California Resources : 2021 Proxy Statement

PROXY REPORT

AND NOTICE OF ANNUAL MEETING

2021

Letter to Shareholders from the Chairman of the Board

Dear Shareholders,

CRC faced many challenges in 2020 including a voluntary Chapter 11 bankruptcy restructuring process that was required to address an unsustainable debt burden given the prevailing commodity markets at the time. CRC emerged from the bankruptcy process with a right-sized balance sheet and a new Board of Directors committed to charting a new course for the Company.

Today, we are engaged in a full-scale business review to serve as the foundation for a strategic repositioning effort. Based on this work, CRC has already realigned its senior management team and broader organization to fit our vision of a leaner and more efficient organization. CRC's 2021 plan will focus on further development and enhancements of our core areas while rationalizing our asset base. As a result, CRC will be better able to drive down costs and improve efficiencies while maintaining our safety and environmental stewardship standards. We have increased our hedging levels to lock in cash flows and are focused on capital discipline to increase free cash flow generation. The following strategic targets will help CRC maintain financial strength while driving returns to our shareholders through the delivery of robust and resilient free cash flow:

• Target FCF Yield of ~10% or greater on a sustained basis while maintaining stable oil production
• Invest in growth opportunities at appropriate return thresholds and commodity prices
• Maintain a strong liquidity position
• Maintain leverage of less than 1.5x net debt/adjusted EBITDAX

Our new board members collectively bring operational turnaround experience, financial and capital markets expertise as well as over 100 years of E&P leadership and knowledge and will provide valuable leadership to our repositioning effort.

Each member of the Board is up for re-election this year and we would encourage you to vote at or prior to our Annual Meeting on May 12, 2021.

Thank you for your support.

Mark A. (Mac) McFarland

Chairman, President and Chief Executive Officer

California Resources Corporation

PLEASE NOTE: This letter and the Proxy Statement contain forward-looking statements that involve risks and uncertainties that could materially affect our expected results of operations, liquidity, cash flows and business prospects. For a discussion of these risks and uncertainties, please refer to the "Risk Factors" and "Forward-Looking Statements" described in our Annual Report on Form 10-K. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "goal," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "target," "will" or "would" and similar words that reflect the prospective nature of events or outcomes typically identify forward-looking statements. Such statements are based on management's expectations as of the date of this filing, unless an earlier date is specified, and involve many risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Readers are urged to carefully review and consider the various disclosures made in our Form 10-K and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business. Any forward-looking statement speaks only as of the date on which such statement is made and we undertake no obligation and expressly disclaim any duty to correct or update any forward-looking statement, except as required by applicable law.

We have included in this letter and the Proxy Statement certain voluntary disclosures regarding our Sustainability Goals, Sustainability Reports and related matters because we believe these matters are of interest to our investors; however, we do not believe these disclosures are "material" as that concept is defined by or construed in accordance with the securities laws or any other laws of the U.S. or any other jurisdiction, or as that concept is used in the context of financial statements and financial reporting. These disclosures speak only as of the date on which they are made, and we undertake no obligation and expressly disclaim any duty to correct or update such disclosures, whether as a result of new information, future events or otherwise, except as required by applicable law.

27200 Tourney Road, Suite 200 | Santa Clarita | California 91355

Notice of the 2021 Annual Meeting of Stockholders

Meeting Date:	May 12, 2021
Meeting Time:	11:00 a.m., Pacific Time
Location:	Virtual meeting at https://www.virtualshareholdermeeting.com/CRC2021
Record Date:	March 15, 2021

Purposes of the 2021 annual meeting of stockholders:

1. To elect the seven director nominees named in this proxy statement, each to a one-year term;
2. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021;
3. To hold an advisory vote to approve named executive officer compensation; and
4. To hold an advisory vote on the frequency of future stockholder advisory votes to approve named executive officer compensation.

Information relevant to these matters is set forth in the accompanying proxy statement.

The close of business on March 15, 2021 was fixed as the record date for the determination of stockholders entitled to receive notice of and to vote at the annual meeting or any adjournment or postponement thereof. Only our stockholders of record or their legal proxy holders as of the record date or our invited guests may attend the annual meeting in person.

Due to the public health impact of the COVID-19 pandemic and to support the health and well-being of our employees and shareholders, the annual meeting will be held in a virtual meeting format only at https://www.virtualshareholdermeeting.com/CRC2021. You will not be able to attend the annual meeting physically. If you wish to attend the annual meeting, you must follow the instructions under "Attending the Annual Meeting" on page 65 of the proxy statement. We have also provided information regarding how stockholders can engage during the Annual Meeting, including how they can vote, ask questions, request technical support and access information following the Annual Meeting within this proxy statement.

Beginning on March 30, 2021, we mailed a Notice of Internet Availability of Proxy Materials to our stockholders containing instructions on how to access the proxy statement and vote online and made our proxy materials available to our stockholders over the Internet.

By Order of the Board of Directors,

Michael L. Preston

Senior Executive Vice President, Chief Administrative Officer and General Counsel Corporate Secretary