

Selling, general and administrative expenses increased 8%, or $12 million, for the six months ended June 30, 2014, compared to the same period of 2013, predominantly due to higher employee related costs.

Depreciation, depletion and amortization ("DD&A") expense increased 3% or $17 million for the six months ended June 30, 2014, compared to the same period of 2013, and reflected additional capital investments.

Taxes other than on income for the six months ended June 30, 2014 were comparable to the same period of 2013.

Exploration expense increased by $6 million, or 15%, for the six months ended 2014, compared to the same period of 2013, due to higher dry hole expenses of $8 million.

Provision for income taxes increased by $32 million, or 11%, due to the effect of higher pre-tax income of $79 million.

Year Ended December 31, 2013 vs. 2012

Net sales increased 5%, or $213 million, in 2013, compared to 2012. Of this increase, $47 million was attributable to higher oil and gas volumes, $77 million was attributable to higher oil and gas prices, $63 million was attributable to higher volumes for NGLs and $41 million was attributable to higher power sales. The increase was partially offset by $15 million attributable to lower prices for NGLs. Our daily liquids production increased by 5,000 Boe while our daily natural gas production increased by 4 MMcf, or less than 700 Boe. The increase in liquids production primarily reflected our strategy to increase our

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overall capital expenditure program with a focus on oil drilling while reducing drilling capital for natural gas in light of higher oil prices and lower gas prices in recent years. The slight increase in our natural gas production reflected increased production from acquisitions made in 2012 and associated gas produced from oil drilling, partially offset by lower gas production due to reduced investment in natural gas drilling in 2013.

Production costs decreased by $248 million to $18.99 per Boe in 2013, compared to $24.34 per Boe for 2012, almost entirely due to a wide range of operational efficiency initiatives implemented in late 2012, including activities such as high-grading and more efficient utilization of service rigs, improved job scheduling, more efficient liquids usage and handling, optimization of field supervision and contractor usage, and reduced consumption of purchased fuel, power and field rental equipment.

Selling, general and administrative and other operating expenses increased 10%, or $30 million, in 2013, compared to 2012, mostly due to higher compensation and employee related costs of approximately $25 million, in particular higher headcount and equity compensation in part due to the higher price of Occidental's stock.

DD&A expense increased by $218 million. Of this increase, $44 million was attributable to higher volumes and $174 million was attributable to a $3.23 per Boe increase in the DD&A rate, which was a result of additional capital investments throughout our asset base. In recent years, we have been systematically increasing our investments in IOR and EOR recovery assets and facilities. Significant investment on the front end of these projects is necessary, which has caused an increase in our DD&A rate.

A significant majority of the $41 million in "Asset Impairments and other related items" in 2012 was related to the impairment of uneconomic properties in various areas, in particular gas properties.

Taxes other than on income increased 11%, or $18 million, in 2013, compared to 2012, primarily due to a $32 million increase in California greenhouse gas costs, which we began incurring at the beginning of 2013, partially offset by lower property taxes of $14 million.

Exploration expense decreased 22%, or $32 million, in 2013, compared to 2012, due to higher success rates resulting in lower dry hole expense of $78 million in the San Joaquin and Los Angeles basins, partially offset by higher dry hole expense of $14 million in the Ventura basin and higher expense of $30 million for seismic, geological and geophysical and lease rentals.

Provision for income taxes increased by $96 million due to the effect of higher pre-tax income of $266 million, partially offset by a 1% lower effective tax rate.

Year Ended December 31, 2012 vs. 2011

Net sales increased 3%, or $134 million, in 2012 compared to 2011. Of this increase, $325 million was attributable to higher oil volumes, $7 million was attributable to higher oil prices and $40 million was attributable to higher NGL volumes. The increase was partially offset by $124 million attributable to lower gas prices, $6 million attributable to lower gas volumes, $94 million attributable to lower NGL prices and $14 million attributable to lower power sales. Our daily liquids production increased by 10,000 Boe, while our daily natural gas production decreased by 4 MMcf, or less than 700 Boe. The increase in production volumes from 2011 to 2012, in particular the growth in our liquids production, was a result of production from acreage acquired in 2011 and increased capital expenditures in 2012 compared to 2011.

Production costs in 2012 increased 22%, or $240 million, compared to 2011, mainly due to $92 million of higher downhole maintenance and $125 million of increased field support costs.

Selling, general and administrative expenses increased 3%, or $9 million, in 2012, compared to 2011, mainly due to higher employee related costs.

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DD&A expense increased by $251 million. Of this increase, $190 million was attributable to a $3.77 per Boe increase in the DD&A rate, reflecting additional capital investments, largely in the San Joaquin and Sacramento basin operations, and $61 million was attributable to asset acquisitions and higher volumes.

A significant majority of the $41 million in "Asset Impairments and other related items" in 2012 was related to the impairment of uneconomic properties in various areas, in particular gas properties.

Taxes other than on income increased 17%, or $24 million, in 2012, compared to 2011, almost entirely due to higher property taxes.

Exploration expense increased by 30%, or $34 million, in 2012 due to higher dry hole expense of $29 million in the Los Angeles basin and $23 million in the Sacramento basin and higher lease rentals of $5 million as compared to 2011, partially offset by lower seismic and geological and geophysical expenses of $23 million.

Provision for income taxes decreased by $188 million in 2012, compared to 2011, due to the effect of $460 million in lower pre-tax income.

Liquidity and Capital Resources

Our primary sources of liquidity and capital resources to fund our capital programs have historically been cash flows from operations. In the past, we have distributed our cash flows in excess of our capital expenditures to Occidental and will continue to do so until the spin-off. However, we have occasionally required funding from Occidental to execute large acquisitions, as was the case in 2012 and 2011. Following the spin-off we will not receive any capital contributions from Occidental. We believe our future needs for capital expenditures and acquisitions will be met by cash generated from operations, and borrowings or issuances of securities when necessary. Operating cash flows are largely dependent on oil and gas prices, sales volumes and costs.

We have historically participated in Occidental's corporate treasury management program and have not incurred any debt. We issued $5.0 billion of notes on October 1, 2014 and expect to incur $1.0 billion of borrowings under our new Term Loan Facility and $65 million of borrowings under our new five-year Revolving Credit Facility prior to the separation. We will use the net proceeds of these initial debt incurrences to make cash distributions of approximately $6.0 billion to Occidental. We also expect to borrow an additional $300 million to $350 million under our Revolving Credit Facility, including borrowings of approximately $200 million we expect to incur prior to the separation to repay a short term loan from Occidental principally used to fund the acquisition of oil and gas properties and between $100 million and $150 million of borrowings that we expect to incur concurrently with, or shortly after, the separation to fund our working capital requirements as a stand-alone company. We expect that remaining availability under our new Revolving Credit Facility will be sufficient for operational needs.

Senior Notes

On October 1, 2014, we issued $5.00 billion in aggregate principal amount of our senior notes, including $1.00 billion of 5.00% senior notes due 2020 (the "2020 Notes"), $1.75 billion of 5.50% senior notes due 2021 (the "2021 Notes") and $2.25 billion of 6.00% senior notes due 2024 (the "2024 Notes" and, together with the 2020 Notes and 2021 Notes, the "notes"), in a private placement. The notes were issued at par and will initially be fully and unconditionally guaranteed on a senior unsecured basis by all of our material subsidiaries. We intend to use the net proceeds from the private placement to make a cash distribution to Occidental.

The 2020 Notes will mature on January 15, 2020, the 2021 Notes will mature on September 15, 2021 and the 2024 Notes will mature on November 15, 2024. We will pay interest on the 2020 notes semi-annually in cash in arrears on January 15 and July 15 of each year, beginning on July 15, 2015. We will

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pay interest on the 2021 notes semi-annually in cash in arrears on March 15 and September 15 of each year, beginning on March 15, 2015. We will pay interest on the 2024 notes semi-annually in cash in arrears on May 15 and November 15 of each year, beginning on May 15, 2015.

The indenture governing the notes includes covenants that, among other things, limit our and our restricted subsidiaries' ability to incur debt secured by liens. These covenants will also restrict our ability to merge or consolidate with, or transfer all or substantially all of our assets to, another entity. These covenants are subject to a number of important qualifications and limitations that will be set forth in the indenture. In addition, if we experience a "change of control triggering event" (as defined in the indenture) with respect to a series of notes, we will be required, unless we have exercised our right to redeem the notes of such series, to offer to purchase the notes of such series at a purchase price equal to 101 percent of their principal amount, plus accrued and unpaid interest. In connection with the private placement of notes, we granted the initial purchasers certain registration rights under a registration rights agreement.

The Indenture also provides a special mandatory redemption covenant that provides that if Occidental does not complete the spin-off distribution on or prior to January 31, 2015, or we earlier determine in our sole discretion that the spin-off distribution will not occur by such date, we will be required to redeem all of the notes at a redemption price equal to the issue price thereof plus accrued and unpaid interest.

Credit Facilities

On September 24, 2014, we entered into a credit agreement among us, as borrower, certain lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent, a swingline lender and a letter of credit issuer (the "Credit Agreement"). The Credit Agreement provides for (i) a five-year senior term loan facility (the "Term Loan Facility") and (ii) a five-year senior revolving loan facility (the "Revolving Credit Facility" and, together with the Term Loan Facility, the "Credit Facilities").

The aggregate initial commitments of the lenders under the Revolving Credit Facility is $2.0 billion, and the aggregate initial commitments of the lenders under the Term Loan Facility is $1.0 billion. The Credit Agreement provides for an accordion feature pursuant to which the aggregate commitments under the Credit Facilities may be increased by an additional $1.0 billion, subject to agreement of the applicable lenders and certain other limitations and conditions. The Revolving Credit Facility includes a sub-limit of $400.0 million for the issuance of letters of credit and a $200.0 million sub-limit for swingline loans. The initial aggregate commitment under the Term Loan Facility will be funded on the date of initial funding of the Credit Facilities ("Funding Date"), and the initial aggregate commitment under the Revolving Credit Facility will be available on a revolving basis from the Funding Date until the Maturity Date (as defined below). All borrowings and letters of credit under the Credit Facilities will be subject to the satisfaction of certain customary conditions, including the absence of any default or event of default and the accuracy of representations and warranties. The Credit Facilities will not become effective unless the foregoing conditions are satisfied or waived on or before January 31, 2015 and, in the event such conditions are not so satisfied or waived, the commitments under the Credit Facilities will terminate at such time.

We intend to use the proceeds from the Credit Facilities (i) to make permitted dividends and distributions (including to Occidental in connection with the spin-off), (ii) to pay fees and certain expenses incurred in connection with the spin-off and related transactions, (iii) to finance the acquisition, development and exploration of oil and gas properties and (iv) for working capital, capital expenditures and other general corporate purposes of us and our subsidiaries. The Credit Facilities will mature on the fifth anniversary of the Funding Date (the "Maturity Date"), provided that if the spin-off is not consummated within five business days after the Funding Date, the Credit Facilities will automatically terminate and all amounts thereunder will become due and payable. Additionally, we will be required to

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repay the Term Loan Facility in equal quarterly installments equal to 2.5% (10.00% per annum) of the principal amount of the Term Loan Facility beginning on March 31, 2016.

Borrowings under the Credit Facilities will bear interest at either the LIBOR Rate or an alternate base rate (equal to the greatest of (i) the administrative agent's prime rate, (ii) the one-month LIBOR Rate plus 1.00% and (iii) the federal funds effective rate plus 0.50%), at our election, in each case plus an applicable margin. This applicable margin is based on our most-recently tested leverage ratio and will vary from (a) in the case of LIBOR loans, 1.50% to 2.25% and (b) in the case of alternate base rate loans, 0.50% to 1.25%. The unused portion of the Revolving Credit Facility is subject to commitment fees ranging from 0.30% to 0.50%. We will also pay certain customary fees and expenses under the Revolving Credit Facility.

All obligations under the Credit Facilities initially will be guaranteed by all of our wholly-owned (directly or indirectly) material restricted subsidiaries, and subject to certain conditions, may be guaranteed by certain future wholly-owned (directly or indirectly) domestic restricted subsidiaries (collectively, the "Guarantors"). Initially, the Credit Facilities will be unsecured; however, we will be required to provide collateral for the Credit Facilities, and the Credit Facilities will become subject to a borrowing base, if our corporate family rating is B1 or lower from (or is unrated by) Moody's or our corporate credit rating is B+ or lower from (or is unrated by) S&P (unless our corporate family rating is B1 or our corporate credit rating is B+, and our other rating is BB or Ba2 or higher, as applicable). The borrowing base will be the lenders' engineered value of our proved reserves set forth in our most recent reserve report. We also may elect to have the Credit Facilities governed by a borrowing base.

The Credit Agreement will also require us to maintain the following financial covenants as of the last day of each fiscal quarter: (a) a leverage ratio of no more than 4.50 to 1.00 and (b) an interest expense ratio of no less than 2.50 to 1.00.

Cash Flow Analysis

	Six months ended June 30,						Years ended December 31,

	2014			2013			2013			2012			2011
	(in millions)
Net cash flows provided by operating activities	$	1,234		$	1,177		$	2,476		$	2,223		$	2,456
Net cash flows used in investing activities	$	(1,038	)	$	(768	)	$	(1,713	)	$	(2,755	)	$	(3,565	)
Net cash flows (used in) provided by financing activities	$	(196	)	$	(409	)	$	(763	)	$	532		$	1,106
EBITDAX(1)	$	1,410		$	1,308		$	2,707		$	2,255		$	2,430

(1): We define EBITDAX as earnings before interest expense; income taxes; depreciation, depletion and amortization; and exploration expense. Our management believes EBITDAX provides useful information in assessing our financial condition, results of operations and cash flows and is widely used by the industry and investment community. The amounts included in the calculation of EBITDAX were computed in accordance with GAAP. This measure is provided in addition to, and not as an alternative for income and liquidity measures calculated in accordance with GAAP, and should be read in conjunction with the information contained in our financial statements prepared in accordance with GAAP.

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: The following table sets forth a reconciliation of the non-GAAP financial measure of EBITDAX to the GAAP measure of net cash provided by operating activities:

	Six Months Ended June 30,						Year Ended December 31,

	2014			2013			2013			2012			2011
Net cash provided by operating activities	$	1,234		$	1,177		$	2,476		$	2,223		$	2,456
Interest expense		—			—			—			—			—
Cash income taxes		135			155			318			(121	)		84
Cash exploration expenses		14			16			44			20			40
Changes in operating assets and liabilities		48			(13	)		(102	)		202			(123	)
Asset impairments and related items		—			—			—			(41	)		—
Other, net		(21	)		(27	)		(29	)		(28	)		(27	)


EBITDAX	$	1,410		$	1,308		$	2,707		$	2,255		$	2,430

Six months ended June 30, 2014 vs. June 30, 2013

Our net cash provided by operating activities increased by $57 million from $1,177 million in 2013 to $1,234 million in 2014 consistent with the $47 million increase in our net income over the same period. The increase in operating cash flows also reflected higher non-cash items such as deferred taxes of $52 million and DD&A of $17 million, partially offset by a decrease in working capital of $61 million.

Our cash flow used in investing activities increased by $270 million for the six months ended June 30, 2014 to $1,038 million, compared to the same period of 2013. The increase mainly consisted of $266 million of higher capital expenditures for development and exploration activities, in line with our strategy of increasing our focus on oil drilling.

Our cash flow used in financing activities decreased by $213 million for the six months ended June 30, 2014, compared to the same period of 2013, reflecting lower excess cash flow distributed to Occidental.

Year Ended December 31, 2013 vs. 2012

Our operating cash flows in 2013 increased by approximately $250 million compared to 2012. The increase reflected lower operating expenses of $250 million resulting from cost efficiencies and $210 million in higher revenues due to higher oil and gas prices and volumes. Other significant items affecting operating cash flows consisted of higher tax payments of $440 million and other costs of $70 million in 2013, as well as $300 million in positive working capital changes.

Our cash flow used in investing activities decreased by approximately $1.0 billion in 2013 to $1.7 billion, compared to 2012. We reduced our capital expenditures in 2013 by approximately $660 million primarily due to approximately 20% lower drilling costs and lower capital needs for the Elk Hills cryogenic gas plant, which was completed during 2012. Further, our 2013 acquisitions of $50 million were approximately $380 million lower than the 2012 acquisition amount.

Cash used for financing activities in 2013 reflected excess cash flow distributed to Occidental. Cash provided by financing activities in 2012 reflected contributions from Occidental primarily to fund our acquisitions.

Year Ended December 31, 2012 vs. 2011

Our operating cash flows in 2012 decreased by approximately $230 million compared to 2011. The decrease reflected $240 million of higher operating expenses in 2012, lower revenues of approximately $225 million from lower gas and NGLs prices and $15 million of higher other costs, offset by higher revenues of approximately $325 million due to increased oil volumes, $40 million of higher NGLs volumes

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and lower tax payments of $205 million. Additionally, working capital changes used an additional $320 million in 2012 compared to 2011.

Our cash flow used in investing activities decreased by $810 million from 2011 to 2012. We increased our capital expenditures by $170 million to $2.3 billion in 2012 from $2.2 billion in 2011. Capital expenditures for the years ended December 31, 2012 and 2011 included expenditures for development and exploration activities of approximately $2.2 billion and $1.9 billion, respectively, as well as infrastructure investments of approximately $150 million and $300 million, mostly for the Elk Hills cryogenic gas plant which was completed in 2012. The increase in our year-over-year capital expenditures was primarily to fund the growth in the San Joaquin and Ventura basins. In addition, our 2012 acquisition activity fell by approximately $1.0 billion to $400 million in 2012, as compared to $1.4 billion in 2011.

Our cash flows from financing activities decreased by $574 million from 2011 to 2012, reflecting a year-over-year decrease in cash funding from Occidental due to lower acquisition activity in 2012.

Acquisitions

We recently entered into agreements with third party sellers to purchase $240 million of oil and gas properties. We expect to fund approximately $200 million of these acquisitions with a short term loan from Occidental that will be repaid with borrowings under our new Revolving Credit Facility prior to the separation.

During the year ended December 31, 2013, we paid approximately $50 million to acquire certain oil and gas properties in California. An acquisition in the San Joaquin basin also included an obligation to spend at least $250 million on exploration and development activities over a period of five years from the date of acquisition. We currently plan to spend significantly more than this amount in capital in the next five years. Any deficiency in meeting this capital spending obligation would need to be paid in cash at the end of the five-year period.

During the year ended December 31, 2012, we paid approximately $380 million for oil and gas properties including $275 million for certain producing and non-producing assets in the Sacramento basin and undeveloped acreage in the San Joaquin basin.

During the year ended December 31, 2011, we acquired approximately $1.4 billion of various oil and gas assets. We paid $720 million for producing and non-producing assets within the San Joaquin basin. We also acquired producing and non-producing assets in the Los Angeles Basin for $330 million and certain assets in the Sacramento basin for $190 million.

2014 Capital Expenditures

We have a 2014 capital budget of $2.1 billion for projects targeting investments in the San Joaquin, Los Angeles and Ventura basins, as compared to $1.7 billion in 2013. We allocated approximately $340 million of our 2014 capital budget to primary recovery projects, approximately $790 million to waterfloods and approximately $340 million to steamfloods. Approximately $545 million of our 2014 capital budget will be deployed to develop resources from unconventional plays. Virtually all of our 2014 capital budget will be directed towards oil-weighted production consistent with 2013. In addition, we expect to continue an active exploration program in California and have allocated approximately $95 million of the 2014 capital budget for exploration spending. Assuming current market conditions and drilling success rates comparable to our historical performance, we expect to fund our entire 2014 capital program with cash flow from our operations.

Off-Balance-Sheet Arrangements

We have no material off-balance-sheet arrangements other than those noted below.

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Leases

We, or certain of our subsidiaries, have entered into various operating lease agreements, mainly for field equipment, office space and office equipment. We lease assets when leasing offers greater operating flexibility. Lease payments are generally expensed as part of production costs or selling, general and administrative expenses. For more information, see "Contractual Obligations."

Contractual Obligations

The table below summarizes and cross-references our contractual obligations as of December 31, 2013, and does not give effect to the notes or expected borrowings under the Credit Facilities. This summary indicates on- and off-balance-sheet obligations as of December 31, 2013. There were no material changes to the amounts between December 31, 2013 and June 30, 2014.

	Payments Due by Year

Contractual Obligations(a)	Total		2014		2015 and 2016		2017 and 2018		2019 and thereafter
	(in millions)
On-Balance Sheet
Long-term liabilities(b)	$	117	$	—	$	7	$	8	$	102
Off-Balance Sheet
Operating leases		33		9		11		9		4
Purchase obligations(c)		653		247		123		260		23


Total	$	803	$	256	$	141	$	277	$	129

(a): Includes contractual obligations entered into by us or our subsidiaries or by an Occidental subsidiary on behalf of us or our subsidiaries (which obligation will be assumed by us as of our separation from Occidental).
(b): Includes obligations under postretirement benefit and deferred compensation plans, as well as certain accrued liabilities.
(c): Amounts include payments, which will become due under long-term agreements to purchase goods and services used in the normal course of business to secure drilling rigs and services. Long-term purchase contracts are discounted using our estimated borrowing rate.

Lawsuits, Claims and Contingencies

In the normal course of business, we or certain of our subsidiaries are involved in lawsuits, 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 at June 30, 2014 and December 31, 2013 and 2012 were not material to our balance sheets. 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 accrued on the balance sheet would not be material to our financial position or results of operations.

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not attributable to the fault of either party. See "Arrangements Between Occidental and Our Company—Tax Sharing Agreement." In addition, under the Separation and Distribution Agreement, we will also indemnify Occidental and its remaining subsidiaries against claims and liabilities relating to the past operation of our business. See "Arrangements Between Occidental and Our Company."

Critical Accounting Policies and Estimates

The process of preparing financial statements in accordance with generally accepted accounting principles requires management to select appropriate accounting policies and to make informed estimates and judgments regarding certain items and transactions. Changes in facts and circumstances or discovery of new information may result in revised estimates and judgments, and actual results may differ from these estimates upon settlement. We consider the following to be our most critical accounting policies and estimates that involve management's judgment and that could result in a material impact on the financial statements due to the levels of subjectivity and judgment.

Oil and Gas Properties

The carrying value of our property, plant and equipment ("PP&E") represents the cost incurred to acquire or develop the asset, including any asset retirement obligations, net of accumulated DD&A and any impairment charges. For assets acquired, initial PP&E cost is based on fair values at the acquisition date.

We use the successful efforts method to account for our oil and gas properties. Under this method, we capitalize costs of acquiring properties, costs of drilling successful exploration wells and development costs. The costs of exploratory wells are initially capitalized pending a determination of whether we find proved reserves. If we find proved reserves, the costs of exploratory wells remain capitalized. Otherwise, we charge the costs of the related wells to expense. In some cases, we cannot determine whether we have found proved reserves at the completion of exploration drilling, and must conduct additional testing and evaluation of the wells. We generally expense the costs of such exploratory wells if we do not determine we have found proved reserves within a 12-month period after drilling is complete.

We determine depreciation and depletion of oil and gas producing properties by the unit-of-production method. We amortize acquisition costs over total proved reserves, and capitalized development and successful exploration costs over proved developed reserves.

Proved oil and gas reserves and production are used as the basis for recording depreciation and depletion of oil and gas producing properties. Proved reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—regardless of whether deterministic or probabilistic methods are used for the estimation. We have no proved oil and gas reserves for which the determination of economic producibility is subject to the completion of major additional capital expenditures.

Several factors could change our proved oil and gas reserves. For example, we receive a share of production from arrangements similar to production-sharing contracts to recover costs and generally an additional share for profit. Our share of production and reserves from these contracts decreases when product prices rise and increases when prices decline. Overall, our net economic benefit from these contracts is greater at higher product prices. In other cases, particularly with long-lived properties, lower product prices may lead to a situation where production of a portion of proved reserves becomes uneconomical. For such properties, higher product prices typically result in additional reserves becoming economical. Estimation of future production and development costs is also subject to change partially due to factors beyond our control, such as energy costs and inflation or deflation of oil field service costs. These factors, in turn, could lead to changes in the quantity of proved reserves. Additional factors that could

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result in a change of proved reserves include production decline rates and operating performance differing from those estimated when the proved reserves were initially recorded.

Additionally, we perform impairment tests with respect to our proved properties when product prices decline other than temporarily, reserve estimates change significantly, other significant events occur or management's plans change with respect to these properties in a manner that may impact our ability to realize the recorded asset amounts. Impairment tests incorporate a number of assumptions involving expectations of undiscounted future cash flows, which can change significantly over time. These assumptions include estimates of future product prices, which we base on forward price curves and, when applicable, contractual prices, estimates of oil and gas reserves and estimates of future expected operating and development costs.

The most significant ongoing financial statement effect from a change in our oil and gas reserves or impairment of our proved properties would be to the DD&A rate. For example, a 5% increase or decrease in the amount of oil and gas reserves would change the DD&A rate by approximately $1.15 per Bbl, which would increase or decrease pre-tax income by approximately $65 million annually based on production rates for the year ended December 31, 2013.

A portion of the carrying value of our oil and gas properties is attributable to unproved properties. At December 31, 2013, the net capitalized costs attributable to unproved properties were approximately $900 million. While exploration and development work progresses, the unproved amounts are not subject to DD&A until they are classified as proved properties. However, if the exploration and development work were to be unsuccessful, or management decided not to pursue development of these properties as a result of lower commodity prices, higher development and operating costs, contractual conditions or other factors, the capitalized costs of the related properties would be expensed. The timing of any writedowns of these unproved properties, if warranted, depends upon management's plans, the nature, timing and extent of future exploration and development activities and their results. We believe our current plans and exploration and development efforts will allow us to realize the unproved property balance.

We perform impairment tests on our infrastructure assets whenever events or changes in circumstances lead to a reduction in the estimated useful lives or estimated future cash flows that would indicate that the carrying amount may not be recoverable, or when management's plans change with respect to those assets.

Fair Value Measurements

We have categorized our assets and liabilities that are measured at fair value in a three-level fair value hierarchy, based on the inputs to the valuation techniques: Level 1—using quoted prices in active markets for the assets or liabilities; Level 2—using observable inputs other than quoted prices for the assets or liabilities; and Level 3—using unobservable inputs. Transfers between levels, if any, are recognized at the end of each reporting period. We primarily apply the market approach for recurring fair value measurement, maximize our use of observable inputs and minimize use of unobservable inputs. We generally use an income approach to measure fair value when observable inputs are unavailable. This approach utilizes management's judgments regarding expectations of projected cash flows and discounts those cash flows using risk-adjusted discount rate.

Other Loss Contingencies

In the normal course of business, we are involved in lawsuits, claims and other environmental and legal proceedings and audits. We accrue reserves for these matters when it is probable that a liability has been incurred and the liability can be reasonably estimated. In addition, we disclose, if material, in aggregate, our exposure to loss in excess of the amount recorded on the balance sheet for these matters if it is reasonably possible that an additional material loss may be incurred. We review our loss contingencies on an ongoing basis.

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Loss contingencies are based on judgments made by management with respect to the likely outcome of these matters and are adjusted as appropriate. Management's judgments could change based on new information, changes in, or interpretations of, laws or regulations, changes in management's plans or intentions, opinions regarding the outcome of legal proceedings, or other factors. See "—Lawsuits, Claims and Contingencies" for additional information.

Significant Accounting and Disclosure Changes

In May 2014, the Financial Accounting Standards Board ("FASB") issued rules related to revenue recognition. Under the new rules, an entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects what it expects to receive in exchange for the goods or services. The rules will also require more detailed disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The rules are effective for interim and annual periods beginning after December 15, 2016 and early application is not permitted. While we are evaluating any potential impact of these new rules, we currently believe the effect of the new rules will not have a material impact on our financial statements.

In April 2014, the FASB issued rules changing the requirements for reporting discontinued operations to where only the disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity's operations and financial results will be reported as discontinued operations in the financial statements. These rules are effective for the annual periods beginning on or after December 15, 2014. They are not expected to have a material impact on our financial statements upon adoption and will require assessment on an ongoing basis.

In July 2013, the FASB issued rules requiring net, rather than gross, presentation of a deferred tax asset for a net operating loss or other tax credit and any related liability for unrecognized tax benefits. These rules became effective on January 1, 2014, and did not have a material impact on our financial statements.

Qualitative and Quantitative Disclosures about Market Risk

Commodity Price Risk

General

Our results are sensitive to fluctuations in oil, NGLs and gas prices. Price changes at current levels of production affect our pre-tax annual income by approximately $29 million for a $1 per Bbl change in oil prices and $8 million for a $1 per Bbl change in NGLs prices. If gas prices varied by $0.50 per Mcf, it would have an estimated annual effect on our pre-tax income of approximately $32 million. These price-change sensitivities include the impact on income of volume changes under arrangements similar to production-sharing contracts. If production levels change in the future, the sensitivity of our results to prices also will change.

Cash-Flow Hedges

We have only occasionally hedged our commodity price risk and we do not expect to do so in the foreseeable future. However, we entered into financial swap agreements in November 2012 for the sale of 50 MMcf/d of our gas production beginning in January 2013 through March 2014. These agreements qualified as cash-flow hedges and represented approximately 5% of our 2013 total production on a Boe basis. The weighted-average strike price of these swaps was $4.30.

Credit Risk

Our credit risk relates primarily to trade receivables. Credit exposure for each customer is monitored for outstanding balances and current activity.

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As of December 31, 2013, the substantial majority of the credit exposures related to our business was with investment grade counterparties. We believe exposure to credit-related losses related to our business at December 31, 2013 was not material and losses associated with credit risk have been insignificant for all years presented.

Concentration of Credit Risk

Substantially all of our products have historically been sold through Occidental's marketing subsidiaries. For the years ended December 31, 2013, 2012 and 2011, sales through Occidental subsidiaries accounted for approximately 97%, 97% and 98% of our net sales, respectively. For the years ended December 31, 2013, 2012 and 2011, ConocoPhillips/Phillips 66 Company and Tesoro Refining & Marketing Company LLC each accounted for more than 10% of our net sales and collectively accounted for 42%, 46% and 44%, respectively. No other customer accounted for more than 10% of our net sales during these periods. If a major customer decided to stop purchasing our products, we do not believe the effect on our operating results and financial condition would be material.

Interest Rate Risk

Historically, we had no interest rate risk exposure as we have not historically had debt balances. In September 2014, we entered into the five-year Credit Agreement providing for a $1 billion Term Loan Facility and a $2 billion Revolving Credit Facility, each of which has variable interest rates. Currently, there are no amounts outstanding under the Credit Agreement.

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BUSINESS

Our Company and Vision

Following the spin-off from Occidental, we will be an independent oil and natural gas exploration and production company focused on high-growth, high-return conventional and unconventional assets, which are conducted exclusively in California. California is one of the most prolific oil and natural gas producing regions in the world and is the third largest oil producing state in the nation. It has five of the 12 largest fields in the lower 48 states based on estimated proved reserves as of 2009, and our portfolio includes interests in four of these fields. We are the largest producer in California on a gross operated basis and we believe we have established the largest privately-held mineral acreage position in the state, consisting of approximately 2.3 million net acres spanning the state's four major oil and gas basins. We have developed a sizable inventory of over 17,500 identified drilling locations and, as an independent company, we intend to exploit our significant portfolio of conventional and unconventional opportunities to generate double-digit production growth in the longer term. We produced on average approximately 154,000 Boe/d net in 2013 and, as of December 31, 2013, we had proved reserves of 744 MMBoe, with approximately 69% proved developed and 72% proved oil reserves and an aggregate PV-10 value of $14.0 billion. For an explanation of the non-GAAP financial measure PV-10 and a reconciliation of PV-10 to Standardized Measure, the most directly comparable GAAP financial measure, see "Summary—Summary Combined Historical Operating and Reserve Data—Non-GAAP Financial Measure and Reconciliations."

California oil and gas development began in 1876, and oil-in-place estimates have generally increased throughout the ensuing decades, with over 29 billion Bbls of oil and 40 Tcf of natural gas produced as of 2009 (according to DOGGR). We began our operations in California in the 1950s and have accumulated extensive, proprietary knowledge and experience in developing this world-class resource base. Over the past decade, we have also built an exceptional 3D seismic library, which covers over 4,250 square miles, representing approximately 90% of the 3D seismic data available for California, and we have developed unique and proprietary stratigraphic and structural models of the subsurface geology and hydrocarbon potential in each of the four basins in which we operate. As a result of our long, successful operating history, our extensive exploration programs, our exceptional 3D seismic library and proprietary subsurface geologic models, we have tested and successfully implemented in recent years various exploration, drilling, completion and enhanced recovery technologies to enhance and increase recoveries, growth and returns from our portfolio.

We believe that over the last several decades the oil and gas industry has focused significantly less effort on utilizing modern development and exploration processes and technologies in California relative to other prolific U.S. basins. We believe this is largely due to other oil companies' limited capital spending in California, focus on shallow zone thermal projects or investments in other assets in their global portfolios. As an independent company focused exclusively on California, we expect to drive strong production growth through increased application of modern technologies and increased capital spending on development of the significant potential in our portfolio.

Our large acreage position contains numerous growth opportunities due to its varied geologic characteristics and multiple stacked pay reservoirs that, in most cases, are thousands of feet thick. We have a significant portfolio of unconventional growth opportunities, with in excess of 4,500 identified drilling locations targeting unconventional reservoirs primarily in the San Joaquin basin. Unconventional reservoirs have low permeability and require enhanced stimulation and extraction techniques. Unconventional reservoirs include both shale and low-permeability sandstone reservoirs. Over the last few years, we have increased our production by exploiting seven discrete stacked pay horizons within the Monterey formation, primarily within the upper Monterey. We continue to drill unconventional wells within these intervals and are also applying the knowledge acquired from these successes to the Kreyenhagen and the Moreno shales, which we believe offer significant development opportunities as well. We also intend to pursue development opportunities in the lower Monterey shale, which contains a variety of reservoir lithologies and is the principal hydrocarbon source rock within the overall Monterey

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formation. The lower Monterey has a more limited production history than the upper Monterey, and therefore limited knowledge exists regarding its potential. However, we believe it will be productive over time. Over the last five years, we have drilled and completed over 570 development wells in unconventional reservoirs, primarily in the upper Monterey formation, with a nearly 100% commercial success rate.

We also have a large portfolio of lower-risk, high-growth conventional opportunities in each of California's four major oil and gas basins with approximately 71% of our proved reserves associated with conventional opportunities. Conventional reservoirs are capable of natural flow. We have a proven track record of successful exploration and development using primary, waterflood and steamflood recovery methods. In 2014, we anticipate that approximately 70% of our capital expenditures will target conventional development, primarily low-risk waterflood and steamflood projects that we expect to generate significant near-term production and cash flow growth. For example, our Lost Hills and Kern Front steamflood projects and our Huntington field waterflood project are expected to deliver combined production growth of over 35% compounded annually through 2016 from their combined 2013 average production of 15,000 Boe/d.

The following table summarizes certain information concerning our acreage and drilling activities (as of December 31, 2013, unless otherwise stated):

																			2014 Projected Development Drilling Capital ($MM)(3)

	Acreage (in millions)												Identified Drilling Locations(1)				2014 Projected Gross Development Wells(2)
					Gross Acreage Held in Fee (%)					Average Working Interest (%)
								Producing Wells, gross
	Gross		Net					Producing Wells, gross					Gross		Net
San Joaquin basin(4)		1.8		1.5		59	%		5,764		90	%		12,836		11,127		969	$	942
Los Angeles basin(5)		<0.1		<0.1		50	%		1,382		95	%		1,537		1,478		201		384
Ventura basin		0.3		0.3		77	%		780		98	%		2,310		1,716		32		56
Sacramento basin		0.6		0.5		36	%		729		100	%		1,008		864		3		8


Total		2.7		2.3		55	%		8,655		92	%		17,691		15,185		1,205	$	1,390

(1): Our total identified drilling locations include 2,141 gross (2,024 net) locations associated with proved undeveloped reserves as of December 31, 2013 and 2,344 gross (2,251 net) injection well locations associated with our waterflood and steamflood projects. Our total identified drilling locations exclude 6,400 gross (5,300 net) prospective resource drilling locations. Please see "—Our Reserves and Production Information—Determination of Identified Drilling Locations" for more information regarding the processes and criteria through which we identified our drilling locations. Of our total identified drilling locations, we believe approximately 75% are attributable to acreage owned or held by production.
(2): Includes 207 injection wells expected to be drilled in connection with our waterflood and steamflood projects.
(3): Includes drilling and completion expenditures of $173 million associated with injection wells. Our 2014 capital budget of $2.1 billion also includes spending on support equipment, facilities, workovers and exploration.
(4): Excluding Elk Hills, our average working interest in the San Joaquin basin is 97%.
(5): We currently hold approximately 39,859 gross (29,881 net) acres in the Los Angeles basin. Our Los Angeles basin operations are concentrated with pad drilling.

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on a compound annual basis, from an average of 138 MBoe/d in 2011 to 154 MBoe/d in 2013, while the proportionate share of liquids production grew from 69% to 71%. We intend to accelerate our production growth by significantly increasing our capital investments and focusing on higher-growth opportunities in our extensive drilling inventory. Our 2014 capital budget of $2.1 billion represents an increase of approximately 26% over the $1.7 billion we spent in 2013. After the spin-off, we intend to reinvest substantially all of our operating cash flow in our capital program for the foreseeable future as we will no longer be required to distribute cash to Occidental. We expect to increase our production by 6-9% on a compound annual basis in 2015 and 2016 with a 15% compound annual increase in our oil production for the same period. Over 90% of our expected production for this period is from currently producing fields where we have existing or permitted capacity in our production facilities.

As we develop our sizable inventory of over 17,500 identified drilling locations, the majority of which are vertical drilling locations with thousands of feet of stacked pay, and utilize horizontal drilling techniques, we expect that our inventory of drilling locations will increase. As a result, we believe our total annual production growth will increase to over 10% after 2016, as we continue to reinvest our cash flow from operations in our capital program and accelerate our unconventional development program.

The table below summarizes our proved reserves as of December 31, 2013, and average production for the six months ended June 30, 2014 in each of California's four major oil and gas basins.

															Average Net Daily Production for the six months ended June 30, 2014

	Proved Reserves as of December 31, 2013
	Oil (MMBbl)		NGLs (MMBbl)		Natural Gas (Bcf)		Total (MMBoe)					Proved Developed (%)								R/P Ratio (Years)(1)
	Oil (MMBbl)		NGLs (MMBbl)		Natural Gas (Bcf)		Total (MMBoe)		Oil (%)			Proved Developed (%)			(MBoe/d)		Oil (%)			R/P Ratio (Years)(1)
San Joaquin basin		331		68		669		511		65	%		68	%		109		57	%		12.9
Los Angeles basin		156		—		17		159		98	%		70	%		28		100	%		15.5
Ventura basin		45		4		35		55		82	%		64	%		9		67	%		16.4
Sacramento basin		—		—		117		19		—	%		100	%		9		—	%		6.4


Total operations		532		72		838		744		72	%		69	%		155		62	%		13.2

(1): Calculated as total proved reserves as of December 31, 2013 divided by annualized Average Net Daily Production for the six months ended June 30, 2014.

Our Operations

Our Areas of Operation

California is one of the most prolific oil and natural gas producing regions in the world and is the third largest oil producing state in the nation. It has five of the 12 largest fields in the lower 48 states based on proved reserves as of 2009, and our portfolio includes interests in four of these fields. California is also the nation's largest state economy, with significant energy demands that exceed local supply. California imports approximately 62% of its oil, mostly from foreign locations, and 90% of its natural gas. Because of limited crude transportation infrastructure from other parts of the country to California, the California market is generally isolated from the rest of the nation, which allows California producers to typically receive a premium to WTI-based prices. Our operations span the four major oil and gas basins in California and include 130 fields with 8,655 gross active wellbores as of December 31, 2013. We believe we are the largest private oil and natural gas mineral acreage holder in California, with interests in approximately 2.3 million net acres, and the largest land owner in each of the states' four major oil and gas basins. Approximately 60% of our total net mineral interest position is held in fee. A majority of our interests are in producing properties located in reservoirs characterized by what we believe to be long-lived production profiles with repeatable development opportunities. These reservoirs generally have been developed over a long period of time, typically decades. Observing the performance of these fields over many years has helped us develop a greater understanding of production and reservoir characteristics and, we believe, makes our future performance more predictable.

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*: Production is for the six months ended June 30, 2014. Proved reserves are as of December 31, 2013. Our total net identified drilling locations are as of December 31, 2013. Please see "—Our Reserves and Production Information—Determination of Identified Drilling Locations" for more information regarding the processes and criteria through which we identified all of our drilling locations.

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Across all of our California operations, we drilled 779 wells in 2013, of which 83% were producers. Our 2013 drilling capital was $1.0 billion. Our 2013 total capital of $1.7 billion also included spending on support equipment, facilities, workovers and exploration. Our capital program added 89 MMBoe of proved reserves in 2013 representing a 159% reserve replacement ratio, calculated by using the proved reserves additions for 2013 divided by our 2013 production of 56 MMBoe.

San Joaquin Basin

Approximately 69% of our estimated proved reserves as of December 31, 2013 and approximately 70% of our average daily net production for the six months ended June 30, 2014 were located in the San Joaquin basin. We actively operate and develop 42 fields in this basin consisting of conventional primary, IOR, EOR and unconventional project types. We currently hold approximately 1.5 million net acres in the San Joaquin basin, approximately 63% of which we hold in fee.

According to DOGGR, approximately 74% of California's daily oil production for 2013 was produced in the San Joaquin basin. Commercial petroleum development began in the basin in the 1800s when asphalt deposits were mined and shallow wells were hand dug and drilled in the Coalinga, McKittrick and Kern River areas. Rapid discovery of many of the largest oil accumulations followed during the next several decades, including the Elk Hills field. We have been redeveloping this field and building our expertise to use in other fields across the state. According to the U.S. Geological Survey as of 2012, the San Joaquin basin contained three of the 10 largest oil fields in the United States based on cumulative production and proved reserves. Most discovered oil accumulations occur in Eocene-age through Pleistocene-age sedimentary sections. Source rocks are organic-rich shales from the Monterey, Kreyenhagen and Tumey formations.

In the 1960s, introduction of thermal techniques resulted in substantial new additions to reserves in heavy oil fields. We have been successfully developing steamfloods in our Kern Front operations, which are located next to the giant Kern River field and in the northwest portion of the Lost Hills field. Starting in the 1980s, reserves additions have continued in the Monterey formation on the west side of the basin and in our new conventional field discoveries. As shown in the stratigraphic column below, the basin contains multiple stacked formations throughout its areal extent, and we believe that the San Joaquin basin provides an appealing inventory of existing field re-development opportunities, as well as new play discovery and unconventional play potential. The complex stratigraphy and structure in the San Joaquin basin has allowed continuing discoveries of stratigraphic and structural traps. We believe our extensive 3D seismic library, which covers over 2,625 square miles in the San Joaquin basin, including 35% of our San Joaquin acreage, will give us a competitive advantage in further exploring this basin.

We have established a large ownership interest in several of the largest existing oil fields in San Joaquin basin, including Elk Hills, our largest producing field, as well as the Buena Vista and Kettleman North Dome fields.

Elk Hills

Elk Hills is our world-class onshore asset located 20 miles west of Bakersfield. The field, one of the largest fields in the continental United States based on proved reserves, covers 75 square miles, was discovered in 1911 and has produced over 1.6 BBoe. Production from Elk Hills' over 3,000 active wells contributes over 40% of California's gas production and 5% of oil production. At Elk Hills, we operate large and efficient gas processing facilities with a combined capacity of 540 MMcf/d. The gas plant facilities are located adjacent to our 550 megawatt combined-cycle power plant and our 46 megawatt cogeneration plant that not only supply sufficient electricity to operate the field, but also, in the case of the Elk Hills power plant, sells excess power to the grid. Please see "—Our Infrastructure" for more information regarding the gas processing facilities and our Elk Hills power plant. Our operations at Elk Hills possess a state-of-the-art central control facility, remote automation control on over 95% of wells and consolidated production facilities for economies of scale, all of which result in high operational efficiencies.

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Due to the nature of the multiple stacked pay zones at Elk Hills, we typically deploy a portion of our annual capital to execute well workovers, such as adding additional uphole pay zones, performing stimulation treatments or increasing lift capacity, resulting in incremental production and reserves and mitigating production decline. In 2013, we produced 68,000 Boe/d on average from our Elk Hills properties, or approximately 44% of our total average daily production, including 46,000 Boe/d of unconventional production on average from the Monterey shale. In 2013, this property contributed cash flow from operations, after capital spending, of approximately $500 million.

Los Angeles Basin

Approximately 21% of our estimated proved reserves as of December 31, 2013 and approximately 18% of our average daily net production for the six months ended June 30, 2014 were located in the Los Angeles basin. We actively operate and develop 10 fields in this urban, coastal basin consisting of conventional primary, IOR, EOR and unconventional project types. We have a leading acreage position within the Los Angeles basin and over 50% of the basin's production comes from the fields we operate. We currently hold 39,859 gross (29,881 net) acres in the Los Angeles basin.

The Los Angeles basin is a northwest-trending plain about 50 miles long and 20 miles wide on the coast of southern California containing Miocene through Pleistocene sediments. The Los Angeles basin has great structural relief and complexity in relation to its geologic youth and small size and is noted for its prolific oil production. The basin's small areal extent, prolific source rocks, thick sandstone reservoirs and large anticlinal traps are considered a nearly ideal petroleum system. As a result, the Los Angeles basin has one of the highest concentrations per acre of crude oil in the world. Sixty-eight oil fields have been named in an area of about 450 square miles. These accumulations of fine-grained sediments with high organic content, interlayered with coarser grained sands, contributed to the formation of large deposits of oil, including the Wilmington field where we have significant operations as described further below. Other large active oil fields include the Long Beach field, the Huntington field and the Torrance field. Most of the significant discoveries in the Los Angeles basin date back to the 1920s. A majority of the numerous fields in the basin have either been abandoned or had production greatly scaled back since the early part of the 1990s. Existing fields range in depth from around 2,000 to 10,000 feet. As shown in the stratigraphic chart below, the basin contains multiple stacked formations throughout its depths, and we believe that the Los Angeles basin provides an appealing inventory of existing field re-development opportunities as well as new play discovery potential.

Wilmington Oil Field

The Wilmington field is our world-class coastal asset located in the Long Beach harbor. The field, the third largest field in the United States, was discovered in 1932 and has produced over 2.9 BBoe from over 8,000 wells. During the year ended December 31, 2013, we produced approximately 35,000 Boe/d gross on average, or approximately 90% of the total Wilmington field daily production for that year, where we operate on behalf of the State of California and the City of Long Beach. Most of our Wilmington production is covered under a set of production-sharing contracts under which we recover all capital and operating costs and our share of profits from production. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Operations" for more information regarding these production-sharing contracts. The field is developed by applying waterflood methods of oil recovery. Waterfloods are low-cost operations that extend the productive life of a reservoir beyond the economic life expected for primary development. Over 90% of the water injected into the reservoir is produced from the field. We currently operate approximately 1,200 producing wells and approximately 700 water injection wells in the Wilmington field. There are five major stacked oil producing zones in the field, ranging in depth from 2,000 to 10,000 feet. We have identified over 1,000 future drilling locations that we plan to develop over the next five years. For a more detailed description of these waterfloods, please see "—Conventional Reservoir Recovery Methods—Waterfloods." In 2013, this property contributed cash flow from operations, after capital spending, of $25 million.

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Ventura Basin

Approximately 7% of our estimated proved reserves as of December 31, 2013 and approximately 6% of our average daily net production for the six months ended June 30, 2014 were located in the Ventura basin. We actively operate and develop 25 fields (nearly 40% of the fields) in this basin consisting of conventional primary, IOR, EOR and unconventional project types. We currently hold approximately 0.3 million net acres in the Ventura basin, approximately 83% of which we hold in fee.

The Ventura basin contains a Cretaceous-age to Pleistocene-age, mostly marine, sedimentary section in a major fold and thrust belt that began developing during the late Pliocene. The Ventura basin is the onshore part of the main structural feature and its offshore extension is the modern Santa Barbara basin. All of the sedimentary section is productive at various locations, and most reservoirs are sandstones with favorable porosity and permeability. In general, most traps are anticlinal, modified to some degree by faults and with significant stratigraphic trapping. As shown in the stratigraphic column below, the basin contains multiple stacked formations throughout its depths, and we believe that the Ventura basin provides an appealing inventory of existing field re-development opportunities, as well as new play discovery and unconventional play potential.

The first fields discovered in the Ventura basin were near the Ojai field in the town of Santa Paula in 1861. Since then, approximately 100 oil and gas fields have been discovered. Multiple source rocks are present with Miocene-age (Monterey and Rincon formations) and Eocene-age (Anita and Cozy Dell formations) sediments. Complex stratigraphy and structural geology enhance the exploration potential in the basin. Only limited use of modern drilling and completion techniques and limited seismic surveys have occurred since the late 1960s, with virtually no exploration drilling. In 2013, we completed the acquisition of, and are currently processing, the first ever 3D seismic survey in the Ventura basin. We believe this 3D seismic data gives us a competitive advantage in exploring this basin.

Sacramento Basin

Approximately 3% of our estimated proved reserves as of December 31, 2013 and approximately 6% of our average daily net production for the six months ended June 30, 2014 were located in the Sacramento basin. We actively operate and develop 53 fields in this basin primarily consisting of dry gas production. We currently hold approximately 0.5 million net acres in the Sacramento basin, approximately 36% of which we hold in fee. We believe our significant acreage position in the Sacramento basin gives us the option for future development and rapid production growth in an attractive gas price environment. We produced approximately 84% of the produced gas in the Sacramento basin during 2013.

The Sacramento basin is a deep, elongated northwest-trending basin located in northern California covering around 12,000 square miles and forming the northern part of California's Central Valley. It contains a thick sequence of sedimentary rocks that range in age from lower Cretaceous to Neogene sediments in an area that is approximately 200 miles long and 45 miles wide. Producing reservoirs range from upper Cretaceous-age to Pliocene-age. The main reservoirs are the Cretaceous Starkey, Winters, Forbes, Kione, and the Eocene Domengine sands. Exploration in the basin started in 1918 and was focused on seeps and topographic highs. In the 1970s, the use of multifold 2D seismic led to large discoveries in the basin. The acquisition of 3D seismic surveys in the mid-1990s helped define trapping mechanisms and reservoir geometries. The Sacramento basin has been extensively explored for petroleum resources, and more than 10 Tcf of natural gas have been produced.

Stratigraphic Chart of San Joaquin, Los Angeles, Ventura and Sacramento Basins

California is home to several basins characterized by extensive production history, long reserve life and multiple producing horizons. As shown in the table below, the state's four major oil and gas basins contain multiple stacked formations throughout their depths that include both conventional and unconventional opportunities. Our current operations in these four basins are focused on the formations

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highlighted below, however, we believe the stacked reservoirs within our asset base provide exposure to additional upside potential in several emerging resource plays.

Our Business Strategy

We plan to maximize shareholder returns by accelerating production growth profitably through the development of our high-growth unconventional assets and low-risk conventional assets. The principal elements of our business strategy include the following:

•: Accelerate development of high-growth unconventional drilling opportunities. Over the longer term, we expect substantial production growth to come from unconventional reservoirs such as tight sandstones and shales. We hold mineral interests in approximately 1.1 million net acres with unconventional potential and have identified 4,682 drilling locations on this acreage. As a result of our increased focus on these reservoirs over the past few years, more than one-third of our production now comes from unconventional assets, an increase of approximately 160% since the acquisition of our Elk Hills field properties in 1998. As of December 31, 2013, we had proved reserves of 217 MMBoe associated with our unconventional properties, of which approximately 30% was proved undeveloped. We have been building a growing technical understanding of these reservoirs through our successful development of portions of our acreage. For example, we have developed seven discrete, productive intervals within the Monterey formation, primarily within the upper Monterey, with a nearly 100% commercial success rate on our development wells. We are now applying the knowledge acquired from these successes to operations in other unconventional

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reservoirs, such as the Kreyenhagen and Moreno shale formations, which we believe offer significant development opportunities due to similar reservoir characteristics with multiple potentially productive zones in each well bore.

•: Drive significant production growth from high-return, low-risk conventional assets. In the near term, we intend to increase our capital spending and generate significant production and cash flow growth from proven IOR methods, such as waterflooding, and EOR methods, such as steamflooding. The oil and gas industry has observed that primary recovery methods typically produce less than 10% of the oil volume initially in place and that subsequent waterfloods and steamfloods typically increase recovery to a range of 20% to 60%. Our Lost Hills and Kern Front steamflood projects and our Huntington field waterflood project are expected to deliver combined production growth of over 35% compounded annually through 2016 and together account for approximately 60% of our projected 6-9% annual production growth through 2016. We believe these projects are substantially derisked as they are currently producing and we have existing or permitted capacity in our production facilities sufficient to develop these projects through 2016. We have significant additional low-risk conventional opportunities like these with over 13,009 identified drilling locations, 52% of which are associated with IOR and EOR projects. The remaining 48% are associated with primary recovery methods, many of which we expect will develop into IOR and EOR projects in the future.
•: Aggressively apply modern technologies to enhance production growth. Over the last several decades, the oil and gas industry has focused significantly less effort on utilizing modern development and exploration processes and technologies in California relative to other prolific U.S. basins. We believe this is largely due to other oil companies' limited capital spending in California, focus on shallow zone thermal projects or investments in other assets within their global portfolios. As an independent company focused exclusively on California, we intend to make significant use of modern technologies in drilling and completing wells, which we expect will substantially increase both our cost-efficiency and production growth over time. We are well positioned to execute on this strategy as we have developed an extensive 3D seismic library, which covers over 4,250 square miles, representing approximately 90% of the 3D seismic data available for California, and have tested and successfully implemented various exploration, drilling, completion and IOR and EOR technologies in the state. As a result of our long, successful operating history, our geographically broad exploration drilling programs and exceptional 3D seismic library, we believe we have developed a leading understanding of the geology, petroleum systems and hydrocarbon potential in the basins in which we operate. Our unique and proprietary stratigraphic and structural models of the subsurface geology allow us to recognize new development and exploration areas in each of our basins, and identify the applicable modern drilling and completion technologies needed to enhance recoveries and returns. For example, we recently applied rigorous seismic, stratigraphic and reservoir analyses to discover unconventional resources in a new field in the Monterey zone in the San Joaquin basin. This area was previously tested from the 1940s to the 1970s with six wells drilled by major oil companies, but hydrocarbon resources were not recognized until our 2012 discovery, following our seismic evaluation and application of our unique and proprietary subsurface models. We have already increased production five-fold to over 1,400 Bbls/d from first quarter production in 2012 and have identified an additional 150 drilling locations in the field.
•: Generate strong cash flows through a focus on high-margin crude oil in order to internally fund our capital budget . We intend to focus on increasing cost-efficiency and developing profitable opportunities in our portfolio in order to achieve self-funded growth in any foreseeable market or regulatory environment. We intend to reinvest substantially all of our operating cash flow in our capital program for the foreseeable future as we will no longer be required to distribute cash to Occidental. In 2013, we generated cash flow from operations of approximately $763 million after capital spending of approximately $1.7 billion. We believe we will continue to generate a substantial

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amount of free cash flow in 2014 after planned capital spending of $2.1 billion. Almost all our 2014 capital budget will be focused on oil producing projects and we expect this emphasis to continue in a high oil price environment. As of December 31, 2013, crude oil represented 72% and 58%, respectively, of our total reserves and production which positions us well to grow our oil production. In addition, we believe we have significant potential upside in a more favorable natural gas price environment, particularly with respect to our Sacramento basin acreage, where we had identified 1,008 gross (864 net) drilling locations as of December 31, 2013. Given our large acreage position and drilling inventory across both oil and natural gas opportunities, we expect to generate strong production and cash flow growth in different commodity price environments.

We sell all of our crude oil into the California refining markets at prices we believe are among the most favorable in the United States. California refiners typically purchase crude oil at international waterborne-based prices at a premium to WTI-based prices. For example, our 2013 realized price averaged across all grades of crude oil reflected a 6% premium to WTI index prices. We believe that the limited crude transportation infrastructure from other parts of the country to California will allow us to continue to realize strong cash margins as a result. The figure below shows our operating cash margin per Boe for 2013 of approximately $50/Bbl or 65% of our average realized price.

*: Other costs includes other operating expenses and taxes other than on income and excludes exploration expense.

•: Proactive and collaborative approach to safety, environmental protection and community relations. We are committed to developing our assets in a manner that safeguards people and protects the environment. We seek to proactively engage with regulatory agencies, communities, other stakeholders and our workforce to pursue mutually beneficial outcomes. To further implement this strategy and commitment, we have recently appointed a senior manager whose primary duty is to collaborate with the regulatory agencies and other stakeholders to address their questions and obtain required approvals in a timely fashion. One recent example of our proactive approach is our development of a regional water mapping tool based on existing public data from the San Joaquin Valley, which we have shared with state and local agencies. Our multidisciplinary team worked with regulatory agencies to integrate those data sets with computer modeling and field validation, which allowed us to obtain new well stimulation permits for a key operating areas at Elk Hills and elsewhere. This strategy also applies directly to our protection of the environments in which we operate. For example, we actively promote biodiversity, having set aside approximately 8,000 acres of certified habitat conservation areas at our Elk Hills and Long Beach field operations. To reduce our use of fresh water, we employ water recycling and treatment extensively in our operations, such as our use of reclaimed municipal wastewater in Long Beach for pressure maintenance and waterflooding.

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•: Significantly increase our successful exploration program. We intend to significantly increase our investment in exploration over the next several years, focusing on both unconventional and conventional opportunities, primarily in areas that we believe can be quickly developed, such as those adjacent to our existing properties. In addition, we plan to explore and test new unconventional resource areas, which, if successful, could result in significant longer-term production growth. We believe our exceptional 3D seismic library, which covers over 4,250 square miles, or 2.7 million acres, including 47% of our current acreage, and our experience in drilling deep wells, provide us a significant competitive advantage in our exploration program. Our technical staff has analyzed this extensive 3D seismic data along with modern well-log data, and mapped multiple exploration plays and drilling prospects across our key basins. From 2007 to 2013, we drilled more than 100 exploration wells targeting both conventional and unconventional reservoirs and substantially all of these wells encountered strong indications of hydrocarbons. Our two most significant exploration discoveries over the past five years were the result of employing our unique and proprietary stratigraphic and structural models of the subsurface geology, proprietary 3D seismic data and understanding of the petroleum systems and hydrocarbon potential. Together, they now contribute approximately 18,000 Boe/d on average to our production. Our current drilling inventory includes 7,237 gross (5,117 net) exploration drilling locations that are located in proven formations, the majority of which are located near existing producing fields. Additionally, we have identified 6,400 gross (5,300 net) prospective resource drilling locations in the lower Monterey, Kreyenhagen, and Moreno resource plays. We expect that these exploration and prospective resource drilling locations, together with additional prospects within our current large acreage holdings, will drive significant growth in our successful exploration program for many years.

Our Competitive Strengths

We believe we are well-positioned to successfully execute our business strategies because of the following competitive strengths:

•: Largest acreage position in a world-class oil province. California is one of the most prolific oil and natural gas producing regions in the world and is the third largest oil producing state in the nation. It has five of the top 12 largest fields in the lower 48 states based on estimated proved reserves as of 2009, and our portfolio includes interests in four of these fields. We believe we are the largest private oil and natural gas mineral acreage holder in California, with interests in approximately 2.3 million net acres that contain attractive conventional and unconventional drilling opportunities using primary, IOR and EOR methods. Our large and diverse acreage position, approximately 60% of which we hold in fee, allows us to prioritize projects by value and risk to achieve strong returns and maintain strong reserve replacement and production growth rather than drill simply to hold leases. A significant percentage of our opportunities are oil-weighted, with approximately 90% of our identified drilling locations associated with oil production. For the year ended December 31, 2013, we were the largest producer in the state on a combined gross operated basis with approximately 188,000 Boe/d of production, on average 59% of which was oil. As of December 31, 2013, we had total combined reserves of over 744 MMBoe, of which approximately 72% was oil and 81% was liquids.
•: Significant growth potential from opportunity-rich drilling portfolio. Our drilling inventory at December 31, 2013 consisted of 17,691 identified well locations, including 4,682 gross (4,264 net) unconventional drilling locations and 13,009 gross (10,921 net) conventional drilling locations. We

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believe we can achieve significant production growth through the development of unconventional reservoirs. Over the last five years, we have drilled and completed over 570 unconventional development wells, primarily in the upper Monterey formation, with an almost 100% commercial success rate. Our successful unconventional drilling program has demonstrated the productive potential of seven stacked pay zones within the Monterey formation, primarily within the upper Monterey, and we believe that these successes are repeatable in other formations such as the Kreyenhagen formation, which has similar geologic attributes. We also have a large inventory of conventional development opportunities that will provide low-risk, near-term production growth with attractive returns. We believe that a significant portion of our production growth over the next two to three years will be driven by IOR and EOR projects, many of which are already being implemented. Over 90% of our expected 6-9% production growth through 2016 is expected to come from currently producing fields. As we develop our sizable inventory of drilling locations, the majority of which are vertical drilling locations with thousands of feet of stacked pay, and utilize horizontal drilling techniques, we expect that we will achieve double-digit production growth in the longer term.

•: Unique ability to drive high returns and growth in different commodity price environments. Our current drilling inventory comprises a diversified portfolio of oil and natural gas locations, which allows us to target drilling projects that are the most economically compelling depending on the prevailing commodity price outlook. Approximately 90% of our drilling inventory is associated with oil-rich projects, primarily located in the San Joaquin, Los Angeles and Ventura basins, and the remaining inventory is associated with natural gas properties in the Sacramento, San Joaquin and Ventura basins. We have operating control over 97% of our properties, enabling us to determine all aspects of our development program, including the selection of specific drilling locations, the timing of the development and the drilling and completion techniques used. Our retention of operating control coupled with our diversified portfolio provides us with the flexibility to invest our capital in the highest return projects and control operating costs to drive strong production and cash flow growth in different commodity price environments as well as to adapt to any changes in regulatory and market conditions. Approximately 26% of our production for the six months ended June 30, 2014 was natural gas. If conditions change and gas prices become more favorable, we believe that we have the ability to significantly increase our gas production within a few years through accelerated capital investment in gas projects currently in our portfolio. In addition to our drilling opportunities, we have made significant investments in infrastructure, including our state-of-the-art Elk Hills cryogenic gas plant and our 550 megawatt Elk Hills power plant, which increase our operational flexibility and ability to maximize returns in any commodity price environment.
•: Strong free cash flow and premium margins driven by deficit California energy market. We sell almost all of our crude oil into the California refining markets at prices we believe are among the most favorable in the United States. California, the largest state economy in the United States, imports approximately 62% of its oil and approximately 90% of its natural gas. Oil is imported via rail or supertanker. As a result, California refiners have typically purchased crude oil at international waterborne-based prices that exceed WTI-based prices for comparable grades. Our 2013 realized price averaged across all grades of crude oil reflected a 6% premium to WTI index prices. We believe that the limited crude transportation infrastructure from other parts of the country to California will allow us to continue to realize strong cash margins. In addition, we own the fee minerals on approximately 60% of our net acreage position. The returns on developed mineral fee acreage are greatly enhanced because we do not pay royalties and other lease payments. We expect the resulting substantial operating cash flow to fund our growth while allowing us to maintain ample liquidity.
•: Proven operational management and technical teams with extensive experience operating in California. Our experienced operational management team and technical staff have a proven track record of applying the leading technologies and operating methods to develop our assets. The members of

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our operational management and technical teams have an average of over 26 years' experience in the oil and natural gas industry, with an average of 17 years focused on California oil and gas operations. We believe this focused experience gives us an inherent competitive advantage. As a result of our long operating history in the state, our team of geoscientists and engineers has developed a growing understanding of the geology and can quickly identify and apply suitable recovery methods, as well as drilling, completion and other relevant technologies, to increase production and reserves. For example, our technical team has extensive experience developing unconventional opportunities and growing large, world-class fields, such as Elk Hills and Wilmington. Our cumulative production and year-end proved reserves from these fields are twice the proved reserves originally purchased and we continue to find additional reserves in these fields. In addition, production from unconventional reservoirs within these fields accounted for over 50% of our 2013 daily combined production for these fields. We are applying the expertise gained through re-developing Elk Hills and Wilmington to many of the other fields we operate. In addition, we believe that our team has established a favorable reputation among regulators and other stakeholders for our commitment to safety and demonstrated sensitivity to the environment. We believe that our favorable record and reputation with communities and regulators sustains our operations, and gives us an important advantage when we seek to acquire and develop opportunities throughout California.

Portfolio Management and 2014 Capital Budget

	2014 Capital Expenditures through June 30, 2014		Total 2014 Capital Expenditure Budget		2013 Capital Expenditures

	(in millions)
Conventional:
Primary recovery	$	157	$	342	$	266
Waterfloods		298		787		480
Steamfloods		219		343		375


Total conventional		674		1,472		1,121


Unconventional		272		543		457
Exploration		57		95		91


Total	$	1,003	$	2,110	$	1,669

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Conventional Reservoir Recovery Methods

We determine the development method to use based on reservoir characteristics, reserves potential and expected returns. We seek to optimize the potential of our conventional assets by progressively using primary recovery methods, which may include some well stimulation techniques, IOR methods such as waterflooding and EOR methods like steamflooding, using both vertical and horizontal drilling. All of these techniques are proven technologies we have used extensively in California.

Primary Recovery

Primary recovery methods are the first techniques we use to develop a reservoir. These methods consist of drilling and producing wells without supplementing the natural reservoir energy. Our successful exploration program continues to provide us with primary recovery opportunities in new reservoirs or through extensions of existing fields. In 2013, 22% of our production came from primary production in conventional reservoirs. We continued to expand our conventional primary recovery programs in 2013, and with our 2014 development plans, we expect this growth pattern to continue. We are planning to drill 113 wells in 2014 that will be produced using conventional primary recovery methods. Our conventional development programs set up future opportunities to convert these reservoirs to waterfloods or steamfloods after their primary production phase.

Waterfloods

Waterflooding works by repressurizing a reservoir through water injection and displacing or "sweeping" oil to producing wellbores. Waterfloods are low-cost operations with attractive margins and returns in the current price environment. These operations typically have low and predictable production declines and allow us to extend the productive life of a reservoir and significantly increase our incremental recovery after primary depletion. We use waterfloods extensively in the San Joaquin, Los Angeles and Ventura basins where they have allowed us to reduce production decline or modestly grow our production from mature fields such as Elk Hills and Wilmington. Since 2011, we have achieved 32% production growth from waterflood projects and we expect this growth pattern to continue. We spent $480 million on waterfloods in 2013, drilling 196 wells including 146 producing wells. We plan to increase our capital spending on waterfloods in 2014 by 64% to $787 million and to drill 309 wells.

Our Long Beach and Tidelands properties in the Wilmington field are two of our largest waterflood operations, representing 14% and 5%, respectively, of our revenues for the year ended December 31, 2013.

Long Beach Unit

Upon acquiring the right to serve as operating contractor to the City of Long Beach in April 2000, we implemented a development drilling program to expand operations in this mature reservoir. Since April 2000, we have drilled 434 oil producing wells and 200 water injecting wells at a cost of $930 million. An additional $193 million was invested in facilities repairs and upgrades to support incremental production and injection. Our cumulative production and year end proved reserves from the unit is over twice the proved reserves originally purchased and we continue to find additional reserves. As of December 31, 2013, we have identified over 500 development drilling locations.

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Tidelands

Recognizing the success of our Long Beach Unit waterflood efforts, we executed new contracts with the State of California and City of Long Beach to facilitate the development of Tidelands properties. These agreements are similar to our contractual arrangement in the Long Beach Unit and support development drilling in this mature property. In the ten years preceding execution of these new contracts, drilling on the Tidelands properties was limited to replacing failed wells or relocating wells to accommodate projects of the Port of Long Beach. As a result of executing these new contractual arrangements, we began development drilling on the Tidelands property in January 2011. Since January 2011, we have drilled 125 oil production wells and 50 water injection wells at a cost of $254 million. An additional $102 million was invested in facilities repairs and upgrades to support incremental production and injection. Tidelands gross oil production has increased by more than 50% from 6,400 Bbls/d in January 2010 to 9,800 Bbls/d today. As of December 31, 2013, over 400 development drilling projects have been identified to further develop the Tidelands waterflood.

Steamfloods

Steamfloods work by lowering the viscosity of the oil, causing it to flow more easily to wells. Our steamflood properties have seen some of the highest growth in our portfolio over the last year. We have steamflood projects in the San Joaquin and Ventura basins where we produce heavy oil, primarily in Kern County and in fields such as Kern Front and Lost Hills with demonstrated steamflood results. We have gradually increased our capital allocated to steamfloods over the years and expect to continue doing so for as long as the current oil versus gas price spread continues. Our steamfloods are highly profitable in this price environment, allowing us to use inexpensive gas to generate steam, which is then injected into the reservoir to produce oil. Full development of these steamfloods is a multi-year endeavor that involves upfront infrastructure construction for steam and water processing facilities and follow-on development drilling. These steam projects are generally shallower in depth (300 to 2,500 ft) than our other programs and the wells are relatively inexpensive to drill. Therefore, we can normally implement a drilling program quickly with attractive rates of return. We spent $375 million on steamfloods in 2013, drilling 387 wells, including 304 producing wells. We expect our total capital spending on steamfloods for 2014 to be slightly lower than 2013, although our total drilling capital expenditures are expected to be slightly higher in 2014, with 614 wells expected to be drilled in 2014 as compared to 387 wells in 2013. In 2013, our total average production from steamfloods was 25,000 Boe/d gross, and in the last quarter of 2013, we were injecting an average of about 116,000 BS/d gross in our operated fields. We expect to nearly quadruple our 2013 injection rate by around 2020. We have already made significant infrastructure investments to support the bulk of this planned expansion.

Our Kern Front property is an example of an ongoing successful steamflood project with steamflood expansion occurring laterally across the field. As part of our multi-year development program, we drilled 197 new wells on our Kern Front steamflood in 2013 for $77 million. We have also invested in new steam generators to increase current steam capacity to 115,000 BS/d from 70,000 BS/d at the beginning of 2013. Gross production response increased by 1,900 Bbls/d, or 23%, in 2013. It can take 12 to 18 months following the drilling of a producing well and initiation of a steamflood before the producing wells begin to fully respond. We anticipate additional, steady steamflood expansion to continue for several more years at Kern Front resulting in nearly doubled levels of injection by about 2020. Our Kern Front steamflood represented 7% of our revenues for the year ended December 31, 2013 and we expect it will be a significant contributor to operating cash flow going forward.

Unconventional Reservoir Potential

We believe our undeveloped unconventional acreage has the potential to provide significant long-term production growth. In total we hold mineral interests in approximately 1.1 million net acres with unconventional potential and have identified 4,682 gross (4,264 net) unconventional drilling locations on

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this acreage. Over the last five years, we have drilled and completed over 570 unconventional development wells, primarily in the upper Monterey formation, with a nearly 100% commercial success rate. As a result of focusing more on these reservoirs over the past few years, approximately 39% of our 2013 production was from unconventional reservoirs, an increase of approximately 160% since the acquisition of our Elk Hills field properties in 1998. As of December 31, 2013, we had proved reserves of 217 MMBoe associated with our unconventional properties, with approximately 30% proved undeveloped.

Approximately 3,812 of our unconventional drilling locations are located on our acreage in the Monterey formation in the San Joaquin, Los Angeles and Ventura basins. The geology of the Monterey formation is highly complex and not uniform due to localized and varied faulting and changes in structure and rock characteristics. The potential of our Monterey and our other potential unconventional acreage is difficult to estimate because of these variations in the underlying geology and the relative lack of readily available information about the geology in the public domain. We believe, however, that our own work on unconventional acreage in California, including the study of subsurface geology, well log and seismic data, and observed production results has given us a better understanding of the geology and hydrocarbon potential than relying solely on publicly available data.

The Monterey formation is divided into upper and lower intervals. The overwhelming majority of the Monterey shale production to date, both onshore and offshore, has been from the upper Monterey. We have successfully produced from seven discrete stacked pay horizons within the Monterey formation, primarily within the upper Monterey, using modern drilling techniques. The intervals we have produced include the N, A/B, C/D, PG, McDonald, Devilwater and Gould. In 2013, we produced over 50,000 Boe/d on average from unconventional reservoirs of the upper Monterey shale. In the upper Monterey we plan to expand the productive area and will continually strive to increase recoveries by applying reduced well spacing and both vertical and horizontal well geometries. To date, production from our unconventional reservoirs has been by primary mechanisms, resulting in recoveries typically below 10%. In the future, we plan to test the application of IOR and EOR methods to increase the recovery factor for these reservoirs.

We are applying the knowledge acquired from our successes in the upper Monterey to other shales in the San Joaquin basin such as the Kreyenhagen and Moreno formations. The Kreyenhagen and Moreno formations are hydrocarbon source rocks that have generated oil and gas, and we believe they offer similar development opportunities to the upper Monterey due to their multiple stacked pay reservoirs.

The lower Monterey is not as thick as the upper Monterey but contains a variety of reservoir lithologies. This is the principal hydrocarbon source rock within the overall Monterey formation but has a more limited production history than the upper Monterey, and therefore limited knowledge exists regarding its potential. We are applying our knowledge and experience from the upper Monterey to the lower Monterey, which we believe will be productive over time.

In the upper Monterey, we plan to expand the productive area and will continually strive to increase recoveries by applying reduced well spacing and both vertical and horizontal well geometries. To date, production from our unconventional reservoirs has been by primary mechanisms, resulting in recoveries typically below 10%. In the future, we plan to test the application of IOR and EOR methods to increase the recovery factor for these reservoirs.

The table below compares certain characteristics of our unconventional reservoir targets to those of other prolific North American shale plays.

Play

Upper Monterey(1)	3,500' - 12,000'	250' - 3,500'	5 - 30	<0.0001 - 2	1 - 12	0.7 - 1.0
Lower Monterey(1)	9,000' - 16,000'	200' - 500'	5 - 12	<0.001 - 0.05	2 - 18	0.8 - 1.0
Kreyenhagen(1)	8,000' - 16,000'	200' - 350'	5 - 15	<0.001 - 0.1	1 - 6	0.7 - 1.2
Moreno(1)	8,000' - 16,000'	200' - 300'	5 - 10	<0.001 - 0.1	2 - 6	0.7 - 1.3
Bakken	3,000' - 11,000'	6' - 145'	2 - 12	0.05	8 - 21	<1
Barnett	5,400' - 9,500'	100' - 500'	4.0 - 9.6	<0.0001 - 0.1	4 - 8	0.8 - 2.0
Eagle Ford	5,000' - 12,000'	100' - 250'	3.4 - 14.6	0.13	2 - 9	1.0 - 1.45

(1): Reservoir characteristics were internally generated based on regional 2D seismic data, 3D seismic data, open hole and mud log data, cores and other reservoir engineering data.

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While we have not yet developed sufficient information to reliably predict success rates across our entire portfolio, our continued investment in unconventional projects is allowing us to develop a pattern of success across these different reservoirs in addition to improving our overall cycle time from project identification to development. As a result of our increased understanding of these reservoirs, we believe we will be able to better direct our capital to higher success projects allowing us to strategically increase our investment levels on unconventional drilling. We expanded our unconventional programs in 2013, and plan to continue this expansion by drilling 150 wells in 2014, all of which will target oil. With continued successful development and expansion, we believe that the unconventional production from these assets will become a significant portion of our production.

Exploration Program

We intend to continue our active exploration program in both conventional and unconventional plays where discoveries can quickly be developed into producing fields. We believe our experienced technical staff, leading acreage position and extensive 3D seismic library, covering over 4,250 square miles, or 2.7 million acres, including 47% of our acreage, result in a strong competitive advantage. Our interpretation of this seismic data, covering a large portion of our prospective acreage, and our extensive knowledge of California geology and producing fields has resulted in a large inventory of exploratory projects. Our current drilling inventory includes 7,237 gross (5,117 net) exploration drilling locations that are located in proven formations, the majority of which are located near existing producing fields. Additionally, we have identified 6,400 gross (5,300 net) prospective resource drilling locations in the lower Monterey, Kreyenhagen, and Moreno resource plays.

From 2007 to 2013, we drilled more than 100 exploration wells targeting both conventional and unconventional reservoirs. These projects were primarily in hydrocarbon-rich areas in and around discovered oil and gas fields. As a result, substantially all of our exploration wells encountered strong indications of hydrocarbons. Approximately 70% of these wells produced hydrocarbons and approximately 50% of those wells were converted to commercial production. We believe that many of the remaining exploration wells that produced hydrocarbons could also be converted to commercial production and potentially development projects, although we are currently pursuing higher return projects in lieu of developing these wells.

In 2014, we expect to spend approximately 5% of our total capital, or $95 million, on exploration projects with a continued focus on prospects that can generate near-term returns. Slightly more than half of this amount will target unconventional reservoirs. We expect exploration capital in the future to be focused in the San Joaquin, Ventura and Sacramento basins, and weighted toward projects where we have a proven track record of success. In addition, our program also includes exploration prospects in several high-potential resource plays, where we are the largest holder of unconventional acreage in the state. Success in these plays could generate significant longer-term production growth. We currently expect the portion of our exploration budget targeting such projects to increase following the spin-off.

Our Infrastructure

Our recent investments in infrastructure downstream of the wellhead have been instrumental in maximizing both the efficiencies of our production and the returns from our assets. As a result, we possess a portfolio of facilities that complements our operations and provides a strategic advantage for us in California. For example, our Elk Hills cryogenic gas plant is the largest gas processing complex in California, with capacity of 200 MMScf/d of wellhead gas. This modern plant, constructed in 2012, along with our other facilities, provides us with an aggregate processing capacity of over 540 MMScf/d with adequate redundancy to maximize uptime. These facilities enable us to optimize the amount of NGLs separated from the unprocessed wellhead gas stream and achieve higher overall realized prices for our production. We also own and operate a system of gas processing facilities in the Ventura basin that is capable of processing equity wellhead gas from the surrounding areas. We continue to identify

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opportunities to add incremental gas processing capacity in close proximity to our natural gas producing areas in order to maximize production efficiencies. Our gas processing facilities are interconnected via pipelines to nearby third-party rail and trucking facilities, with access to certain North American NGLs markets. In addition, we have truck rack facilities coupled with a battery of pressurized storage tanks at our Elk Hills gas processing facility for NGLs sales to third parties.

We are a large consumer of electricity, particularly with respect to our EOR waterflood and steamflood operations. We source all of our electricity needs at our Elk Hills operations, which run at about 120 megawatts, through our wholly-owned 550 megawatt combined cycle power plant located adjacent to our Elk Hills processing facilities, and sell the excess. This power plant provides low cost electricity for field operations and steam that further minimizes overall field operating costs. We also operate a 46 megawatt cogeneration facility at Elk Hills that provides resource diversity and additional reliability to support field operations. Within our Long Beach operations, we operate a 45 megawatt power generating facility that provides almost 40% of the Long Beach operation's electricity requirements, reducing operating costs.

To facilitate access to attractive markets, we own an extensive network of over 20,000 miles of oil and gas gathering lines. Virtually all of our natural gas production in California is connected via these facilities, which interconnect with the major third party natural gas pipeline systems. As a result of these connections, we have the ability to access multiple delivery points to improve the prices we obtain for our natural gas production.

As a result of recent investments in infrastructure, we do not anticipate any substantial infrastructure spending during the next several years. We believe the absence of such significant expenditures should further support strong cash flows.

Marketing Arrangements

We market our crude oil, natural gas, NGLs, and electricity in accordance with standard energy industry practices. Currently, we market our production through a subsidiary of Occidental but, after the spin-off, we will market through our own subsidiary.

Crude Oil. Substantially all of our crude oil production is connected to California markets via our crude oil gathering pipelines. We generally do not transport, refine or process the crude oil we produce and do not have any long-term crude oil transportation arrangements in place. California is heavily reliant on imported sources of energy, with approximately 62% of oil consumed during 2013 imported from outside the state, mostly from foreign locations. We sell almost all of our crude oil into the California refining markets, which we believe are among the most favorable in the U.S. Since California imports a significant percentage of its crude oil requirements, California refiners typically purchase crude oil at international waterborne-based prices that exceed WTI-based prices for comparable grades. For example, crude prices at the California Buena Vista Hills hub were, on average, an 8% premium to WTI in 2013. This price is then adjusted for differentials based upon delivery location and quality. Currently, we do not have any crude oil sales contracts with a term extending past 2015. Our 2013 realized price averaged across all grades of crude oil reflected a 6% premium to WTI index prices.

Natural Gas. Because California imports approximately 90% of the natural gas consumed in the state, we do not have any significant interstate natural gas transportation commitments. We do have intrastate transportation capacity where necessary to access markets. These contracts are required to facilitate deliveries. We sell virtually all of our natural gas production under individually negotiated contracts using market-based pricing on a monthly or shorter basis.

NGLs. We process substantially all of our NGLs through our processing plants, which facilitate access to third party delivery points near the Elk Hills field. We do not have long-term or long-haul

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interstate NGLs transportation agreements. We sell virtually all of our NGLs to third parties using market-based pricing. Our NGLs sales are generally pursuant to one-year contracts that are renewed annually.

Electricity. While part of the electric output of our generation facilities is utilized within our production facilities to reduce field operating costs, a significant portion is sold into the California market. Excess electric output and associated electric products are marketed to third parties and offered daily into the California electric market to be dispatched based on pricing and grid requirements.

Our Principal Customers

We sell our crude oil, natural gas and NGLs production principally to California refineries and marketers and other purchasers that have access to transportation and storage facilities. Our marketing of crude oil, natural gas and NGLs can be affected by factors that are beyond our control, and which cannot be accurately predicted.

For the years ended December 31, 2013, 2012 and 2011, ConocoPhillips/Phillips 66 Company and Tesoro Refining & Marketing Company LLC each accounted for more than 10% of our revenue and collectively accounted for 42%, 46% and 44%, respectively. No other customer accounted for more than 10% of our revenue during these periods. If a major customer decided to stop purchasing our products, we do not believe the effect on our operating results and financial condition would be material.

Our Reserves and Production Information

Reserve Data

The information with respect to our estimated reserves presented below has been prepared in accordance with the rules and regulations of the SEC.

Reserves Presentation

Proved oil, NGLs and natural gas reserves were estimated using the unweighted arithmetic average of the first-day-of-the-month price for each month within the year, unless prices were defined by contractual arrangements. Oil, NGLs and natural gas prices used for this purpose were based on posted benchmark prices and adjusted for price differentials including gravity, quality and transportation costs. For the 2013 disclosures, the calculated average WTI oil price was $96.94 per Bbl. The calculated average NYMEX gas price for 2013 disclosures was $3.65 per MMBtu. The realized prices used for the 2013 disclosures were $102.67 per Bbl for oil $50.53 per Bbl for NGLs and $3.84 per Mcf for natural gas.

The following table summarizes our estimated proved reserves and related PV-10 at December 31, 2013. Reserves are stated net of applicable royalties. Estimated reserves include our economic interests under arrangements similar to production-sharing contracts relating to the Wilmington field in Long

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Beach. For a more detailed description of these contractual arrangements, see "Management's Discussion and Analysis of Financial Condition and Results of Operation—Operations."

	At December 31, 2013

	San Joaquin Basin		Los Angeles Basin		Ventura Basin		Sacramento Basin		Total
Proved developed reserves:
Oil (MMBbl)		225		109		29		—		363
NGLs (MMBbl)		47		—		2		—		49
Natural Gas (Bcf)		459		11		25		116		611


Total (MMBoe)(1)(2)		349		111		35		19		514




Proved undeveloped reserves:
Oil (MMBbl)		106		47		16		—		169
NGLs (MMBbl)		21		—		2		—		23
Natural Gas (Bcf)		210		6		10		1		227


Total (MMBoe)(2)		162		48		20		—		230




Total proved reserves:
Oil (MMBbl)		331		156		45		—		532
NGLs (MMBbl)		68		—		4		—		72
Natural Gas (Bcf)		669		17		35		117		838


Total (MMBoe)(2)		511		159		55		19		744

(1): Approximately 11% of proved developed oil reserves, 2% of proved developed NGLs reserves, 8% of proved developed natural gas reserves and 9% of total proved developed reserves are non-producing.
(2): Natural gas volumes have been converted to Boe based on energy content of six Mcf of gas to one Bbl of oil. Barrels of oil equivalence does not necessarily result in price equivalence. The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in 2013, the average prices of WTI oil and NYMEX natural gas were $97.97 per Bbl and $3.66 per Mcf, respectively, resulting in an oil-to-gas ratio of over 25 to 1.

PV-10 and Standardized Measure

	At December 31, 2013

PV-10 of proved reserves (in millions)(1)	$	14,018
Standardized measure (in millions)	$	9,223

(1): PV-10 is a non-GAAP financial measure and represents the year-end present value of estimated future cash inflows from proved oil and gas reserves, less future development and production costs, discounted at 10% per annum to reflect the timing of future cash flows and using SEC prescribed pricing assumptions for the period. PV-10 differs from Standardized Measure because Standardized Measure includes the effects of future income taxes on future income. Neither PV-10 nor Standardized Measure should be construed as the fair value of our oil and gas reserves. PV-10 and Standardized Measure are used by the industry and by our management as an asset value measure to compare against our past reserve bases and the reserve bases of other business entities because the pricing, cost environment and discount assumptions are prescribed by the SEC and are comparable. PV-10 further facilitates the comparisons to other companies as it is not dependent on the taxpaying status of the entity.

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Proved Reserve Additions

Our total proved reserve additions from all sources were 86 MMBoe in 2013. All of these reserve additions were the result of our development program. We added 89 MMBoe from improved recovery, slightly offset by 3 MMBoe of negative revisions. The total additions to our proved reserves during the year ended December 31, 2013 were as follows:



Improved recovery:
Oil (MMBbl)	49		24		3		—		76
NGLs (MMBbl)	4		—		—		—		4
Natural Gas (Bcf)	47		3		2		—		52


Total (MMBoe)	61		25		3		—		89




Extensions and discoveries:
Oil (MMBbl)	—		—		—		—		—
NGLs (MMBbl)	—		—		—		—		—
Natural Gas (Bcf)	—		—		—		—		—


Total (MMBoe)	—		—		—		—		—




Revisions of previous estimates:
Oil (MMBbl)	(8	)	3		(3	)	—		(8	)
NGLs (MMBbl)	13		—		—		—		13
Natural Gas (Bcf)	(4	)	(4	)	(1	)	(38	)	(47	)


Total (MMBoe)	4		2		(3	)	(6	)	(3	)




Total proved reserve additions:
Oil (MMBbl)	41		27		—		—		68
NGLs (MMBbl)	17		—		—		—		17
Natural Gas (Bcf)	43		(1	)	1		(38	)	5


Total (MMBoe)	65		27		—		(6	)	86

Our ability to add reserves, other than through purchases, depends on the success of improved recovery, extension and discovery projects, each of which depends on reservoir characteristics, technology improvements and oil and gas prices, as well as capital and operating costs. Many of these factors are outside management's control, and will affect whether the historical sources of proved reserve additions continue to provide reserves at similar levels.

Improved Recovery

In 2013, we added proved reserves of 89 MMBoe from improved recovery through proven IOR and EOR methods, as well as unconventional primary mechanisms. The improved recovery additions in 2013 were mainly associated with the continued development of properties in the San Joaquin and Los Angeles basins. These properties comprise both conventional and unconventional projects. The types of conventional IOR and EOR development methods we use can be applied through existing wells, though additional drilling is frequently required to fully optimize the development configuration. Many of our projects, including unconventional projects, rely on improving permeability to increase flow in the wells. In addition, some improved recovery comes from drilling infill wells that allow recovery of reserves that would not be recoverable from existing wells.

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Revisions of Previous Estimates

Revisions can include upward or downward changes to previous proved reserve estimates due to the evaluation or interpretation of geologic, production decline or operating performance data. In addition, product price changes affect proved reserves we record. For example, higher prices may increase the economically recoverable reserves, because the extra margin extends the expected life of the operations. Offsetting this effect, higher prices slightly decrease our share of proved reserves under arrangements similar to production-sharing contracts at our Long Beach operations because less oil is required to recover costs. Conversely, when prices drop, our share of proved reserves slightly increases for such arrangements similar to production-sharing contracts and economically recoverable reserves may drop for other operations. In 2013, revisions of previous estimates were negligible resulting in a decrease of 3 MMBoe to proved reserves.

Reserve estimation rules require that estimated ultimate recoveries be more likely to increase or remain constant than to decrease as changes are made due to increased availability of technical data. As a result, apart from the effect of product prices, future proved reserve revisions should be positive in aggregate over time rather than negative.

Proved Undeveloped Reserves

In 2013, we had proved undeveloped reserve additions of 72 MMBoe from improved recovery, primarily in the San Joaquin and Los Angeles basins, offset slightly by 6 MMBoe of negative revisions. We also transferred 43 MMBoe of proved undeveloped reserves to the proved developed category as a result of the 2013 development programs, of which 91% were in the San Joaquin and Los Angeles basins. We spent approximately $700 million in 2013 to convert proved undeveloped reserves to proved developed reserves. While costs to develop proved undeveloped reserves have generally increased over time, in 2013

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drilling costs per barrel decreased by 20% as a result of capital efficiency initiatives. The total changes to our proved undeveloped reserves during the year ended December 31, 2013 were as follows:



Improved recovery:
Oil (MMBbl)	40		20		3		—		63
NGLs (MMBbl)	3		—		—		—		3
Natural Gas (Bcf)	35		2		1		—		38


Total (MMBoe)	49		20		3		—		72




Extensions and discoveries:
Oil (MMBbl)	—		—		—		—		—
NGLs (MMBbl)	—		—		—		—		—
Natural Gas (Bcf)	—		—		—		—		—


Total (MMBoe)	—		—		—		—		—




Revisions of previous estimates:
Oil (MMBbl)	(1	)	(2	)	(1	)	—		(4	)
NGLs (MMBbl)	4		—		—		—		4
Natural Gas (Bcf)	(15	)	—		—		(21	)	(36	)


Total (MMBoe)	—		(2	)	(1	)	(3	)	(6	)




Transfers to proved developed reserves:
Oil (MMBbl)	(24	)	(7	)	(3	)	—		(34	)
NGLs (MMBbl)	(3	)	—		—		—		(3	)
Natural Gas (Bcf)	(30	)	(1	)	(2	)	(4	)	(37	)


Total (MMBoe)	(32	)	(7	)	(3	)	(1	)	(43	)




Proved undeveloped reserve additions, net of transfers:
Oil (MMBbl)	15		11		(1	)	—		25
NGLs (MMBbl)	4		—		—		—		4
Natural Gas (Bcf)	(10	)	1		(1	)	(25	)	(35	)


Total (MMBoe)	17		11		(1	)	(4	)	23

Reserves Evaluation and Review Process

Our estimates of proved reserves and associated future net cash flows as of December 31, 2013 were made by Occidental's technical personnel, including personnel that will work for us after the separation, and are the responsibility of each company's management. The estimation of proved reserves is based on the requirement of reasonable certainty of economic producibility and management's funding commitments to develop the reserves. This process involves reservoir engineers, geoscientists, planning engineers and financial analysts. As part of the proved reserves estimation process, all reserve volumes are estimated by a forecast of production rates, operating costs and capital expenditures. Price differentials between benchmark prices (the unweighted arithmetic average of the first-day-of-the-month price for each month within the year) and realized prices and specifics of each operating agreement are then used to estimate the net reserves. Production rate forecasts are derived by a number of methods, including estimates from decline-curve analysis, type-curve analysis, material balance calculations that take into account the volumes of substances replacing the volumes produced and associated reservoir pressure changes, seismic analysis and computer simulation of the reservoir performance. These field-tested technologies have demonstrated reasonably certain results with consistency and repeatability in the

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formation being evaluated or in an analogous formation. Operating and capital costs are forecast using the current cost environment applied to expectations of future operating and development activities.

Net proved developed reserves are those volumes that are expected to be recovered through existing wells with existing equipment and operating methods, for which the incremental cost of any additional required investment is relatively minor. Net proved undeveloped reserves are those volumes that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

The current Senior Vice President, Reserves for Occidental's oil and gas operations was responsible for overseeing the preparation of Occidental's reserve estimates, including those related to our properties for 2013, and for ensuring the estimates comply with SEC rules and regulations. He also oversaw the internal audit and review of the oil and gas reserves data. He has over 30 years of experience in the upstream sector of the exploration and production business, and has held various assignments in North America, Asia and Europe. He is a three-time past Chair of the Society of Petroleum Engineers Oil and Gas Reserves Committee, is an American Association of Petroleum Geologists ("AAPG") Certified Petroleum Geologist and currently serves on the AAPG Committee on Resource Evaluation. He is a member of the Society of Petroleum Evaluation Engineers, the Colorado School of Mines Potential Gas Committee and the UNECE Expert Group on Resource Classification. He is also an active member of the Joint Committee on Reserves Evaluator Training. Additionally, he has Bachelor of Science and Master of Science degrees in geology from Emory University in Atlanta.

Occidental has a Corporate Reserves Review Committee ("Reserves Committee"), consisting of senior corporate officers, who reviewed and approved Occidental's oil and gas reserves, which included our oil and gas reserves for 2013. The Reserves Committee reports to the Audit Committee of Occidental's board of directors during the year. Ryder Scott was retained to separately review the oil and gas reserves estimation processes used in 2013 for our properties and to provide the opinion noted below.

Ryder Scott conducted a process review of the methods and analytical procedures used by Occidental's engineering and geological staff to estimate the proved reserves volumes, prepare the economic evaluations and determine reserves classifications as of December 31, 2013. Ryder Scott reviewed the specific application of such methods and procedures for selected oil and gas properties considered to be a valid representation of our 2013 year-end total proved reserves portfolio. In 2013, Ryder Scott reviewed approximately 37% of our proved oil and gas reserves. Since being engaged by Occidental in 2003, Ryder Scott has reviewed the specific application of reserve estimation methods and procedures for approximately 79% of our proved oil and gas reserves that existed at December 31, 2013. Ryder Scott was retained to provide objective third-party input on the methods and procedures used to estimate our oil and gas reserves for 2013 and to gather industry information applicable to the reserve estimation and reporting process for those reserves. Ryder Scott was not engaged to render an opinion as to the reasonableness of our reserves quantities. We filed Ryder Scott's independent report as an exhibit to this Form 10.

Based on its reviews, including the data, technical processes and interpretations presented with respect to our oil and gas reserves, Ryder Scott concluded that the overall procedures and methodologies utilized in estimating the proved reserves volumes, documenting the changes in reserves from prior estimates, preparing the economic evaluations and determining the reserves classifications for the reviewed properties are appropriate for the purpose thereof and comply with current SEC regulations.

Because the separation of CRC from Occidental will occur in late 2014, we will use the established reserves review process described above to estimate 2014 proved reserves. Following the 2014 reserve estimation, we intend to rely more heavily on independent reserves estimation companies, such as Ryder Scott, to estimate our proved reserves volumes.

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Determination of Identified Drilling Locations

Proven Drilling Locations

Based on our reserves report as of December 31, 2013, we have 2,141 gross (2,024 net) drilling locations attributable to our proved undeveloped reserves. We use production data and experience gained from our development programs to identify and prioritize this proven drilling inventory. These drilling locations are included in our inventory only after they have been evaluated technically and are deemed to have a high likelihood of being drilled within a five-year time frame. As a result of rigorous technical evaluation of geologic and engineering data, it can be estimated with reasonable certainty that reserves from these locations will be commercially recoverable in accordance with SEC guidelines. Management considers the availability of local infrastructure, drilling support assets, state and local regulations and other factors it deems relevant in determining such locations.

Unproven Drilling Locations

We have also identified a multi-year inventory of 8,313 gross (8,043 net) drilling locations that are not associated with proved undeveloped reserves but are specifically identified on a field-by-field basis considering the applicable geologic, engineering and production data. We analyze past field development practices and identify analogous drilling opportunities taking into consideration historical production performance, estimated drilling and completion costs, spacing and other performance factors. These drilling locations primarily include (i) infill drilling locations, (ii) additional locations due to field extensions or (iii) potential IOR and EOR project expansions, some of which are currently in the pilot phase across our properties, but have yet to be moved to the proven category. We believe the assumptions and data used to estimate these drilling locations are consistent with established industry practices with well spacing selected based on the type of recovery process we are using.

Exploration Drilling Locations

Our portfolio of prospective drilling locations contains 7,237 gross (5,117 net) unrisked exploration drilling locations that are located in proven formations, the majority of which are located near existing producing fields. We use internally generated information and proprietary models consisting of data from analog plays, 3D seismic data, open hole and mud log data, cores, and reservoir engineering data to help define the extent of the targeted intervals and the potential ability of such intervals to produce commercial quantities of hydrocarbons. Information used to identify exploration locations includes both our own proprietary as well as industry data available in the public domain. After defining the reservoir target area, we identified our exploration drilling locations within the applicable intervals by applying the well spacing we have historically utilized for the applicable type of recovery process used.

Prospective Resource Drilling Locations

In addition, we have 6,400 gross (5,300 net) unrisked prospective resource drilling locations identified in the lower Monterey, Kreyenhagen, and Moreno resource plays based on screening criteria that contain geologic and economic considerations and very limited production information. Prospective play areas are defined by geologic data consisting of well cuttings, hydrocarbon shows, open-hole well logs, geochemical data, available 3D or 2D seismic data and formation pressure data where available. Information used to identify our prospective locations includes both our own proprietary data, as well as industry, data available in the public domain. Prospective resource drilling locations were based on an assumption of 80-acre spacing per well throughout the prospective area for each resource play.

Well Spacing Determination

Our well spacing determinations in the above categories of identified well locations are based on actual operational spacing within our existing producing fields, which we believe are reasonable for the particular recovery process employed (i.e., primary, waterflood, EOR). Due to the significant vertical thickness and multiple stacked reservoirs usually encountered by our drilling wells, typical well spacing is

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generally less than 20 acres and often 10 acres or less in the majority of our fields unless specified differently above. These parameters also meet the general well spacing restrictions imposed on certain oil and gas fields in California.

Drilling Schedule

Our identified drilling locations have been scheduled as part of our current multi-year drilling schedule or are expected to be scheduled in the future. However, we may not drill our identified sites at the times scheduled or at all. We view the risk profile for our exploration drilling locations and our prospective resource drilling locations as being higher than for our other drilling locations due to relatively less available geologic and production data and drilling history, in particular with respect to our prospective resource locations, which are in unproven geologic plays. We make assumptions about the consistency and accuracy of data when we identify these locations that may prove inaccurate.

Our ability to profitably drill and develop our identified drilling locations depends on a number of variables, including crude oil and natural gas prices, the availability of capital, costs, drilling results, regulatory approvals, available transportation capacity and other factors. If future drilling results in these projects do not establish sufficient reserves to achieve an economic return, we may curtail drilling or development of these projects. For a discussion of the risks associated with our drilling program, see "Risk Factors—Risks Related to Our Business—We may not drill our identified sites at the times we scheduled or at all."

The table below sets forth our total identified drilling locations as of December 31, 2013, excluding our prospective drilling locations from new resource plays.

	Proven Drilling Locations				Total Identified Drilling Locations

	Oil and Natural Gas Wells		Injection Wells		Oil and Natural Gas Wells		Injection Wells
San Joaquin Basin
Primary Conventional		156		—		3,760		—
Waterflood		117		59		930		675
Steamflood		758		222		2,212		612
Unconventional		276		—		4,324		323


San Joaquin Basin subtotal		1,307		281		11,226		1,610


Los Angeles Basin
Primary Conventional		—		—		37		—
Waterflood		287		132		1,000		500
Steamflood		—		—		—		—
Unconventional		—		—		—		—


Los Angeles Basin subtotal		287		132		1,037		500


Ventura Basin
Primary Conventional		43		—		1,650		—
Waterflood		36		38		201		234
Steamflood		14		—		190		—
Unconventional		2		—		35		—


Ventura Basin subtotal		95		38		2,076		234


Sacramento Basin
Primary Conventional		1		—		1,008		—


Sacramento Basin subtotal		1		—		1,008		—


Total Identified Drilling Locations		1,690		451		15,347		2,344

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Production, Price and Cost History

Oil, NGLs and natural gas are commodities; therefore, the price that we receive for our production is largely a function of market supply and demand. Product prices are affected by a variety of factors, including changes in consumption patterns, global and local (particularly for gas) economic conditions, inventory levels, production disruptions or threatened disruptions, the actions of OPEC and other oil and natural gas producing countries, currency exchange rates, worldwide drilling and exploration activities, the effects of conservation, weather, geophysical and technical limitations, refining and processing disruptions, transportation bottlenecks and other matters affecting the supply and demand dynamics of oil, gas and NGLs, and the effect of changes in market perceptions. We typically have not hedged commodity price risk and do not currently expect to have a hedging program in the future.

The following table sets forth information regarding production, realized and benchmark prices, and production costs for the years ended December 31, 2013, 2012 and 2011 and for the six months ended June 30, 2014 and 2013. For additional information on price calculations, see information set forth in "Management's Discussion and Analysis of Financial Condition and Results of Operations."

	Six Months Ended June 30,				Year Ended December 31,

	2014		2013		2013		2012		2011
Production Data(a):
Oil (MBbl/d)		96		88		90		88		80
NGLs (MBbl/d)		18		20		20		17		15
Natural gas (MMcf/d)		243		262		260		256		260
Average daily combined production (MBoe/d)(b)		155		152		154		148		138
Total combined production (MMBoe)(b)		28		28		56		54		50
Average realized prices(a):
Oil (per Bbl)	$	103.43	$	105.21	$	104.16	$	104.02	$	103.80
NGLs (per Bbl)	$	54.86	$	47.90	$	50.43	$	52.76	$	70.03
Natural gas (per Mcf)	$	4.67	$	3.82	$	3.73	$	2.94	$	4.31
Average Benchmark prices:
WTI oil ($/Bbl)	$	100.84	$	94.30	$	97.97	$	94.21	$	95.12
NYMEX gas ($/Mcf)	$	4.60	$	3.68	$	3.66	$	2.81	$	4.11
Average costs per Boe:
Production costs(a)	$	18.45	$	17.16	$	17.10	$	22.58	$	19.09
Other operating expenses	$	4.80	$	4.15	$	4.38	$	4.04	$	3.87
Depreciation, depletion and amortization	$	20.48	$	20.22	$	20.11	$	16.82	$	13.01
Taxes other than on income	$	3.56	$	3.71	$	3.05	$	3.09	$	2.84

(a): The following table sets forth information regarding production, realized prices, and production costs for our Elk Hills and Wilmington fields for the years ended December 31, 2013, 2012 and 2011.

	Elk Hills						Wilmington

	2013		2012		2011		2013		2012		2011
Production data:
Oil (MBbl/d)		26		29		30		22		21		19
NGLs (MBbl/d)		18		15		14		—		—		—
Natural gas (MMcf/d)		145		168		174		—		—		—
Average realized prices:
Oil (MBbl/d)	$	106.32	$	101.19	$	101.10	$	103.29	$	102.15	$	102.37
NGLs (MBbl/d)	$	49.62	$	53.19	$	69.67	$	—	$	—	$	—
Natural gas (MMcf/d)	$	3.67	$	2.86	$	4.39	$	—	$	—	$	—
Production costs per Boe:	$	12.34	$	16.46	$	12.14	$	31.56	$	35.13	$	35.76

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(b): Natural gas volumes have been converted to Boe based on energy content of six Mcf of gas to one Bbl of oil. Barrels of oil equivalence does not necessarily result in price equivalence. The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in 2013, the average prices of WTI oil and NYMEX natural gas were $97.97 per Bbl and $3.66 per Mcf, respectively, resulting in an oil-to-gas ratio of over 25 to 1.

The following table sets forth our reserves and production by basin and recovery mechanism.

						Average Net Daily Production(MBoe/d)

	Total Proved Reserves (MMBoe)		Oil (%)			Year Ended December 31, 2013		Six Months Ended June 30, 2014
San Joaquin basin
Primary Conventional		68		57	%		16		17
Waterflood		53		80	%		8		7
Steamflood		176		100	%		25		29
Unconventional		214		35	%		59		56


San Joaquin basin subtotal		511		65	%		108		109


Los Angeles basin
Primary Conventional		—		—	%		1		1
Waterflood		159		98	%		25		27
Steamflood		—		—	%		—		—
Unconventional		—		—	%		—		—


Los Angeles basin subtotal		159		98	%		26		28


Ventura basin
Primary Conventional		25		81	%		6		6
Waterflood		26		88	%		2		2
Steamflood		2		100	%		—		—
Unconventional		2		67	%		1		1


Ventura basin subtotal		55		82	%		9		9


Sacramento basin
Primary Conventional		19		—	%		11		9


Sacramento basin subtotal		19		—	%		11		9


Total		744		72	%		154		155

Productive Wells

As of December 31, 2013, we had a total of 8,655 gross (7,792 net) producing wells, approximately 90% of which were oil wells. Our average working interests in our producing wells is approximately 92%. Many of our oil wells produce associated gas and some of our gas wells also produce condensate and NGLs.

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The following table sets forth our productive oil and natural gas wells (both producing and capable of production) as of December 31, 2013.



Oil
Gross(a)(b)	9,353	(1,066	)	1,562	(56	)	1,684	(32	)	—	—		12,599	(1,154	)
Net(a)(c)	8,237	(833	)	1,459	(51	)	1,622	(31	)	—	—		11,318	(915	)
Gas
Gross(a)(b)	382	(104	)	8	—		—	—		1,053	(52	)	1,443	(156	)
Net(a)(c)	333	(87	)	8	—		—	—		937	(46	)	1,278	(133	)

(a): Numbers in parentheses indicate the number of wells with multiple completions.
(b): The total number of wells in which interests are owned.
(c): The sum of fractional interests.

Acreage

The following table sets forth certain information regarding the total developed and undeveloped acreage in which we owned an interest as of December 31, 2013. Approximately 60% of our leased acreage was held by production at December 31, 2013.

	San Joaquin Basin

	(in thousands)
Developed(1)
Gross(2)		409	24	63	268	764
Net(3)		375	20	60	246	701
Undeveloped(4)
Gross(2)		1,383	16	234	365	1,998
Net(3)		1,110	10	196	288	1,604

(1): Acres spaced or assigned to productive wells.
(2): Total acres in which we hold an interest.
(3): Sum of fractional interests owned based on working interests or interests under arrangements similar to production-sharing contracts.
(4): Acres on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas, regardless of whether the acreage contains proved reserves.

Work programs are designed to ensure that the exploration potential of any leased property is fully evaluated before expiration. In some instances, we may elect to relinquish leased acreage in advance of the contractual expiration date if the evaluation process is complete and there is not a business basis for extension. In cases where additional time may be required to fully evaluate acreage, we have generally been successful in obtaining extensions. Scheduled lease expirations for undeveloped acreage over the next three years are not significant and are not expected to have a material adverse impact on us. Historically, we have not dedicated any significant portion of our capital to prevent lease expirations and do not expect we will need to do so in the future.

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Participation in Exploratory and Development Wells Being Drilled

The following table sets forth our participation in exploratory and development wells being drilled as of December 31, 2013.



Exploratory and development wells
Gross	23	10	—	—	33
Net	21	9	—	—	30

At December 31, 2013, we were participating in 43 waterflood and eight steamflood pressure-maintenance projects. Twenty-five waterflood projects were located in the Los Angeles basin, 12 in the San Joaquin basin and six in the Ventura basin. All of the significant steamflood projects were located in San Joaquin basin.

Drilling Activity

The following table describes our drilling activity for the periods indicated. The information should not be considered indicative of future performance, nor should it be assumed that there is necessarily any correlation among the number of productive wells drilled, quantities of reserves found or economic value. Productive wells are those that produce, or are capable of producing, commercial quantities of hydrocarbons, regardless of whether they produce a reasonable rate of return. Net wells represent the sum of fractional interests in wells in which we own an interest.



2013
Oil
Exploratory	2.0	—	—	—	2.0
Development	543.1	125.7	18.8	—	687.6
Natural Gas
Exploratory	—	—	—	—	—
Development	—	—	—	7.7	7.7
Dry
Exploratory	5.0	—	1.0	1.0	7.0
Development	2.5	0.9	—	—	3.4
2012
Oil
Exploratory	8.0	—	2.0	—	10.0
Development	485.7	121.4	63.9	—	671.0
Natural Gas
Exploratory	1.0	—	—	—	1.0
Development	2.5	—	—	3.0	5.5
Dry
Exploratory	11.0	—	—	—	11.0
Development	4.0	—	—	—	4.0
2011
Oil
Exploratory	7.0	—	1.0	—	8.0
Development	472.2	68.8	43.3	—	584.3
Natural Gas
Exploratory	—	—	—	—	—
Development	—	—	—	4.0	4.0
Dry
Exploratory	10.3	—	—	—	10.3
Development	—	—	—	—	—

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Since December 31, 2013, we have drilled 711 gross (644 net) wells, 436 of which were completed as producing wells and 118 of which are in various stages of completion.

Delivery Commitments

We have made commitments to certain refineries and other buyers to deliver oil, natural gas and NGLs. In certain cases, an Occidental subsidiary entered into the commitment on our behalf and to the extent it exists as of the spin-off we will assume the commitment as of our separation from Occidental. As of December 31, 2013, the total amount contracted to be delivered is approximately 36 MBbls/d of oil under 60-day contracts, 3 Bcf of natural gas through 2014 and 1 MMBbl of NGLs through 2014. As of June 30, 2014, the total amount contracted to be delivered is approximately 36 MBbls/d of oil under 60-day contracts, 2 Bcf of natural gas through 2015 and 8 MMBbls of NGLs through 2015. The price for these deliveries is set at the time of delivery of the product at benchmark prices. We have significantly more production capacity than the amounts committed and have the ability to secure additional volumes in case of a shortfall. None of the commitments in any given year is expected to have a material impact on our financial statements.

Title to Properties

As is customary in the oil and natural gas industry, we initially conduct only a cursory review of the title to our properties at the time of acquisition. Prior to the commencement of drilling operations on those properties, we conduct a more thorough title examination and perform curative work with respect to significant defects. We generally will not commence drilling operations on a property until we have cured known title defects on such property that are material to the project. Individual properties may be subject to burdens that we believe do not materially interfere with the use or affect the value of the properties. Burdens on properties may include customary royalty interests, liens incident to operating agreements and for current taxes, obligations or duties under applicable laws, development obligations, or net profits interests.

Competition

We have many competitors, some of which are larger and better funded, may be willing to accept greater risks or have special competencies. See "Risk Factors."

Regulation of the Oil and Natural Gas Industry

Our operations are regulated under a wide range of federal, state, local and other laws and regulations. California has regulations governing the conservation of oil and natural gas, including provisions for the unitization or pooling of natural gas and oil properties, the establishment of maximum allowable rates of production from natural gas and oil wells and the regulation of well spacing or density. California also regulates methods of drilling and casing wells, plugging and abandonment of wells, the use and restoration of the surface of properties upon which wells are drilled, sourcing and disposal of water used in the drilling and completion process, the disposal of fluids used and produced in connection with operations, the prevention of spills and cleanup of pollutants and other materials, and the venting or flaring of natural gas. In addition, the state requires permits for, among other things, the drilling and stimulation of wells, and requires certain bonding requirements be met in order to drill or operate wells. The effect of these regulations is to limit the amount of oil and natural gas that we can produce from our wells and to limit the number of wells or the locations at which we can drill, although we can apply for exceptions to such regulations or to have reductions in well spacing or density. Our competitors in the California oil and natural gas industry are subject to the same regulatory requirements and restrictions that affect our operations.

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Regulation of Health, Safety and Environmental Matters

General

Our operations are subject to numerous federal, state, local, and other laws and regulations governing health and safety, the release or discharge of materials into the environment or otherwise relating to environmental protection. Generally, these health, safety and environmental laws and regulations may restrict or prohibit certain activities by us or by our contractors, increase costs or lower demand for or restrict the use of our products and services. Applicable federal safety and environmental laws include, but are not limited to, the Occupational Safety and Health Act ("OSHA"), the Clean Air Act ("CAA"), the Clean Water Act ("CWA"), the Safe Drinking Water Act ("SDWA"), the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") and the Resource Conservation and Recovery Act ("RCRA"), and California imposes additional laws that are analogous to, and often more stringent than, such federal laws. These laws and regulations:

•: require various permits and approvals before drilling, workovers, production, underground fluid injection, or solid and hazardous waste disposal commences, or before facilities are constructed or put into operation;
•: require the installation of sophisticated safety and pollution control equipment;
•: restrict the types, quantities, and concentration of various materials, including, without limitation, oil, natural gas and water, that can be released or discharged into the environment in connection with drilling, production, processing or transportation activities;
•: limit or prohibit operations on lands lying within coastal, wilderness, wetlands, endangered species habitat, and other protected areas;
•: establish standards for the closure, abandonment, cleanup or restoration of former operations, such as plugging of abandoned wells;
•: impose substantial liabilities for unauthorized releases or discharges of regulated materials into the environment;
•: require comprehensive environmental analyses, recordkeeping and reports with respect to operations affecting federal, state, and private lands or leases;
•: may expose us to litigation by governmental authorities, special interest groups and other claimants; and
•: may restrict the rate of oil, NGLs and natural gas production below the rate that would otherwise be possible.

Federal, state and local governments frequently revise health, safety and environmental laws and regulations, and any changes that result in delay or more stringent permitting, materials handling, engineering, disposal, cleanup and restoration requirements for the oil and gas industry could have a significant impact on our capital expenditures and operating costs. Failure to comply with these laws and regulations may result in the assessment of administrative, civil, and/or criminal fines and penalties and liability for non-compliance, costs of corrective action, cleanup and restoration, compensation for personal injury, property damage or other losses, and the imposition of injunctive or declaratory relief. Releases or discharges may occur in the course of our operations, and we cannot be sure that we will not incur significant costs and liabilities as a result of such releases or discharges, including any third-party claims for damage to property, natural resources, or persons. Although we believe that we substantially comply with all current applicable environmental laws and regulations and that our continued compliance with existing requirements will not have a material adverse impact on our financial condition or results of operations, we can make no assurance that future developments, such as increasingly stringent environmental laws or enforcement thereof, will not cause us to incur material environmental liabilities or costs in the future.

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Air Emissions

The CAA and its state analogues and their associated regulations restrict the emission of various air pollutants from oil and gas operations through the issuance of permits and the imposition of various pre-construction, monitoring, and reporting requirements. The U.S. Environmental Protection Agency ("EPA"), California Air Resources Board ("CARB") and regional air control districts and other local agencies also regulate such emissions through their permitting processes. Each of these agencies has developed, and continues to develop, stringent regulations governing emissions of air pollutants, which may increase the costs of compliance for our facilities. The control of air emissions from oil and gas operations is expected to be an ongoing focus of federal, state and local agencies for the foreseeable future.

Producing wells and associated equipment, natural gas plants, compressor stations and electric generating facilities generate volatile organic compounds ("VOCs"), particulate matter ("PM"), nitrogen oxides ("NOx") and other air pollutants. Some of our producing wells and associated facilities are in counties that potentially are subject to restrictive emission limitations and permitting requirements for VOCs, PM, NOx and other materials. If we are unable to comply with air pollution regulations or to obtain permits for emissions associated with our operations, we could be required to forego construction, modification, or certain operations. These regulations may also increase compliance costs for some facilities we own or operate, and result in administrative, civil and/or criminal penalties for non-compliance. Obtaining permits may delay the development of our oil, NGLs and natural gas projects, including the construction and operation of facilities.

Water Discharges

The CWA and analogous state laws regulate the discharge of oil and other materials into U.S. and state waters. The scope of the CWA and analogous state laws depends on the definitions of "waters of the U.S." and "state waters," which have expanded from time to time. EPA and analogous California agencies prohibit the discharge of pollutants into regulated waters except in accordance with the terms of a permit or waiver. The CWA and associated regulations also prohibit the discharge of dredged and fill material to regulated waters, including jurisdictional wetlands, without a permit issued by the U.S. Army Corps of Engineers. Obtaining these permits may delay the development of oil, NGLs and natural gas projects and associated facilities. Federal and California state regulatory agencies can impose administrative, civil and/or criminal penalties as well as other enforcement mechanisms for non-compliance. The imposition of new or additional regulations could further limit or prohibit our ability to manage or dispose of wastewater, including produced water, drilling and completion fluids and other wastes associated with our operations.

The Oil Pollution Act of 1990 ("OPA") and associated regulations subject owners and operators of vessels, onshore facilities, and pipelines, as well as lessees or permittees of areas in which offshore facilities are located, to strict liability for removal costs and damages arising from an oil spill in U.S. waters. Although there are certain limits for liabilities that apply under OPA, potential limits on liability do not apply if the spill was caused by gross negligence or willful misconduct, resulted from violation of a federal safety, construction, or operating regulation or if a party fails to report a spill or to cooperate fully in the cleanup. OPA imposes ongoing requirements on parties responsible for an oil spill, including the preparation of oil spill response plans and proof of financial responsibility to cover environmental cleanup and restoration costs.

Hazardous Substances and Wastes

CERCLA, or "Superfund", imposes joint and several liability, without regard to fault, for the release of a "hazardous substance" into the environment, on responsible persons including the current and past owners or operators of the site where the release occurred, and companies that disposed or arranged for

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the transport or disposal of the hazardous substance. Under CERCLA and analogous California laws, responsible persons may be liable for cleanup costs, natural resource damages, and the costs of certain health studies. In addition, third parties may file claims for personal injury, property damage and other losses allegedly caused by the hazardous substances released into the environment. Although petroleum and crude oil fractions are not considered hazardous substances, in the course of our operations, we may use materials that, if released, may be treated as hazardous substances under CERCLA. Thus, governmental agencies or third parties may seek to hold us responsible for all or part of the costs to clean up sites at which such hazardous substances have been deposited.

RCRA and analogous California laws regulate the generation, transportation, treatment, storage, disposal, and cleanup of "hazardous wastes" and the disposal of non-hazardous wastes. Drilling fluids, produced waters, and other wastes associated with the exploration or production of crude oil, natural gas, or geothermal energy constitute "solid wastes," which are subject to less stringent provisions than hazardous wastes. RCRA and California law also regulate Naturally Occurring Radioactive Materials ("NORM") generated in operations. Legislation or regulations have been proposed that could reclassify certain oil and natural gas exploration and production wastes as hazardous wastes, which would subject the reclassified wastes to more stringent handling, disposal and cleanup requirements. Such legislation, if enacted, could affect our operating costs.

Prior owners may have commenced exploration and production operations on some of our owned or leased property. Although we have utilized operating and disposal practices that were standard in the industry at the time, hydrocarbons or other materials or wastes may have been released or discharged at the properties owned or leased by us, or at other locations where such materials or wastes may have been taken for disposal. In addition, a portion of these sites may have been operated by third parties whose waste management and disposal practices were not under our control. These properties and the wastes disposed thereon may be subject to CERCLA, RCRA, and analogous state laws. Under such laws, we could be required to remove or remediate contamination (potentially including waste disposed of or groundwater contamination caused by prior owners or operators), or to perform plugging or closure operations to prevent future contamination.

Regulation of Well Completion and Stimulation

Hydraulic fracturing, acid matrix stimulation and similar techniques are important and common practices we use to stimulate production of oil and gas. Hydraulic fracturing involves the injection of water, sand and trace chemicals under pressure into underground oil and gas bearing rock formations to create or enlarge fractures and stimulate the flow of oil and gas into the oil and gas production well. Acid matrix stimulation involves the injection of a low pH solution designed to dissolve the sediments and mud solids that inhibit the permeability of the oil and gas bearing rock. Although these stimulation techniques have been regulated by DOGGR and safely utilized in California for decades, numerous federal and state agencies and certain local governments seek to further regulate them.

In February 2014, the EPA asserted regulatory authority over hydraulic fracturing involving diesel additives under the SDWA's Underground Injection Control ("UIC") Program, and requested comments in May 2014 on a proposal to require disclosure of chemical ingredients in hydraulic fracturing fluids under the Toxic Substances Control Act. In May 2013, the Bureau of Land Management proposed rules governing hydraulic fracturing on federal and Indian oil and gas leases that would require public disclosure of chemicals used, confirmation that wells used in hydraulic fracturing operations meet defined construction standards, and development of plans for managing water that flows back to the surface. In addition, studies by EPA and other federal agencies are underway that focus on environmental aspects of hydraulic fracturing activities, with draft reports expected for public comment and peer review in late 2014. These studies could spur further regulation. Additional regulations adopted at the federal level could result in permitting delays and cost increases.

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At the state level, California adopted SB 4 in 2013, mandating additional, comprehensive regulation of well stimulation operations. The law requires, among other things, notification to property owners and tenants in the vicinity of well stimulation operations at least 30 days before the operations start, groundwater testing of an existing well if requested by such owners or tenants, implementation of water management and groundwater monitoring plans and the adoption of new regulations in 2015 governing well and casing construction and additional disclosure of well stimulation fluid constituents. In December 2013, the California Department of Conservation issued interim regulations to implement SB 4 that are currently in effect. The interim rules require approval of Well Stimulation Treatment Notices before starting stimulation treatment, disclosure of the fluids used and implementation of groundwater monitoring and water management plans. They also govern resident notifications, storage and handling of fluids and well integrity.

In April 2014, a California Senate committee proposed legislation that would have indefinitely banned hydraulic fracturing and other stimulation activity until the state examined potential environmental effects. Although the California Senate did not adopt the committee's proposal, similar legislation may be considered in the future. In addition, some local governments have proposed or adopted ordinances within their jurisdictions that purport to regulate drilling activities in general, or stimulation and completion activities in particular, or to ban such activities outright. None of the adopted local ordinances is expected to materially impact our current or expected future operations. If new or more stringent federal, state, or local restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, we could incur potentially significant added costs, experience delays or curtailment of our exploration or production activities and potentially be precluded from drilling wells.

Safe Drinking Water Act and Underground Injection Control Program

The SDWA, the UIC Program and comparable California programs regulate the disposal, treatment, or release of water produced or used during oil and gas development and the drilling and operation of water disposal wells and fluid injection wells to enhance recovery of hydrocarbons. Permits are required to drill wells for water disposal or for fluid injection in EOR, and casing integrity must be periodically monitored to ensure the casing is adequate to prevent fluids from migrating outside of targeted zones. Non-compliance with regulations or groundwater contamination by oil and natural gas drilling operations may result in fines, penalties, and remediation costs, among other enforcement mechanisms under the SDWA and analogous California laws. In addition, landowners and other parties may assert claims for personal injury, alternative water supplies, property damage and other claims. These regulations and attendant liabilities may increase operating costs for some facilities.

Environmental Impact Analysis

Oil and natural gas exploration and production activities on federal lands are subject to the National Environmental Policy Act ("NEPA"). NEPA requires federal agencies, including the Department of Interior and its Bureau of Land Management, to evaluate major agency actions that may significantly impact the environment. Some of our exploration and production activities occur on federal leases. NEPA may require the preparation of Environmental Assessments or more detailed Environmental Impact Statements which may be made available for public review and comment. This process may delay permitting and development of projects, increase costs, and in certain instances could result in the cancellation of existing federal leases.

Like NEPA, the California Environmental Quality Act ("CEQA") requires consideration of potential significant environmental impacts of any project proposed for agency approval. CEQA may require the responsible governmental agency to prepare an Environmental Impact Report ("EIR") that is made available for public comment. The responsible agency also is required to impose measures to mitigate all significant impacts of the proposed action or make a finding of considerations that override the imposition of identified mitigation measures. The party requesting agency action must pay EIR preparation and

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defense costs. The CEQA process may impose additional delays and expense on the process of obtaining new permits and permit renewals.

Endangered Species Act and Migratory Bird Treaty Act

Various federal and state statutes prohibit certain actions that adversely affect endangered or threatened species and their habitats, migratory birds, wetlands and natural resources. These statutes include the federal Endangered Species Act ("ESA"), the California ESA ("CESA"), the Migratory Bird Treaty Act ("MBTA"), and the CWA. The U.S. Fish and Wildlife Service and the California Department of Fish and Wildlife may designate critical or suitable habitat areas that they believe are necessary for the survival of threatened or endangered species. Such a designation could materially restrict use of or access to federal, state and private lands and could delay or prohibit oil and gas development. While some of our operations may be located in areas that are designated as habitats for endangered or threatened species or that may attract migratory birds, we believe that we are in substantial compliance with the ESA, CESA, MBTA and similar statutes, and we are not aware of any proposed species listings that will materially affect our operations. However, there could be new designations of previously unidentified endangered or threatened species, or critical or suitable habitat that would affect our operations.

Abandonment, Decommissioning and Remediation Requirements

Federal, state, and local laws and regulations provide detailed requirements for the abandonment of wells, the closure or decommissioning of production and transportation facilities and the environmental restoration of sites where operations have ceased. DOGGR is the principal state agency responsible for regulating the abandonment of wells and associated facilities in California. These regulations can impose significant costs on us related to (i) plugging, abandonment and restoration of facilities; (ii) cleanup costs and compensation for property damage due to releases or discharges; and (iii) penalties imposed for releases or non-compliance with applicable laws and regulations. As is customary in the oil and natural gas industry, we typically have contractually assumed, and may assume in the future, certain obligations relating to plugging and abandonment, cleanup, and other environmental costs in connection with our acquisition of operating interests in oil and gas fields, and these costs can be significant.

Climate Change Legislation and Greenhouse Gas Regulations

A number of federal, state, and regional efforts have emerged that seek to track or reduce emissions of GHGs. EPA has adopted regulations that restrict GHG emissions under existing provisions of the CAA and rules requiring certain operations, including onshore and offshore oil and natural gas production facilities, to monitor and report GHG emissions on an annual basis.

In 2006, California adopted AB 32, which established a statewide "cap-and-trade" program for GHG emissions. The program, which commenced in 2012, sets statewide maximum limits on total GHG emissions and requires the oil and natural gas extraction sector to report GHG emissions. Under the program, the cap will decline annually through 2020. We are required to obtain allowances or qualifying offset credits for each metric ton of GHGs that we emit. The state grants a portion of the allowance, but we must make up any shortfall by purchasing additional allowances either from the state or a third party. The availability of allowances will decline over time, and the cost to acquire such allowances may increase. The cap-and-trade program currently expires in 2020. A California Senate bill in 2014 proposed to extend the program to 2050. Although that bill was not adopted, similar legislation may be proposed in the future.

The California cap-and-trade program is scheduled to incorporate transportation fuels beginning in 2015. As planned, petroleum refiners would be responsible for retiring allowances equivalent to the volume of transportation fuels they market in California. CARB also imposed a "low carbon fuels" standard, which requires refiners to reduce the carbon content of fuels they market in California by 10% by 2020. These programs may reduce demand for our products or require further controls on, or

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modifications to, our operations. Federal and California subsidies and tax incentives for the development and construction of alternative energy-fueled power generation and transportation also may reduce demand for our products and services.

If we are unable to recover or pass through a significant portion of our costs related to complying with climate change regulations, it could materially affect our operations and financial condition. To the extent financial markets view climate change and GHG emissions as a financial risk, this could negatively impact our cost of, and access to, capital. Future legislation or regulations adopted to address climate change could also make our products more or less desirable than competing sources of energy.

Worker Safety

The federal OSHA and analogous California laws regulate the protection of the safety and health of workers. The California Department of Industrial Relations' Division of Occupational Safety and Health ("Cal/OSHA") requires maintenance of information about hazardous materials used or produced in operations and provision of such information to employees, state and local government authorities, and the public. Cal/OSHA has adopted and enforces Petroleum Safety Orders that require safety programs, and protective measures in our operations. Failure to comply with Cal/OSHA requirements can lead to the imposition of administrative, civil and/or criminal penalties as well as injunctive relief.

Regulation of Transportation and Sales of Natural Gas

Regulations affecting sales

The sales prices of oil, NGLs and natural gas are not presently regulated, but rather are set by the market. We cannot predict, however, whether new legislation to regulate the price of energy commodities might be proposed, what proposals, if any, might actually be enacted by the United States Congress or the various state legislatures, and what effect, if any, the proposals might have on the operations of the underlying properties.

Interstate transportation rates for oil, NGLs and other products are regulated by the Federal Energy Regulatory Commission ("FERC"). The price we receive from the sale of oil, natural gas and NGLs is affected by the cost of transporting those products to market. The FERC has established an indexing system for such transportation, which allows such pipelines to take an annual inflation-based rate increase. We are not able to predict with any certainty what effect, if any, these regulations will have on us, but, other factors being equal, the regulations may, over time, tend to increase transportation costs, which may have the effect of reducing wellhead prices for oil and natural gas liquids.

Market manipulation and market transparency regulations

Under the Energy Policy Act of 2005 ("EP Act 2005"), the FERC possesses regulatory oversight over natural gas markets to prevent market manipulation. The Federal Trade Commission ("FTC") has similar regulatory oversight of oil markets to prevent market manipulation. The Commodity Futures Trading Commission ("CFTC") also holds authority to monitor certain segments of the physical and futures energy commodities market pursuant to the Commodity Exchange Act. We are required to observe these anti-market manipulation laws and related regulations enforced by the FERC, the FTC, and/or the CFTC when we engage in physical purchases and sales or gathering of oil, NGLs and natural gas and when we engage in related hedging activity. These agencies hold substantial enforcement authority, including the ability to assess civil penalties of up to $1 million per day per violation, to order disgorgement of profits and to recommend criminal penalties. Should we violate the anti-market manipulation laws and regulations, we could also be subject to related third-party damage claims by, among others, sellers, royalty owners and taxing authorities.

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The FERC has issued market transparency rules for the natural gas that may affect some our operations. The FERC issued a final rule in 2007, as amended by subsequent orders on rehearing ("Order 704"), which requires wholesale buyers and sellers of more than 2.2 million MMBtu of physical natural gas, including natural gas producers, gatherers, processors and marketers, to report on May 1 of each year, aggregate volumes of natural gas purchased or sold at wholesale in the prior calendar year to the extent such transactions utilize, contribute to, or may contribute to the formation of price indices. The FERC has issued a Notice of Inquiry in Docket No. RM13-1-000 seeking comments from the industry regarding whether it should require more detailed information from sellers of natural gas. It is unclear what action, if any, will result and whether our reporting burden will increase or decrease.

Gathering regulations

Section 1(b) of the federal Natural Gas Act ("NGA") exempts natural gas gathering facilities from the jurisdiction of the FERC. We own certain natural gas pipelines that we believe meet the traditional tests that FERC has used to establish a pipeline's status as a gatherer not subject to FERC jurisdiction. The distinction between FERC-regulated transmission facilities and federally unregulated gathering facilities is, however, the subject of substantial, ongoing litigation, so the classification and regulation of our gathering lines may be subject to change based on future determinations by the FERC, the courts, or Congress.

State regulation of gathering facilities generally includes various safety, environmental and, in some circumstances, "nondiscriminatory take" requirements and in some instances complaint-based rate regulation. Our gathering operations are also subject to state statutes designed to prohibit discrimination favoring producers or sources of supply. The regulations may restrict those with whom we contract to gather natural gas. In addition, our natural gas gathering operations could be adversely affected should they be subject to more stringent application of state or federal regulation of rates and services, though we do not believe that we would be affected by any such action in a manner materially differently than other companies in our areas of operation.

Regulation of power sales and transmission

The FERC regulates the sale of electricity at wholesale and the transmission of electricity under the Federal Power Act. The FERC's jurisdiction includes, among other things, authority over the rates, charges and other terms for the sale of electricity at wholesale by public utilities and for transmission services. In most cases, the FERC does not set rates for the sale of electricity at wholesale by generating companies (such as our subsidiary) that qualify for market-based rate authority, enabling companies to negotiate rates based on market conditions. In order to be eligible for market-based rate authority, and to maintain exemptions from certain FERC regulations, our subsidiary must request market based rate authorization from the FERC. With respect to its regulation of the transmission of electricity, the FERC requires transmission providers to provide open access transmission services, which supports the development of competitive power markets by assuring non-discriminatory access of non-utility generators to the transmission grid.

Regulation of Pipeline Safety and Maintenance

We are subject to regulation by the Pipeline and Hazardous Materials Safety Administration ("PHMSA") of the Department of Transportation ("DOT"), pursuant to the Natural Gas Pipeline Safety Act of 1968 ("NGPSA") and the Pipeline Safety Improvement Act of 2002 ("PSIA"). The NGPSA regulates safety requirements in the design, construction, operation and maintenance of gas pipeline facilities, while the PSIA establishes mandatory inspections for all U.S. oil and natural gas transportation pipelines and some gathering lines in high-consequence areas. The PHMSA has developed regulations implementing the PSIA that require transportation pipeline operators to implement integrity management programs, including more frequent inspections and other measures to ensure pipeline safety in "high consequence areas," such as high population areas, areas with sensitive environmental receptors and

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commercially navigable waterways. In addition, PHMSA has authorized the California State Fire Marshal and California Public Utilities Commission to enforce federal intrastate pipeline regulations and inspection requirements in California.

The Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, or the Pipeline Safety Act, expanded the DOT's authority under the PSIA and requires the DOT to evaluate whether integrity management programs should be expanded beyond high consequence areas, authorizes the DOT to promulgate regulations requiring the use of automatic and remote-controlled shut-off valves for new or replaced pipelines, and requires the DOT to promulgate regulations requiring the use of excess flow values where feasible. Our natural gas pipelines have continuous inspection and compliance programs designed to keep facilities in compliance with pipeline safety requirements. Although we do not believe that any regulatory changes will affect us in a way that materially differs from the way they will affect our competitors, any new or amended pipeline safety regulations at the federal or state level may require us to incur additional capital expenditures and may increase our operating costs.

Employees

As of December 31, 2013, we had approximately 1,600 California employees. Our future success will depend partially on our ability to attract, retain and motivate qualified personnel. Approximately 86 of our employees are represented by labor unions. We have not experienced any strikes or work stoppages. We utilize the services of independent contractors to perform various field and other services.

Legal Proceedings

We are party to various legal proceedings and claims in the ordinary course of our business. One of our subsidiaries has settled a previously disclosed matter with the California Air Resources Board regarding reporting and emissions from four pieces of equipment at its facility in Long Beach, California by paying a penalty of approximately $254,000 in the second quarter of 2014 without admitting liability.

Two of our subsidiaries settled a claim asserted by the Regional Water Quality Control Board for the Central Valley Region in the second quarter of 2014 regarding the past use of certain drilling sumps in Kern County, California. Our subsidiaries will pay a cash penalty totaling approximately $239,000, and pay the same amount to fund a non-profit organization's community water center as a supplemental environmental project. We believe the other various legal proceedings and claims we are subject to in the ordinary course of our business will not have a material adverse effect on our consolidated or combined financial position, results of operations or liquidity.

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MANAGEMENT

Executive Officers

The following table sets forth information, as of October 8, 2014, regarding the individuals who were appointed to serve as our executive officers and directors following the distribution. After the distribution, none of our executive officers will continue to be employees of Occidental.

Name	Position(s) with CRC

William E. Albrecht	Executive Chairman of the Board	62
Todd A. Stevens	President and Chief Executive Officer	47
Marshall D. Smith	Senior Executive Vice President and Chief Financial Officer	54
Robert A. Barnes	Executive Vice President—Northern Operations	58
Frank E. Komin	Executive Vice President—Southern Operations	59
Shawn M. Kerns	Executive Vice President—Corporate Development	44
Roy Pineci	Executive Vice President—Finance	51
Michael L. Preston	Executive Vice President, General Counsel and Corporate Secretary	50
Charles F. Weiss	Executive Vice President—Public Affairs	50
Darren Williams	Executive Vice President—Exploration	42

William E. Albrecht was appointed as Executive Chairman of the Board of CRC in July 2014. Mr. Albrecht served as Vice President of Occidental from May 2008 to July 2014 and as President, Oxy Oil & Gas, Americas from January 2012 to July 2014. Mr. Albrecht also served as President—Oxy Oil & Gas, USA from April 2008 to January 2012. During his tenure with Occidental, Mr. Albrecht has had managerial oversight over our upstream assets. Mr. Albrecht has more than 35 years of experience in the domestic oil and gas industry, having previously served as an executive officer for domestic energy producer EOG Resources, and as a petroleum engineer for Tenneco Oil Company. Mr. Albrecht holds a Master of Science degree from the University of Southern California and a Bachelor of Science degree from the United States Military Academy. Mr. Albrecht's extensive managerial and operational experience in the upstream domestic energy business and his specific knowledge of our assets and proactive engagement with regulatory agencies, communities, and other stakeholders make him a valuable member of our Board of Directors.

Todd A. Stevens was appointed President, Chief Executive Officer and a Director of CRC in July 2014. Mr. Stevens served as Vice President—Corporate Development of Occidental Petroleum Corporation from August 2012 to July 2014, as Vice President—California Operations, Oxy Oil & Gas from April 2008 to September 2012 and as Vice President—Acquisitions and Corporate Finance of Occidental from October 2004 to August 2012. Mr. Stevens holds a Master of Business Administration degree from the University of Southern California and a Bachelor of Science degree from the United States Military Academy. Our Board of Directors will benefit from Mr. Stevens' deep knowledge of the oil and gas industry, his expertise in strategically evaluating and valuing oil and gas assets, and his significant managerial experience as an executive at Occidental, including his extensive experience in allocating capital, managing Occidental's and our assets and dealing with California's regulatory environment, agencies and political landscape.

Marshall D. "Mark" Smith was appointed Senior Executive Vice President and Chief Financial Officer of CRC in July 2014. Mr. Smith served as Senior Vice President of Ultra Petroleum Corp. from January 2011 to July 2014 and served as its Chief Financial Officer from July 2005 to July 2014. Mr. Smith has over 32 years of progressive experience in a multitude of disciplines within the energy industry including operations, strategic planning, corporate finance and business development. Early in his career, Mr. Smith served as a practicing petroleum engineer for both major and independent oil companies and later focused his career on mergers, acquisitions and corporate finance advisory assignments in the energy sector. From 2004 until joining Ultra Petroleum Corp. in July 2005, Mr. Smith served as Vice President of Upstream Business Development at Constellation Energy. Mr. Smith was the Vice President of Business

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Development at J.M. Huber Energy from 2002 to 2004. From 2001 to 2002, Mr. Smith served as the Chief Financial Officer at Gulf Liquids, Inc. Mr. Smith holds a Masters of Business Administration degree with highest honors from Oklahoma City University and a Bachelors of Science degree from the University of Oklahoma.

Robert A. Barnes was appointed Executive Vice President—Northern Operations of CRC in July 2014. Mr. Barnes served as President and General Manager of Occidental of Elk Hills from December 2012 to July 2014. He served as Operations Manager for Oxy Permian CO ₂ from May 2011 to November 2012, as Deputy General Manager and Senior Vice President, Operations, of Occidental Argentina from June 2010 to April 2011, and as Vice President, Operations, of Occidental Argentina from August 2007 to June 2010. Mr. Barnes also held Production Operations Manager and Operations Team Leader roles at Occidental of Elk Hills from 1998 to 2007, and worked as Production Superintendent in the Hugoton and Virginia Coalbed Methane Operations and held various roles in Operations and Drilling Engineering throughout the Rocky Mountains, California and Mid-Continent regions since joining Occidental in 1978. Mr. Barnes has over 36 years of oil and gas industry experience and holds a Bachelor of Business Administration degree from New Mexico State University.

Frank E. Komin was appointed Executive Vice President—Southern Operations of CRC in July 2014. Mr. Komin served as President and General Manager of OXY Long Beach from February 2001 to July 2014, and served as President and General Manager of Oxy THUMS from February 2001 to December 2009. During his tenure at OXY Long Beach, Mr. Komin oversaw all aspects of Long Beach operations and the development of the Wilmington field. Mr. Komin has more than 36 years of experience in the domestic oil and gas industry. Before joining Oxy THUMS in 2000 as Manager, Production & Development, Mr. Komin worked for 22 years at ARCO as Reservoir Engineering Manager and Operations Superintendent, Kuparuk, Alaska from 1993 to 1997, as Asset Manager in Midland-Permian Basin, from 1988 to 1993, District Coordinator in Dallas, Texas, from 1987 to 1988, and in various engineering and engineering leadership roles from 1978 to 1987. Mr. Komin holds a Bachelor of Science degree from the University of Kansas.

Shawn M. Kerns was appointed Executive Vice President—Corporate Development of CRC in July 2014. Mr. Kerns served as President and General Manager of Vintage Production California from December 2012 to July 2014. He served as General Manager for Occidental of Elk Hills from June 2010 to December 2012, as Asset Development Manager for Occidental of Elk Hills from October 2008 to April 2010, and as Vice President, Operations, of Occidental Petroleum of Qatar Ltd. from July 2007 to October 2008. Mr. Kerns also held various management roles for Occidental of Qatar Inc., Occidental of Elk Hills and OXY USA Inc. from 1992 to 2007. Mr. Kerns has over 22 years of oil and gas industry experience and holds a Bachelor of Science in Electrical Engineering degree from the University of Oklahoma and studied Business and Managerial Economics at University of California, Los Angeles.

Roy Pineci was appointed Executive Vice President—Finance of CRC in July 2014. Mr. Pineci served as Vice President and Controller of Occidental Petroleum Corporation from November 2008 to July 2014, and served as Senior Vice President, Occidental Oil and Gas from November 2007 to November 2008. He served as Vice President, Internal Audit for Occidental Petroleum Corporation from June 2005 to October 2007. Prior to joining Occidental, Mr. Pineci was a Partner at KPMG LLP in Los Angeles where he worked from 2002 and worked at Andersen LLP in Los Angeles from 1985 to 2002, most recently as a Partner. Mr. Pineci holds a Bachelor of Arts in Business Administration/Accounting from Coe College and is a member of the American Institute of Certified Public Accountants and the California Society of CPAs.

Michael L. Preston was appointed Executive Vice President, General Counsel and Corporate Secretary of CRC in July 2014. Mr. Preston served as Vice President and General Counsel of Occidental Oil and Gas from June 2001 to July 2014. He had previously served in successive roles as Senior Counsel, Managing Counsel and Vice President and General Counsel—North America after joining Occidental Oil and Gas in February 1997. Prior to joining Occidental, Mr. Preston was a Corporate Associate for Sullivan &

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Cromwell from October 1990 to February 1997. Mr. Preston holds a Bachelor of Arts from the University of California, Los Angeles and a Juris Doctorate from Loyola Marymount University.

Charles F. Weiss was appointed Executive Vice President—Public Affairs of CRC in July 2014. Mr. Weiss served as Vice President, Health, Environment and Safety of Occidental Petroleum Corporation from October 2007 to July 2014, as Vice President and General Counsel, OXY Inc. from October 2001 to October 2007, and as Chief Counsel, Oxy Litigation Group from July 2000 to September 2001. He served as Senior Counsel of Occidental Petroleum Corporation from May 1996 to July 2000. Prior to joining Occidental, Mr. Weiss was a Partner at Latham & Watkins LLP from January to May 1996 and started his legal career there as an Associate in September 1988. Mr. Weiss received a Bachelor of Science in Engineering degree in Chemical Engineering from Princeton University and a Juris Doctorate from the University of Michigan.

Darren Williams was appointed Executive Vice President—Exploration in September 2014. Mr. Williams has 20 years of experience in the oil and gas industry, working 17 of those years for Marathon Oil in London, Houston and Oklahoma City. Mr. Williams has broad experience and proven track record in both conventional and unconventional exploration programs. Mr Williams served as Africa Exploration Manager and President of Marathon Upstream Gabon Limited from May 2013 to September 2014. From September 2010 to May 2013 he served as Oklahoma Subsurface Manager where he managed the Woodford shale development program and established Marathon's Oklahoma Resource Basin growth strategy. From 2008 to 2010, Mr Williams served as Gulf of Mexico Exploration and Appraisal Manager overseeing participation in the Gunflint and Shenandoah discoveries and from 2004 to 2008 he managed teams responsible for discovery of the Droshky field and rebuilding Marathon's deepwater Gulf of Mexico inventory. From 1997 to 2004, Mr Williams held various roles exploring assets in Europe, Africa & the Gulf of Mexico. Mr. Williams holds a Master of Science degree from Royal Holloway, University of London, UK, and a Bachelor of Science degree from the University of Leicester, UK.

Board of Directors

We currently expect that, upon completion of the separation, our board of directors will consist of eight members, a majority of whom we expect to satisfy the independence standards established by the Sarbanes-Oxley Act of 2002 and the applicable rules of the SEC and the NYSE. The following table sets forth information, as of October 8, 2014, regarding individuals who are expected to serve on our board of directors following the distribution.

Name		Age

William E. Albrecht		62
Justin A. Gannon		65
Ronald L. Havner		56
Harold M. Korell		69
Richard W. Moncrief		72
Avedick B. Poladian		62
Robert V. Sinnott		65
Todd A. Stevens		47

Justin A. Gannon —Immediately following the spin-off, Mr. Gannon will be appointed to the Board of CRC. Since September 2013, Mr. Gannon has acted as an independent consultant and private investor. From February 2003 through August 2013, Mr. Gannon served in various roles at Grant Thornton LLP, an independent audit, tax and advisory firm, including as National Leader of Merger and Acquisition Development from June 2011 through August 2013, Central Region Managing Partner from October 2009 through May 2011, Office Managing Partner in Houston, Texas from May 2007 through May 2011 and Office Managing Partner in Kansas City, Missouri from August 2004 to May 2007. From 1971 through 2002, Mr. Gannon worked at Arthur Andersen LLP, including as an Audit Partner for 21 years. Mr. Gannon is also a Director and Chairman of the Audit Committee of the general partner of Cross

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America Partners LP (formerly Lehigh Gas Partners LP), a publicly traded master-limited partnership engaged in motor fuels distribution. He is a former chairman of the Board of Directors of American Red Cross charters in the Tulsa, Oklahoma and San Antonio, Texas areas. Mr. Gannon received a Bachelor of Science degree in Accounting from Loyola Marymount University and is a Certified Public Accountant licensed in Texas and California. Mr. Gannon's more than four decades in financial accounting practice and his private investment experience give him deep insight into financial analysis and management. His financial acumen provides Mr. Gannon valuable expertise to provide the CRC Board with guidance on its fiscal management and strategic direction.

Ronald L. Havner, Jr .—Immediately following the spin-off, Mr. Havner will be appointed to the Board of CRC. Mr. Havner is the Chairman of the Board, President and Chief Executive Officer of Public Storage, a developer, owner, and operator of self-storage facilities. He was elected Vice Chairman and Chief Executive Officer of Public Storage in 2002 and was elected Chairman of the Board in August 2011. He joined Public Storage in 1986. Mr. Havner has been Chairman of the Board of Public Storage's affiliate, PS Business Parks, Inc. since March 1998 and is also a Director of Business Machine Security, Inc. He previously served on the boards of Avalon Bay, a publicly traded real estate investment company. He is the 2014 Chairman of the Board of Governors of the National Association of Real Estate Investment Trusts, Inc. Mr. Havner holds a Bachelor of Arts degree from the University of California in Los Angeles. Mr. Havner's experience as Chief Executive Officer of a public, California-headquartered business with locations across the United States and Europe gives him insight into business generally and California in particular that will benefit CRC. His nearly three decades of experience growing a business gives him valuable perspectives that will help CRC implement its growth plans.

Harold M. Korell —Immediately following the spin-off, Mr. Korell will be appointed to the Board of CRC. From May 2002 through May 2014, Mr. Korell served as the Chairman of the Board of Southwestern Energy Company, an independent energy company engaged in natural gas and oil exploration, development and production. From May 2009 through March 2010, he served as Southwestern's Executive Chairman and, from January 1999 through May 2009, as its Chief Executive Officer. From 1997 through May 2009, Mr. Korell served in various other roles at Southwestern, including President and Executive Vice President and Chief Operating Officer. Prior to his tenure at Southwestern, Mr. Korell was Senior Vice President—Operations of American Exploration Company, Executive Vice President of McCormick Resources, held various technical and managerial positions during his 17 years with Tenneco Oil Company, including Vice President of Production, and held various positions with Mobil Corporation. He is a member of the Society of Petroleum Engineers and has served as a Board Member for the Independent Petroleum Association of America and the American Exploration & Production Council and as a Board Member and Executive Committee Member for America's Natural Gas Alliance. He also serves on the Board of Governors at the Colorado School of Mines and the Board of Trustees at the Baylor College of Medicine. Mr. Korell holds a degree in Chemical and Petroleum Refining Engineering from the Colorado School of Mines. Mr. Korell's experience over four decades in the oil and gas industry gives him a deep understanding of the upstream oil and gas business as well as the midstream and public utility businesses.

Richard W. Moncrief —Immediately following the spin-off, Mr. Moncrief will be appointed to the Board of CRC. Mr. Moncrief has been a principal in Moncrief Oil International, Inc., an oil and gas exploration and production company with headquarters in Fort Worth, Texas, since founding the company in 1970. He currently serves as its President and as Chairman of its Board of Directors. Moncrief Oil participates in U.S. and international oil and gas exploration and production. Mr. Moncrief also serves on the boards of trustees for the Amon Carter Museum and The University of Texas Development Board. He holds a Bachelor of Science degree in petroleum engineering from the University of Texas. Mr. Moncrief's extensive experience in the upstream oil and gas industry will bring an in-depth understanding of key industry issues to the CRC Board. His leadership experience at Moncrief Oil provides him with strategic and management insights from which CRC can benefit.

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Avedick B. Poladian —Mr. Poladian was appointed to the Board of CRC in September 2014. Mr. Poladian is Executive Vice President and Chief Operating Officer of Lowe Enterprises, Inc., a diversified national real estate company active in commercial, residential and hospitality property investment, management and development. Mr. Poladian previously served as Executive Vice President, Chief Financial Officer and Chief Administrative Officer for Lowe from 2003 to 2006. Mr. Poladian was with Arthur Andersen LLP from 1974 to 2002, most recently as a Partner, and is a certified public accountant (inactive). He is a past member of the Young Presidents Organization, the Chief Executive Organization, the California Society of CPAs and the American Institute of CPAs. Mr. Poladian is a director of the YMCA of Metropolitan Los Angeles, a member of the Board of Councilors of the University of Southern California School of Policy, Planning, and Development, a member of the Board of Advisors of the Ronald Reagan UCLA Medical Center, and a former Trustee of Loyola Marymount University. He serves as a Director and on the Audit Committees of two funds managed by Western Asset Management Funds. He is also a member of the Board of Trustees of Public Storage where he is the Chair of the Audit Committee and the Chair of the Nominating/Corporate Governance Committee. Mr. Poladian also serves as a Director of Occidental Petroleum Corporation where he is a member of the Executive Compensation Committee and the Finance and Risk Management Committee, and chair of the Audit Committee. He previously served as a Director of California Pizza Kitchen. His service in a senior management position at one of the world's largest accounting firms, combined with his experience as Chief Operating Officer and Chief Financial Officer of a diversified real estate company, gives Mr. Poladian deep knowledge of key business issues, including personnel and asset utilization, in addition to all aspects of fiscal management. Through his work on the board of Occidental Petroleum and other public entities, Mr. Poladian has garnered valuable insight into our business and corporate governance generally.

Robert V. Sinnott —Immediately following the spin-off, Mr. Sinnott will be appointed to the Board of CRC. Mr. Sinnott is President, Chief Executive Officer and Chief Investment Officer of Kayne Anderson Capital Advisors, L.P., an investment management firm. He also served as a Managing Director there from 1992 to 1996 and as its Senior Managing Director from 1996 until assuming his CEO role in 2010. He is also President of Kayne Anderson Investment Management, Inc., the general partner of Kayne Anderson Capital Advisors, L.P. Mr. Sinnott served as a director of Kayne Anderson Energy Development Company from 2006 through 2013. He was Vice President and Senior Securities Officer of the Investment Banking Division of Citibank from 1986 to 1992 and previously held positions with United Energy Resources, a pipeline company and Bank of America in its oil and gas finance department. Mr. Sinnott has served on the board of the general partners of Plains All American Pipeline, L.P. and its public general partner, Plains GP Holdings, L.P., since 1998 and 2013, respectively. Additionally, he is a Director of the Kayne Anderson Capital Advisors Foundation and a member of the Board of Visitors of the UCLA Anderson School of Management. Mr. Sinnott received a Bachelor of Arts degree from the University of Virginia and a Masters of Business Administration from Harvard University. As President of a California-based investment company investing in energy and other areas, Mr. Sinnott brings extensive insight into the oil and gas and financial industries to the CRC Board. His responsibility for analyzing industry players and managing a multi-billion dollar investment enterprise allow him to provide insight on a broad variety of matters that will affect CRC.

Board Committees

Upon completion of the spin-off, our board of directors will have the following committees:

Audit Committee

Our Audit Committee will be composed entirely of independent directors. The committee will meet separately with representatives of our independent auditors, our internal audit personnel and representatives of senior management in performing its functions. The Audit Committee will approve the services of the independent auditors and review the general scope of audit coverage, matters relating to internal controls systems and other matters related to accounting and reporting functions. The Board of

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Directors is expected to determine that all of the members of the Audit Committee are financially literate and have accounting or related financial management expertise, each as required by the applicable NYSE listing standards. The Board of Directors is also expected to determine that at least one member of the Audit Committee will qualify as an audit committee financial expert under the applicable rules of the Exchange Act.

Compensation Committee

Our Compensation Committee will be composed entirely of independent directors. The committee will be responsible for (i) determining compensation for our Chief Executive Officer and other executive officers, (ii) overseeing and approving compensation and employee benefit policies and (iii) reviewing and discussing with our management the Compensation Discussion and Analysis and related disclosure included in our annual proxy statement.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee will be composed entirely of independent directors. The committee will make proposals to the Board of Directors for candidates to be nominated by the Board of Directors to fill vacancies or for new directorship positions, if any, which may be created from time to time. The Nominating and Corporate Governance Committee will also develop and recommend a set of corporate governance guidelines to our board of directors and oversee evaluation of our board and management.

Health, Safety and Environmental Committee

Our Health, Safety and Environmental committee will be composed solely of independent directors. The committee will review and discuss the status of health, safety and environmental issues, laws and regulations with management. It will also review the company's programs to ensure compliance with applicable laws and regulations and to conserve natural resources, and periodically report to the Board of Directors on matters affecting the company.

Director Independence

To qualify as "independent" under the NYSE listing standards, a director must meet objective criteria set forth in the NYSE listing standards, and the board of directors must affirmatively determine that the director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us) that would interfere with his or her exercise of independent judgment in carrying out his or her responsibilities as a director. The NYSE independence criteria include that the director not be our employee and not have engaged in various types of business dealings with us.

The Board of Directors has reviewed all direct or indirect business relationships between each Director (including his or her immediate family) and us, as well as each Director's relationships with charitable organizations, to assess director independence as defined in the listing standards of the NYSE. Based on this evaluation, the Board of Directors has determined that, when appointed, Messrs. Gannon, Havner, Korell, Moncrief, Poladian and Sinnott will each be independent directors as that term is defined in the listing standards of the NYSE. Neither Mr. Albrecht, the Executive Chairman of the Board, nor Mr. Stevens, the President and Chief Executive Officer, is considered by the Board of Directors to be an independent director because of his employment with CRC.

Corporate Governance Policies

Our Board of Directors will adopt corporate governance policies to help ensure that the Board of Directors has the necessary authority and practices in place to make decisions that are independent from management, that the Board of Directors adequately performs its function as the overseer of management

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and to help ensure that the interests of the Board of Directors and management are aligned with the interests of the stockholders.

Corporate Business Ethics and Corporate Policies

Our business ethics and corporate policies will require that all our directors, officers and employees act ethically in conducting company business.

Our salaried employees will be required to complete online training on a regular basis, which includes a review of business ethics and corporate policies and an acknowledgement that the employee has read and understands the policies.

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 31, 2013 and the six months ended June 30, 2014, the California business was operated by subsidiaries of Occidental and not through an independent company and therefore did not have a compensation committee or any other committee serving a similar function. Decisions as to the compensation of those who will serve as our executive officers will be made initially by Occidental. See "Executive Compensation—Compensation Discussion and Analysis" included elsewhere in this information statement.

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EXECUTIVE COMPENSATION

For purposes of the following Compensation Discussion and Analysis and Executive Compensation disclosures, the five persons who we expect would be our named executive officers upon effectiveness of this registration statement are:

Name	Most Recent Position at Occidental	Position at CRC

Todd A. Stevens	Vice President—Corporate Development	President and Chief Executive Officer
William E. Albrecht	Vice President of Occidental Petroleum Corporation and President, Oxy Oil & Gas, Americas	Executive Chairman of the Board
Marshall (Mark) D. Smith	n/a	Senior Executive Vice President and Chief Financial Officer
Robert A. Barnes	President and General Manager of Occidental of Elk Hills	Executive Vice President—Northern Operations
Frank E. Komin	President and General Manager of Oxy Long Beach	Executive Vice President—Southern Operations

For purposes of the Compensation Discussion and Analysis, we refer to Messrs. Albrecht, Stevens, Smith, Barnes and Komin collectively as our "named executive officers." With the exception of Mr. Smith, all of our expected named executive officers have been employed by Occidental or its subsidiaries; therefore, the compensation information provided for 2013 will reflect compensation earned at Occidental or its subsidiaries and the design and objectives of the executive compensation programs in place prior to the spin-off.

Compensation decisions for our named executive officers prior to the spin-off will be made by Occidental. To the extent such persons are executive officers of Occidental, the decisions will be made by the Executive Compensation Committee of the board of directors of Occidental (the "Occidental Compensation Committee"), which is composed entirely of independent directors. Executive compensation decisions following the spin-off will generally be made by the compensation committee of CRC.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Because we are currently part of Occidental and not an independent company, our compensation committee has not yet been formed. This Compensation Discussion and Analysis discusses Occidental's historical compensation practices with respect to its executive officers. Initially, we anticipate that our compensation practices will reflect in some ways those practices employed at Occidental. However, given the differences between Occidental and us, we expect that the compensation practices ultimately approved by our compensation committee and board of directors will be designed to support our strategies and may differ in many ways from Occidental's practices outlined below. Information regarding our compensation programs, to the extent determined, is included in this information statement.

This Compensation Discussion and Analysis has three main parts:

•: Occidental 2013 Executive Compensation —This section describes and analyzes the executive compensation programs at Occidental in 2013 (beginning on page 135).

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•: Effects of Spin-Off on Outstanding Executive and Other Compensation Arrangements —This section discusses Occidental's current expectations as to the effect of the spin-off on outstanding Occidental compensation awards that may be held by CRC's named executive officers upon the spin-off (beginning on page 143).
•: Anticipated Post-Spin-off Compensation Programs —This section discusses our anticipated executive compensation programs from and after the spin-off (beginning on page 145).

Occidental 2013 Executive Compensation

Occidental 2013 Compensation Program

The Occidental Compensation Committee measures executive performance by evaluating both long-term performance of the company and the consistent achievement of short-term financial goals. This approach is intended to link executive compensation to company performance and help maximize value creation for stockholders. The Occidental Compensation Committee developed a compensation program designed not only to be consistent with industry practice, but also to attract and retain outstanding executives, and to provide incentives to reward them for superior performance that supports Occidental's long-term strategic objectives.

Occidental Peer Companies

In 2013, the Occidental Compensation Committee reviewed the peer company group used by Occidental in 2012 to ensure continued comparability to Occidental. The considerations taken into account, as a whole, were:

•: Alternative investment choices in the energy sector, including level of investment analyst coverage;
•: Competitors for projects and acquisitions worldwide;
•: Competitors for employees worldwide;
•: Percentages of total proved reserves and total production attributable to oil and to natural gas;
•: Oil and gas production and reserves;
•: Total revenue and the percentage derived from upstream (exploration and production) activities; and
•: Market capitalization.

Within the oil and gas industry, Occidental has a unique combination of revenue, market capitalization and proportion of production and reserves attributable to oil. Investors take this into account when making investment choices in the energy industry and Occidental competes for these investor dollars with companies of varying revenue and market capitalization levels, including companies with much larger levels. Occidental's level of investment analyst coverage is comparable to many of the peer companies. Occidental competes for talent, projects and acquisitions worldwide against companies with both significantly larger and smaller levels of revenue and market capitalization and very different oil production profiles. This was taken into consideration in formulating an appropriate peer company group for executive compensation purposes.

The peer group does not include companies primarily in energy-related businesses such as (i) refining, (ii) midstream (transportation, storage and logistics) and marketing, or (iii) the sale and distribution of products because these companies have different investor bases, do not compete with Occidental for the same projects, and typically do not compete with Occidental for the same talent. Additionally, publicly traded limited partnerships are not included in the group because they have significantly different investor bases, corporate structures and compensation structures.

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The Occidental Compensation Committee's review of the 2012 peer group and the factors discussed above resulted in replacing Royal Dutch Shell plc with Marathon Oil Corporation, whose market capitalization, revenues, lines of business and geographical presence are more comparable to Occidental's. In addition to Occidental, the peer companies (collectively, the "peer group"), effective beginning with Occidental's 2013 long-term incentive awards, are:


Anadarko Petroleum Corporation		Devon Energy Corporation
Apache Corporation		EOG Resources, Inc.
Canadian Natural Resources Limited		ExxonMobil Corporation
Chevron Corporation		Hess Corporation
ConocoPhillips		Marathon Oil Corporation
		Total S.A.

The Occidental Compensation Committee designated this group of companies as the peer group for purposes of the total shareholder return ("TSR") award granted to Occidental's executive officers in 2013.

The Occidental Compensation Committee also reviewed information regarding the oil and gas industry and the peer group companies' executive compensation practices, programs and data that was publicly disclosed or available. Additionally, the Occidental Compensation Committee reviewed and considered broad-based compensation surveys and related materials. The purpose of reviewing this information was to evaluate and understand how Occidental's executive compensation program compares within the oil and gas industry, particularly with respect to types of awards, performance metrics for awards and reported levels of compensation. The information was not used to establish compensation benchmarks and Occidental does not benchmark executive compensation to a specific percentile within the peer group.

Elements of the Occidental Program

Occidental Salary and Other Annual Compensation.

The Occidental Compensation Committee believes that overall executive compensation should include elements that reward executives for consistent performance of basic job requirements and achievement of certain short-term goals which, over time, contribute to long-term growth of stockholder value. Consistent with the Occidental Compensation Committee's goal of emphasizing long-term compensation, salary and other annual compensation generally represent the smaller portion of the 2013 compensation packages of Occidental's executive officers. Short-term compensation for Occidental's executive officers generally includes base salary and other compensation, plus an award under Occidental's Executive Incentive Compensation Plan. Certain other compensation and benefits that apply to senior executives of Occidental are described under "Other Occidental Compensation and Benefits" beginning on page 141.

Occidental Executive Incentive Compensation Plan Award (Annual Incentive).

The Annual Incentive is composed of a Non-Equity Incentive portion (60% of target value) and a Bonus portion (40% of target value). The Occidental Compensation Committee sets target amounts for each senior executive based on a review of commercially available compensation surveys and other publicly available information. In setting targets for each executive, the Occidental Compensation Committee considers each executive's ability to influence Occidental's performance during the one-year performance period.

Occidental Non-Equity Incentive Award (Performance-Based Portion). The Non-Equity Incentive portion (60% of target value) is a performance-based cash award that is based on Occidental's performance during the year as measured against Occidental's targets established in the first quarter of the year. For purposes of the Performance-Based Portion of the Annual Incentive, Core, Occidental's Basic Earnings Per Share ("EPS") is computed by excluding the "Significant Items Affecting Earnings" from Occidental's Net

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Income and dividing this amount by the weighted-average basic shares of Occidental outstanding. For a discussion of "Significant Items Affecting Earnings," see "Management Discussion and Analysis of Financial Condition and Results of Operations—Significant Items Affecting Earnings" on page 25 of Occidental's Annual Report on Form 10-K for the year ended December 31, 2013 ("Occidental's Form 10-K") and, for Basic Earnings Per Common Share see Occidental's consolidated statements of income on page 44 of Occidental's Form 10-K. Occidental's EPS was chosen as the financial target for all of Occidental's corporate executives because it directly impacts stockholder value, is a readily determinable measure of annual performance and rewards the executives for current operating performance. In early 2013, the Occidental Compensation Committee set the 2013 EPS targets with $7.00 per share as the target, $6.26 per share as the threshold for any payout, and $7.75 per share resulting in the maximum payout of 200% of the target value. The payout percentage for EPS values from $6.25 to $7.75 is based on a linear interpolation of values from 0% to 200%. These targets were chosen based on consideration of management's financial models, as well as a review of analysts' estimates of Occidental's earnings per share for 2013 and then-current estimates of global oil prices for 2013. The EPS for 2013 as certified by Occidental's Compensation Committee was $6.95, which resulted in a payout percentage of 93% for all executives participating in this bonus program.

Occidental Bonus Award (Discretionary Portion). The Bonus portion (40% of target value) is a discretionary cash award designed to link incentive compensation directly to the performance of the particular executive. Payout is determined by the Occidental Compensation Committee's subjective assessment of an executive's handling of certain key performance areas within such executive's area of responsibility, as well as the executive's response to unanticipated challenges during the year. Key performance areas assessed by the Occidental Compensation Committee include:

•: Organizational development;
•: Succession planning;
•: Governance and ethical conduct;
•: Functional and operating accomplishments;
•: Health, environment and safety responsibilities; and
•: Encouragement of diversity.

Occidental Long-Term Compensation.

This portion of Occidental's compensation program consists of performance-based awards that provide incentives for achieving results consistent with the goal of sustained growth in stockholder value. The Occidental Compensation Committee believes that long-term compensation should represent the largest portion of an executive's total compensation package and that the levels of payouts should reflect the company's performance levels. During the process of determining the values of each of Occidental's named executive officer's compensation package, the Occidental Compensation Committee evaluated many factors, including the following:

•: Alignment of executive and stockholder interests in achieving long-term growth in stockholder value,
•: Ensuring that maximum payouts are made only for exceptional performance,
•: Consistency with the compensation programs of peer companies, and
•: Allocation of total compensation between long-term and short-term components.

This portion of the executive compensation program includes three types of awards: (i) an incentive based on either return on capital employed ("ROCE") (for executives with primarily corporate level

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responsibilities) or two return on asset ("ROA") awards (one for the oil & gas division as a whole and the other for the regional oil & gas division for which the executive is responsible); (ii) performance incentives based on TSR; and (iii) performance-based restricted stock incentives ("RSI"). The Occidental Compensation Committee awarded long-term incentives to Occidental's named executive officers in the following percentages: 40% to either one ROCE award or to two ROA awards, 30% to the TSR award and 30% to the RSI award.

The table following this paragraph and subsequent descriptions summarize the key features of the long-term incentive components of the 2013 compensation program for Occidental's named executive officers. Effective as of the spin-off, we currently expect that the awards described below that are held by our named executive officers will be converted into awards with respect to shares of our common stock in the manner described below under the heading "—Effects of Spin-off on Outstanding Executive and Other Compensation Arrangements—Equity Based and other Long-Term Incentive Awards."

Summary of Long-Term Incentive Compensation

Compensation Component	Return on Capital Employed Award	Return on Assets Awards	Total Shareholder Return Award(6)	Restricted Stock Award

PERFORMANCE PERIOD	3 Years(2)	3 Years(2)	3 Years	3 - 7 Years(7)
FORM OF PAYOUT	Stock	Stock	Stock	Stock
PERFORMANCE BASIS	Return on Capital Employed(3)	Return on Assets for Oil and Gas segment as a whole (ROA-Total), or for the Americas region (ROA-Americas)(6)	TSR ranking within peer group, TSR being positive or negative, and TSR of S&P 500 Index	Cumulative Net Income
PAYOUT RANGE
Minimum Payout(1)	0%	0%	0%	0%
Performance Resulting in Minimum Payout	ROCE < 9%(4)	ROA-Total < 9%(4) ROA-Americas < 8%(4)	TSR ranking of 25 ^th percentile or less	Cumulative Net Income < $12 billion(7)
Target Payout(1)	100%	100%	100%	100%
Performance Required for Target Payout	ROCE = 12%(4)	ROA-Total = 13%(4) ROA-Americas = 12%(4)	TSR performance two-thirds of the way between the 25 ^th percentile TSR (0% payout) and the 75 ^th percentile TSR (150% payout)(6)	Cumulative Net Income ³ $12 billion(7)
Maximum Payout(1)	200%	200%	150%	100%
Performance Required for Maximum Payout	ROCE ³ 18%(4)	ROA-Total ³ 20%(4) ROA-Americas ³ 18%(4)	TSR ranking of 75th percentile or greater, TSR is positive and exceeds S&P 500 TSR	Cumulative Net Income ³ $12 billion(7)
ADJUSTMENTS	The ROCE and all ROA thresholds would have been adjusted up or down by 2% if the three-year average forward strip West Texas Intermediate crude oil (WTI) prices as of December 31, 2013, were at least $10 greater or less than, respectively, the three-year average forward strip WTI prices as of June 30, 2013, but actual WTI prices resulted in no adjustments. All thresholds will be further adjusted up or down by 2% at the end of the performance period if actual average WTI prices over the performance period are at least $10 greater or less than, respectively, the three-year average forward strip WTI prices as of December 31, 2013.
HOLDING PERIOD	For all awards, a number of shares equal to 50% of net after-tax shares received are required to be retained for three years after vesting.
TAX DEDUCTIBILITY	All awards are intended to satisfy the tax deductibility requirements of Section 162(m) of the Internal Revenue Code.

(1): Percent of grant for TSR award, RSI award, ROCE award and all ROA awards.
(2): Three-year performance period began January 1, 2014 and ends December 31, 2016.
(3): ROCE shall be the percentage obtained by dividing (i) the sum of annual net income attributable to common stock for Occidental, after adding back after-tax interest expense, for each year in the performance period, as reported in Occidental's Form 10-K by (ii) the sum of the average capital employed (long-term debt plus stockholders' equity) for each year in the performance period, as reported in Occidental's Form 10-K.
(4): See Adjustments row in chart for threshold adjustments.
(5): ROA shall be the percentage obtained by dividing (i) the sum of the Net Income for the Oil and Gas Segment (Total or Americas) for each year in the performance period by (ii) the sum of the Assets for the Oil and Gas Segment (Total or Americas) for each year in the performance period. For the purposes of the foregoing calculation, "Net Income" shall be Results of Operations for the Oil and Gas Segment (Total or Americas) for the applicable year and "Assets" will be the Net Capitalized Costs (Total or Americas) for the applicable year, in each case as reported in the Supplemental Oil and Gas Information contained in Occidental's Annual Report on Form 10-K. For the purpose of the foregoing sentence, "Assets" will reflect all acquisitions, divestures and write downs during the performance period unless the senior management of Occidental recommends exclusion and the Occidental Compensation Committee agrees.
(6): Payout percent for the TSR award is determined by performance compared to the peer group and is linearly interpolated between 25 ^th percentile and 75 ^th percentile TSR values.
(7): The shares become non-forfeitable on the later of June 30, 2016, through which date the executive must remain employed by the company, and the date the Occidental Compensation Committee certifies the achievement of the Cumulative Net Income threshold. If the threshold is not met by June 30, 2020, the shares are forfeited entirely.

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Occidental Return on Capital Employed Incentive Award. This award is a new award implemented in 2013 to ensure a high level of executive focus on the key objective of ensuring efficient use of capital. This award is denominated in performance shares, each of which is equal to one share of Occidental's common stock. Key terms of the award are set forth in the table on page 138. At the end of the performance period, dividend equivalents will be paid with respect to the performance share level achieved in an amount equal to the dividends declared per share of Occidental common stock during the performance period. As described below, in connection with the spin-off, we expect that any of these awards that are held by our named executive officers will be converted into restricted shares of our common stock subject to performance-based vesting requirements established by the Occidental Compensation Committee and time-based vesting conditions.

Occidental Return on Assets Incentive Awards. These new awards were implemented in 2013 to reward operating unit executives for performance within their direct areas of responsibility and influence. These awards are denominated in performance shares, each of which is equal to one share of Occidental common stock. Key terms of the awards are set forth in the table on page 138. At the end of the performance period, dividend equivalents will be paid with respect to the performance share level achieved in an amount equal to the dividends declared per share of Occidental common stock during the performance period. As described below, in connection with the spin-off, we expect that any of these awards that are held by our named executive officers will be converted into restricted shares of our common stock subject to performance-based vesting requirements established by the Occidental Compensation Committee and time-based vesting conditions.

Occidental Total Shareholder Return Incentive Award. The Occidental Compensation Committee believes that the comparison of Occidental's TSR over a specified period of time to peer companies' returns over that same period is an objective external measure of the company's effectiveness in translating its results into stockholder returns. TSR is the change in price of a share of Occidental common stock plus reinvested dividends, over a specified period of time, and is an indicator of management's achievement of long-term growth in stockholder value. TSR awards use both comparative peer company and S&P 500 Index TSRs to determine payout amounts and are not based on internal performance metrics. The TSR award also takes into account whether TSR is negative or positive. The TSR awards were designed to:

•: Reward higher returns in Occidental's stock relative to the peer group stockholder returns, based on a percentile ranking of the TSR within the peer group. This approach neutralizes major market variables that impact the entire oil and gas industry, thereby rewarding executives for superior performance compared to peer group companies.
•: Align executive rewards with stockholder returns over a three-year period, which encourages executive focus on long-term returns.
•: Ensure above-target payouts occur only if Occidental's TSR is positive and exceeds the TSR of the S&P 500 Index.

The TSR awards are denominated in performance share units, each of which is equivalent to one share of Occidental common stock. The percentage of such number of performance share units that will be payable at the end of the three-year performance period, which runs from July 1, 2013 through June 30, 2016, will depend on Occidental's TSR performance as described in the table on page 138. Cumulative dividend equivalents will be paid at the end of the three-year performance period and will be paid only on performance share units earned. As described below, in connection with the spin-off, we expect that any of these awards that are held by our named executive officers will be converted into restricted shares of our common stock subject to performance-based vesting requirements established by the Occidental Compensation Committee and time-based vesting conditions.

Occidental Restricted Stock Incentive Award. Consistent with the executive compensation programs of a majority of the peer group companies, the Occidental Compensation Committee selected Restricted

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Stock Incentive awards (RSI awards) as a component of executive long-term incentive compensation. The RSI award is a grant of shares of Occidental's common stock and key terms of the award are set forth in the table on page 138. The Occidental Compensation Committee increased the performance goal from the 2012 level of $10 billion in cumulative net income to $12 billion in cumulative net income in order to make the achievement of the goal more challenging. Dividends will be paid on the shares from the grant date. As described below, in connection with the spin-off, we expect that any of these awards that are held by our named executive officers will be converted into restricted shares of our common stock subject to performance-based vesting requirements established by the Occidental Compensation Committee and time-based vesting conditions.

Participants in the Occidental Executive Compensation Process

Role of Occidental Management in Executive Compensation

The Occidental Compensation Committee sets compensation for Occidental's senior executives. Occidental's chief executive officer is involved in making recommendations relating to compensation payable to senior executives other than himself.

Role of Occidental's Compensation Consultants

In 2013, Occidental participated in compensation surveys conducted by independent compensation consultants in order to better understand general external compensation practices, including executive compensation. From time to time, Occidental, through its executive compensation department or the Occidental Compensation Committee, engages a consultant to provide advice on specific compensation issues. The Occidental Board's policy on retention of independent compensation consultants, adopted in 2009, is set forth in Occidental's corporate governance policies. In 2013, the Occidental Compensation Committee engaged Pay Governance LLC as compensation consultants to advise and recommend on the design of long-term incentives for executives and on the design of director compensation programs.

In addition, Occidental has also retained Pay Governance LLC to advise and recommend on the treatment of Occidental compensation awards held by our senior officers in connection with the spin-off and, as described in greater detail below, with respect to the design of CRC's ongoing executive compensation programs.

The Occidental Compensation Committee reviewed the independence of Pay Governance LLC under the Securities and Exchange Commission and New York Stock Exchange Listed Company Manual Standards and found it to be independent and without conflicts of interest.

Occidental Risk Management of Compensation Policies and Practices

Although the executive compensation program has a high percentage of pay that is performance-based, the Occidental Compensation Committee believes its program does not encourage unnecessary or excessive risk-taking. The Occidental Compensation Committee believes that the program, through a balanced set of performance metrics, enhances business performance by encouraging appropriate levels of risk-taking by executives. The Occidental Compensation Committee believes that any potential risk of the executive compensation program influencing behavior that could be inconsistent with the overall interests of Occidental and its stockholders is mitigated by several factors:

•: Program elements that use both annual and longer-term performance periods, with the most substantial portion having terms of at least three years.
•: Transparent performance metrics that use absolute and relative measures readily ascertainable from public information.

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•: Use of external performance metrics, such as TSR, for a significant portion of the long-term performance-based incentive awards.
•: Comparative nature of the TSR performance measure, which neutralizes the potential impact volatile world oil prices could have on Occidental's TSR.
•: Use of internal performance metrics, such as ROCE and ROA, that are transparent and publicly disclosed in Occidental's Form 10-K, and reported consistently with the Securities and Exchange Commission rules and regulations and United States Generally Accepted Accounting Principles.
•: Adjustment of threshold performance levels for ROCE and ROA awards to moderate the effects of commodity prices on performance levels achieved.
•: Payouts of long-term incentive awards that are 100% in stock rather than cash.
•: Stringent share ownership guidelines for executives and the additional requirement that Occidental's named executive officers retain a number of shares equal to at least 50% of net after-tax shares acquired through equity awards granted after 2009 for at least three years following vesting of such awards.
•: Forfeiture provisions for unvested awards in the event of violations of Occidental's Code of Business Conduct.

Other Occidental Compensation and Benefits

The following paragraphs provide brief descriptions of some additional Occidental compensation and benefits programs. Our compensation and benefits programs that will be in effect after the spin-off are still being developed and may differ from Occidental's programs described below. Information concerning our expected compensation programs, to the extent developed, is included in this information statement under the section entitled "—Anticipated Post-Spin-off Compensation Programs."

Defined Benefit Pension Program

Occidental does not have a defined benefit pension program that provides salaried employees, other than a limited group of acquired employees, a fixed monthly retirement payment.

Occidental Qualified Defined Contribution Plans

All salaried employees on the U.S. dollar payroll are eligible to participate in one or more tax-qualified, defined contribution plans. The defined contribution retirement plan provides for periodic contributions by Occidental based on annual cash compensation and age, up to certain levels pursuant to Internal Revenue Service (IRS) regulations. Occidental generally matches employee contributions with Occidental common stock on a dollar-for-dollar basis, in an amount up to 6% of the employee's base salary.

Occidental Nonqualified Defined Contribution Retirement Plan

Substantially all employees whose participation in Occidental's qualified defined contribution retirement and savings plans is limited by applicable tax laws are eligible to participate in Occidental's nonqualified defined contribution retirement plan, which provides additional retirement benefits outside of those limitations.

Annual plan allocations for each participant restore the amounts that would have accrued for salary, bonus and non-equity incentive compensation under the qualified plans, but for the tax law limitations. Account balances are fully vested after three years of service and are payable following separation from service, or upon attainment of a specified age elected by the participant, as described below.

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Interest on nonqualified retirement plan accounts is allocated monthly to each participant's account, based on the opening balance of the account in each monthly processing period. The amount of interest earnings is calculated using a rate equal to the five-year U.S. Treasury Note rate on the last business day of the processing month plus 2%, converted to a monthly allocation factor.

In order to provide greater financial planning flexibility to participants while not increasing costs under the plan, the Supplemental Retirement Plan II allows in-service distribution of a participant's account at a specified age, but not earlier than age 60, as elected by the participant when initially participating in the plan.

Occidental Nonqualified Deferred Compensation Plan

Occidental also sponsors a nonqualified deferred compensation plan referred to as the Modified Deferred Compensation Plan (MDCP), which provides for elective deferrals of compensation. Under the MDCP, the maximum amount that may be deferred for any one year is limited to $75,000. A participant's overall plan balance must be less than $1 million at the end of any given year to enable a participant to defer compensation for the subsequent year. Deferred amounts earn interest at a rate equal to the five-year U.S. Treasury Note rate plus 2%, except for amounts deferred prior to 1994, which will continue to earn interest at a minimum interest rate of 8%.

Occidental Security

Personal security services, including home detection and alarm systems and personal security guards, are provided to certain of Occidental's senior executives to address perceived risks, at allocated costs based on actual charges and presented to the Occidental Compensation Committee.

Occidental Tax Preparation and Financial Planning

A select group of Occidental's executive officers are eligible to receive reimbursement for financial planning and investment advice, including legal advice related to tax and financial matters. Eligible Occidental executives are required to have their personal tax returns prepared by a tax professional qualified to practice before the Internal Revenue Service in order to ensure compliance with applicable tax laws.

Occidental Insurance

Occidental offers a variety of health coverage options to all employees. Occidental's senior executives participate in these plans on the same terms as other employees. In addition, for all employees above a certain job level, Occidental will pay for an annual physical examination. Occidental provides all salaried employees with life insurance equal to twice the employee's base salary. For certain senior employees, Occidental increases that insurance coverage to three times base salary. Occidental also provides senior executives with excess liability insurance coverage.

Individual Retention and Severance Arrangements

In February 2013, Occidental provided a written arrangement regarding retention payment and separation benefits (the "Retention and Separation Arrangements") in certain circumstances for Messrs. Stevens, Albrecht and Barnes, none of whom has an employment agreement or offer letter that addresses termination payments and benefits. These arrangements replaced any notice and severance pay that they would otherwise have received under the applicable Occidental severance plan.

Pursuant to the Retention and Separation Arrangements, Messrs. Stevens, Albrecht and Barnes are eligible to receive a retention payment (the "retention payment") of one to two times their then-current annual base salary, payable in one lump sum cash payment one year after a new Chief Executive Officer of

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Occidental began employment. As Messrs, Stevens, Albrecht and Barnes will no longer be employed by Occidential following the spin-off, they will not receive the retention payment from Occidental. However, in connection with the spin-off, the Retention and Separation Arrangement with Mr. Albrecht will be terminated upon his receipt of the transition bonus described below and the Retention and Separation Arrangements with Messrs. Stevens and Barnes will be assumed by us.

Under the Retention and Separation Arrangements, if the executive is terminated without cause prior to December 31, 2014 (and, in the case of Mr. Albrecht, prior to the spin-off), subject to providing typical waivers and releases, he will be eligible to receive (i) separation pay at his then-current base salary for 24 months, payable monthly; (ii) his target annual bonus amount for the year of separation, payable in one lump sum cash payment; (iii) the same medical and other benefits (other than notice and severance pay) as are received by employees under Occidental's severance plan; (iv) the retention payment (if not previously paid); and (v), in the case of Messrs. Stevens and Barnes, cash payments in consideration of forfeiture of all of their outstanding long-term incentive awards.

Effects of Spin-off on Outstanding Executive and Other Compensation Arrangements

In connection with the spin-off, we and Occidental will enter into an Employee Matters Agreement which will address, among other things, the treatment of certain outstanding Occidental executive and other compensation awards in connection with the spin-off. The spin-off is not expected to result in a "change in control" or similar transaction under any of Occidental's executive compensation programs.

Below is a brief summary of what is currently anticipated to occur with respect to outstanding Occidental equity and other compensation awards that may be held by our executive officers upon the spin-off.

Equity-Based and other Long-Term Incentive Awards

We currently expect that effective as of the spin-off, each Occidental equity-based or other long-term incentive award held by an individual who will be employed by us following the spin-off will be converted into an award with respect to shares of CRC common stock. Specifically, we currently expect that the following will occur:

•: Stock-Based Equity Incentive Awards. Each equity incentive award with respect to Occidental common stock (other than Occidental restricted shares, which are addressed below) that is held by our employees will be converted upon the spin-off into an award of shares of our restricted common stock, with the number of shares determined based upon the trading price of our common stock following the spin-off and (a) the payout of such incentive award at target performance, in the case of performance cycles with more than one year of performance remaining as of the spin-off, and (b) the payout of such incentive award based upon actual performance, calculated as of a date on or prior to the spin-off (as will be determined by the Occidental Compensation Committee), in the case of performance cycles with less than one year of performance remaining as of the spin-off. Any cash dividend equivalents that have accrued with respect to the equity incentive award held by our employees will be paid upon the spin-off, assuming settlement of such equity incentive award at the same level of performance assumed for purposes of converting the award, as described in the preceding sentence. From and after the spin-off, such restricted shares will be subject to service-based vesting requirements satisfied through continued service with us and our subsidiaries similar to the time-based vesting requirements that were applicable to the corresponding Occidental incentive award and, in the case of performance-based awards held by individuals with a title of executive vice president or above (including our named executive officers), performance-based vesting requirements established by the Occidental Compensation Committee. Outstanding long-term incentive units (each representing one share of Occidental common stock) that are held by our employees and that are to be settled 50% in cash and 50% in shares of Occidental common

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stock, however, will be converted upon the spin-off into long-term incentive units of CRC (each representing one share of our common stock) based upon the trading price of our common stock following the spin-off. Such company incentive units will be subject to service-based vesting requirements satisfied through continued service with us and our subsidiaries similar to the time-based vesting requirements that were applicable to the corresponding Occidental award and will be settled 50% in cash and 50% in shares of our common stock. In addition, outstanding phantom share units (each representing one share of Occidental common stock) that are held by our employees and that are to be settled 100% in cash will be converted upon the spin-off into phantom share units of CRC (each representing one share of our common stock) based upon the trading price of our common stock following the spin-off. Such CRC phantom share units will be subject to service-based vesting requirements satisfied through continued service with us and our subsidiaries similar to the time-based vesting requirements that were applicable to the corresponding Occidental award and will be settled 100% in cash.

•: Cash-Based Long-Term Incentive Awards . Each cash-based long-term incentive award held by our employees will be converted upon the spin-off into an award of shares of our restricted common stock, with the number of shares determined based upon the trading price of our common stock following the spin-off and (a) the payout of such incentive award at target performance, in the case of performance cycles with more than one year of performance remaining as of the spin-off, and (b) the payout of such incentive award based upon actual performance, calculated as of a date on or prior to the spin-off (as will be determined by the Occidental Compensation Committee), in the case of performance cycles with less than one year of performance remaining as of the spin-off. From and after the spin-off, such restricted shares will be subject to service-based vesting requirements satisfied through continued service with us and our subsidiaries similar to the time-based vesting requirements that were applicable to the corresponding Occidental incentive award and, in the case of performance-based awards held by individuals with a title of executive vice president or above (including our named executive officers), performance-based vesting requirements established by the Occidental Compensation Committee.
•: Restricted Shares . Each share of restricted Occidental common stock held by our employees will be converted into shares of our restricted common stock, with the number of shares determined based upon the trading price of our common stock following the spin-off. The company restricted common stock will vest generally based upon the same schedule as the prior Occidental restricted share, subject to continued service with us and our subsidiaries, and, in the case of performance-based awards held by individuals with a title of executive vice president or above (including our named executive officers), performance-based vesting requirements established by the Occidental Compensation Committee.

Annual Incentive Awards

In the event the spin-off occurs during 2014, we anticipate that our employees will receive a full 2014 annual incentive plan award under our annual incentive programs.

In the event the spin-off occurs during 2015, we anticipate that our employees will not be eligible to receive an award under Occidental's annual incentive programs for 2015, but instead would be eligible for a full-year award under our annual incentive program to be established in connection with the spin-off.

Individual Arrangements

In connection with the spin-off, we expect to assume all individual compensation arrangements between our named executive officers and Occidental which are in effect at such time.

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Other Compensation Programs

Effective as of the spin-off, our employees are expected to cease active participation in all other compensation and benefit plans sponsored by Occidental and its subsidiaries and commence participation in corresponding plans that we and our subsidiaries maintain, to the extent that we sponsor such plans.

Anticipated Post-Spin-off Compensation Programs

In order to have our executive compensation programs in effect at the time of the spin-off, the Occidental Compensation Committee has approved the initial compensation programs as described below. The Occidental Compensation Committee retained Pay Governance LLC, its independent compensation consultant, to assist in the design and implementation of our compensation programs to be in effect following the spin-off. All executive compensation decisions for our named executive officers prior to the spin-off will be made by Occidental. To the extent such persons are executive officers of Occidental, the decisions will be made by the Occidental Compensation Committee. Executive compensation decisions following the spin-off will be made by our compensation committee.

In early 2014, Pay Governance LLC assisted in developing a rewards structure for CRC. Specifically, Pay Governance LLC worked with Occidental and us to develop a peer group for purposes of conducting market analyses and to determine the level and form of executive and broad-based compensation after the spin-off.

Compensation Objectives

Our executive compensation program to be in effect immediately following the spin-off is designed to provide competitive compensation levels generally targeted to market median, with flexibility to pay above or below market based on individual factors such as experience, performance, and internal equity. In developing our compensation program, Occidental and we took into account the following:

•: Market practices.
•: The need for a smooth transition of talent from Occidental to us.
•: The need to attract executive talent from outside of Occidental.
•: The need to provide CRC with appropriate programs immediately following the spin-off, recognizing that our board of directors (or a committee thereof) and management will be responsible for program design following the spin-off.

The descriptions below reflect our current expectations as to the initial compensation programs for our named executive officers immediately following the spin-off. We expect our compensation committee will review the compensation program approved by Occidental post spin-off and make adjustments as it deems appropriate to support our long-term strategic objectives.

Peer Companies

Since our compensation program was designed based on market practices, Occidental and we worked with Pay Governance LLC to develop a peer group of companies on which to base market practice. Our peer group was developed using a multi-step screening process based on the following criteria:

•: Industry—Companies in the Global Industry Classification Standard sub-industry of oil and gas exploration and production.
•: Scope—Companies in the range of 25% -400% of our expected market capitalization and 40% - 250% of our expected revenue.
•: Geography—U.S.-listed companies focused on U.S. exploration and production.

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Based on these screens, the following compensation peer group was developed which includes companies generally similar in operations and scope to CRC, as well as companies that may have some operational or scope differences to CRC, but are in the same industry, and provide a more robust peer group:

Peer Companies


Apache Corporation		Cabot Oil and Gas Corporation
Chesapeake Energy Corporation		Cimarex Energy Co.
Concho Resources Inc.		Continental Resources, Inc.
Denbury Resources Inc.		Devon Energy Corporation
EOG Resources, Inc.		Marathon Oil Corporation
Newfield Exploration Company		Noble Energy, Inc.
Pioneer Natural Resources Company		QEP Resources, Inc.
Range Resources Corporation		Southwestern Energy Company
Whiting Petroleum Corporation		WPX Energy, Inc.

Elements of the Program

The Occidental Compensation Committee believes that overall executive compensation should include elements that reward executives for consistent performance of basic job requirements and achievement of certain short-term goals which, over time, contribute to long-term growth of stockholder value. With a goal of emphasizing long-term compensation, salary and other annual compensation will represent the smaller portion of the compensation program for our named executive officers. Our initial executive compensation program is designed to be consistent with industry practice, linking executive compensation with the performance of the company by providing appropriate incentives to reward executives for performance that maximizes value creation for stockholders, while also enhancing retention during the Company's critical transition to independence.

Salary —The salaries for our named executive officers will be established based on peer group market data, as well as individual factors including experience and internal pay equity.

Annual Incentive —The annual incentive component of our initial compensation program will provide each named executive officer with a target annual incentive opportunity expressed as a percentage of salary. Award opportunities will range from 0% to 200% of target and will be paid in cash. The initial awards will be based 50% on financial performance (the non-equity incentive award portion) and 50% on strategic goals related to our transition to an independent company (the bonus portion). In subsequent years, our compensation committee will determine the appropriate mix of financial, strategic and individual goals.

The annual incentive will have established performance targets and weightings for each metric. Each metric will be evaluated independently with results on each metric summed to determine the final award payout. Specific payouts associated with performance above and below the target level will be determined on a subjective evaluation of results, including considerations related to the broader business environment, industry environment, oil prices and other factors. Initially, after the spin-off financial performance may be measured based on internal metrics such as EBITDAX, cash flow, and other metrics to be determined by our compensation committee and strategic goals will focus on measures related to executing a successful transition.

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Long-Term Incentives —Our initial compensation program will provide the majority of each named executive officer's compensation package through long-term incentives. The long-term incentive portion of the initial compensation program will be delivered using two types of awards:

•: Restricted Stock Awards —The restricted stock portion of the long-term incentives will generally represent 40%—50% of the total long-term incentive award value for named executive officers. These awards are intended to enhance retention and development of ownership in the new organization and will vest, subject to attainment of an established performance goal, as early as the end of three years from the grant date, or as late as the end of seven years from the grant date. If the performance goal is not attained by the end of the applicable performance period, the award will forfeit in its entirety.
•: Stock Options —The stock option portion of the long-term incentives will generally represent 50%—60% of the total long-term incentive award value for named executive officers. These awards are intended to incentivize executive behaviors that drive stock price appreciation by providing potential for long-term upside. The stock options will vest in equal installments over three years from the grant date and will have a seven-year exercise term. To account for potential volatility at the spin-off and to provide additional incentive for meaningful stock price appreciation, initial awards of stock options to named executive officers in connection with the spin-off will be granted with an exercise price that is 10% above the fair market value of our common stock at the time of the grant.

For future years, the types of awards granted, their weighting as a percentage of total long-term incentive opportunity and any performance metrics will be determined by our compensation committee.

These long-term incentives will be granted pursuant to the California Resources Corporation Long-Term Incentive Plan. For greater detail regarding the terms of this plan, see "Executive Compensation-CRC Long-Term Incentive Plan" and the form of California Resources Corporation Long-Term Incentive Plan, a copy of which is filed as an exhibit to the registration statement of which this information statement is a part.

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The following table summarizes key features of the long-term incentive components of the initial compensation program for named executive officers.

	Restricted Stock Awards	Stock Options

Forfeiture Provisions	Shares of stock will become non-forfeitable on the vesting date. If the grantee dies, becomes permanently disabled, retires with our consent, or is terminated without cause for our convenience prior to the vesting date, then the grantee will forfeit a pro rata portion of the shares based on the days remaining until the vesting date. If the grantee terminates voluntarily or is terminated for cause prior to the vesting date, all of the shares will be forfeited.	Stock options will become non-forfeitable on the applicable vesting dates. If the grantee dies, becomes permanently disabled, retires with our consent, or is terminated without cause for our convenience prior to the final vesting date, then the grantee will forfeit a pro rata portion of the unvested stock options based on the days remaining until the final vesting date. Vested stock options will remain exercisable through the term of the original award.
		If the grantee terminates voluntarily or is terminated for cause prior to the final vesting date, all unvested stock options will be forfeited. Vested stock options will be exercisable for 90 days following the termination and will be forfeited after that date.
Change in Control	In the event of a change in control prior to the vesting date, a pro-rata portion of the shares will be forfeited based on the days remaining until the vesting date following the later of the date of the change in control and the date of the termination of the grantee's employment. The remaining shares will become nonforfeitable.	In the event of a change in control prior to the final vesting date, if a grantee is terminated by us as a result of the change in control, unvested stock options will become non-forfeitable. Vested stock options will remain exercisable through the term of the original award.
	In the event of a change in control after the vesting date, but prior to certification of the performance threshold, the shares of stock will become non-forfeitable.

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Individual Compensation Arrangements

The Occidental Compensation Committee has approved the following cash and equity compensation arrangements for our expected named executive officers. As discussed above, our retirement and other benefits will be substantially similar to the Occidental programs and are described below.

Todd A. Stevens—President and Chief Executive Officer

Mr. Stevens, a 19-year veteran of Occidental, was appointed President, Chief Executive Officer and Director of CRC in July 2014. Mr. Stevens served as Vice President—Corporate Development of Occidental Petroleum Corporation from August 2012 to July 2014. In that role, he led Occidental's growth-focused initiatives including mergers and acquisitions, land management and worldwide exploration, and played a key role in the capital allocation process. From April 2008 to September 2012, Mr. Stevens was Vice President—California Operations, Oxy Oil & Gas and from October 2004 to August 2012, Mr. Stevens was Vice President—Acquisition and Corporate Finance of Occidental Petroleum Corporation.

Compensation Element	Target Value on Grant Date

Base Salary	$	825,000
Annual Incentive	$	825,000
Long-Term Incentive
Restricted Stock Award	$	2,000,000
Stock Option Award	$	3,000,000


Total Cash and Equity Compensation	$	6,650,000

William E. Albrecht—Executive Chairman

Mr. Albrecht was appointed as Executive Chairman of our board of directors in July 2014. Mr. Albrecht served as Vice President of Occidental from May 2008 to July 2014 and as President, Oxy Oil & Gas, Americas from January 2012 to July 2014. With more than 35 years of industry experience, Mr. Albrecht was responsible for Occidental's oil and gas operations in North and South America, including its health, environment and safety, government relations and social responsibility activities. He joined Occidental in 2007 as Vice President, California Operations.

Compensation Element	Target Value on Grant Date

Base Salary	$	500,000
Annual Incentive	$	500,000
Long-Term Incentive
Restricted Stock Award	$	2,000,000
Stock Option Award	$	2,000,000


Total Cash and Equity Compensation	$	5,000,000

In addition, Mr. Albrecht will receive a transition bonus from Occidental of $1,250,000 on the date of the spin-off whereupon his existing Retention and Separation Arrangement will terminate.

Marshall (Mark) D. Smith—Senior Executive Vice President and Chief Financial Officer

Mr. Smith was appointed Senior Executive Vice President and Chief Financial Officer of CRC in July 2014. He most recently served as Senior Vice President of Ultra Petroleum Corp. from January 2011 to July 2014 and served as its Chief Financial Officer from July 2005 to July 2014. Mr. Smith's 32 years of experience in the energy industry spans operations, strategic planning, corporate finance and business

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development. He began his career as a petroleum engineer working at both major and independent oil companies, later focusing on mergers, acquisitions and corporate finance advisory assignments. Mr. Smith served as Vice President of Upstream Business Development at Constellation Energy from 2004 to 2005. He was Vice President of Business Development at J.M. Huber Energy from 2002 to 2004, and Chief Financial Officer of Gulf Liquids, Inc. from 2001 to 2002. Mr. Smith holds a Bachelors of Science degree from the University of Oklahoma and a Masters of Business Administration degree from Oklahoma City University.

Compensation Element	Target Value on Grant Date

Base Salary	$	600,000
Annual Incentive	$	600,000
Long-Term Incentive
Restricted Stock Award	$	1,200,000
Stock Option Award	$	1,800,000


Total Cash and Equity Compensation	$	4,200,000

In addition, Mr. Smith received a cash sign-on bonus of $500,000 and a sign-on restricted stock award with a grant date value of $2,500,000, which will vest at the end of two years, subject solely to his continued employment with CRC.

Robert A. Barnes—Executive Vice President—Northern Operations

Mr. Barnes, with 36 years' experience at Occidental, was appointed Executive Vice President—Northern Operations of CRC in July 2014. Mr. Barnes served as President and General Manager of Occidental of Elk Hills from December 2012 to July 2014. He served as Operations Manager for Oxy Permian CO ₂ from May 2011 to November 2012, as Deputy General Manager and Senior Vice President, Operations, of Occidental Argentina from June 2010 to April 2011, and as Vice President, Operations, of Occidental Argentina from August 2007 to June 2010. Mr. Barnes also held Production Operations Manager and Operations Team Leader roles at Occidental of Elk Hills from 1998 to 2007, and worked as Production Superintendent in the Hugoton and Virginia Coalbed Methane Operations and held various roles in Operations and Drilling Engineering throughout the Rocky Mountains, California and Mid-Continent regions since joining Occidental in 1978.

Compensation Element	Target Value on Grant Date

Base Salary	$	400,000
Annual Incentive	$	360,000
Long-Term Incentive
Restricted Stock Award	$	800,000
Stock Option Award	$	1,200,000


Total Cash and Equity Compensation	$	2,760,000

Frank E. Komin—Executive Vice President—Southern Operations

Mr. Komin, with 14 years' experience at Occidental, was appointed Executive Vice President—Southern Operations of CRC in July 2014. Mr. Komin served as President and General Manager of OXY Long Beach from January 2010 to July 2014, and served as President and General Manager of Oxy THUMS from February 2001 to December 2009. With more than 36 years of experience in the domestic oil and gas industry, Mr. Komin has overseen all aspects of Long Beach operations and the development of

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the Wilmington field. Before joining Occidental, Mr. Komin worked for 22 years at ARCO, most recently as Reservoir Engineering Manager and Operations Superintendent, Kuparuk, Alaska.

Compensation Element	Target Value on Grant Date

Base Salary	$	400,000
Annual Incentive	$	360,000
Long-Term Incentive
Restricted Stock Award	$	800,000
Stock Option Award	$	1,200,000


Total Cash and Equity Compensation	$	2,760,000

Other Compensation and Benefits

In addition to the three components of the executive compensation program described above, we will provide the following programs to our named executive officers.

Qualified Defined Contribution Plan —All of our employees will be eligible to participate in a tax-qualified, defined contribution plan. The defined contribution plan will provide for periodic cash contributions by CRC based on annual cash compensation and employee deferrals. Employees will be permitted to save a percentage of their annual salary and bonus up to the annual limit set by IRS regulations. Employees will be able to direct their account balances to a variety of investments.

Nonqualified Defined Contribution Plan —Substantially all employees whose participation in our qualified defined contribution plan is limited by applicable tax laws will be eligible to participate in our nonqualified defined contribution plan, which provides additional retirement benefits outside of those limitations.

Annual allocations for each participant will restore the amounts that would have been contributed to the qualified defined contribution plan, but for the tax law limitations. Account balances will be payable following separation from service, or upon attainment of a specified age elected by the participant when initially participating in the plan.

Interest on nonqualified defined contribution accounts will be allocated monthly to each participant's account, based on the balance of the account in each monthly processing period. The amount of interest earnings will be calculated using a rate equal to the five-year U.S. Treasury Note rate on the last business day of the processing month plus 2%, converted to a monthly allocation factor.

Nonqualified Deferred Compensation Plan —Certain management and other highly compensated employees will be eligible to participate in a nonqualified deferred compensation plan. Under the plan, participants will be able to elect to defer a portion of their base salary and annual bonus for a given year. Deferred amounts will earn interest at a rate equal to the five-year U.S. Treasury Note rate on the last business day of the processing month plus 2%, converted to a monthly allocation factor. Account balances will be payable following separation from service, or upon attainment of a specified age elected by the participant when initially participating in the plan.

Tax Preparation and Financial Planning —Our senior executives, including each of the named executive officers, will be eligible to receive reimbursement, up to certain annual limits, for financial planning and investment advice, including legal advice related to tax and financial matters.

Insurance —We will offer a variety of health coverage options to all employees. Named executive officers will participate in these plans on the same terms as other employees. In addition, for all employees above a certain job level, we will pay for an annual physical examination. We will provide all non-bargained employees with life insurance equal to twice the employee's base salary. We will also provide senior executives, including the named executive officers, with excess liability insurance coverage.

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Severance Benefits —We will maintain a notice and severance pay plan that will, in connection with a qualifying termination of employment, provide for up to 12 months of base salary and other insurance coverage, depending on years of service, for non-bargained employees, including the named executive officers.

Stock Ownership Guidelines

CRC will have minimum stock ownership guidelines for senior executives following the spin-off. The target ownership level for the Chief Executive Officer will be six times annual base salary and for the other named executive officers will be three times annual base salary. Executives will have five years to attain their required ownership levels.

CRC Long-Term Incentive Plan

We have adopted, and OXY USA Inc. ("OXY USA"), a subsidiary of Occidental Petroleum Corporation, in its capacity as the sole stockholder of CRC has approved, the California Resources Corporation Long-Term Incentive Plan (the "LTIP") to attract and retain employees, consultants and directors of CRC and its affiliates. The description of the LTIP set forth below is a summary of the material features of the LTIP. This summary, however, does not purport to be a complete description of all of the provisions of the LTIP and is qualified in its entirety by reference to the LTIP, a copy of which is filed as an exhibit to the registration statement of which this information statement is a part. As described in greater detail below, the LTIP provides for the grant of cash-based and equity-based awards with respect to our common stock.

Share Limits

The LTIP authorizes awards to be granted with respect to up to 25,000,000 shares of our common stock, subject to adjustment in accordance with the terms of the LTIP upon certain changes in capitalization and similar events. Awards payable in cash or payable in cash or shares, including restricted shares, that are forfeited, cancelled or do not vest, and shares that are subject to awards that expire or for any reason are terminated, cancelled, or fail to vest, will be available for subsequent awards under the LTIP. If an award under the LTIP is or may be settled only in cash, such award generally will not be counted against the share limit in the LTIP.

During the term of the LTIP, no participant may be granted awards with respect to more than 12,500,000 shares of our common stock, subject to adjustment in accordance with the terms of the LTIP. In addition, under the LTIP the maximum amount of compensation that can be paid with respect to any performance-based awards denominated in cash granted to any one individual during any calendar year is $20,000,000.

Administration and Eligibility

Prior to the spin-off, the LTIP will be administered by the Occidental Compensation Committee. From and after the spin-off, the LTIP will be administered by our Compensation Committee or a subcommittee thereof (collectively with the Occidental Compensation Committee, the "Committee").

Under the terms of the LTIP, the Committee has broad discretion to administer the plan, including the ability to determine to whom and when awards will be granted, determine the type and amount of awards (measured in cash or in shares of our common stock), construe and interpret the terms and provisions of each award agreement (the terms of which may vary), accelerate the vesting of any award, delegate certain duties under the LTIP and execute all other responsibilities permitted or required under the LTIP.

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The individuals eligible to receive awards under the LTIP include any person who at the time of grant is an officer, employee or consultant of CRC or any of our affiliates or is a non-employee member of our board of directors (together, an "eligible person").

Types of Awards

As described above, the Committee has broad discretion under the plan to determine the types of awards it grants to eligible persons. The types of awards permitted under the LTIP (collectively, "awards") include: stock options (including both incentive stock options and nonstatutory options), stock purchase rights, stock bonuses, restricted stock units, stock appreciation rights, limited stock appreciation rights, phantom stock, restricted stock, stock units, dividend equivalents (independently or in tandem with any form of stock grant), dividend rights (independently or in tandem with any form of stock grant), or any similar securities with a value derived from the value of or related to our common stock or other securities or returns thereon, in each case, any of which may be payable in shares or cash, and may consist of one or more of such features in any combination, as determined by the Committee. In addition, the Committee has the authority under the LTIP to grant cash-based awards.

Performance-Based Awards

The Committee may designate any award under the LTIP (including a cash award) as a "performance-based award." A performance-based award is any award the grant, exercise or settlement of which is subject to one or more performance standards that the Committee deems appropriate. However, if the Committee desires a performance-based award to constitute "performance-based compensation" for purposes of Section 162(m) of the Internal Revenue Code, then one or more of the following business criteria for us, on a consolidated basis, and/or for specified subsidiaries or business or geographical units, may be used by the Committee in establishing the performance goals for such performance awards: (A) accounts receivable to day sales outstanding; (B) accounts receivable to sales, services and/or other income; (C) debt; (D) debt to debt plus stockholder equity; (E) debt to earnings before interest expense and taxes (EBIT) or earnings before interest expense, taxes, depreciation and amortization (EBITDA); (F) EBIT; (G) EBITDA; (H) earnings per share; (I) economic value added; (J) expense reduction or improvement; (K) interest coverage; (L) inventory to sales, (M) inventory turns, (N) net income, (O) operating cash flow, (P) pre-tax margin, (Q) return on assets; (R) return on capital employed; (S) return on equity; (T) sales; (U) stock price appreciation; (V) total stockholder return; (W) operational measures such as changes in proved reserves, production goals, drilling costs, lifting costs, exploration costs, environmental compliance, safety and accident rates; (X) mix of oil and natural gas production or reserves; (Y) finding and development costs; (Z) recycling ratios; (AA) reserve growth; (BB) additions or revisions; (CC) captured prospects; (DD) lease operating expense; or (EE) captured net risked resource potential, in each case, as determined on an absolute or relative basis or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor's 500 Stock Index or a group of comparable companies.

Change in Control and Other Adjustments

Upon a "change in control" (as defined in the LTIP), unless otherwise determined by the Committee, all awards outstanding pursuant to the plan will fully-vest and, if applicable, become exercisable. In addition, upon any change that is made to our capitalization, such as a stock split, stock combination, stock dividend, exchange of shares or other recapitalization, merger or otherwise, appropriate adjustments may be made by the Committee in the shares subject to the LTIP and awards under the LTIP.

Amendment and Termination

Our Board of Directors may amend or terminate the LTIP at any time. However, no amendment or termination may impair the rights or benefits of a participant under an outstanding award in any material

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way without such participant's consent. In addition, to the extent required pursuant to any federal or state law or regulation or the rules of any stock exchange or automated quotations system in which shares of our common stock are listed or quoted, any such amendment will be subject to the approval of our stockholders.

No awards may be granted under the LTIP from or after the tenth anniversary of the effective date of the plan.

Restrictions on Transfer

Subject to certain limited exceptions under the LTIP, awards are generally not transferrable by the participant other than by will or the laws of descent.

Tax Withholding

At our discretion, subject to conditions that the Committee may impose, a participant's minimum statutory tax withholding with respect to an award may be satisfied by withholding from any payment related to an award or by the withholding of shares of our common stock issuable pursuant to the award based on the fair market value of the shares.

CRC Employee Stock Purchase Plan

We have adopted, and OXY USA, in its capacity as the sole stockholder of CRC has approved, the California Resources Corporation 2014 Employee Stock Purchase Plan (the "ESPP"). The ESPP will provide our employees and the employees of our subsidiaries that participate in the ESPP the ability to purchase shares of our common stock at a price equal to 85% of the closing price of a share of our common stock as of the first day of each offering period or the last day of each offering period, whichever amount is less. The ESPP will be administered by our Compensation Committee or a subcommittee thereof and is intended to qualify as an "employee stock purchase plan" pursuant to Section 423 of the Internal Revenue Code.

The maximum number of shares of our common stock which may be issued pursuant to the ESPP is 5,000,000, subject to adjustment pursuant to the terms of the ESPP. In addition, participants in the ESPP are subject to certain limits on the number of shares that can be purchased in any given year and during any given offering period under the ESPP.

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EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

We are a newly-formed entity and have not historically paid compensation or had employees (including executive officers). The tables below and the accompanying footnotes summarize the 2013 compensation paid by Occidental for the individuals that we expect would constitute our named executive officers upon effectiveness of this registration statement. Compensation relating to our principal financial officer is not shown because he was not an employee of Occidental during 2013.

Name		Salary		Bonus(1)			Stock Awards(2)		Option Awards		Non-Equity Incentive Plan Compensation(3)		Change in Pension Value and Nonqualified Deferred Compensation Earnings		All Other Compensation(4)		Total

Todd A. Stevens	2013	$	385,000	$	259,000		$	2,846,340	$	0	$	791,000	$	360	$	114,766	$	4,396,466
President and Chief Executive Officer
William E. Albrecht	2013	$	575,000	$	300,000		$	4,197,732	$	0	$	420,000	$	0	$	159,347	$	5,652,079
Executive Chairman
Robert A. Barnes	2013	$	310,000	$	325,186	(5)	$	250,000	$	0	$	393,000	$	0	$	83,475	$	1,361,661
Executive Vice President—Northern Operations
Frank E. Komin	2013	$	302,000	$	288,459	(5)	$	225,000	$	0	$	280,625	$	0	$	77,714	$	1,173,798
Executive Vice President—Southern Operations

(1): The 2013 amounts shown represent only the discretionary portion of the executive's Annual Incentive award, which was paid in the first quarter of 2014.
(2): Awards that are payable in stock or based on stock value are stated at the grant date fair value, which incorporates the value of Occidental's stock as well as the estimated payout percentage as of the grant date. For a description of the assumptions used for calculating this amount, see Note 12 to Consolidated Financial Statements in Occidental's Form 10-K for the year ended December 31, 2013 regarding assumptions underlying valuation of equity awards.
(3): The amounts represent only the performance-based portion of the executive's Annual Incentive award. The payout related to the Annual Incentive award was determined based on Occidental's attainment of specified earnings per share targets for Messrs. Stevens and Albrecht or production and cash flow goals for Messrs. Barnes and Komin.
(4): The following table shows "All Other Compensation" amounts for 2013.

All Other Compensation

	Todd A. Stevens			William E. Albrecht			Robert A. Barnes		Frank E. Komin

Savings Plan(a)	$	15,300		$	15,300		$	15,300	$	15,300
Supplemental Retirement Plan II(b)	$	83,355		$	129,675		$	68,175	$	62,175
Personal Benefits	$	16,111	(c)	$	14,372	(d)	$	0	$	239	(d)
Total	$	114,766		$	159,347		$	83,475	$	77,714

(a): The amount shown is the company's contribution to the Occidental Petroleum Corporation Savings Plan (the "Savings Plan").
(b): The amount shown is the company's contribution to the Occidental Petroleum Corporation Supplemental Retirement Plan II (the "Supplemental Retirement Plan II").
(c): Includes tax preparation and financial counseling, excess liability insurance, physical examinations, and tax gross-up related to the amounts paid by Occidental for spousal travel ($596).
(d): Reflects tax gross-up related to the amounts paid by Occidental for spousal travel.

(5): Includes a special bonus of $183,186 for Mr. Barnes and $178,459 for Mr. Komin for 2013 operational performance.

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Grants of Plan-Based Awards

The table below summarizes the following plan-based awards granted by the Occidental Compensation Committee in 2013 to the individuals we expect would be our named executive officers upon effectiveness of this registration statement: Executive Incentive Compensation Plan (Non-Equity Incentive Portion)—EICP, Total Shareholder Return Incentive Awards ("TSR"), Restricted Stock Incentive Awards ("RSI"), Restricted Stock Incentive Awards (Time Vested)—RSI-TV, Return on Capital Employed Incentive Awards ("ROCE"), Return on Assets (Total) Awards ("ROA-T"), Return on Assets (Americas) Awards ("ROA-A").

The equity awards listed below are the only stock awards granted to the expected named executive officers in 2013. No option awards or non-performance-based stock awards were granted in 2013.



			Estimated Future Payouts Under Non-Equity Incentive Plan Awards						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards: Number of Shares or Units (# Shares)		Grant Date Fair Value of Stock and Option Awards ($)
									Estimated Future Payouts Under Equity Incentive Plan Awards							Exercise or Base Price of Option Awards ($)
Name / Type of Grant	Grant Date		Threshold ($)		Target ($)		Maximum ($)		Threshold # Shares		Target # Shares		Maximum # Shares			Exercise or Base Price of Option Awards ($)
Todd A. Stevens
EICP(1)			$	4,000	$	285,000	$	570,000
TSR(3)		7/22/2013								88		8,808		13,212			$	550,865
RSI(2)		7/22/2013										8,808					$	810,000
ROCE(4)		7/22/2013								2,935		11,740		23,480			$	1,493,315
William E. Albrecht
EICP(1)			$	6,000	$	450,000	$	900,000
TSR(3)		7/22/2013								147		14,679		22,019			$	918,045
RSI(2)		7/22/2013										14,679					$	1,350,000
ROA-T(4)		7/22/2013								1,223		4,893		9,786			$	579,687
ROA-A(4)		7/22/2013								3,670		14,679		29,358			$	1,350,000
Robert A. Barnes
EICP(1)			$	3,000	$	210,000	$	420,000
RSI-TV(5)		7/22/2013										2,719					$	250,000
ROA-T(6)		7/22/2013	$	15,000	$	60,000	$	120,000
ROA-A(6)		7/22/2013	$	47,500	$	190,000	$	380,000
Frank E. Komin
EICP(1)			$	2,000	$	150,000	$	300,000
RSI-TV(5)		7/22/2013										2,447					$	225,000
ROA-T(6)		7/22/2013	$	13,500	$	54,000	$	108,000
ROA-A(6)		7/22/2013	$	42,750	$	171,000	$	342,000

(1): Payout at threshold assumes EPS of $6.26.
(2): Dollar value shown represents the estimated grant date fair value of the full number of shares granted which become non-forfeitable on the later of the vesting date (July 21, 2016), through which date the executive must remain employed by the company, and the date the Occidental Compensation Committee certifies the achievement of the performance goal, which must be met no later than June 30, 2020. The RSI award does not have threshold to maximum payout ranges.
(3): Actual payout may range from zero to the maximum number of performance share units. Awards will be paid out 100% in stock in a number of shares equal to the number of performance share units earned on the date of certification of the attainment of the performance goals. The target shares represent the target number of performance shares granted on the grant date, representing a payout of 100%. Threshold shares represent Occidental's performance just above the 25th percentile, resulting in an assumed payout of 1% of the target number of performance share units. The actual percentage payout would be linearly interpolated between the 25th percentile TSR performance (0% payout) and the 75th percentile TSR performance (150% payout). The estimated fair value of the TSR at the grant date is based on the projected performance at the grant date for Occidental indicating a payout of 68% of the target number of performance share units. See Note 12 to Consolidated Financial Statements in Occidental's Form 10-K for the year ended December 31, 2013, regarding assumptions underlying valuation of equity awards.
(4): Dollar value shown represents the estimated grant date fair value of the target number of performance share units granted. The estimated fair value of the ROCE, ROA-T, and ROA-A is based on the projected performance at the grant date for Occidental indicating payouts of approximately 138%, 129%, and 100%, respectively. The actual payout may range from 0% to 200% of the target number of performance share units and will be paid out 100% in stock. Threshold shares represent a 25% payout percentage, which would be achieved with a return meeting the minimum threshold of 9% ROCE, 9% ROA-T, and 8% ROA-A.
(5): Dollar value shown represents the estimated grant date fair value of the full number of units granted which become non-forfeitable with respect to one—third of the total units granted each on July 21, 2014, July 21, 2015, and July 21, 2016. The RSI-TV award does not have threshold to maximum payout ranges.
(6): Dollar value shown represents the estimated grant date fair value of the target award granted. The estimated fair value of the ROA-T, and ROA-A is based on the projected performance at the grant date for Occidental indicating payouts of approximately 129%, and 100%, respectively. The actual payout may range from 0% to 200% of the target award amount and will be paid out 100% in cash. Threshold shares represent a 25% payout percentage, which would be achieved with a return meeting the minimum threshold of 9% ROA-T and 8% ROA-A.

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Outstanding Equity Awards at December 31, 2013

The table below sets forth the outstanding equity awards held as of December 31, 2013 by the individuals we expect would be our named executive officers upon effectiveness of this registration statement, including RSI, TSR, ROCE, ROA-T, ROA-A, Restricted Stock Incentive Awards (Time Vested), Phantom Share Unit Awards (PhSU), and Long-Term Incentive Awards (LTI).

The TSR, RSI, ROCE, ROA-T, and ROA-A are performance-based awards with payouts that depend on the outcome of the performance criteria and the price of Occidental's stock on the award certification date, as applicable, with the possibility of no payout if performance criteria are not met. These are long-term awards with three-year and three- to seven-year performance periods, as applicable, that, based on achievement of performance criteria, will vest or become nonforfeitable between 2014 and 2020. The values shown for the TSR, ROCE, ROA-T, and ROA-A awards in the table below are shown at threshold, target, estimated performance, or maximum levels, as described below. Actual payouts, if any, will reflect actual performance, which may be at lower or higher levels than shown below, and on the price of Occidental's common stock at the time of payout, as applicable.

			Option Awards				Stock Awards

Name / Type of Grant	Grant Date		Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Option Exercise Price ($)	Option Exercise Date	Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units That Have Not Vested ($)(1)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#)(1)
Todd A. Stevens
RSI		7/13/2011											15,539	(2)	$	1,477,759	(2)
RSI		7/11/2012											18,920	(3)	$	1,799,292	(3)
RSI		7/22/2013											8,808	(4)	$	837,641	(4)
TSR		7/13/2011											2,331	(5,6)	$	221,678	(5)
TSR		7/11/2012											2,838	(5,7)	$	269,884	(5)
TSR		7/22/2013											8,808	(5,8)	$	837,641	(5)
ROCE		7/22/2013											2,936	(9)	$	279,190	(9)
William E. Albrecht
RSI		7/13/2011											15,539	(2)	$	1,477,759	(2)
RSI		7/11/2012											18,920	(3)	$	1,799,292	(3)
RSI		7/22/2013											14,679	(4)	$	1,395,973	(4)
TSR		7/13/2011											6,216	(5,6)	$	591,142	(5)
TSR		7/11/2012											7,568	(5,7)	$	719,688	(5)
TSR		7/22/2013											14,679	(5,8)	$	1,395,973	(5)
ROA-T		7/22/2013											1,223	(9)	$	116,331	(9)
ROA-A		7/22/2013											3,670	(9)	$	348,993	(9)
Robert A. Barnes
PhSU		7/15/2011						585	(10)	$	55,634
LTI		7/11/2012						1,656	(11)	$	157,486
RSI-TV		7/22/2013						2,719	(12)	$	258,577
Frank E. Komin
LTI		7/13/2011						566	(13)	$	53,827
LTI		7/11/2012						1,576	(11)	$	149,878
RSI-TV		7/22/2013						2,447	(12)	$	232,710

(1): The amounts shown represent the product of the number of shares or units shown in the column immediately to the left and the closing price on December 31, 2013 of Occidental common stock as reported in the NYSE Composite Transactions, which was $95.10.
(2): The shares were forfeitable until the later of July 12, 2014 and the certification by the Occidental Compensation Committee that the achievement of the performance threshold was met no later than June 30, 2018.
(3): The shares are forfeitable until the later of July 10, 2015 and the certification by the Occidental Compensation Committee that the achievement of the performance threshold is met no later than June 30, 2019.
(4): The shares are forfeitable until the later of July 21, 2016 and the certification by the Occidental Compensation Committee that the achievement of the performance threshold is met no later than June 30, 2020.
(5): For TSRs granted in 2011 and 2012, the values shown reflect an estimated payout of a number of shares based on the threshold performance level which also reflects the performance of Occidental through December 31, 2013, and would result in payouts of 10%. For TSRs granted in 2013, the

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values shown reflect an estimated payout of the target number of shares since the performance of Occidental through December 31, 2013 exceeds the threshold payout level, but is less than the level required to attain target payout. However, the ultimate payout may be significantly less or more than the amounts shown, with the possibility of no payout, depending on the outcome of the performance criteria and the value of Occidental stock on the award certification date.

(6): The performance period for the TSR ended June 30, 2014.
(7): The performance period for the TSR ends June 30, 2015.
(8): The performance period for the TSR ends June 30, 2016.
(9): For ROA awards and ROCE awards granted in 2013, payout values shown are at the threshold payout level of 25% since the performance periods begin January 1, 2014. However, the ultimate payout may be significantly less (zero) or more than the amounts shown, depending on the outcome of the performance criteria and the value of Occidental stock on the award certification date.
(10): The units were forfeitable until July 14, 2014.
(11): 50% of the units were forfeitable until July 10, 2014 and 50% of the units are forfeitable until July 10, 2015.
(12): 33 ¹ / 3 % of the units were forfeitable until July 21, 2014, 33 ¹ / 3 % of the units are forfeitable until July 21, 2015 and 33 ¹ / 3 % of the units are forfeitable until July 21, 2016.
(13): The units were forfeitable until July 12, 2014.

Option Exercises and Stock Vested in 2013

The following table summarizes, for the individuals we expect would be our named executive officers on effectiveness of this registration statement, the stock awards vested during 2013. The amounts reported as value realized are shown on a before-tax basis. No option awards vested. The stock awards that vested for Messrs. Stevens and Albrecht were TSR awards granted in 2009 and 2010 and RSI awards granted in 2010. The stock awards that vested for Messrs. Barnes and Komin were LTI awards granted in 2012 which were payable 50% in stock and 50% in cash.

Previously Granted Vested Option Awards Exercised and Previously Granted Stock Awards Vested in 2013

	Option Awards				Stock Awards

Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)(1)
Todd A. Stevens		0	$	0		29,223	$	2,719,740
William E. Albrecht		0	$	0		48,104	$	4,487,310
Robert A. Barnes		0	$	0		414	$	36,962
Frank E. Komin		0	$	0		395	$	35,266

(1): The amount represents the product of the number of shares vested and the closing price of the common stock on the New York Stock Exchange on the vesting date. The following table shows the number of shares of each type of performance-based award that vested.

Name

Todd A. Stevens	19,731	9,492
William E. Albrecht	31,494	16,610
Robert A. Barnes	0	414
Frank E. Komin	0	395

Nonqualified Deferred Compensation

Nonqualified Defined Contribution Retirement Plan

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In order to provide greater financial planning flexibility to participants while not increasing costs under the plan, Occidental's Supplemental Retirement Plan II (SRP II) allows in-service distribution of a participant's account at a specified age, but not earlier than age 60, as elected by the participant when initially participating in the plan.

Mr. Albrecht made a specified age election such that his SRP II account, shown below, is being distributed annually. After a participant receives a specified age distribution, future allocations under the SRP II and earnings on those allocations will be distributed in the first 70 days of each following year.

Nonqualified Deferred Compensation

Under Occidental's Modified Deferred Compensation Plan (MDCP), the maximum amount that may be deferred by a participant for any one year is limited to $75,000. A participant's overall plan balance must be less than $1 million at the end of any given year to enable a participant to defer compensation for the subsequent year. Deferred amounts earn interest at a rate equal to the five-year U.S. Treasury Note rate plus 2%, except for amounts deferred prior to 1994, which will continue to earn interest at a minimum interest rate of 8%.

The following table sets forth for 2013 the contributions, earnings, withdrawals and balances under the SRP II and the MDCP in which the named executive officers participate. Each of the named executive officers are fully vested in their respective aggregate balances shown below.

Name	Plan	Executive Contributions in 2013 ($)(1)		Occidental Contributions in 2013 ($)(2)		Aggregate Earnings in 2013 ($)		Aggregate Withdrawals/ Distributions in 2013 ($)(3)		Aggregate Balance at 12/31/2013 ($)

Todd A. Stevens	SRP II	$	0	$	83,355	$	27,856	$	0	$	905,719
	MDCP	$	30,200	$	0	$	17,948	$	0	$	576,809
William E. Albrecht	SRP II	$	0	$	129,675	$	3,641	$	191,006	$	132,859
Robert A. Barnes	SRP II	$	0	$	68,175	$	11,619	$	0	$	385,823
Frank E. Komin	SRP II	$	0	$	62,175	$	11,993	$	0	$	396,773
	MDCP	$	0	$	0	$	38,060	$	0	$	1,209,745

(1): No employee contributions are permitted in the SRP II.
(2): Amounts represent Occidental's 2013 contributions to the SRP II, which are reported under "All Other Compensation" in the Summary Compensation Table.
(3): Distribution made in February 2013 in accordance with the specified age elections described under Nonqualified Defined Contribution Retirement Plan above.

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Potential Payments Upon Termination or Change in Control

Summary

Payments and other benefits payable to named executive officers in various termination circumstances and a change of control are subject to certain policies, plans and agreements. Following is a summary of the material terms of these arrangements.

Occidental's Golden Parachute Policy provides that, subject to certain exceptions, Occidental will not grant Golden Parachute Benefits (as defined in the Policy) to any senior executive which exceed 2.99 times his or her salary plus annual incentive pay unless the grant of such benefits is approved by a vote of the corporation's stockholders or the obligation with respect to such benefit pre-dated adoption of the Policy. The Golden Parachute Policy was approved by Occidental's stockholders. The complete Golden Parachute Policy is available at www.oxy.com.

Under Occidental's Notice and Severance Pay Plan, employees, including named executive officers without employment agreements (which includes our expected named executive officers), terminated in certain circumstances without cause or as a result of a change of control are eligible for up to 12 months base salary depending on years of service, two months of contributions pursuant to Occidental's Savings Plan and the SRP II, and continued medical and dental coverage for the 12-month notice and severance period at the active employee rate.

In February 2013, Occidental provided the Retention and Separation Arrangements for Messrs. Stevens, Albrecht and Barnes, none of whom has an employment agreement or offer letter that addresses termination payments and benefits. These arrangements replaced any notice and severance pay that they would otherwise have received under the Notice and Severance Pay Plan. Had they remained employees of Occidental, they would have received a retention payment (Retention Payment) of one to two times their then-current annual base salary, payable in one lump sum cash payment one year after a new Chief Executive Officer of Occidental began employment. As Messrs. Stevens, Albrecht and Barnes will no longer be employed by Occidental following the spin-off, they will not receive the Retention Payment from Occidental. If they were terminated without cause by Occidental prior to December 31, 2014, subject to providing typical waivers and releases, they would have received (i) separation pay at their then-current base salary for 24 months, payable monthly; (ii) their target annual bonus amount for the year of separation, payable in one lump sum cash payment; (iii) the same medical and other benefits (other than notice and severance pay) as are received by employees under the Notice and Severance Pay Plan; and (iv) the Retention Payment (if not previously paid). In addition, Messrs. Stevens and Barnes would have received cash payments in consideration of forfeiture of all of their outstanding long-term incentive awards, as described in the footnotes to the individual tables below. In connection with the spin-off, Mr. Albrecht's Separation and Retention Arrangement will terminate upon his receipt of a transition bonus and the Retention and Separation Arrangements of Messrs. Stevens and Barnes will be assumed by us.

Occidental's 2005 Long-Term Incentive Plan has provisions that, in the event of a change of control of Occidental, require the outstanding awards granted under such plan to become fully vested and exercisable unless the Plan Administrator determines, prior to the occurrence of the event, that benefits will not accelerate. This plan was approved by Occidental's stockholders. Notwithstanding the foregoing, as of 2011, all new grants of equity awards under such plan vest on a pro rata basis in the event of a change of control, TSR awards granted prior to 2013 vest based on 50% of the maximum number of units that could be paid, and TSR awards, ROCE awards and ROA awards granted in 2013 vest at the target number of performance shares granted and are converted to restricted stock. All outstanding RSI awards vest on a pro rata basis. Payout of all outstanding awards in the event of a change of control occurs at the earlier of the employee's termination date as a result of the change of control or the end of the applicable performance or restricted period.

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Except as described in this summary and below under "Potential Payments," Occidental does not have any other agreements or plans that will require it to provide compensation to our expected named executive officers in the event of a termination of employment or a change of control.

Potential Payments

In the discussion that follows, payments and other benefits payable upon various terminations and change of control situations are set out as if the conditions for payments had occurred and the terminations took place on December 31, 2013, and reflect the terms of applicable plans, agreements, offer letters and long-term incentive award agreements then in effect. The amounts set forth below are estimates of the amounts that would be paid to each named executive officer upon his or her termination. The "Maximum Payout" is the maximum amount, including incentive awards and certain benefits, that could have been payable in the event of a change of control situation. The actual amounts to be paid out can be determined only at the time of such named executive officer's separation from Occidental. The disclosures below do not take into consideration any requirements under Section 409A of the Internal Revenue Code, which could affect, among other things, the timing of payments and distributions.

The following payments and benefits, which are potentially available to all full-time salaried employees when their employment terminates, are not included in the amounts shown below:

•: Notice and Severance Pay Plan payments and benefits.
•: Life insurance proceeds equal to two times base salary, payable on death as available to all eligible employees.
•: Amounts vested under Occidental's plans that are qualified under Section 401(a) of the Internal Revenue Code.
•: Amounts vested under the Nonqualified Deferred Compensation arrangements.
•: Bonus and non-equity incentive compensation (collectively, "bonus") under Occidental's Executive Incentive Compensation Plan (EICP) that would have been earned as of year-end. Any plan participant who leaves on or after that date for any reason is entitled to such amounts when payment is made in the first quarter of the following year. The amounts that were earned in 2013 by the named executive officers are included in the Summary Compensation Table. Bonus under the EICP that would have been payable in accordance with the terms of the Retention and Separation Arrangements is shown in the amounts below.

Mr. Stevens. Mr. Stevens does not have an employment agreement, but effective beginning February 2013, he would have received the benefits pursuant to his Retention and Separation Arrangement as

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described above. The following is a summary of the payments and benefits he would have been entitled to receive if the event specified occurred as of December 31, 2013.

Benefits and Payments Upon Termination	Retirement with Occidental Consent, Death, or Disability			Termination by Mr. Stevens or Termination for Cause		Termination without Cause			Change of Control			Change of Control and Termination

Equity Compensation
TSR Awards	$	417,538	(1)	$	0	$	3,295,358	(a)	$	3,295,358	(3)	$	3,295,358	(3)
RSI Awards(2)	$	2,227,908		$	0	$	2,227,908		$	2,103,327		$	2,227,908
ROCE Awards(4)	$	0		$	0	$	1,116,474	(b)	$	1,116,474		$	1,116,474
Cash Payments
Unused Vacation (lump sum)	$	31,420		$	31,420	$	31,420		$	0		$	31,420
Retention Payment	$	0		$	0	$	770,000		$	0		$	770,000
Severance (24 months)	$	0		$	0	$	770,000		$	0		$	770,000
EICP Bonus (at target)(5)	$	0		$	0	$	475,000		$	0		$	475,000
Benefits
Retirement Benefits (2 months)
Savings Plan	$	0		$	0	$	3,850		$	0		$	3,850
SRP II	$	0		$	0	$	4,492		$	0		$	4,492


TOTAL	$	2,676,866		$	31,420	$	8,694,502		$	6,515,159		$	8,694,502

For numeric footnotes, see page 164.

(a): Under the terms of his Retention and Separation Arrangement, Mr. Stevens would have been entitled to receive a cash payment equal to the product of the year-end price of Occidental common stock of $95.10, and 50% of the maximum number of shares payable under the TSR awards.
(b): Under the terms of his Retention and Separation Arrangement, Mr. Stevens would have been entitled to receive a cash payment equal to the product of the year-end price of Occidental common stock of $95.10, and the target number of shares payable under the ROCE awards.

Mr. Albrecht. Mr. Albrecht does not have an employment agreement, but effective beginning February 2013, he would have received the benefits pursuant to his Retention and Separation

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Arrangement as described above. The following is a summary of the payments and benefits he would have been entitled to receive if the event specified occurred as of December 31, 2013.

Benefits and Payments Upon Termination	Retirement with Occidental Consent, Death, or Disability			Termination by Mr. Albrecht or Termination for Cause		Termination without Cause			Change of Control			Change of Control and Termination

Equity Compensation
TSR Awards	$	1,016,224	(1)	$	0	$	1,016,224	(1)	$	7,949,980	(3)	$	7,949,980	(3)
RSI Awards(2)	$	2,311,025		$	0	$	2,311,025		$	2,103,327		$	2,311,025
ROA Awards(4)	$	0		$	0	$	0		$	1,861,297		$	1,861,297
Cash Payments
Unused Vacation (lump sum)	$	64,505		$	64,505	$	64,505		$	0		$	64,505
Retention Payment	$	0		$	0	$	1,150,000		$	0		$	1,150,000
Severance (24 months)	$	0		$	0	$	1,150,000		$	0		$	1,150,000
EICP Bonus (at target)(5)	$	0		$	0	$	750,000		$	0		$	750,000
Benefits
Retirement Benefits (2 months)
Savings Plan	$	0		$	0	$	5,750		$	0		$	5,750
SRP II	$	0		$	0	$	6,708		$	0		$	6,708


TOTAL	$	3,391,754		$	64,505	$	6,454,212		$	11,914,604		$	15,249,265

For numeric footnotes, see page 164.

Mr. Barnes. Mr. Barnes does not have an employment agreement, but effective beginning February 2013, he would have received the benefits pursuant to his Retention and Separation Arrangement as described above. The following is a summary of the payments and benefits he would have been entitled to receive if the event specified occurred as of December 31, 2013.

Benefits and Payments Upon Termination	Retirement with Occidental Consent, Death, or Disability		Termination by Mr. Barnes or Termination for Cause		Termination without Cause		Change of Control		Change of Control and Termination

Equity Compensation
RSI-TV Awards(6)	$	38,516	$	0	$	38,516	$	0	$	38,516
LTI Awards(a)	$	37,565	$	0	$	157,486	$	157,486	$	157,486
PhSU Awards(a)	$	26,248	$	0	$	55,634	$	55,634	$	55,634
Cash Payments
ROA Awards(4)	$	0	$	0	$	250,000	$	250,000	$	250,000
Unused Vacation (lump sum)	$	62,000	$	62,000	$	62,000	$	0	$	62,000
Retention Payment	$	0	$	0	$	310,000	$	0	$	310,000
Severance (24 months)	$	0	$	0	$	620,000	$	0	$	620,000
EICP Bonus (at target)(5)	$	0	$	0	$	350,000	$	0	$	350,000
Benefits
Retirement Benefits (2 months)
Savings Plan	$	0	$	0	$	3,100	$	0	$	3,100
SRP II	$	0	$	0	$	3,617	$	0	$	3,617


TOTAL	$	164,329	$	62,000	$	1,850,353	$	463,120	$	1,850,353

For numeric footnotes, see page 164.

(a): Represents the product of the year-end price of Occidental common stock of $95.10 and the pro-rata number of unvested LTI or PhSU awards for Retirement with Occidental Consent, Death, or Disability, payable 50% in cash and 50% in shares for the LTI awards and 100% cash for the PhSU awards. Under the terms of his Retention and Separation Arrangement, Mr. Barnes

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would have received a cash payment equal to the product of the year-end price of Occidental common stock of $95.10, and the number of unvested LTI and PhSU awards for Termination without Cause. For Change of Control, represents the product of the year-end price of Occidental common stock of $95.10 and the number of unvested LTI and PhSU awards, payable in cash. All unvested LTI and PhSU awards are forfeited in the case of voluntary termination by the executive and termination for cause.

Mr. Komin. Mr. Komin does not have an employment agreement. The following is a summary of the payments and benefits he would have been entitled to receive if the event specified occurred as of December 31, 2013.

Benefits and Payments Upon Termination	Retirement with Occidental Consent, Death, or Disability		Termination by Mr. Komin or Termination for Cause		Termination without Cause		Change of Control		Change of Control and Termination

Equity Compensation
RSI Awards(2)	$	34,616	$	0	$	34,616	$	0	$	34,616
LTI Awards(a)	$	61,150	$	0	$	61,150	$	203,705	$	203,705
Cash Payments
ROA Awards(4)	$	0	$	0	$	0	$	225,000	$	225,000
Unused Vacation (lump sum)	$	20,924	$	20,924	$	20,924	$	0	$	20,924
Benefits
Retirement Benefits (2 months)
Savings Plan	$	0	$	0	$	3,020	$	0	$	3,020
SRP II	$	0	$	0	$	3,523	$	0	$	3,523


TOTAL	$	116,690	$	20,924	$	123,233	$	428,705	$	490,788

(a): Represents the product of the year-end price of Occidental common stock of $95.10 and the pro-rata number of unvested LTI awards for all scenarios except voluntary termination or termination for cause, payable 50% in cash and 50% in shares. All unvested LTI awards are forfeited in the case of voluntary termination by the executive and termination for cause.
(1): Represents the product of the year-end price of Occidental common stock of $95.10, and the pro rata shares of TSR awards. Under the terms of the TSR agreements, executives receive a prorated payout, paid after the end of the applicable performance period, based on actual performance and the number of days employed at Occidental during the performance period. The values shown reflect an estimated payout of a prorated number of shares based on performance of Occidental through December 31, 2013, which would result in payouts of 10% for the TSRs granted in 2011, 2012 and 69% for 2013. The performance periods for the TSRs end in 2014, 2015 and 2016 for the 2011, 2012 and 2013 grants, respectively, so these payouts may not be indicative of the payout that would be made at the end of the performance period based on actual performance. Actual payout would be prorated and could vary from zero to 100% of maximum for grants in 2011 and 2012, or zero to 150% of target for 2013 grants, depending on attainment of performance objectives. The value of the payout also depends on the price of Occidental common stock at payout.
(2): Represents the product of the year-end price of Occidental common stock of $95.10 and the pro rata number of RSI awards for scenarios other than Change of Control for 2013 RSI awards which are not affected by a Change of Control. All RSI awards are forfeited in the case of voluntary termination by the executive and termination for cause. Awards that have not been forfeited are subject to achievement of performance goals in all scenarios except Change of Control. The right to receive amounts in excess of these amounts would have been forfeited.
(3): Represents the product of the year-end price of Occidental common stock of $95.10 and the shares of TSR awards that become non-forfeitable. For 2011 and 2012 awards, the right to receive 50% of the maximum number of performance shares (payable in shares for 2012 awards and 50% in shares and 50% in cash for 2011 awards) becomes non-forfeitable, and for all shares received, a number of shares equal to 50% of the after-tax shares received are subject to a 3-year holding period. For 2013 awards, the target number of performance shares is converted into shares of restricted stock which become non-forfeitable. A number of shares equal to 50% of the net after-tax shares received are subject to a 3-year holding period until the earlier of the date of the grantee's termination as a result of the Change of Control, or the last day of the performance period. The right to receive amounts in excess of these amounts would have been forfeited.
(4): Under the terms of the respective agreements for the ROCE awards and all ROA awards, in scenarios of termination due to death, disability, retirement with the consent of Occidental less than 12 months after the grant date and termination without cause, executives receive a prorated payout, paid after the end of the applicable performance period, based on actual performance and the number of days employed at Occidental during the performance period. Since the performance period

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began January 1, 2014 and these tables show values for events as of December 31, 2013, no values are shown for most scenarios because the executive would not have been employed during the performance period. For voluntary termination and termination for cause, all awards are forfeited. For Change of Control, the target number of shares granted convert to shares of restricted stock that become non-forfeitable. A number of shares equal to 50% of the net after-tax shares received are subject to a 3-year holding period until the earlier of the date of termination due to the Change of Control or the last day of the performance period. Values shown for both Change of Control scenarios represent either the product of the year-end price of Occidental common stock of $95.10, and the target number of shares granted or the target dollar amount granted, as applicable.

(5): Calculated assuming Occidental achieves target performance for the performance-based portion, but payment would be based on Occidental's actual performance.
(6): Represents the product of the year-end price of Occidental common stock of $95.10 and the pro rata number of unvested RSI-TV awards for scenarios other than Change of Control which does not affect the award. All unvested RSI-TV awards are forfeited in the case of voluntary termination by the executive and termination for cause.

Director Compensation

In order to have our Director compensation program in effect at the time of the spin-off, Occidental has approved the initial Director compensation program as described below. Following the spin-off, our Board of Directors will make decisions regarding our Director compensation program.

The Occidental Compensation Committee retained Pay Governance LLC, its independent compensation consultant, to assist in the design of the Director compensation program to be in effect following the spin-off. Specifically, Pay Governance worked with Occidental and us to develop a peer group for purposes of conducting market analyses, as described above under "Executive Compensation—Anticipated Post-Spin-off Compensation Programs", and to determine the level and form of outside director compensation after the spin-off.

Program Objectives

Our Director compensation program to be in effect immediately following the spin-off is designed to be consistent with the programs of peer companies. In developing our Director compensation program, Occidental and we took into account the following:

•: Market practices of our peer companies, as well as a group of 100 general industry companies similar in size to us, targeting a compensation package between the median of those two groups.
•: The need to recruit independent Directors.
•: The need to provide us with appropriate programs immediately following the spin-off, recognizing that our Board of Directors will be responsible for program design following the spin-off.

Program Elements

The elements of our approved outside Director compensation program are as follows:

•: Outside Directors will receive an annual cash board retainer of $100,000.
•: Board committee chairpersons will receive an additional annual cash retainer of $15,000.
•: The lead independent Director will receive an additional annual cash retainer of $20,000.
•: Outside Directors will receive an annual equity award relating to our common stock equivalent to $150,000 on the grant date. The equity award will generally vest one year following the grant date.
•: A stock ownership guideline of five times the annual cash board retainer will apply to outside directors and must be attained within five years of election to our Board of Directors.

In addition, we anticipate that after the spin-off we will implement a program that allows our outside Directors to defer some or all of their cash compensation.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

As of the date of this information statement, all outstanding shares of our common stock are owned beneficially and of record by Occidental. After the spin-off, Occidental will hold the Retained Securities for a maximum of 18 months. The following table sets forth information with respect to the anticipated beneficial ownership of our common stock by:

•: each shareholder we believe (based on the assumptions described below) will beneficially own more than 5% of our outstanding common stock;
•: each person who is expected to serve as a director upon completion of the spin-off;
•: each person who is expected to serve as an executive officer upon completion of the spin-off; and
•: all persons who are expected to serve as directors or executive officers upon completion of the spin-off as a group.

Except as otherwise noted below, we based the share amounts shown on each person's actual ownership of Occidental common stock known to us on September 30, 2014, and a distribution ratio of 0.4 shares of our common stock for each share of Occidental common stock held by such person.

To the extent persons who are Directors or executive officers or who are expected to serve as Directors or executive officers upon completion of the spin-off own Occidental common stock at the record date of the spin-off, they will participate in the distribution on the same terms as other holders of Occidental common stock.

Immediately following the spin-off, we expect to have approximately 29,000 registered holders of our common stock, based on the number of registered holders of Occidental common stock as of September 30, 2014. Upon completion of the spin-off, we estimate that we will have an aggregate of no more than approximately 387 million shares of our common stock outstanding based on approximately 775 million shares of Occidental common stock outstanding as of September 30, 2014, assuming distribution of at least 80.1% of our common stock to shareholders of Occidental and that each Occidental shareholder will receive 0.4 shares of our common stock for each share of Occidental common stock. As a result, we expect to distribute approximately 310 million shares to Occidental shareholders, and the remaining outstanding shares will be held by Occidental.

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To our knowledge, except as indicated in the footnotes to this table or as provided by applicable community property laws, the persons named in the table have sole voting and investment power with respect to the shares of common stock indicated.

	Beneficial Ownership(3)

Name and Address of Beneficial Owners(1)	Shares		Percentage(2)
Occidental Petroleum Corporation		77,062,509		19.9	%
5 Greenway Plaza, Suite 110
Houston, TX 77046
William E. Albrecht		11,946		*
Robert A. Barnes		2,806		*
Justin A. Gannon		—		*
Ronald L. Havner		—		*
Shawn M. Kerns		1,326		*
Frank E. Komin		948		*
Harold M. Korell		—		*
Richard W. Moncrief		800		*
Roy Pineci		9,816		*
Avedick B. Poladian		14,796		*
Michael L. Preston		7,988		*
Robert V. Sinnott		—		*
Marshall D. Smith		—		*
Todd A. Stevens		5,347		*
Charles F. Weiss		7,810		*
Darren Williams		—		*
All directors and executive officers as a group (16 persons)		63,583		*

*: Less than one percent.
(1): Unless otherwise indicated, the address of each owner is c/o California Resources Corporation, 10889 Wilshire Blvd., Los Angeles, California 90024.
(2): Based on total Occidental shares outstanding of approximately 775 million as of September 30, 2014.
(3): Does not include the restricted shares that our officers and directors are expected to receive as a result of the conversion of their existing equity-based and long-term incentive awards from Occidental and in connection with new awards upon completion of the spin-off. The number of shares of our common stock issued with respect to such awards will be determined based upon the relative trading prices of our common stock immediately following the spin-off and Occidental common stock immediately prior to the spin-off, which cannot be estimated at this time. We estimate that the current aggregate value of these awards would be less than $50 million based on Occidental's share price as of October 6, 2014.

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ARRANGEMENTS BETWEEN OCCIDENTAL AND OUR COMPANY

This section provides a summary description of agreements between Occidental and us relating to our restructuring transactions and our relationship with Occidental after the spin-off. This description of the agreements between Occidental and us is a summary and, with respect to each such agreement, is qualified by reference to the terms of the agreement, a form of each of which will be filed as an exhibit to the registration statement of which this information statement is a part. We encourage you to read the full text of these agreements. We will enter into these agreements with Occidental prior to the completion of the spin-off; accordingly, we will enter into these agreements with Occidental in the context of our relationship as a wholly-owned subsidiary of Occidental. Occidental will determine the terms of these agreements, which may be more or less favorable to us than if they had been negotiated with unaffiliated third parties.

The terms of the agreements described below have not yet been finalized. Changes, some of which may be material, may be made prior to our separation from Occidental, in Occidental's sole discretion. No changes may be made after the spin-off without our consent.

Separation and Distribution Agreement

The Separation and Distribution Agreement will govern the terms of the separation of the California business from Occidental's other businesses. Generally, the Separation and Distribution Agreement will include the agreements of Occidental and us on the steps to be taken to complete the separation, including the assets and rights to be transferred, liabilities to be assumed or retained, contracts to be assigned and related matters. Subject to the receipt of required governmental and other consents and approvals, in order to accomplish the separation, the Separation and Distribution Agreement will provide for Occidental and us to transfer specified assets and liabilities between the two companies to separate the California business from Occidental's remaining businesses. As a result of this transfer, we will own all assets exclusively related to the California business, including the assets reflected on our balance sheet as of June 30, 2014 other than assets disposed of after such date, and certain other assets related to the California business specifically allocated to us. We will also be responsible for all liabilities, including environmental liabilities, to the extent relating to the operation or ownership of the California business or any of the assets allocated to us in the separation, as well as all liabilities arising out of, relating to or resulting from our new financing arrangements or reflected as liabilities on our balance sheet as of June 30, 2014, subject to the discharge of any such liabilities after June 30, 2014. Occidental will retain all other assets and liabilities, including assets and liabilities related to discontinued businesses (other than those businesses that were a part of the California business prior to being discontinued). For purposes of allocating assets and liabilities between us and Occidental, the Separation and Distribution Agreement will provide that the California business will generally be defined as:

•: the exploration for and development and production of crude oil and condensate, NGLs and natural gas in the State of California and in state waters offshore California, including all California operations of Occidental's oil and gas segment;
•: the ownership and operation of our power plants at Elk Hills Field and in a portion of the Wilmington Field;
•: the marketing and trading of crude oil and condensate, NGL, natural gas, water, steam and electricity produced in the operations described in the prior two bullet points; and
•: the abandonment, monitoring and remediation of oil and gas properties and operations utilized therein.

Occidental transferred all of the material existing assets, operations and liabilities of the California business to CRC. Certain immaterial assets and liabilities are expected to be transferred after the closing of the notes offering but before the completion of the separation. The Separation and Distribution Agreement will also provide that the California business will not include the existing third-party gas

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marketing business of Occidental's non-California midstream and marketing segment, which participates in various U.S. markets, including California.

Unless otherwise provided in the Separation and Distribution Agreement or any of the related ancillary agreements, all assets will be transferred on an "as is, where is" basis.

The Separation and Distribution Agreement will require Occidental and us to endeavor to obtain consents, approvals and amendments required to novate or assign the assets and liabilities that are to be transferred pursuant to the Separation and Distribution Agreement as soon as reasonably practicable. Generally, if the transfer of any assets or liabilities requires a consent that will not be obtained before the distribution, or if any assets or liabilities are erroneously transferred or if any assets or liabilities are erroneously not transferred, each party will agree to hold the relevant assets or liabilities for the intended party's use and benefit (at the intended party's expense) until they can be transferred to the intended party.

The Separation and Distribution Agreement will also govern the treatment of all aspects relating to indemnification and insurance, and will generally provide for cross-indemnities principally designed to place financial responsibility for the obligations and liabilities of our business with us and financial responsibility for the obligations and liabilities of the remaining Occidental business with Occidental. The Separation and Distribution Agreement will also establish procedures for handling claims subject to indemnification and related matters. We and Occidental will also generally release each other from all claims arising prior to the spin-off other than claims arising under the transaction agreements, including the indemnification provisions described above.

The Separation and Distribution Agreement will specify those conditions that must be satisfied or waived by Occidental, in its sole discretion, prior to the distribution, including the following conditions:

•: the SEC will have declared effective our registration statement on Form 10, of which this information statement is a part, under the Exchange Act; no stop order suspending the effectiveness of the registration statement shall be in effect;
•: any required actions and filings with regard to state securities and blue sky laws of the U.S. (and any comparable laws under any foreign jurisdictions) will have been taken and, where applicable, have become effective or been accepted by the applicable governmental authority;
•: our common stock will have been authorized for listing on the NYSE, or another national securities exchange approved by Occidental, subject to official notice of issuance (which authorization has been received);
•: Occidental shall have received a private letter ruling from the IRS to the effect that certain aspects of the transactions that will be undertaken in preparation for, or in connection with, the spin-off will not cause the distribution to be taxable to Occidental or its affiliates;
•: Occidental shall have received an opinion of its tax counsel, in form and substance acceptable to Occidental and which shall remain in full force and effect, that (i) certain transactions that will be undertaken in preparation for, or in connection with, the spin-off will not be taxable to Occidental or its affiliates for federal income tax purposes and (ii) the spin-off generally qualifies as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code;
•: no order, injunction, decree or regulation issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution will be in effect, and no other event outside the control of Occidental shall have occurred or failed to occur that prevents the consummation of the Initial Distribution or any of the related transactions;
•: Occidental shall have received the approximately $6.0 billion of distributions contemplated to be paid to Occidental;

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•: no other events or developments shall have occurred or exist that, in the judgment of the board of directors of Occidental, in its sole discretion, makes it inadvisable to effect the distribution or other transactions contemplated by the Separation and Distribution Agreement or would result in the transactions contemplated by the Separation and Distribution Agreement not being in the best interest of Occidental or its shareholders;
•: each of the ancillary agreements contemplated by the Separation and Distribution Agreement shall have been executed and delivered by each party thereto;
•: any government approvals and other material consents necessary to consummate the distribution will have been obtained and remain in full force and effect; and
•: one or more nationally recognized investment banking firms or other firms acceptable to Occidental, in its sole and absolute discretion, shall have delivered one or more solvency opinions to the board of directors of Occidental and our Board of Directors, in form and substance acceptable to Occidental in its sole discretion, regarding the effect of the distribution and related transactions.

In addition, Occidental will have the right to determine the date and terms of the distribution, including payment by us of special distributions of approximately $6.0 billion to Occidental, and will have the right, at any time until completion of the distribution, to determine to abandon or modify the distribution and to terminate or modify the Separation and Distribution Agreement.

Transition Services Agreement

The Transition Services Agreement will set forth the terms on which Occidental will provide to us, and we will provide to Occidental, on a temporary basis, certain services or functions that the companies historically have shared. Transition services may include administrative, payroll, human resources, data processing, environmental health and safety, financial audit support, financial transaction support, marketing support and other support services, information technology systems and various other corporate services. We expect the agreement will provide for the provision of specified transition services, generally for a period of up to 12 months, with a possible extension of 6 months (an aggregate of 18 months), on a cost or a cost-plus basis.

Tax Sharing Agreement

The Tax Sharing Agreement will govern the respective rights, responsibilities, and obligations of Occidental and us with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and other matters regarding taxes. The Tax Sharing Agreement will remain in effect until the parties agree in writing to its termination; however, notwithstanding such termination, the Tax Sharing Agreement will remain in effect with respect to any payments or indemnification due for all taxable periods prior to such termination during which the agreement was in effect.

In general, pursuant to the Tax Sharing Agreement:

•: CRC and Occidental will agree to cooperate in the preparation of tax returns, refund claims and with regard to audits concerning matters covered by the agreement;
•: the Tax Sharing Agreement will assign responsibilities for administrative matters, such as the filing of tax returns, payment of taxes due, retention of records and conduct of audits, examinations, or similar proceedings;
•: with respect to any periods (or portions thereof) ending prior to the distribution and periods that begin on or before but end after the distribution, Occidental will pay any U.S. federal income taxes of the affiliated group of which Occidental is the common parent and, if CRC (including any of its subsidiaries) is included in that affiliated group, CRC will pay Occidental an amount equal to the

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amount of additional U.S. federal income taxes payable by Occidental resulting from Occidental's election to capitalize some or all of certain CRC intangible drilling costs. Occidental has sole discretion to make the election but will likely elect to capitalize intangible drilling costs only to the extent that higher CRC taxable income is needed to ensure that distributions paid by CRC to Occidental or its subsidiaries are not taxable. CRC will also be responsible for any increase in Occidental's federal tax liability for any period in which CRC or any CRC subsidiaries are combined or consolidated with Occidental if such increase results from audit adjustments attributable to CRC's business. With respect to any periods (or portions thereof) beginning after the distribution, CRC will be responsible for any U.S. federal income taxes of CRC and its subsidiaries;

•

with respect to any periods (or portions thereof) ending prior to the distribution and periods that begin on or before but end after the distribution, Occidental will pay any state or local franchise or income taxes that are determined on a consolidated, combined, or unitary basis and, if CRC (including any of its subsidiaries) is included in such determination, CRC will pay Occidental an amount equal to the amount of additional taxes payable by Occidental resulting from Occidental's election to capitalize some or all of certain CRC intangible drilling costs. CRC will also be responsible for any increase in Occidental's state tax liability for any period in which CRC or any CRC subsidiaries are combined or consolidated with Occidental if such increase results from audit adjustments attributable to CRC's business;

•

with respect to any periods (or portions thereof) beginning after the distribution, CRC will be responsible for any U.S. federal, state or local income taxes of CRC and its subsidiaries;

•

Occidental will be responsible for any U.S. federal, state, local, or foreign taxes due with respect to tax returns that include only Occidental and/or its subsidiaries (excluding CRC and its subsidiaries), and CRC will be responsible for any U.S. federal, state, local or foreign taxes due with respect to tax returns that include only CRC and/or its subsidiaries;

•

to the extent that any gain or income is recognized by Occidental (including its subsidiaries) in connection with the failure of the spin-off or certain transactions undertaken in preparation for, or in connection with, the spin-off, to qualify for tax-free treatment under the relevant provisions of the Code, CRC will indemnify Occidental for any taxes on such gain or income to the extent such failure is attributable to:

•: inaccurate covenants, representations, or warranties by CRC (or any CRC subsidiaries) made in connection with the Tax Sharing Agreement or any tax ruling requested or received from the IRS or opinions of Occidental's outside tax advisors;
•: any breach by CRC (or any CRC subsidiaries) of certain restrictive covenants in the Tax Sharing Agreement; or
•: certain other actions taken by CRC; and

•

CRC will bear 50% of the amount of any taxes resulting from gain or income that is recognized by Occidental (including its subsidiaries) in connection with the failure of the spin-off or a related transaction to qualify for tax-free treatment under the relevant provisions of the Code, to the extent such failure is not attributable to the fault of either party; however, if CRC receives an increase in the tax basis of its depletable, depreciable or amortizable assets as a result of any such tax being imposed, CRC will pay to Occidental an amount equal to any reduction in its tax liability attributable to such basis increase when such reduction in tax liability arises.

Occidental has received a private letter ruling from the IRS substantially to the effect that certain aspects of the transactions that will be undertaken in preparation for, or in connection with, the spin-off will not cause the distribution to be taxable to Occidental or its affiliates for federal income tax purposes. In addition, the spin-off is conditioned on Occidental's receipt of an opinion from its tax counsel, in form

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and substance acceptable to Occidental, that (i) certain transactions that will be undertaken in preparation for, or in connection with, the spin-off will not be taxable to Occidental or its affiliates for federal income tax purposes, and (ii) the spin-off generally qualifies as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code. The opinion will rely on the private letter ruling as to matters covered by the private letter ruling.

CRC will agree to certain restrictions that are intended to preserve the tax-free status of the contribution, distribution, and related transactions. After Occidental's initial distribution of at least 80.1% of CRC common stock and during the two-year period following Occidental's final disposition of the Retained Securities, these covenants will restrict CRC's ability to: (a) voluntarily liquidate or dissolve; (b) merge, convert or consolidate with or into another entity; (c) issue any capital stock or other equity interests, options or rights to acquire capital stock or other equity interests, or any other instruments convertible into or exchangeable for, or that could otherwise result in the issuance of, capital stock or other equity interests; (d) redeem or otherwise repurchase any outstanding capital stock or other equity interests, rights or instruments, other than pursuant to open market stock repurchase programs meeting certain requirements; (e) recapitalize, reclassify, or alter the voting rights of one or more shares of capital stock or other equity interests, rights or instruments; (f) take certain other actions inconsistent with any representation made in any materials provided in connection with any private letter ruling request or opinions of Occidental's outside tax advisors; (g) increase or decrease the number of members of the board of directors of CRC or any pre-spin-off CRC subsidiary, alter in any way the procedures for the nomination, election, and termination of members of the board, or expand, contract, or otherwise modify the rights of the board to govern the affairs of CRC except in certain circumstances; (h) sell, exchange, distribute, or otherwise dispose of any pre-spin-off CRC subsidiary or all or a substantial part of the assets of any of the trades or businesses conducted by CRC and the pre-spin-off CRC subsidiaries (other than sales or transfers of inventory in the ordinary course of business) before the spin-off except in certain circumstances; (i) take, or fail to take, any action that causes the trades or businesses conducted by CRC or any pre-spin-off CRC subsidiary to cease to be actively conducted in substantially the manner conducted pre-spin-off; (j) sell, transfer or agree to sell or transfer to any corporate subsidiary any assets held by certain Occidental subsidiaries before Occidental's internal reorganization in connection with the spin-off; (k) enter into any negotiations, agreements, understandings, or arrangements with respect to any of the foregoing; and (l) take, or fail to take, any action that could reasonably be expected to cause the spin-off to fail to qualify as a tax-free transaction under Sections 355, 361 and/or 368(a)(1)(D) of the Code. CRC may take certain actions otherwise subject to these restrictions only if Occidental consents to the taking of such action or if CRC obtains, and provides to Occidental, a private letter ruling from the IRS and/or an opinion from an independent law firm or accounting firm, in either case, acceptable to Occidental in its sole discretion, to the effect that such action would not jeopardize the tax-free status of the contribution, distribution, or related transactions.

Employee Matters Agreement

The Employee Matters Agreement will govern Occidental's and our compensation and employee benefit obligations with respect to the current and former employees of each company, and generally will allocate liabilities and responsibilities relating to employee compensation and benefit plans and programs. The Employee Matters Agreement will generally provide for the following:

•: the transfer of all employees who, following the spin-off, will work for the California business ("transferred employees") to us or one of our subsidiaries;
•: the assumption (or retention) by us and our subsidiaries of all liabilities and obligations relating to current and former employees of the California business (excluding, with respect to current employees, certain pension obligations and, with respect to former employees, certain pension, retiree medical and nonqualified deferred compensation plan obligations);

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•: the retention by Occidental of all employee and benefit plan-related liabilities and obligations not relating to current or former employees of the California business;
•: the establishment by us and our subsidiaries of new employee benefit plans for purposes of providing benefits to transferred employees;
•: the cessation of active participation by transferred employees under all benefit plans sponsored by Occidental;
•: the conversion of Occidental equity and equity-based awards held by transferred employees into awards with respect to our common stock;
•: the adjustment of Occidental equity and equity-based awards not held by transferred employees to reflect the effect of the spin-off;
•: the transfer of all assets held in trusts maintained by Occidental which relate to benefits payable under certain defined benefit plans maintained by our subsidiaries to a trust (or trusts) maintained by the respective subsidiaries;
•: the transfer of liabilities and other obligations relating to benefits accrued by transferred employees pursuant to Occidental's supplemental retirement and nonqualified deferred compensation plans from Occidental to us and our subsidiaries;
•: that the spin-off is not intended to constitute a "change in control" or similar transaction under Occidental or our benefit and compensation plans;
•: the crediting of transferred employees for their service with Occidental for purposes of determining eligibility, vesting and benefit levels under our benefit plans; and
•: general cooperation and sharing of information between us and Occidental on matters relating to the transfers of employees and employee benefit plan-related liabilities and obligations.

AMI Agreement

The AMI Agreement will set forth the terms upon which Occidental may acquire an interest in and rights with respect to certain oil and gas properties (the "AMI Interests") in the United States (excluding California and federal waters offshore California) (the "AMI Area"). Pursuant to the terms of the AMI Agreement, for a period of one year after notice from us, Occidental may elect to exercise an option to acquire an interest in the AMI Interests. Upon exercise, Occidental will acquire an undivided 51% interest in the subject AMI Interests for consideration equal to the sum of (i) 51% of the net acquisition price paid by us for such AMI Interests and (ii) 51% of the drilling and/or operating costs paid by us (net of any reimbursements) in respect of such AMI Interests attributable to any periods after the date of our acquisition of such AMI Interests, and less (iii) 51% of the revenue attributable to such AMI Interests after the date of our acquisition of such AMI Interests, subject to certain limited exceptions. If applicable, in connection with the exercise of Occidental's option, we will resign as operator and vote for Occidental or its designee as the replacement operator. The term of the AMI Agreement will be five years.

Confidentiality and Trade Secret Protection Agreement

Pursuant to the Confidentiality and Trade Secret Protection Agreement, we will agree to keep confidential certain information we learned about Occidental prior to the spin-off. In order to preserve Occidental's trade secrets and confidential information and to protect the goodwill transferred to us in connection with the spin-off, among other things, CRC and Occidental will agree (i) not to hire the other party's employees for a period of one year following the completion of the spin-off and (ii) not to solicit the other party's employees for an additional four years following the expiration of the non-hire restrictions.

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Intellectual Property License Agreement

The Intellectual Property License Agreement will set forth the terms on which Occidental, on behalf of itself and its affiliates, will license certain intellectual property and documentation to us and our affiliates, including software owned by Occidental and its affiliates. We will have the right to create derivative works of the software and documentation and use them for our internal business purposes. The Intellectual Property License Agreement will also set forth the terms on which we will license Occidental and its affiliates certain data and documentation. Occidental and its affiliates will have the right to create derivative works of such data and documentation and use them for their internal business purposes.

Stockholder's and Registration Rights Agreement

Prior to the distribution, we and Occidental will enter into a Stockholder's and Registration Rights Agreement pursuant to which we will agree that, upon the request of Occidental, we will use our reasonable best efforts to effect the registration under applicable federal and state securities laws of the disposition of shares of our common stock retained by Occidental after the distribution and to cooperate with Occidental to facilitate its disposition of the Retained Securities through one or more exchanges for Occidental common stock. In addition, we have agreed to certain restrictions on our ability to file registration statements during any exchange offer or grant registration rights to third parties during the term of the Stockholder's and Registration Rights Agreement. Occidental will also grant us a proxy to vote the shares of our common stock that Occidental retains immediately after the distribution in proportion to the votes cast by our other stockholders. This proxy, however, will be automatically revoked as to a particular share upon any transfer of such share from Occidental to a person other than Occidental, and neither the voting agreement nor the proxy will limit or prohibit any transfer.

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OTHER RELATED PARTY TRANSACTIONS

In addition to the related party transactions described in "Arrangements Between Occidental and Our Company" above, this section discusses other transactions and relationships with related persons during the past three fiscal years. As a current subsidiary of Occidental, we engage in related party transactions with Occidental. Those transactions are described in more detail in the notes to the accompanying combined financial statements.

Marketing Transactions

Substantially all of our marketing of oil, gas and NGLs has historically been transacted through Occidental's marketing subsidiaries. For the years ended December 31, 2013, 2012 and 2011, sales to Occidental's marketing subsidiaries accounted for approximately $4.2 billion, $4.0 billion and $3.9 billion of our net sales respectively.

In August 2014, we began to market products through a wholly-owned marketing subsidiary and, through September 30, 2014, we entered into contracts for approximately $28 million in net sales with subsidiaries of Plains All American Pipeline, L.P. ("Plains"). Occidental owns approximately 25% of the general partner of Plains. Funds managed by Kayne Anderson Capital Advisors L.P. and affiliates ("Kayne Anderson") own approximately 21% of the general partner of Plains and an additional 3% interest in Plains GP Holdings, L.P. (the public portion of the general partner). In addition, funds managed by Kayne Anderson own approximately 3% of Plains. Occidental appoints, and Mr. Sinnott serves as, a director for the general partner of Plains and Mr. Sinnott serves as a director for Plains.

Transactions with Related Persons, Promoters and Certain Control Persons

Certain funds controlled by Kayne Anderson Investment Management, Inc., of which Robert V. Sinnott serves as President, purchased, and subsequently sold, $5 million in aggregate principal amount of our 6% senior notes due 2024.

Policies and Procedures with Respect to Related Party Transactions and Conflicts of Interest

Prior to the spin-off, our board of directors will adopt policies restricting related party transactions. We will review all relationships and transactions in which we and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. Our Corporate Secretary's office will develop and implement procedures to obtain information from the directors and executive officers with respect to related party transactions. Following the spin-off, determinations as to whether an executive officer or director has a direct or indirect material interest and whether such an interest is permissible will be determined by the audit committee of our board of directors. Agreements that embody transactions that are material in amount or significance will be filed with the SEC as required, and the transactions will be disclosed in our proxy statement as required.

Our business ethics and corporate policies will prohibit significant conflicts of interest. Any waivers of these policies will require approval by a compliance officer, the corporate compliance committee or uninvolved members of the audit committee (in the case of conflicts of our executive officers or directors). Under the business ethics and corporate policies, conflicts of interest will occur when private or family interests interfere or compete with the interests of our Company.

We will have multiple processes for reporting conflicts of interests, including related party transactions. Under the business ethics and corporate policies, all our directors and employees will be required to report any known or apparent conflict of interest, or potential conflict of interest, to their

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supervisors, a compliance officer, the corporate compliance committee or the audit committee as appropriate. As part of any review, the following factors will generally be considered:

•: the nature of the related person's interest in the transaction;
•: the material terms of the transaction
•: the importance of the transaction to the related person;
•: the importance of the transaction to us;
•: whether the transaction would impair the judgment of a director or executive officer to act or their ability to act in our best interest;
•: whether the transaction might affect a director's independence under NYSE standards; and
•: any other matters deemed appropriate with respect to the particular transaction.

We also will have other policies and procedures to prevent conflicts of interest, including related person transactions. For example, the charter of our Nominating & Governance Committee will require that committee members assess the independence of the non-management directors at least annually, including a requirement that it determine whether any such directors have a material relationship with us, either directly or indirectly, as defined therein and as further described above under "Management—Board of Directors—Director Independence."

Guidelines will be contained in our business ethics and corporate policies to establish restrictions with regard to corporate participation in the political system as imposed by law.

DESCRIPTION OF MATERIAL INDEBTEDNESS

In connection with the separation, we expect to incur an aggregate of $6.065 billion in new debt from which we will not retain any substantial amount of cash following the separation. We expect that this indebtedness will consist of long-term notes, term loans and borrowings under a revolving credit facility.

In addition, we expect that our revolving credit facility will be available for working capital and for general corporate purposes.

We will describe the terms and covenants of any notes to be issued, bank debt to be incurred or liquidity facilities to be entered into in an amendment to the registration statement of which this information statement is a part.

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DESCRIPTION OF CAPITAL STOCK

The following is a description of the material terms of our capital stock as provided in our amended and restated certificate of incorporation and amended and restated bylaws, as each is anticipated to be in effect upon the completion of the spin-off. The summaries and descriptions below do not purport to be complete statements of the relevant provisions of these documents. For a complete description, we refer you to, and the following summaries and descriptions are qualified in their entirety by reference to, our amended and restated certificate of incorporation and amended and restated bylaws, copies of which will be filed as exhibits to the registration statement of which this information statement forms a part.

Authorized Capitalization

Following completion of the spin-off, our authorized capital stock will consist of (i) 200,000,000 shares of preferred stock, par value $0.01 per share, of which no shares will be issued and outstanding and (ii) 2,000,000,000 shares of common stock, par value $0.01 per share, of which we expect that no more than approximately 387,000,000 shares will be issued and outstanding based on approximately 775,000,000 shares of Occidental common stock outstanding as of September 30, 2014, assuming distribution of at least 80.1% of our common stock to shareholders of Occidental and that each Occidental shareholder will receive 0.4 shares of our common stock for each share of Occidental common stock. As a result, we expect to distribute approximately 310,000,000 shares to Occidental shareholders, and the remaining outstanding shares will be held by Occidental.

Common Stock

Except as provided by law or in a preferred stock designation, holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, will have the exclusive right to vote for the election of directors and do not have cumulative voting rights. Except as otherwise required by law, holders of common stock are not entitled to vote on any amendment to the amended and restated certificate of incorporation (including any certificate of designations relating to any series of preferred stock) that relates solely to the terms of any outstanding series of preferred stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the amended and restated certificate of incorporation (including any certificate of designations relating to any series of preferred stock) or pursuant to the DGCL. Subject to prior rights and preferences that may be applicable to any outstanding shares or series of preferred stock, holders of common stock are entitled to receive ratably in proportion to the shares of common stock held by them such dividends (payable in cash, stock or otherwise), if any, as may be declared from time to time by our board of directors out of funds legally available for dividend payments. All outstanding shares of common stock are fully paid and non-assessable, and the shares of common stock to be issued upon completion of the-spin off will be fully paid and non-assessable. The holders of common stock have no preferences or rights of conversion, exchange, pre-emption or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of our affairs, holders of common stock will be entitled to share ratably in our assets in proportion to the shares of common stock held by then that are remaining after payment or provision for payment of all of our debts and obligations and after distribution in full of preferential amounts to be distributed to holders of outstanding shares of preferred stock, if any.

Preferred Stock

Our amended and restated certificate of incorporation authorizes our board of directors, subject to any limitations prescribed by law, without further stockholder approval, to establish and to issue from time to time one or more series of preferred stock, par value $0.01 per share, covering up to an aggregate of 200,000,000 shares of preferred stock. Each series of preferred stock will cover the number of shares and will have the powers, preferences, rights, qualifications, limitations and restrictions determined by the

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board of directors, which may include, among others, dividend rights, liquidation preferences, voting rights, conversion or exchange rights, preemptive rights and redemption rights. Except as provided by law or in a preferred stock designation, the holders of preferred stock will not be entitled to vote at or receive notice of any meeting of stockholders.

Anti-Takeover Effects of Provisions of our Amended and Restated Certificate of Incorporation, our Amended and Restated Bylaws and Delaware Law

Some provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws could make acquisitions of control of our company by means of a tender offer, a proxy contest or otherwise or removal of our incumbent officers and directors more difficult. These provisions may also have the effect of preventing changes in our management. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interests or in our best interests, including transactions that might result in a premium over the market price for our shares.

These provisions are designed to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire control of our company outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.

Delaware Law

We will be subject to Section 203 of the DGCL, which generally prohibits a Delaware corporation, including those whose securities are listed for trading on the NYSE, from engaging in any business combination with any interested stockholder (which is defined generally as a person owning 15% or more of a Delaware corporation's outstanding voting stock) or its affiliates or associates for a period of three years following the time that the stockholder became an interested stockholder, unless:

•: the transaction is approved by the board of directors before the time the interested stockholder attained that status;
•: upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or
•: on or after such time the business combination is approved by the board of directors and authorized at a meeting of stockholders by at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder.

We may elect in the future to not be subject to the provisions of Section 203 of the DGCL.

Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws

Provisions of our amended and restated certificate of incorporation and amended and restated bylaws, which will become effective following the spinoff, may delay or discourage transactions involving an actual or potential change in control or change in our management, or transactions that our stockholders might otherwise deem to be in their best interests or in our best interests, including transactions that might result in a premium over the market price for our shares. Therefore, these provisions could adversely affect the price of our common stock.

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Among other things, upon the completion of the spin-off, our amended and restated certificate of incorporation and amended and restated bylaws will:

•: establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not later than 90 days nor earlier than 120 days prior to the first anniversary date of the annual meeting for the preceding year. Our amended and restated bylaws specify the requirements as to form and content of all stockholder notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting, and may discourage or deter a third party from conducting a solicitation of proxies to elect its slate of directors or to approve its proposal, without regard to whether consideration of those nominees or proposals might be harmful or beneficial to us and our stockholders;
•: provide our board of directors the ability to authorize undesignated preferred stock. This ability makes it possible for our board of directors to issue, without stockholder approval, preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of our company;
•: provide that our board of directors is initially divided into three classes, but that our classified board structure will be eliminated at our 2018 annual meeting, when stockholders will be permitted to elect all of our board members annually. The terms of our initial first class of directors will expire at our 2015 annual meeting of stockholders, and their successors will be elected for a three-year term. The terms of our initial second class of directors will expire at our 2016 annual meeting of stockholders, and their successors will be elected for a two-year term. The terms of our initial third class of directors will expire at our 2017 annual meeting of stockholders, and their successors will be elected for a one-year term. These provisions regarding the election of our board of directors may have the effect of deterring hostile takeovers or delaying changes in control or management of our company prior to our 2018 annual meeting;
•: provide that (x) the authorized number of directors may be changed only by resolution of the board of directors, (y) all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum, and (z) for so long as we have a classified board of directors, our stockholders will have no ability to remove our directors without cause, and that, upon the declassification of our board of directors, directors may be removed without cause by our stockholders only upon the affirmative vote of holders of at least 75% of the voting power of our then outstanding common stock. "Cause" is defined as the director's (i) conviction of a serious felony involving moral turpitude or a violation of federal or state securities laws; (ii) the commission of any material act of dishonesty resulting or intended to result in material personal gain or enrichment of such director at the expense of CRC or any of its subsidiaries and which act, if made the subject of criminal charges, would be reasonably likely to be charged as a felony; or (iii) adjudication as legally incompetent by a court of competent jurisdiction. These provisions may have the effect of deterring hostile takeovers or delaying changes in control or management of our company;
•: provide that (x) any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders, subject to the rights of the holders of any series of preferred stock with respect to such series, and (y) special meetings of our stockholders may only be

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called by the board of directors, the chief executive officer or the chairman of the board. These provisions regarding our stockholder meetings may have the effect of deterring hostile takeovers or delaying changes in control or management of our company;

•: provide that (x) certain provisions of our certificate of incorporation related to the voting rights of stockholders, our board of directors, special meetings of our stockholders, the ability of our stockholders to act by written consent, the forum for certain disputes related to us or our stockholders, and the applicability of Section 203 DGCL may be amended only by the affirmative vote of the holders of at least 75% of the voting power of our then outstanding common stock and that other provisions of our certificate of incorporation may be amended upon the affirmative vote of the holders of at least a majority of our then outstanding common stock, in each case, in addition to the approval of a majority of our directors then in office and (y) our bylaws can be amended or repealed at any regular or special meeting of stockholders or by the board of directors, except that any amendment by the stockholders will require the affirmative vote of the holders of at least 75% of the voting power of the shares of common stock outstanding and entitled to vote thereon. These provisions regarding the amendment of our constituent documents may have the effect of deterring hostile takeovers or delaying changes in control or management of our company.

Provisions of Our Certificate of Incorporation Governing Corporate Opportunities

Following the spin-off, Occidental will retain ownership of up to 19.9% of our common stock. Occidental expects to dispose of all of the Retained Securities by making one or more offers to exchange such Retained Securities for outstanding shares of Occidental common stock. For each share of Occidental common stock tendered for exchange, the holder of such Occidental common stock will receive a number of shares of CRC common stock based on an exchange ratio to be determined by Occidental. Any Retained Securities Occidental does not dispose of through such exchanges will be distributed pro rata to Occidental shareholders no later than 18 months after the spin-off.

Occidental will remain a significant stockholder of ours until it exchanges the Retained Securities for outstanding shares of Occidental common stock or otherwise disposes of our common stock that it owns. We and Occidental are engaged in the same or similar activities or lines of business and have an interest in the same kinds of corporate opportunities. Occidental will not have a duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as us, and to the fullest extent permitted by law, neither Occidental nor any of its directors or officers will be liable to us or our stockholders for breach of any fiduciary duty, by reason of any such activities. Additionally, if Occidental acquires knowledge of a potential transaction, or matter that may be a corporate opportunity for Occidental and us, to the fullest extent permitted by law, Occidental will have no duty to communicate or offer such corporate opportunity to us and will not be liable to us or our stockholders for breach of any duty (fiduciary or otherwise) if Occidental pursues or acquires such corporate opportunity for itself or directs such corporate opportunity to its affiliates. If any director of Occidental who is also one of our directors becomes aware of a potential business opportunity, transaction, or other matter (other than one expressly offered to that director in writing solely in his or her capacity as our director), that director will have no duty to communicate or offer that opportunity to us, and will be permitted to communicate or offer that opportunity to Occidental (or its affiliates) and that director will not, to the fullest extent permitted by law, be deemed to have (1) breached or acted in a manner inconsistent with any of his or her duties to us and our stockholders with respect to such business opportunity or (2) acted in bad faith or in a manner inconsistent with the best interests of our company or our stockholders. See "Risk Factors—Risks Related to Our Common Stock—Pursuant to the terms of our certificate of incorporation, Occidental is not required to offer corporate opportunities to us, and certain of our directors are permitted to offer certain corporate opportunities to Occidental before us." The provisions in our certificate of incorporation governing corporate opportunities between Occidental and us will automatically terminate, expire, and have no further force and effect on the earlier of the first date that (1) no person who is a director of CRC

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is also a director of Occidental or (2) Occidental no longer owns any of our common stock. At that point, any such activities will be governed by Delaware law generally.

Forum Selection

•: any derivative action or proceeding brought on our behalf;
•: any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders;
•: any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our bylaws (as either may be amended from time to time); or
•: any action asserting a claim that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.

Our amended and restated certificate of incorporation will also provide that any person or entity purchasing or otherwise holding any interest in shares of our capital stock will be deemed to have notice of and to have consented to this forum selection provision. However, it is possible that a court could find our forum selection provision to be inapplicable or unenforceable.

Limitation of Liability and Indemnification Matters

Our amended and restated certificate of incorporation limits the liability of our directors for monetary damages for breach of their fiduciary duty as directors, except for liability that cannot be eliminated under the DGCL. Delaware law permits a certificate of incorporation to provide that directors of a company will not be personally liable for monetary damages for breach of their fiduciary duty as directors, except for liabilities:

•: for any breach of their duty of loyalty to us or our stockholders;
•: for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
•: for unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174 of the DGCL; or
•: for any transaction from which the director derived an improper personal benefit.

Any amendment, repeal or modification of these provisions will be prospective only and would not affect any limitation on liability of a director for acts or omissions that occurred prior to any such amendment, repeal or modification.

Our amended and restated bylaws also provide that we will indemnify our directors and officers to the fullest extent permitted by Delaware law. Our amended and restated bylaws also permit us to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person's actions as our officer, director, employee or agent, regardless of whether Delaware law would permit indemnification. We may from time to time enter into indemnification agreements with our directors and officers. These agreements will typically require us to indemnify these individuals to the fullest extent permitted under Delaware law against liability that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We believe that the limitation of liability provision in our amended and restated certificate of

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incorporation and any indemnification agreements we enter into will facilitate our ability to continue to attract and retain qualified individuals to serve as directors and officers.

Sale of Unregistered Securities

Upon our incorporation, we issued 1,000 shares of our common stock, par value $0.01 per share, to Occidental upon payment by Occidental of $10.00 pursuant to Section 4(a)(2) of the Securities Act. We did not register the issuance of these shares under the Securities Act because such issuance did not constitute a public offering.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC.

Following the distribution, all inquiries regarding our common stock should be directed to the following:

Regular Mail: 6201 15 ^th Avenue, Brooklyn, NY 11219

Telephone: (800) 937-5449

Listing

Our common stock has been approved for listing on the NYSE under the symbol "CRC," subject to official notice of issuance.

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WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a Registration Statement on Form 10 for our shares of common stock that Occidental stockholders will receive in the distribution. This information statement does not contain all of the information contained in the Form 10 and the exhibits to the Form 10. We have omitted some items in accordance with the rules and regulations of the SEC. For additional information relating to us and the spin-off, we refer you to the Form 10 and its exhibits, which are on file at the offices of the SEC. Statements contained in this information statement about the contents of any contract or other document referred to may not be complete, and in each instance, if we have filed the contract or document as an exhibit to the Form 10, we refer you to the copy of the contract or other documents so filed. We qualify each statement in all respects by the relevant reference.

You may inspect and copy the Form 10 and exhibits that we have filed with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (800) SEC-0330 for further information on the Public Reference Room. In addition, the SEC maintains an Internet site at www.sec.gov, from which you can electronically access the Form 10, including its exhibits.

We maintain an Internet site at www.crc.com, and it will become functional in connection with the completion of the spin-off. We do not incorporate our Internet site, or the information contained on that site or connected to that site, into the information statement or our Registration Statement on Form 10.

As a result of the distribution, we will be required to comply with the full informational requirements of the Exchange Act. We will fulfill those obligations with respect to these requirements by filing periodic reports and other information with the SEC.

We plan to make available free of charge on our website, all materials that we file electronically with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, Section 16 reports and amendments to these reports as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC. You also can obtain information about us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

You should rely only on the information contained in this information statement or to which we have referred you. We have not authorized any person to provide you with different information or to make any representation not contained in this information statement.

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GLOSSARY OF TECHNICAL TERMS


%Ro or vitrinite reflectance		A measurement of the maturity of organic matter with respect to whether it has generated hydrocarbons or could be an effective source rock.
100% commercial success rate		All wells were completed and produce in commercially viable quantities.
Basin		A large natural depression on the earth's surface in which sediments generally brought by water accumulate.
Bbl		One stock tank barrel, or 42 U.S. gallons liquid volume, used in reference to oil or other liquid hydrocarbons.
BBoe		One billion Boe.
Bcf		One billion cubic feet of natural gas.
Boe		One stock tank barrel of oil equivalent, using the ratio of six Mcf of natural gas to one barrel of crude oil.
BS		One barrel of steam, cold water equivalent.
Completion		The installation of permanent equipment for the production of oil or natural gas or, in the case of a dry well, reporting to the appropriate authority that the well has been abandoned.
Condensate		A mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure, but that, when produced, is in the liquid phase at surface pressure and temperature.
Conventional Reservoir		A reservoir in which buoyant forces keep hydrocarbons in place below a sealing caprock. Reservoir and fluid characteristics of conventional reservoirs typically permit oil or natural gas to flow readily into wellbores.
/d		Per day.
Development drilling or development wells		Drilling or wells drilled within the proved area of an oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
Disposal well		A well utilized to dispose of excess produced fluids that are not reused in normal operations.
Economically Producible		A resource which generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation.
EOR		Enhanced oil recovery.
Exploration activities		The initial phase of oil and natural gas operations that includes the generation of a prospect or play and the drilling of an exploration well.
Exploration well		Refers to a well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir.
Extension Well		A well drilled to extend the limits of a known reservoir.

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Field		An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
Formation		A layer of rock which has distinct characteristics that differs from nearby rock.
Gross acres or gross wells		The total acres or wells, as applicable, in which a working interest is owned.
Infill drilling		Drilling of an additional well or wells at less than existing spacing to more adequately drain a reservoir.
Injection well		A well in which water, gas or steam is injected, the primary objective typically being to maintain reservoir pressure and/or improve hydrocarbon recovery.
IOR		Improved oil recovery.
Maximum Efficiency Rate		The maximum sustainable daily oil or gas withdrawal rate from a reservoir which will permit economic development and depletion of that reservoir without detriment to ultimate recovery.
MBbl		One thousand barrels.
MBoe		One thousand Boe.
Mcf		One thousand cubic feet of natural gas. For the purposes of this report, this volume is stated at the legal pressure base of the state or area in which the reserves are located and at 60 degrees Fahrenheit.
mD		One millidarcy.
MMBbl		One million barrels.
MMBoe		One million Boe.
MMBtu		One million British thermal units. A British thermal unit is the quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
MMcf		One million cubic feet of natural gas. For the purposes of this report, this volume is stated at the legal pressure base of the state or area in which the reserves are located and at 60 degrees Fahrenheit.
Natural gas liquids or NGLs		Hydrocarbons found in natural gas which may be extracted as liquefied petroleum gas and natural gasoline.
Net acres or net wells		The gross acres or wells, as applicable, multiplied by the working interests owned.
NYMEX		The New York Mercantile Exchange.
Oil		Crude oil or condensate.
Pay zone		A geological deposit in which oil and natural gas is found in commercial quantities.
Permeability		The ability, or measurement of a rock's ability, to transmit fluids.

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Porosity		The total pore volume per unit volume of rock.
Primary Recovery		The first stage of hydrocarbon production, in which natural reservoir energy, such as gasdrive, waterdrive or gravity drainage, displaces hydrocarbons from the reservoir, into the wellbore and up to surface. During primary recovery, only a small percentage of the initial hydrocarbons in place are produced, typically around 10% for oil reservoirs. Primary recovery is also called primary production.
Productive Wells		Producing wells and wells mechanically capable of production.
Proved developed non-producing reserves		Proved developed reserves that do not qualify as proved developed producing reserves, including reserves that are expected to be recovered from (i) completion intervals that are open at the time of the estimate, but have not started producing, (ii) wells that are shut in because pipeline connections are unavailable or (iii) wells not capable of production for mechanical reasons.
Proved developed reserves		Proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods, or for which the cost of the required equipment is relatively minor compared to the cost of a new well.
Proved developed producing reserves		Reserves that are being recovered through existing wells with existing equipment and operating methods.
Proved reserves or proved oil and gas reserves		Refers to the quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.
Proved undeveloped reserves or PUDs		Undeveloped reserves that qualify as proved reserves.
PV-10		PV-10 is a non-GAAP financial measure and represents the year-end present value of estimated future cash inflows from proved oil and gas reserves, less future development and production costs, discounted at 10% per annum to reflect the timing of future cash flows and using SEC prescribed pricing assumptions for the period.
Recompletion		The completion for production of an existing wellbore in a different formation or producing horizon, either deeper or shallower, from that in which the well was previously completed.
Secondary recovery		The second stage of hydrocarbon production during which a substance such as water or gas is injected into the reservoir through injection wells located in rock that has fluid communication with production wells. The purpose of secondary recovery is to support reservoir pressure and to displace hydrocarbons toward the wellbore.

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Shut in		A well suspended from production or injection but not abandoned.
Tcf		One trillion cubic feet of natural gas.
Thermal Maturity		The degree of heating of a source rock in the process of transforming kerogen into hydrocarbon.
Thickness		The thickness of a layer or stratum of sedimentary rock measured perpendicular to its lateral extent, presuming deposition on a horizontal surface.
Total Organic Carbon		The concentration of organic material in source rocks as represented by the weight percent of organic carbon.
Unconventional Resource		Oil and gas resources whose porosity, permeability, fluid trapping mechanism, or other characteristics differ from conventional sandstone and carbonate reservoirs.
Undeveloped acreage		Acreage on which wells have not been drilled or completed to a point that would permit the production of economic quantities of oil or natural gas regardless of whether the acreage contains proved oil or natural gas reserves.
Undeveloped reserves		Refers to reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.
Working interest		The operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and to receive a share of production, subject to all royalties, overriding royalties and other burdens, all costs of exploration, development and operations and all risks in connection therewith.
Workover		Remedial operations on a well conducted with the intention of restoring or increasing production from the same zone, including by plugging back, squeeze cementing, reperforating, cleanout and acidizing.

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INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

		Page

Interim unaudited combined condensed financial statements
Combined Condensed Balance Sheets as of June 30, 2014 and December 31, 2013 (unaudited)			F-2
Combined Condensed Statements of Income for the six months ended June 30, 2014 and 2013 (unaudited)			F-3
Combined Condensed Statements of Comprehensive Income for the six months ended June 30, 2014 and 2013 (unaudited)			F-4
Combined Condensed Statements of Cash Flows for the six months ended June 30, 2014 and 2013 (unaudited)			F-5
Notes to Combined Condensed Financial Statements (unaudited)			F-6
Annual audited combined financial statements
Report of Independent Registered Public Accounting Firm			F-12
Combined Balance Sheets as of December 31, 2013 and 2012			F-13
Combined Statements of Income for the Years Ended December 31, 2013, 2012 and 2011			F-14
Combined Statements of Comprehensive Income for the Years Ended December 31, 2013, 2012 and 2011			F-15
Combined Statements of Net Investment for the Years Ended December 31, 2013, 2012 and 2011			F-16
Combined Statement of Cash Flows for the Years Ended December 31, 2013, 2012 and 2011			F-17
Notes to Combined Financial Statements			F-18
Supplemental Financial Information
Supplemental Oil and Gas Information (unaudited)			F-35

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Combined Condensed Balance Sheets

(unaudited)

	June 30, 2014			Pro Forma Adjusted June 30, 2014			December 31, 2013

	(in millions)
CURRENT ASSETS
Cash and cash equivalents	$	—		$	—		$	—
Trade receivables, net		21			21			30
Inventories		72			72			75
Other current assets		185			185			149


Total current assets		278			278			254


PROPERTY, PLANT AND EQUIPMENT		21,985			21,985			20,972
Accumulated depreciation, depletion and amortization		(7,551	)		(7,551	)		(6,964	)


		14,434			14,434			14,008


OTHER ASSETS		34			34			35


TOTAL ASSETS	$	14,746		$	14,746		$	14,297




CURRENT LIABILITIES
Accounts payable	$	504		$	504		$	448
Accrued liabilities		175			175			241
Dividend payable to parent		—			6,000			—


Total current liabilities		679			6,679			689


DEFERRED INCOME TAXES		3,293			3,293			3,122
OTHER LONG-TERM LIABILITIES		500			500			497


		3,793			3,793			3,619
NET INVESTMENT
Accumulated other comprehensive income		(22	)		(22	)		(24	)
Net parent company investment		10,296			4,296			10,013


Total net investment		10,274			4,274			9,989


TOTAL LIABILITIES AND NET INVESTMENT	$	14,746		$	14,746		$	14,297

The accompanying notes are an integral part of these combined financial statements.

F-2

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CALIFORNIA RESOURCES CORPORATION

Combined Condensed Statements of Income

(unaudited)

	For the six months ended June 30,

	2014			2013
	(in millions)
REVENUES
Net sales to related parties	$	2,206		$	2,049
Net sales to third parties		56			49
Other income		(1	)		—


		2,261			2,098


COSTS AND OTHER DEDUCTIONS
Production costs		578			527
Selling, general and administrative expenses		166			154
Depreciation, depletion and amortization		582			565
Taxes other than on income		107			109
Exploration expense		46			40


		1,479			1,395


INCOME BEFORE INCOME TAXES		782			703
Provision for income taxes		(313	)		(281	)


NET INCOME	$	469		$	422

The accompanying notes are an integral part of these combined financial statements.

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CALIFORNIA RESOURCES CORPORATION

Combined Condensed Statements of Comprehensive Income

(unaudited)

	For the six months ended June 30,

	2014			2013
	(in millions)

Net income	$	469		$	422
Other comprehensive income (loss) items:
Unrealized losses on derivatives(a)		(2	)		—
Pension and postretirement gains(b)		1			2
Reclassification to income of realized losses (gains) on derivatives(c)		3			(1	)


Other comprehensive income (loss), net of tax		2			1


Comprehensive income	$	471		$	423

(a): Net of tax of $1 and zero in 2014 and 2013, respectively.
(b): Net of tax of zero and $1 in 2014 and 2013, respectively. See Note 6, Retirement and Postretirement Benefit Plans, for additional information.
(c): Net of tax of $(2) and zero in 2014 and 2013, respectively.

The accompanying notes are an integral part of these combined financial statements.

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CALIFORNIA RESOURCES CORPORATION

Combined Condensed Statements of Cash Flows

(unaudited)

	For the six months ended June 30,

	2014			2013
	(in millions)
CASH FLOW FROM OPERATING ACTIVITIES
Net income	$	469		$	422
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization of assets		582			565
Deferred income tax provision		178			126
Other noncash charges to income		21			27
Dry hole expenses		32			24
Changes in operating assets and liabilities, net		(48	)		13


Net cash provided by operating activities		1,234			1,177


CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures		(1,003	)		(737	)
Payments for purchases of assets and businesses, and other		(35	)		(31	)


Net cash used by investing activities		(1,038	)		(768	)


CASH FLOW FROM FINANCING ACTIVITIES
Distributions to parent company		(196	)		(409	)


Net cash used by financing activities		(196	)		(409	)


Increase (decrease) in cash and cash equivalents		—			—
Cash and cash equivalents—beginning of period		—			—


Cash and cash equivalents—end of period	$	—		$	—

The accompanying notes are an integral part of these combined financial statements.

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Condensed Financial Statements

(unaudited)

NOTE 1 THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Separation and Spin-Off

On February 14, 2014, Occidental Petroleum Corporation ("Occidental") announced that its board of directors had authorized Occidental's management to pursue the separation of its California oil and gas exploration and production operations and related assets, which CRC will assume in connection with the spin-off, into a stand-alone, publicly traded company (California Resources Corporation and its subsidiaries). Unless otherwise stated or the context otherwise indicates, references to "CRC," "us", "our" or "we" refer to California Resources Corporation, or as the context requires, the California business.

The separation will be completed through a spin-off that is being executed in accordance with a separation and distribution agreement and several other agreements between us and Occidental. The spin-off is intended to be tax-free to the stockholders of Occidental and to Occidental and us for United States federal income tax purposes. Occidental intends to distribute, on a pro-rata basis, at least 80.1% of the outstanding shares of our common stock to the Occidental stockholders as of the record date for the spin-off. Upon completion of the spin-off, which does not require shareholder approval, we will be an independent, stand-alone company from Occidental. The spin-off is, among other things, subject to final approval by Occidental's board of directors, receipt of a private letter ruling from the Internal Revenue Service regarding certain aspects of the spin-off and an opinion of tax counsel, with respect to the tax-free nature of the spin-off for federal income tax purposes, the registration statement on Form 10 being declared effective and the execution of the separation and distribution and related agreements.

We were incorporated in Delaware as a wholly-owned subsidiary of Occidental on April 23, 2014. We are an oil and gas exploration and production company operating properties exclusively within the State of California, with integrated organization and infrastructure to gather, process and market our production.

Basis of Presentation

The accompanying combined condensed financial statements were prepared in connection with the spin-off and were derived from the consolidated financial statements and accounting records of Occidental. These combined condensed financial statements reflect the historical results of operations, financial position and cash flows of Occidental's California business, which comprises exploration and production of oil and gas properties located exclusively in California. We account for our share of oil and gas exploration and production ventures, 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 the balance sheets and statements of income and cash flows.

The combined statements of income also include expense allocations for certain corporate functions and centrally-located activities historically performed by Occidental. These functions include executive oversight, accounting, treasury, tax, financial reporting, finance, internal audit, legal, risk management, information technology, government relations, public relations, investor relations, human resources, procurement, engineering, drilling, exploration, marketing, ethics and compliance, and certain other shared services. These allocations are based primarily on specific identification of time or activities associated with us, employee headcount or our relative size compared to Occidental. Our management believes the assumptions underlying the combined condensed financial statements, including the assumptions regarding allocating expenses from Occidental, are reasonable. However, the combined condensed financial statements may not include all of the actual expenses that would have been incurred,

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Condensed Financial Statements (Continued)

(unaudited)

NOTE 1 THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

may include duplicative costs and may not reflect our combined results of operations, financial position and cash flows had we operated as a stand-alone public company during the periods presented. Actual costs that would have been incurred if we had been a stand-alone company would depend on multiple factors, including organizational structure and strategic and operating decisions.

The assets and liabilities in the combined financial statements are presented on a historical cost basis. We have eliminated all of our significant intercompany transactions and accounts. We have historically participated in Occidental's centralized treasury management program. Excess cash generated by our business has been distributed to Occidental, and likewise our cash needs have been provided by Occidental, in the form of an investment. We have not included debt or related interest expense in the combined condensed financial statements since there was no specifically identifiable debt associated with our operations.

In the opinion of our management, the accompanying combined condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our combined condensed financial position as of June 30, 2014, and the combined condensed statements of income, comprehensive income and cash flows for the six months ended June 30, 2014 and 2013, as applicable. The income and cash flows for the periods ended June 30, 2014 and 2013 are not necessarily indicative of the income or cash flows to be expected for the full year.

In the Pro Forma Adjusted June 30, 2014 Combined Condensed Balance Sheet, we have included the effect of dividends to be paid to Occidental prior to the spin-off.

Events and transactions subsequent to the balance sheet date have been evaluated through August 18, 2014, the date these combined condensed financial statements were issued, for potential recognition or disclosure in the combined condensed financial statements.

NOTE 2 INVENTORIES

Inventories as of June 30, 2014 and December 31, 2013, consisted of the following (in millions):

	2014		2013

Materials and supplies		69		73
Finished goods		3		2


Total	$	72	$	75

NOTE 3 OTHER INFORMATION

Other current assets include amounts due from joint venture partners of approximately $135 million and $97 million at June 30, 2014 and December 31, 2013, respectively. Other long-term liabilities include asset retirement obligations of $385 million and $388 million at June 30, 2014 and December 31, 2013, respectively.

F-7

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Condensed Financial Statements (Continued)

(unaudited)

NOTE 4 DERIVATIVES

Objective & Strategy

We only occasionally hedge our oil and gas production, and, when we do so, the volumes are usually insignificant.

Cash-Flow Hedges

We entered into financial swap agreements in November 2012 for the sale of a portion of our natural gas production. These swap agreements hedged 50 MMcf of natural gas per day beginning in January 2013 through March 2014 and qualified as cash-flow hedges. The weighted-average strike price of these swaps was $4.30. The gross and net fair values of these derivatives as of June 30, 2014 and December 31, 2013 were not material, as determined using Level 2 inputs in the fair value hierarchy.

The after-tax gains and losses recognized in, and reclassified to income from, Accumulated Other Comprehensive Income (AOCI) for derivative instruments classified as cash-flow hedges for the six month periods ended June 30, 2014 and 2013, and the ending AOCI balances for each period were not material. The gains and losses reclassified to income were recognized in net sales, and the amount of the ineffective portion of cash-flow hedges was immaterial for the six months ended June 30, 2014 and 2013.

There were no fair value hedges as of and during the six month periods ended June 30, 2014 and 2013.

NOTE 5 LAWSUITS, CLAIMS AND CONTINGENCIES

We or certain of our subsidiaries 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 at June 30, 2014 and December 31, 2013, were not material to our balance sheets. 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 accrued on the balance sheet would not be material to our financial position or results of operations.

We will indemnify Occidental under the Tax Sharing Agreement for taxes incurred as a result of the failure of the spin-off or certain transactions undertaken in preparation for, or in connection with, the spin-off, to qualify as tax-free transactions under the relevant provisions of the Internal Revenue Code of 1986, as amended, to the extent caused by our breach of any representations or covenants made in the Tax Sharing Agreement, or made in connection with the private letter ruling or the tax opinion or by any other action taken by us. We also have agreed to pay 50% of any taxes arising from the spin-off or related transactions to the extent that the tax is not attributable to the fault of either party. In addition, under the Separation and Distribution Agreement, we will also indemnify Occidental and its remaining subsidiaries against claims and liabilities relating to the past operation of our business.

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Notes to Combined Condensed Financial Statements (Continued)

(unaudited)

NOTE 6 RETIREMENT 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 six months ended June 30, 2014 and 2013 (in millions):

	2014					2013

Net Periodic Benefit Costs	Pension Benefits			Postretirement Benefits		Pension Benefits			Postretirement Benefits
Service cost	$	2		$	2	$	2		$	2
Interest cost		2			2		2			2
Expected return on plan assets		(3	)		—		(2	)		—
Recognized actuarial loss		1			—		2			1


Total	$	2		$	4	$	4		$	5

We did not make any contributions in either of the six-month periods ended June 30, 2014 and 2013, to our defined benefit pension plans.

NOTE 7 RELATED-PARTY TRANSACTIONS

During the periods ended June 30, 2014 and 2013, we entered into the following related-party transactions (in millions):

	2014		2013

Sales	$	2,206	$	2,049
Allocated costs for services provided by affiliates	$	77	$	61
Purchases	$	119	$	86

Substantially all of our products were historically sold to Occidental's marketing subsidiaries at market prices and have been settled at the time of sale to those entities. For each of the periods ended June 30, 2014 and 2013, sales to Occidental subsidiaries accounted for approximately 98% of our net sales.

The combined statements of income include expense allocations for certain corporate functions and centrally-located activities historically performed by Occidental. These functions include executive oversight, accounting, treasury, tax, financial reporting, finance, internal audit, legal, risk management, information technology, government relations, public relations, investor relations, human resources, procurement, engineering, drilling, exploration, marketing, ethics and compliance, and certain other shared services. Charges from Occidental for these services are reflected in selling, general and administrative expenses.

Purchases from related parties reflect products purchased at market prices from Occidental's subsidiaries and are used in our operations. These purchases are included in production costs. There are no significant related party receivable or payable balances at June 30, 2014 and 2013.

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Notes to Combined Condensed Financial Statements (Continued)

(unaudited)

SUBSEQUENT EVENTS

On October 1, 2014, we issued $5.00 billion in aggregate principal amount of our senior notes, including $1.00 billion of 5.00% senior notes due January 15, 2020 (the "2020 notes"), $1.75 billion of 5.50% senior notes due September 15, 2021 (the "2021 notes") and $2.25 billion of 6.00% senior notes due November 15, 2024 (the "2024 notes" and together with the 2020 notes and the 2021 notes, the "notes"), in a private placement. The notes were issued at par and initially are fully and unconditionally guaranteed on a senior unsecured basis by all of our material subsidiaries. We expect to use the net proceeds from the private placement to make a $4.95 billion cash distribution to Occidental.

We will pay interest on the 2020 notes semi-annually in cash in arrears on January 15 and July 15 of each year, beginning on July 15, 2015. We will pay interest on the 2021 notes semi-annually in cash in arrears on March 15 and September 15 of each year, beginning on March 15, 2015. We will pay interest on the 2024 notes semi-annually in cash in arrears on May 15 and November 15 of each year, beginning on May 15, 2015.

In connection with the private placement of the notes, we granted the initial purchasers certain registration rights under a registration rights agreement. The indenture governing the notes also provides a special mandatory redemption covenant that provides that if Occidental does not complete the spin-off on or prior to January 31, 2015, we will be required to redeem all of the notes at a redemption price equal to the issue price thereof plus accrued and unpaid interest.

On September 24, 2014, we entered into a credit agreement with a syndicate of lenders (the "Credit Agreement"), providing for (i) a five year senior term loan facility (the "Term Loan Facility") and (ii) a five-year senior revolving loan facility (the "Revolving Credit Facility" and, together with the Term Loan Facility, the "Credit Facilities").

The aggregate initial commitments of the lenders under the Revolving Credit Facility are $2.0 billion and under the Term Loan Facility are $1.0 billion. The Revolving Credit Facility includes a sub-limit of $400 million for the issuance of letters of credit and a $200 million sub-limit for swingline loans. The initial aggregate commitment under the Term Loan will be funded prior to the spin-off ("Funding Date") and the initial aggregate commitment under the Revolving Credit Facility will become available on a revolving basis prior to the spin-off. We intend to use proceeds from the Credit Facility to make a $1.05 billion distribution to Occidental prior to the spin-off and settle all intercompany balances with Occidental as of the date of the spin.

If the spin-off is not consummated within five business days after the Funding Date, no later than January 31, 2015, the Credit Facilities will automatically terminate and all amounts thereunder will become due and payable. Additionally, we will be required to repay the Term Loan Facility in equal quarterly installments equal to 2.5% (10.00% per annum) of the principal amount of the Term Loan Facility beginning on March 31, 2016.

Borrowings under the Credit Facilities will bear interest at either the LIBOR Rate or an alternate base rate (equal to the greatest of (i) the administrative agent's prime rate, (ii) the one-month LIBOR Rate plus 1.00% and (iii) the federal funds effective rate plus 0.50%), at our election, in each case plus an applicable margin. This applicable margin is based on our most-recently tested leverage ratio and will vary from (a) in the case of LIBOR loans, 1.50% to 2.25% and (b) in the case of alternate base rate loans, from 0.50% to 1.25%. The unused portion of the Revolving Credit Facility is subject to commitment fees ranging from 0.30% to 0.50%.

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Condensed Financial Statements (Continued)

(unaudited)

All obligations under the Credit Facilities initially will be guaranteed by all of our wholly-owned (directly or indirectly) material restricted subsidiaries, and will be unsecured while we maintain our credit ratings at the minimum levels defined in the Credit Agreement.

The Credit Agreement will also require us to maintain the following financial covenants as of the last day of each fiscal quarter: (a) a leverage ratio of no more than 4.50 to 1.00; and (b) an interest expense ratio of no less than 2.50 to 1.00.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
Occidental Petroleum Corporation:

We have audited the accompanying combined balance sheets of California Resources Corporation (the "Company") as of December 31, 2013 and 2012, and the related combined statements of income, comprehensive income, net investment and cash flows for each of the years in the three-year period ended December 31, 2013. These combined financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of California Resources Corporation as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2013 in conformity with U.S. generally accepted accounting principles.


		/s/ KPMG LLP

Los Angeles, California
June 2, 2014

F-12

Table of Contents

California Resources Corporation

Combined Balance Sheets

As of December 31, 2013 and 2012

	2013			2012

	(in millions)
CURRENT ASSETS
Cash and cash equivalents	$	—		$	—
Trade receivables, net		30			22
Inventories		75			81
Other current assets		149			142


Total current assets		254			245


PROPERTY, PLANT AND EQUIPMENT		20,972			19,324
Accumulated depreciation, depletion and amortization		(6,964	)		(5,825	)


		14,008			13,499


OTHER ASSETS		35			20


TOTAL ASSETS	$	14,297		$	13,764




CURRENT LIABILITIES
Accounts payable	$	448		$	371
Accrued liabilities		241			180


Total current liabilities		689			551


DEFERRED INCOME TAXES		3,122			2,842
OTHER LONG-TERM LIABILITIES		497			511


		3,619			3,353


CONTINGENT LIABILITIES AND COMMITMENTS
NET INVESTMENT		9,989			9,860


TOTAL LIABILITIES AND NET INVESTMENT	$	14,297		$	13,764

The accompanying notes are an integral part of these combined financial statements.

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Table of Contents

California Resources Corporation

Combined Statements of Income

For the years ended December 31, 2013, 2012 and 2011

	2013			2012			2011

	(in millions)
REVENUES AND OTHER INCOME
Net sales to related parties	$	4,174		$	3,970		$	3,862
Net sales to third parties		111			102			76
Other income		(1	)		1			(4	)


		4,284			4,073			3,934


COSTS AND OTHER DEDUCTIONS
Production costs		1,066			1,314			1,074
Selling, general and administrative expenses		326			296			287
Depreciation, depletion and amortization		1,144			926			675
Asset impairments and related items		—			41			—
Taxes other than on income		185			167			143
Exploration expense		116			148			114


		2,837			2,892			2,293


INCOME BEFORE INCOME TAXES		1,447			1,181			1,641
Provision for income taxes		(578	)		(482	)		(670	)


NET INCOME	$	869		$	699		$	971

The accompanying notes are an integral part of these combined financial statements.

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Table of Contents

California Resources Corporation

Combined Statements of Comprehensive Income

For the years ended December 31, 2013, 2012 and 2011

	2013			2012		2011

	(in millions)
Net income	$	869		$	699	$	971
Other comprehensive income (loss) items:
Unrealized (losses) gains on derivatives(a)		(2	)		3		—
Pension and postretirement gains (losses)(b)		27			2		(10	)
Reclassification to income of realized (gains) losses on derivatives(c)		(2	)		—		—


Other comprehensive income (loss), net of tax		23			5		(10	)


Comprehensive income	$	892		$	704	$	961

(a): Net of tax of $1, $(1) and zero in 2013, 2012 and 2011, respectively.
(b): Net of tax of $(16), $(1) and $6 in 2013, 2012 and 2011, respectively. See Note 10, Retirement and Postretirement Benefit Plans, for additional information.
(c): Net of tax of $1, zero and zero in 2013, 2012 and 2011, respectively.

The accompanying notes are an integral part of these combined financial statements.

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California Resources Corporation

Combined Statements of Net Investment

For the years ended December 31, 2013, 2012 and 2011

	Accumulated Other Comprehensive Income (Loss)			Net Parent Company Investment			Total

	(in millions)
Balance, December 31, 2010	$	(42	)	$	6,599		$	6,557
Net income		—			971			971
Other comprehensive loss, net of tax		(10	)		—			(10	)
Net contributions from parent company		—			1,106			1,106


Balance, December 31, 2011	$	(52	)	$	8,676		$	8,624
Net income		—			699			699
Other comprehensive income, net of tax		5			—			5
Net contributions from parent company		—			532			532


Balance, December 31, 2012	$	(47	)	$	9,907		$	9,860
Net income		—			869			869
Other comprehensive income, net of tax		23			—			23
Net distributions to parent company		—			(763	)		(763	)


Balance, December 31, 2013	$	(24	)	$	10,013		$	9,989

The accompanying notes are an integral part of these combined financial statements.

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CALIFORNIA RESOURCES CORPORATION

Combined Statements of Cash Flows

For the years ended December 31, 2013, 2012 and 2011

	2013			2012			2011

	(in millions)
CASH FLOW FROM OPERATING ACTIVITIES
Net income	$	869		$	699		$	971
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization of assets		1,144			926			675
Deferred income tax provision		260			603			586
Other noncash charges to income		29			28			27
Asset impairments and related items		—			41			—
Dry hole expenses		72			128			74
Changes in operating assets and liabilities:
(Increase) decrease in trade receivables, net		(8	)		20			(31	)
Decrease (increase) in inventories		8			(23	)		(2	)
Decrease (increase) in other current assets		2			(49	)		(15	)
Increase (decrease) in accounts payable and accrued liabilities		100			(150	)		171


Net cash provided by operating activities		2,476			2,223			2,456


CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures		(1,669	)		(2,331	)		(2,164	)
Payments for purchases of assets and businesses		(48	)		(427	)		(1,405	)
Other, net		4			3			4


Net cash used by investing activities		(1,713	)		(2,755	)		(3,565	)


CASH FLOW FROM FINANCING ACTIVITIES
(Distributions to) contributions from parent company		(763	)		532			1,106


Net cash (used) provided by financing activities		(763	)		532			1,106


Increase (decrease) in cash and cash equivalents		—			—			(3	)
Cash and cash equivalents—beginning of year		—			—			3


Cash and cash equivalents—end of year	$	—		$	—		$	—

The accompanying notes are an integral part of these combined financial statements.

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements

NOTE 1 THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Separation and Spin-Off

Basis of Presentation

The accompanying combined financial statements were prepared in connection with the spin-off and were derived from the consolidated financial statements and accounting records of Occidental. These combined financial statements reflect the historical results of operations, financial position and cash flows of Occidental's California oil and gas operations, which comprises exploration and production of oil and gas properties located exclusively in California. We account for our share of oil and gas exploration and production ventures, 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 the balance sheets and statements of income and cash flows.

The combined statements of income also include expense allocations for certain corporate functions and centrally-located activities historically performed by Occidental. These functions include executive oversight, accounting, treasury, tax, financial reporting, finance, internal audit, legal, risk management, information technology, government relations, public relations, investor relations, human resources, procurement, engineering, drilling, exploration, marketing, ethics and compliance, and certain other shared services. These allocations are based primarily on specific identification of time or activities associated with us, employee headcount or our relative size compared to Occidental. Our management believes the assumptions underlying the combined financial statements, including the assumptions regarding allocating expenses from Occidental, are reasonable. However, the combined financial statements may not include all of the actual expenses that would have been incurred, may include duplicative costs and may not reflect our combined results of operations, financial position and cash flows had we operated as a stand-alone public company during the periods presented. Actual costs that would

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 1 THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

have been incurred if we had been a stand-alone company would depend on multiple factors, including organizational structure and strategic and operating decisions.

The assets and liabilities in the combined financial statements are presented on a historical cost basis. We have eliminated all of our significant intercompany transactions and accounts. We have historically participated in Occidental's centralized treasury management program. Excess cash generated by our business has been distributed to Occidental, and likewise our cash needs have been provided by Occidental, in the form of an investment. We have not included debt or related interest expense in the combined financial statements since there was no specifically identifiable debt associated with our operations.

Events and transactions subsequent to the balance sheet date have been evaluated through June 2, 2014, the date these combined financial statements were issued, for potential recognition or disclosure in the combined financial statements.

Risks and Uncertainties

The process of preparing financial statements in conformity with United States generally accepted accounting principles (GAAP) requires management to make informed estimates and judgments regarding certain types of financial statement balances and disclosures. Such estimates primarily relate to unsettled transactions and events as of the date of the combined financial statements and judgments on expected outcomes as well as the materiality of transactions and balances. Changes in facts and circumstances or discovery of new information relating to such transactions and events may result in revised estimates and judgments and actual results may differ from estimates upon settlement. Management believes that these estimates and judgments provide a reasonable basis for the fair presentation of our financial statements.

Revenue Recognition

We recognize revenue from oil and gas production when title has passed from us to the transportation company or the customer, as applicable. We recognize our share of revenues net of any royalties and other third-party share.

Net Investment

In our combined balance sheets, net investment represents Occidental's historical investment in us, our accumulated net income and the net effect of transactions with, and allocations from, Occidental.

Inventories

Materials and supplies are valued at weighted-average cost and are reviewed periodically for obsolescence. Finished goods include oil and gas products, which are valued at the lower of cost or market.

Property, Plant and Equipment

The carrying value of our property, plant and equipment (PP&E) represents the cost incurred to acquire or develop the asset, including any asset retirement obligations, net of accumulated depreciation, depletion and amortization (DD&A) and any impairment charges. For assets acquired, PP&E cost is based

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 1 THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

on fair values at the acquisition date. Asset retirement obligations are capitalized and amortized over the lives of the related assets.

We use the successful efforts method to account for oil and gas properties. Under this method, we capitalize costs of acquiring properties, costs of drilling successful exploration wells and development costs. The costs of exploratory wells are initially capitalized pending a determination of whether we find proved reserves. If we find proved reserves, the costs of exploratory wells remain capitalized. Otherwise, we charge the costs of the related wells to expense. In some cases, we cannot determine whether we have found proved reserves at the completion of the exploration drilling, and must conduct additional testing and evaluation of the wells. We generally expense the costs of such exploratory wells if we do not determine we have found proved reserves within a 12-month period after drilling is complete.

The following table summarizes the activity of capitalized exploratory well costs for continuing operations for the years ended December 31:

	2013			2012			2011

	(in millions)
Balance—Beginning of Year	$	18		$	63		$	24
Additions to capitalized exploratory well costs pending the determination of proved reserves		46			62			85
Reclassifications to property, plant and equipment based on the determination of proved reserves		(31	)		(61	)		(34	)
Capitalized exploratory well costs charged to expense		(15	)		(46	)		(12	)


Balance—End of Year	$	18		$	18		$	63

We expense annual lease rentals, the costs of injection used in production and exploration, geological, geophysical and seismic costs as incurred. Cost of maintenance and repairs are expensed as incurred, except that the costs of replacements that expand capacity or add proven oil and gas reserves are capitalized.

Proved oil and gas reserves and production are used as the basis for recording depreciation and depletion of oil and gas properties. Proved reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—regardless of whether deterministic or probabilistic methods are used for the estimation. We have no proved oil and gas reserves for which the determination of economic producibility is subject to the completion of major additional capital expenditures.

Our gas plant and power plant assets are depreciated over the estimated useful lives of the assets, using the straight-line method, with expected useful lives of the assets ranging from 2 to 30 years. Other

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 1 THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

property and equipment is depreciated using the straight-line method based on expected lives of the individual assets or group of assets ranging from two to 20 years.

We perform impairment tests with respect to proved properties when product prices decline other than temporarily, reserve estimates change significantly, other significant events occur or management's plans change with respect to these properties in a manner that may impact our ability to realize the recorded asset amounts. Impairment tests incorporate a number of assumptions involving expectations of undiscounted future cash flows, which can change significantly over time. These assumptions include estimates of future product prices, which we base on forward price curves and, when applicable, contractual prices, estimates of oil and gas reserves and estimates of future expected operating and development costs. Any impairment loss would be calculated as the excess of the asset's net book value over its estimated fair value.

A portion of the carrying value of our oil and gas properties is attributable to unproved properties. At December 31, 2013, the net capitalized costs attributable to unproved properties were approximately $900 million. The unproved amounts are not subject to DD&A until they are classified as proved properties. As exploration and development work progresses, if reserves on these properties are proved, capitalized costs attributable to the properties become subject to DD&A. If the exploration and development work were to be unsuccessful, or management decided not to pursue development of these properties as a result of lower commodity prices, higher development and operating costs, contractual conditions or other factors, the capitalized costs of the related properties would be expensed. The timing of any writedowns of these unproved properties, if warranted, depends upon management's plans, the nature, timing and extent of future exploration and development activities and their results. In 2012, management decided not to pursue development of certain of our gas properties which were impacted by persistently low gas prices. As a result, we recorded an impairment charge in 2012, which is reflected in asset impairments and related charges in the combined statement of income. We believe the current plans and exploration and development efforts will allow us to realize the unproved property balance.

Asset Retirement Obligations

We recognize the fair value of asset retirement obligations in the period in which a determination is made that a legal obligation exists to dismantle an asset and reclaim or remediate the property at the end of its useful life and the cost of the obligation can be reasonably estimated. The liability amounts are based on future retirement cost estimates and incorporate many assumptions such as time to abandonment, technological changes, future inflation rates and the risk-adjusted discount rate. When the liability is initially recorded, we capitalize the cost by increasing the related PP&E balances. If the estimated future cost of the asset retirement obligation changes, we record an adjustment to both the asset retirement obligation and PP&E. Over time, the liability is increased and expense is recognized for accretion, and the capitalized cost is depreciated over the useful life of the asset.

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 1 THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

At certain of our facilities, we have identified asset retirement obligations that are related mainly to plant and field decommissioning, including plugging and abandonment of wells. We do not know or cannot estimate when we may settle these obligations. Therefore, we cannot reasonably estimate the fair value of these liabilities. We will recognize these asset retirement obligations in the periods in which sufficient information becomes available to reasonably estimate their fair values. Additionally, for certain plants, we do not have a legal obligation to decommission them and accordingly we have not recorded a liability.

The following table summarizes the activity of the asset retirement obligation, of which $388 million and $367 million is included in other long-term liabilities, with the remaining current portion in accrued liabilities at December 31, 2013 and 2012, respectively.

	For the years ended December 31,

	2013			2012
	(in millions)
Beginning balance	$	387		$	327
Liabilities incurred—capitalized to PP&E		25			24
Liabilities settled and paid		(9	)		(12	)
Accretion expense		21			18
Acquisitions, dispositions and other—changes in PP&E		(2	)		—
Revisions to estimated cash flows—changes in PP&E		(7	)		30


Ending balance	$	415		$	387

Derivative Instruments

Derivatives are carried at fair value and on a net basis when a legal right of offset exists with the same counterparty. We apply hedge accounting when transactions meet specified criteria for cash-flow hedge treatment and management elects and documents such treatment. Otherwise, any fair value gains or losses are recognized in earnings in the current period. For cash-flow hedges, the gain or loss on the effective portion of the derivative is reported as a component of other comprehensive income (OCI) with an offsetting adjustment to the basis of the item being hedged. Realized gains or losses from cash-flow hedges, and any ineffective portion, are recorded as a component of net sales in the combined statements of income. Ineffectiveness is primarily created by a lack of correlation between the hedged item and the hedging instrument due to location, quality, grade or changes in the expected quantity of the hedged item. Gains and losses from derivative instruments are reported net in the combined statements of income.

A hedge is regarded as highly effective such that it qualifies for hedge accounting if, at inception and throughout its life, we expect that changes in the fair value or cash flows of the hedged item will be offset by 80 to 125 percent of the changes in the fair value or cash flows, respectively, of the hedging instrument. In the case of hedging a forecast transaction, the transaction must be probable and must present an exposure to variations in cash flows that could ultimately affect reported net income or loss. We discontinue hedge accounting when we determine that a derivative has ceased to be highly effective as a hedge; when the hedged item matures or is sold or repaid; or when a forecast transaction is no longer deemed probable.

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 1 THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Retirement and Postretirement Benefit Plans

A majority of our employees participated in postretirement benefit plans sponsored by Occidental, which included participants from other Occidental subsidiaries. These plans do not have any assets and are funded as benefits are paid. We recognized a liability in the accompanying balance sheets for the employees of the California operations. The related postretirement expenses were allocated to us from Occidental based on headcount.

For defined benefit pension and postretirement plans that are sponsored by us, we recognize the net overfunded or underfunded amounts in the financial statements using a December 31 measurement date.

We determine our defined benefit pension and postretirement benefit plan obligations based on various assumptions and discount rates. The discount rate assumptions used are meant to reflect the interest rate at which the obligations could effectively be settled on the measurement date. We estimate the rate of return on assets with regard to current market factors but within the context of historical returns.

Pension plan assets are measured at fair value. Common stock, preferred stock, publicly registered mutual funds, U.S. government securities and corporate bonds are valued using quoted market prices in active markets when available. When quoted market prices are not available, these investments are valued using pricing models with observable inputs from both active and non-active markets. Common and collective trusts are valued at the fund units' net asset value (NAV) provided by the issuer, which represents the quoted price in a non-active market. Short-term investment funds are valued at the fund units' NAV provided by the issuer.

Actuarial gains and losses that have not yet been recognized through income are recorded in accumulated other comprehensive income within net investment, net of taxes, until they are amortized as a component of net periodic benefit cost.

Fair Value Measurements

We have categorized our assets and liabilities that are measured at fair value in a three-level fair value hierarchy, based on the inputs to the valuation techniques: Level 1—using quoted prices in active markets for the assets or liabilities; Level 2—using observable inputs other than quoted prices for the assets or liabilities; and Level 3—using unobservable inputs. Transfers between levels, if any, are recognized at the end of each reporting period. We primarily apply the market approach for recurring fair value measurements, maximize our use of observable inputs and minimize use of unobservable inputs. We generally use an income approach to measure fair value when observable inputs are unavailable. This approach utilizes management's judgments regarding expectations of projected cash flows and discounts those cash flows using a risk-adjusted discount rate.

Cash flow hedges are carried at fair value. We utilize the mid-point between bid and ask prices for valuing these instruments. In addition to using market data in determining these fair values, we make assumptions about the risks inherent in the inputs to the valuation technique. These instruments are Over-the-Counter (OTC) bilateral financial commodity contracts, which are generally valued using quotations provided by brokers. Substantially all of these inputs are observable data or are supported by observable prices at which transactions are executed in the marketplace. We classify these measurements as Level 2.

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 1 THE SPIN-OFF AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The carrying amounts of on-balance-sheet financial instruments approximate fair value.

Other current assets

Other current assets include amounts due from joint venture partners of approximately $97 million and $71 million at December 31, 2013 and 2012, respectively.

Accrued liabilities

Accrued liabilities include accrued compensation-related costs of approximately $70 million and $50 million at December 31, 2013 and 2012, respectively.

Supplemental Cash Flow Information

We have not made United States federal and state income tax payments directly to taxing jurisdictions; rather, our share of our parent's tax payments or refunds were paid or received, as applicable, by our parent and are reflected as part of the net parent company investment. Such amounts paid during the year ended December 31, 2013 and 2011 were approximately $318 million and $84 million, respectively, while the year ended December 31, 2012 resulted in a net refund of approximately $121 million. We also paid taxes other than on income, consisting mostly of property taxes, of approximately $185 million, $171 million and $143 million during the years ended December 31, 2013, 2012 and 2011, respectively.

Income taxes

Our taxable income was historically included in the consolidated U.S. federal income tax returns of Occidental Petroleum Corporation and in a number of their consolidated state income tax returns. In the accompanying combined financial statements, our provision for income taxes is computed as if we were a stand-alone tax-paying entity.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their tax bases. Deferred tax assets are recorded when it is more likely than not that they will be realized. The realization of deferred tax assets is assessed periodically based on several factors, primarily our expectation to generate sufficient future taxable income.

NOTE 2 ACQUISITIONS

2013

During the year ended December 31, 2013, we paid approximately $50 million to acquire certain oil and gas properties in California. One of our acquisitions in the San Joaquin basin also included an obligation to spend at least $250 million on exploration and development activities over a period of five years from the date of acquisition. We currently plan to spend more than this amount in the next five years.

2012

During the year ended December 31, 2012, we paid approximately $380 million for oil and gas properties, almost all of which was allocated to PP&E, including an acquisition for $275 million for certain

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 2 ACQUISITIONS (Continued)

producing and non-producing assets in the Sacramento basin and undeveloped acreage in the San Joaquin basin.

2011

During the year ended December 31, 2011, we acquired approximately $1.4 billion of various oil and gas assets, almost all of which was allocated to PP&E. We paid $720 million for producing and non-producing assets within the San Joaquin basin. We also acquired producing and non-producing assets in the Los Angeles Basin for $330 million and certain assets in the Sacramento basin for $190 million.

NOTE 3 ACCOUNTING AND DISCLOSURE CHANGES

Recently Adopted Accounting and Disclosure Changes

In July 2013, the Financial Accounting Standards Board (FASB) issued rules requiring net, rather than gross, presentation of a deferred tax asset for a net operating loss or other tax credit and any related liability for unrecognized tax benefits. These rules became effective on January 1, 2014, and did not have a material impact on our financial statements.

In April 2014, the FASB issued rules changing the requirements for reporting discontinued operations so that only the disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity's operations and financial results will be reported as discontinued operations in the financial statements. These rules are effective for annual periods beginning on or after December 15, 2014. They are not expected to have a material impact on our financial statements upon adoption. We will assess them on an ongoing basis.

NOTE 4 INVENTORIES

Inventories consisted of the following:

	Balance at December 31,

	2013		2012
	(in millions)
Materials and supplies	$	73	$	77
Finished goods		2		4


Total	$	75	$	81

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Table of Contents

CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 5 LEASE COMMITMENTS

We have entered into various operating lease agreements, mainly for office equipment, field equipment and office space. We lease assets when leasing offers greater operating flexibility. Lease payments are generally expensed as part of production costs or selling, general and administrative expenses. At December 31, 2013, future net minimum lease payments for noncancelable operating leases (excluding oil and gas and other mineral leases, utilities, taxes, insurance and maintenance expense) totaled:

	Amount

	(in millions)
2014	$	9
2015		6
2016		5
2017		5
2018		4
Thereafter		4


Total minimum lease payments	$	33

Rental expense for operating leases was $11 million in 2013, $12 million in 2012 and $8 million in 2011.

NOTE 6 DERIVATIVES

Objective & Strategy

We only occasionally hedge our oil and gas production, and, when we do so, the volumes are usually insignificant. Refer to Note 1 for our accounting policy on derivatives.

Cash-Flow Hedges

We entered into financial swap agreements in November 2012 for the sale of a portion of our natural gas production. These swap agreements hedged 50 MMcf of natural gas per day beginning in January 2013 through March 2014 and qualified as cash-flow hedges. The weighted-average strike price of these swaps was $4.30. The gross and net fair values of these derivatives as of December 31, 2013 and 2012 were not material, as determined using Level 2 inputs in the fair value hierarchy

The after-tax gains and losses recognized in, and reclassified to income from, Accumulated Other Comprehensive Income (AOCI), for derivative instruments classified as cash-flow hedges for the year ended December 31, 2013 and 2012, and the ending AOCI balances for each period were not material. We expect to reclassify an insignificant amount, based on the valuation as of December 31, 2013, of net after-tax derivative losses from AOCI into income during the next 12 months. We recognized gains and losses reclassified to income in net sales. The amount of the ineffective portion of cash-flow hedges was immaterial for the year ended December 31, 2013 and 2012.

There were no fair value hedges as of and during the years ended December 31, 2013, 2012 and 2011.

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 7 LAWSUITS, CLAIMS, COMMITMENTS AND CONTINGENCIES

We or certain of our subsidiaries 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 at December 31, 2013 and 2012, were not material to our balance sheets. 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 accrued on the balance sheet would not be material to our financial position or results of operations.

We have certain commitments under contracts, including purchase commitments for goods and services. At December 31, 2013, total purchase obligations were approximately $650 million, which included approximately $250 million, $80 million, $40 million, $30 million and $230 million that will be paid in 2014, 2015, 2016, 2017 and 2018, respectively. Included in the purchase obligations are commitments for major fixed and determinable capital expenditures during 2014 and thereafter, which were approximately $270 million.

NOTE 8 INCOME TAXES

Income before income taxes was as follows:

For the years ended December 31,	(in millions)

2013	$	1,447




2012	$	1,181




2011	$	1,641

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 8 INCOME TAXES (Continued)

The provisions (credits) for federal, state and local income taxes consisted of the following:

For the years ended December 31,	United States Federal			State and Local		Total

	(in millions)
2013
Current	$	227		$	91	$	318
Deferred		222			38		260


	$	449		$	129	$	578




2012
Current	$	(140	)	$	19	$	(121	)
Deferred		518			85		603


	$	378		$	104	$	482




2011
Current	$	22		$	62	$	84
Deferred		504			82		586


	$	526		$	144	$	670

The following reconciliation of the United States federal statutory income tax rate to our effective tax rate is stated as a percentage of pre-tax income:

	For the years ended December 31,

	2013			2012			2011
United States federal statutory tax rate		35	%		35	%		35	%
State income taxes, net of federal benefit		6			6			6
Other		(1	)		—			—


Effective tax rate		40	%		41	%		41	%

The tax effects of temporary differences resulting in deferred income taxes at December 31, 2013 and 2012 were as follows:

	2013					2012

Tax effects of temporary differences	Deferred Tax Assets		Deferred Tax Liabilities			Deferred Tax Assets		Deferred Tax Liabilities
	(in millions)
Property, plant and equipment differences	$	—	$	(3,583	)	$	—	$	(3,270	)
Postretirement benefit accruals		14		—			28		—
Deferred compensation and benefits		60		—			46		—
Asset retirement obligations		182		—			170		—
Federal benefit of state income taxes		208		—			170		—
All other		22		(2	)		31		(2	)


Total deferred taxes	$	486	$	(3,585	)	$	445	$	(3,272	)

The current portion of total deferred tax assets was $23 million and $15 million as of December 31, 2013 and 2012, respectively, which was reported in other current assets. The noncurrent portion of total deferred tax assets was reported net against deferred tax liabilities. We expect to realize the recorded deferred tax assets through future operating income and reversal of temporary differences.

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 9 ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive loss consisted of the following after-tax amounts:

	Balance at December 31,

	2013			2012
	(in millions)
Unrealized losses (gains) on derivatives		(1	)		3
Pension and post-retirement adjustments(a)		(23	)		(50	)


Total	$	(24	)	$	(47	)

(a): See Note 10 for further information.

NOTE 10 RETIREMENT AND POSTRETIREMENT BENEFIT PLANS

As discussed in Note 1, a majority of our employees participated in postretirement benefit plans sponsored by Occidental, which included participants of other Occidental subsidiaries and certain employees were part of pension and postretirement plans sponsored by us.

Defined Contribution Plans

All of our employees were eligible to participate in one or more of the defined contribution retirement or savings plans that provide for periodic contributions by us, our subsidiaries or Occidental, based on plan-specific criteria, such as base pay, age, level and employee contributions. Certain salaried employees participated in a supplemental retirement plan that restored benefits lost due to governmental limitations on qualified retirement benefits. The accrued liabilities for the supplemental retirement plan were $17 million and $11 million as of December 31, 2013 and 2012, respectively, and we expensed $34 million in 2013, $35 million in 2012 and $31 million in 2011 under the provisions of these defined contribution and supplemental retirement plans.

Defined Benefit Plans

Participation in defined benefit pension and postretirement plans sponsored by us is limited. Approximately 270 employees, mainly union, nonunion hourly and certain employees that joined us from acquired operations with grandfathered benefits, are currently accruing benefits under these plans.

Pension costs for the defined benefit pension plans, determined by independent actuarial valuations, are generally funded by payments to trust funds, which are administered by independent trustees.

Postretirement and Other Benefit Plans

We provided postretirement medical and dental benefits and life insurance coverage for our employees not covered by our sponsored plans and their eligible dependents through Occidental sponsored plans. The benefits were generally funded as they were paid during the year. These benefit costs were approximately $18 million in 2013, $17 million in 2012 and $12 million in 2011.

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 10 RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Continued)

Obligations and Funded Status

The following tables show the amounts recognized in our combined balance sheets related to pension and postretirement benefit plans, including our share of obligations for Occidental-sponsored plans as well as plans that we or our subsidiaries sponsor, and their funding status, obligations and plan asset fair values (in millions):

	Pension Benefits						Postretirement Benefits

	As of December 31,
	2013			2012			2013			2012
Amounts recognized in the consolidated balance sheet:
Accrued liabilities	$	—		$	—		$	(1	)	$	(1	)
Other long-term liabilities		(12	)		(34	)		(62	)		(73	)


	$	(12	)	$	(34	)	$	(63	)	$	(74	)




AOCI included the following after-tax balances:
Net loss	$	19		$	31		$	4		$	19

	Pension Benefits						Postretirement Benefits

	For the years ended December 31,
	2013			2012			2013			2012
Changes in the benefit obligation:
Benefit obligation—beginning of year	$	108		$	108		$	74		$	67
Service cost—benefits earned during the period		5			4			4			4
Interest cost on projected benefit obligation		3			4			3			3
Actuarial (gain) loss		(2	)		7			(18	)		—
Benefits paid		(11	)		(15	)		—			—


Benefit obligation—end of year	$	103		$	108		$	63		$	74


Changes in plan assets:
Fair value of plan assets—beginning of year	$	74		$	70		$	—		$	—
Actual return on plan assets		13			7			—			—
Employer contributions		15			12			—			—
Benefits paid		(11	)		(15	)		—			—


Fair value of plan assets—end of year	$	91		$	74		$	—		$	—


(Unfunded) status:	$	(12	)	$	(34	)	$	(63	)	$	(74	)

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 10 RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Continued)

The following table sets forth the accumulated and projected benefit obligations and fair values of assets of the defined benefit pension plans:

	Accumulated Benefit Obligation in Excess of Plan Assets				Plan Assets in Excess of Accumulated Benefit Obligation

	As of December 31,
	2013		2012		2013		2012
	(in millions)
Projected Benefit Obligation	$	30	$	108	$	73	$	—
Accumulated Benefit Obligation	$	25	$	85	$	58	$	—
Fair Value of Plan Assets	$	23	$	74	$	68	$	—

We do not expect any plan assets to be returned during 2014.

COMPONENTS OF NET PERIODIC BENEFIT COST

The following table sets forth the components of net periodic benefit costs:

	Pension Benefits									Postretirement Benefits

	For the years ended December 31,
	2013			2012			2011			2013		2012		2011
	(in millions)
Net periodic benefit costs:
Service cost—benefits earned during the period	$	5		$	4		$	4		$	5	$	4	$	3
Interest cost on projected benefit obligation		3			4			5			3		3		3
Expected return on plan assets		(4	)		(4	)		(5	)		—		—		—
Recognized actuarial loss		4			4			3			2		2		2
Settlement cost		2			6			—			—		—		—


Net periodic benefit cost	$	10		$	14		$	7		$	10	$	9	$	8

The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from AOCI into net periodic benefit cost over the next fiscal year are $2 million and zero, respectively. The estimated net loss and prior service cost for the defined benefit postretirement plans that will be amortized from AOCI into net periodic benefit cost over the next fiscal year are $1 million and zero, respectively.

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 10 RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Continued)

ADDITIONAL INFORMATION

The following table sets forth the weighted-average assumptions used to determine our benefit obligations and net periodic benefit cost:

	Pension Benefits						Postretirement Benefits

	For the years ended December 31,
	2013			2012			2013			2012
Benefit Obligation Assumptions:
Discount rate		4.45	%		3.59	%		4.75	%		3.89	%
Rate of compensation increase		4.00	%		4.00	%		—			—
Net Periodic Benefit Cost Assumptions:
Discount rate		3.59	%		4.12	%		3.89	%		4.12	%
Assumed long term rate of return on assets		6.50	%		6.50	%		—			—
Rate of compensation increase		4.00	%		4.00	%		—			—

For pension plans and postretirement benefit plans that we or our subsidiaries sponsor, we based the discount rate on the Aon/Hewitt AA-AAA Universe yield curve in 2013 and 2012. The weighted-average rate of increase in future compensation levels is consistent with our past and anticipated future compensation increases for employees participating in retirement plans that determine benefits using compensation. The assumed long-term rate of return on assets is estimated with regard to current market factors but within the context of historical returns for the asset mix that exists at year end.

The postretirement benefit obligation was determined by application of the terms of medical and dental benefits and life insurance coverage, including the effect of established maximums on covered costs, together with relevant actuarial assumptions and healthcare cost trend rates projected at an assumed U.S. Consumer Price Index (CPI) increase of 2.36 percent and 2.39 percent as of December 31, 2013 and 2012, respectively. A 1-percent increase or a 1-percent decrease in these assumed healthcare cost trend rates would result in an increase of $6 million or a reduction of $5 million, respectively, in the postretirement benefit obligation as of December 31, 2013. The annual service and interest costs would not be materially affected by these changes.

The actuarial assumptions used could change in the near term as a result of changes in expected future trends and other factors that, depending on the nature of the changes, could cause increases or decreases in the plan assets and liabilities.

Fair Value of Pension Plan Assets

We employ a total return investment approach that uses a diversified blend of equity and fixed-income investments to optimize the long-term return of plan assets at a prudent level of risk. The investments were monitored by Occidental's Investment Committee in its role as fiduciary. The Investment Committee, consisting of senior Occidental executives, selected and employed various external professional investment management firms to manage specific investments across the spectrum of asset classes. Equity investments were diversified across United States and non-United States stocks, as well as differing styles and market capitalizations. Other asset classes, such as private equity and real estate, may have been used by the investment management firms with the goals of enhancing long-term returns and improving portfolio

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 10 RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Continued)

diversification. The target allocation of plan assets was 65 percent equity securities and 35 percent debt securities. Investment performance was measured and monitored on an ongoing basis through quarterly investment portfolio and manager guideline compliance reviews, annual liability measurements and periodic studies.

The fair values of our pension plan assets by asset category are as follows (in millions):

	Fair Value Measurements at December 31, 2013 Using

	Level 1		Level 2		Level 3		Total
Asset Class:
Master trust investment account(a)	$	—	$	69	$	—	$	69
Mutual funds:
Bond funds		5		—		—		5
Blend funds		3		—		—		3
Value		3		—		—		3
Growth funds		3		—		—		3
Guaranteed deposit account		—		—		9		9


Total pension plan assets(b)	$	14	$	69	$	9	$	92

	Fair Value Measurements at December 31, 2012 Using

	Level 1		Level 2		Level 3		Total
Asset Class:
Master trust investment account(a)	$	—	$	53	$	—	$	53
Mutual funds:
Bond funds		6		—		—		6
Blend funds		3		—		—		3
Value		3		—		—		3
Growth funds		2		—		—		2
Guaranteed deposit account		—		—		8		8


Total pension plan assets(b)	$	14	$	53	$	8	$	75

(a): Represents our investment in a master trust investment account established by Occidental. The trust investments include common stock, preferred stock, publicly registered mutual funds, U.S. government securities and corporate bonds.
(b): Amounts exclude net payables of approximately $1 million as of December 31, 2013 and 2012.

The activity during the years ended December 31, 2013 and 2012, for the assets using Level 3 fair value measurements was insignificant.

We do not expect to contribute to our defined benefit pension plans during 2014.

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CALIFORNIA RESOURCES CORPORATION

Notes to Combined Financial Statements (Continued)

NOTE 10 RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Continued)

Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows:

For the years ended December 31,	Pension Benefits		Postretirement Benefits

	(in millions)
2014	$	9	$	—
2015	$	7	$	—
2016	$	11	$	—
2017	$	9	$	1
2018	$	9	$	1
2019 - 2023	$	52	$	6

NOTE 11 RELATED-PARTY TRANSACTIONS

Related Party Transactions

During 2013, 2012 and 2011, we entered into the following related-party transactions:

	2013		2012		2011

	(in millions)
Sales	$	4,174	$	3,970	$	3,862
Allocated costs for services provided by affiliates	$	146	$	129	$	148
Purchases	$	164	$	119	$	133

Substantially all of our products are historically sold to Occidental's marketing subsidiaries at market prices and have been settled at the time of sale to those entities. For the years ended December 31, 2013, 2012 and 2011, sales to Occidental subsidiaries accounted for approximately 97%, 97% and 98% of our net sales, respectively.

As discussed in Note 1, the combined statements of income include expense allocations for certain corporate functions and centrally-located activities historically performed by Occidental. These functions include executive oversight, accounting, treasury, tax, financial reporting, internal audit, legal, risk management, information technology, government relations, public relations, investor relations, human resources, procurement, engineering, drilling, exploration, finance, marketing, ethics and compliance, and certain other shared services. Charges from Occidental for these services are reflected in selling, general and administrative expenses.

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SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)

The following tables set forth our net interests in quantities of proved developed and undeveloped reserves of oil (including condensate), natural gas liquids and natural gas and changes in such quantities. Reserves are stated net of applicable royalties. Estimated reserves include our economic interests under arrangements similar to production-sharing contracts (PSCs) relating to the Wilmington field in Long Beach. All of our proved reserves are located within the State of California.

Oil Reserves

	San Joaquin Basin

	(In millions of barrels (MMBbl))
PROVED DEVELOPED AND UNDEVELOPED RESERVES
Balance at December 31, 2010		340		110		39		—	489
Revisions of previous estimates		(58	)	—		—		—	(58	)
Improved recovery		51		12		3		—	66
Extensions and discoveries		7		—		1		—	8
Purchases of proved reserves		16		16		—		—	32
Sales of proved reserves		—		—		—		—	—
Production		(20	)	(7	)	(2	)	—	(29	)


Balance at December 31, 2011		336		131		41		—	508
Revisions of previous estimates		(44	)	1		(3	)	—	(46	)
Improved recovery		36		16		11		—	63
Extensions and discoveries		3		—		—		—	3
Purchases of proved reserves		1		—		—		—	1
Sales of proved reserves		—		—		—		—	—
Production		(21	)	(9	)	(2	)	—	(32	)


Balance at December 31, 2012		311		139		47		—	497
Revisions of previous estimates		(8	)	3		(3	)	—	(8	)
Improved recovery		49		24		3		—	76
Extensions and discoveries		—		—		—		—	—
Purchases of proved reserves		—		—		—		—	—
Sales of proved reserves		—		—		—		—	—
Production		(21	)	(10	)	(2	)	—	(33	)


Balance at December 31, 2013		331		156		45		—	532




PROVED DEVELOPED RESERVES
December 31, 2010		266		83		27		—	376




December 31, 2011		239		97		30		—	366




December 31, 2012		220		104		30		—	354




December 31, 2013(b)		225		109		29		—	363




PROVED UNDEVELOPED RESERVES
December 31, 2010		74		27		12		—	113




December 31, 2011		97		34		11		—	142




December 31, 2012		91		35		17		—	143




December 31, 2013		106		47		16		—	169

(a): Includes proved reserves related to economic arrangements similar to PSCs of 102 MMBbl, 98 MMBbl, 92 MMBbl and 89 MMBbl at December 31, 2013, 2012, 2011 and 2010, respectively.
(b): Approximately 11 percent of the proved developed reserves at December 31, 2013 are nonproducing.

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NGLs Reserves

	San Joaquin Basin

	(In MMBbl)
PROVED DEVELOPED AND UNDEVELOPED RESERVES
Balance at December 31, 2010		72		—	4		—	76
Revisions of previous estimates		(5	)	—	(1	)	—	(6	)
Improved recovery		3		—	—		—	3
Extensions and discoveries		1		—	—		—	1
Purchases of proved reserves		—		—	—		—	—
Sales of proved reserves		—		—	—		—	—
Production		(5	)	—	—		—	(5	)


Balance at December 31, 2011		66		—	3		—	69
Revisions of previous estimates		(14	)	—	—		—	(14	)
Improved recovery		12		—	1		—	13
Extensions and discoveries		—		—	—		—	—
Purchases of proved reserves		—		—	—		—	—
Sales of proved reserves		—		—	—		—	—
Production		(6	)	—	—		—	(6	)


Balance at December 31, 2012		58		—	4		—	62
Revisions of previous estimates		13		—	—		—	13
Improved recovery		4		—	—		—	4
Extensions and discoveries		—		—	—		—	—
Purchases of proved reserves		—		—	—		—	—
Sales of proved reserves		—		—	—		—	—
Production		(7	)	—	—		—	(7	)


Balance at December 31, 2013		68		—	4		—	72




PROVED DEVELOPED RESERVES
December 31, 2010		40		—	4		—	44




December 31, 2011		42		—	3		—	45




December 31, 2012		42		—	2		—	44




December 31, 2013(a)		47		—	2		—	49




PROVED UNDEVELOPED RESERVES
December 31, 2010		32		—	—		—	32




December 31, 2011		24		—	—		—	24




December 31, 2012		16		—	2		—	18




December 31, 2013		21		—	2		—	23

(a): Approximately 2 percent of the proved developed reserves at December 31, 2013 are nonproducing.

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Gas Reserves

	San Joaquin Basin

	(In billions of cubic feet (Bcf))
PROVED DEVELOPED AND UNDEVELOPED RESERVES
Balance at December 31, 2010		1,170		12		39		3		1,224
Revisions of previous estimates		(357	)	5		(1	)	4		(349	)
Improved recovery		39		—		1		6		46
Extensions and discoveries		35		—		—		—		35
Purchases of proved reserves		1		9		1		38		49
Sales of proved reserves		—		—		—				—
Production		(80	)	(1	)	(4	)	(10	)	(95	)


Balance at December 31, 2011		808		25		36		41		910
Revisions of previous estimates		(150	)	(6	)	(3	)	(9	)	(168	)
Improved recovery		100		1		9		1		111
Extensions and discoveries		6		—		—		6		12
Purchases of proved reserves		2		—		—		154		156
Sales of proved reserves		—		—		—				—
Production		(74	)	(1	)	(4	)	(14	)	(93	)


Balance at December 31, 2012		692		19		38		179		928
Revisions of previous estimates		(4	)	(4	)	(1	)	(38	)	(47	)
Improved recovery		47		3		2		—		52
Extensions and discoveries		—		—		—		—		—
Purchases of proved reserves		—		—		—		—		—
Sales of proved reserves		—		—		—		—		—
Production		(66	)	(1	)	(4	)	(24	)	(95	)


Balance at December 31, 2013		669		17		35		117		838




PROVED DEVELOPED RESERVES
December 31, 2010		584		9		31		3		627




December 31, 2011		548		19		31		41		639




December 31, 2012		473		14		28		147		662




December 31, 2013(a)		459		11		25		116		611




PROVED UNDEVELOPED RESERVES
December 31, 2010		586		3		8		—		597




December 31, 2011		260		6		5		—		271




December 31, 2012		219		5		10		32		266




December 31, 2013		210		6		10		1		227

(a): Approximately 8 percent of the proved developed reserves at December 31, 2013 are nonproducing.

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Table of Contents

Total Reserves

	San Joaquin Basin

	(In MMBoe(a))
PROVED DEVELOPED AND UNDEVELOPED RESERVES
Balance at December 31, 2010		606		112		52		—		770
Revisions of previous estimates		(122	)	1		(2	)	—		(123	)
Improved recovery		61		12		3		1		77
Extensions and discoveries		15		—		1		—		16
Purchases of proved reserves		16		17		—		6		39
Sales of proved reserves		—		—		—		—		—
Production		(39	)	(7	)	(2	)	(2	)	(50	)


Balance at December 31, 2011		537		135		52		5		729
Revisions of previous estimates		(83	)	—		(4	)	(1	)	(88	)
Improved recovery		65		16		13		—		94
Extensions and discoveries		5		—		1		1		7
Purchases of proved reserves		1		—		—		25		26
Sales of proved reserves		—		—		—		—		—
Production		(39	)	(9	)	(4	)	(2	)	(54	)


Balance at December 31, 2012		486		142		58		28		714
Revisions of previous estimates		4		2		(3	)	(6	)	(3	)
Improved recovery		61		25		3		—		89
Extensions and discoveries		—		—		—		—		—
Purchases of proved reserves		—		—		—		—		—
Sales of proved reserves		—		—		—		—		—
Production		(40	)	(10	)	(3	)	(3	)	(56	)


Balance at December 31, 2013		511		159		55		19		744




PROVED DEVELOPED RESERVES
December 31, 2010		402		84		39		—		525




December 31, 2011		372		100		40		5		517




December 31, 2012		341		106		38		23		508




December 31, 2013(c)		349		111		35		19		514




PROVED UNDEVELOPED RESERVES
December 31, 2010		204		28		13		—		245




December 31, 2011		165		35		12		—		212




December 31, 2012		145		36		20		5		206




December 31, 2013		162		48		20		—		230

(a): Natural gas volumes have been converted to Boe based on energy content of six Mcf of gas to one Bbl of oil. Barrels of oil equivalence does not necessarily result in price equivalence. The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in 2013, the average prices of West Texas Intermediate (WTI) oil and NYMEX natural gas were $97.97 per Bbl and $3.66 per Mcf, respectively, resulting in an oil to gas ratio of over 25 to 1.
(b): Includes proved reserves related to economic arrangements similar to PSCs of 102 MMBbl, 98 MMBbl, 92 MMBbl and 89 MMBbl at December 31, 2013, 2012, 2011 and 2010, respectively.
(c): Approximately 9 percent of the proved developed reserves at December 31, 2013 are nonproducing.

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Table of Contents

Capitalized Costs

Capitalized costs relating to oil and gas producing activities and related accumulated DD&A were as follows:

	San Joaquin Basin			Los Angeles Basin			Ventura Basin			Sacramento Basin			Total

	(In millions)
December 31, 2013
Proved properties	$	15,120		$	2,487		$	1,479		$	542		$	19,628
Unproved properties		584			105			91			92			872


Total capitalized costs(a)		15,704			2,592			1,570			634			20,500
Accumulated depreciation, depletion and amortization		(5,759	)		(571	)		(342	)		(128	)		(6,800	)


Net capitalized costs	$	9,945		$	2,021		$	1,228		$	506		$	13,700




December 31, 2012
Proved properties	$	14,359		$	1,974		$	1,327		$	286		$	17,946
Unproved properties		639			97			92			92			920


Total capitalized costs(a)		14,998			2,071			1,419			378			18,866
Accumulated depreciation, depletion and amortization		(4,894	)		(424	)		(272	)		(90	)		(5,680	)


Net capitalized costs	$	10,104		$	1,647		$	1,147		$	288		$	13,186




December 31, 2011
Proved properties	$	12,164		$	1,904		$	1,227		$	199		$	15,494
Unproved properties		641			52			12			69			774


Total capitalized costs(a)		12,805			1,956			1,239			268			16,268
Accumulated depreciation, depletion and amortization		(4,087	)		(405	)		(279	)		(39	)		(4,810	)


Net capitalized costs	$	8,718		$	1,551		$	960		$	229		$	11,458

(a): Includes acquisition costs, development costs and asset retirement obligations.

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Table of Contents

Costs Incurred

Costs incurred includes capital expenditures, exploration (whether expensed or capitalized), acquisitions, and asset retirement obligations, as follows:

	San Joaquin Basin		Los Angeles Basin		Ventura Basin		Sacramento Basin		Total

	(In millions)
FOR THE YEAR ENDED DECEMBER 31, 2013
Property acquisition costs
Proved properties	$	14	$	1	$	—	$	5	$	20
Unproved properties		23		9		1		—		33
Exploration costs		127		—		1		3		131
Development costs		1,078		371		110		15		1,574


Costs incurred	$	1,242	$	381	$	112	$	23	$	1,758




FOR THE YEAR ENDED DECEMBER 31, 2012
Property acquisition costs
Proved properties	$	83	$	8	$	—	$	274	$	365
Unproved properties		30		1		—		10		41
Exploration costs		153		4		1		1		159
Development costs		1,721		348		124		26		2,219


Costs incurred	$	1,987	$	361	$	125	$	311	$	2,784




FOR THE YEAR ENDED DECEMBER 31, 2011
Property acquisition costs
Proved properties	$	351	$	413	$	106	$	149	$	1,019
Unproved properties		438		—		6		68		512
Exploration costs		146		29		9		1		185
Development costs		1,703		207		54		40		2,004


Costs incurred	$	2,638	$	649	$	175	$	258	$	3,720

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Table of Contents

Results of Operations

Our oil and gas producing activities, which exclude items such as asset dispositions and corporate overhead, were as follows:

	San Joaquin Basin		Los Angeles Basin		Ventura Basin		Sacramento Basin			Total

	(In millions)
FOR THE YEAR ENDED DECEMBER 31, 2013
Revenues(a)	$	2,823	$	968	$	259	$	89		$	4,139
Production costs(b)		552		306		75		27			960
Other operating expenses		153		56		19		18			246
Depreciation, depletion and amortization		851		108		73		97			1,129
Taxes other than on income		109		43		9		10			171
Exploration expenses		94		1		13		8			116


Pretax income		1,064		454		70		(71	)		1,517
Income tax expense		423		181		28		(28	)		604


Results of operations	$	641	$	273	$	42	$	(43	)	$	913




FOR THE YEAR ENDED DECEMBER 31, 2012
Revenues(a)	$	2,738	$	921	$	262	$	46		$	3,967
Production costs(b)		790		331		81		17			1,219
Other operating expenses		138		52		18		10			218
Depreciation, depletion and amortization		724		79		61		44			908
Taxes other than on income		114		37		9		7			167
Asset impairments and related items		31		10		—		—			41
Exploration expenses		112		29		1		6			148


Pretax income		829		383		92		(38	)		1,266
Income tax expense		338		156		38		(15	)		517


Results of operations	$	491	$	227	$	54	$	(23	)	$	749




FOR THE YEAR ENDED DECEMBER 31, 2011
Revenues(a)	$	2,782	$	766	$	231	$	43		$	3,822
Production costs(b)		610		264		77		12			963
Other operating expenses		126		50		13		6			195
Depreciation, depletion and amortization		524		58		44		30			656
Taxes other than on income		101		29		8		5			143
Exploration expenses		113		—		—		1			114


Pretax income		1,308		365		89		(11	)		1,751
Income tax expense		534		149		36		(4	)		715


Results of operations	$	774	$	216	$	53	$	(7	)	$	1,036

(a): Revenues are net of royalty payments.
(b): Production costs are the costs incurred in lifting the oil and gas to the surface and include gathering, processing, field storage and insurance on proved properties, but do not include DD&A, royalties, income taxes and general and administrative expenses.

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Table of Contents

Results per Unit of Production

	San Joaquin Basin		Los Angeles Basin		Ventura Basin		Sacramento Basin			Total

FOR THE YEAR ENDED DECEMBER 31, 2013
Revenue from each barrel of oil equivalent ($/Boe)(a)(b)	$	71.86	$	101.17	$	79.28	$	22.09		$	73.72
Production costs		14.05		31.98		22.96		6.70			17.10
Other operating expenses		3.89		5.85		5.82		4.47			4.38
Depreciation, depletion and amortization		21.66		11.29		22.34		24.08			20.11
Taxes other than on income		2.77		4.49		2.75		2.48			3.05
Exploration expenses		2.39		0.10		3.98		1.99			2.07


Pretax income		27.10		47.46		21.43		(17.63	)		27.01
Income tax expense		10.77		18.92		8.57		(6.95	)		10.76


Results of operations	$	16.33	$	28.54	$	12.86	$	(10.68	)	$	16.25




FOR THE YEAR ENDED DECEMBER 31, 2012
Revenue from each barrel of oil equivalent ($/Boe)(a)(b)	$	69.30	$	102.45	$	81.85	$	20.09		$	73.48
Production costs		20.00		36.82		25.30		7.42			22.58
Other operating expenses		3.49		5.78		5.62		4.37			4.04
Depreciation, depletion and amortization		18.33		8.79		19.06		19.21			16.82
Taxes other than on income		2.89		4.12		2.81		3.06			3.09
Asset impairments and related items		0.78		1.11		—		—			0.76
Exploration expenses		2.83		3.23		0.31		2.62			2.74


Pretax income		20.98		42.60		28.75		(16.59	)		23.45
Income tax expense		8.56		17.35		11.87		(6.55	)		9.58


Results of operations	$	12.42	$	25.25	$	16.88	$	(10.04	)	$	13.87




FOR THE YEAR ENDED DECEMBER 31, 2011
Revenue from each barrel of oil equivalent ($/Boe)(a)(b)	$	72.09	$	103.99	$	82.38	$	25.67		$	75.78
Production costs		15.81		35.84		27.46		7.16			19.09
Other operating expenses		3.27		6.79		4.64		3.58			3.87
Depreciation, depletion and amortization		13.58		7.87		15.69		17.91			13.01
Taxes other than on income		2.62		3.94		2.85		2.99			2.84
Exploration expenses		2.93		—		—		0.60			2.26


Pretax income		33.88		49.55		31.74		(6.57	)		34.71
Income tax expense		13.84		20.23		12.84		(2.39	)		14.16


Results of operations	$	20.04	$	29.32	$	18.90	$	(4.18	)	$	20.55

(a): Natural gas volumes have been converted to Boe based on energy content of six Mcf of gas to one barrel of oil. Barrels of oil equivalence does not necessarily result in price equivalence. The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in 2013, the average prices of WTI oil and NYMEX natural gas were $97.97 per Bbl and $3.66 per Mcf, respectively, resulting in an oil to gas ratio of over 25 to 1.
(b): Revenues are net of royalty payments.

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Standardized Measure, Including Year-to-Year Changes Therein, of Discounted Future Net Cash Flows

For purposes of the following disclosures, future cash flows were computed by applying to our proved oil and gas reserves the unweighted arithmetic average of the first-day-of-the-month price for each month within the years ended December 31, 2013, 2012 and 2011, respectively. The realized prices used to calculate future cash flows vary by producing area and market conditions. Future operating and capital costs were forecast using the current cost environment applied to expectations of future operating and development activities. Future income tax expenses were computed by applying, generally, year-end statutory tax rates (adjusted for permanent differences, tax credits and allowances) to the estimated net future pre-tax cash flows. The discount was computed by application of a 10-percent discount factor. The calculations assumed the continuation of existing economic, operating and contractual conditions at December 31, 2013, 2012 and 2011. Such assumptions, which are prescribed by regulation, have not always proven accurate in the past. Other valid assumptions would give rise to substantially different results.

Standardized Measure of Discounted Future Net Cash Flows

	Total

	(In millions)
AT DECEMBER 31, 2013
Future cash inflows	$	60,884
Future costs
Production costs and other operating expenses		(29,523	)
Development costs(a)		(6,327	)
Future income tax expense		(8,213	)


Future net cash flows		16,821
Ten percent discount factor		(7,598	)


Standardized measure of discounted future net cash flows	$	9,223




AT DECEMBER 31, 2012
Future cash inflows	$	57,468
Future costs
Production costs and other operating expenses		(26,968	)
Development costs(a)		(5,961	)
Future income tax expense		(8,059	)


Future net cash flows		16,480
Ten percent discount factor		(7,407	)


Standardized measure of discounted future net cash flows	$	9,073




AT DECEMBER 31, 2011
Future cash inflows	$	60,872
Future costs
Production costs and other operating expenses		(26,642	)
Development costs(a)		(5,015	)
Future income tax expense		(9,925	)


Future net cash flows		19,290
Ten percent discount factor		(8,943	)


Standardized measure of discounted future net cash flows	$	10,347

(a): Includes asset retirement costs.

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Table of Contents

Changes in the Standardized Measure of Discounted Future Net Cash Flows From Proved Reserve Quantities

	For the years ended December 31,

	2013			2012			2011
	(In millions)
Beginning of year	$	9,073		$	10,347		$	7,051


Sales and transfers of oil and gas produced, net of production costs and other operating expenses		(3,082	)		(2,695	)		(2,840	)
Net change in prices received per Bbl, net of production costs and other operating expenses		575			(1,431	)		4,837
Extensions, discoveries and improved recovery, net of future production and development costs		1,914			1,897			2,662
Change in estimated future development costs		(688	)		(1,526	)		(1,015	)
Revisions of quantity estimates		(62	)		(1,405	)		(1,839	)
Previously estimated development costs incurred during the period		1,185			1,039			869
Accretion of discount		1,292			1,512			1,048
Net change in income taxes		(95	)		984			(1,960	)
Purchases and sales of reserves in place, net		4			221			1,065
Changes in production rates and other		(893	)		130			469


Net change		150			(1,274	)		3,296


End of year	$	9,223		$	9,073		$	10,347

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Table of Contents

Oil, NGLs and Natural Gas Production Per Day

The following table set forth the production volumes of oil, NGLs and natural gas per day for each of the three years in the period ended December 31, 2013.



Oil (MBbl/d)
San Joaquin Basin(b)	58	58	56
Los Angeles Basin(c)	26	24	19
Ventura Basin	6	6	5
Sacramento Basin	—	—	—


Total	90	88	80


NGLs (MBbl/d)
San Joaquin Basin(b)	19	16	14
Los Angeles Basin	—	—	—
Ventura Basin	1	1	1
Sacramento Basin	—	—	—


Total	20	17	15


Natural gas (MMcf/d)
San Joaquin Basin(b)	182	204	220
Los Angeles Basin(c)	2	3	1
Ventura Basin	11	12	12
Sacramento Basin	65	37	27


Total	260	256	260


Total Production (MBoe/d)(a)	154	148	138

(a): Natural gas volumes have been converted to Boe based on energy content of six Mcf of gas to one barrel of oil. Barrels of oil equivalence does not necessarily result in price equivalence The price of natural gas on a barrel of oil equivalent basis is currently substantially lower than the corresponding price for oil and has been similarly lower for a number of years. For example, in 2013, the average prices of WTI oil and NYMEX natural gas were $97.97 per Bbl and $3.66 per Mcf, respectively, resulting in an oil to gas ratio of over 25 to 1.
(b): Includes daily production from Elk Hills field of 26 MBbl oil, 18 MBbl NGLs and 145 MMcf gas in 2013; 29 MBbl oil, 15 MBbl NGLs and 168 MMcf gas in 2012; and 30 MBbl oil, 14 MBbl NGLs and 174 MMcf gas in 2011.
(c): Includes daily production from Wilmington field of 22 MBbl Oil in 2013; 21 MBbl Oil in 2012 and 19 MBbl Oil 2011.

F-45

Exhibit 99.4

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