NOTE 12 CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Our Credit Facilities and Senior Notes (Note 5 - Debt) are guaranteed both fully and unconditionally and jointly and severally by our material wholly owned subsidiaries (Guarantor Subsidiaries). Certain of our subsidiaries do not guarantee our Credit Facilities and Senior Notes (Non-Guarantor Subsidiaries). The following condensed consolidating balance sheets at June 30, 2017 and December 31, 2016, condensed consolidating statements of operations for the three and six months ended June 30, 2017 and 2016 and condensed consolidating statements of cash flows for the six months ended June 30, 2017 and 2016 reflect the condensed consolidating financial information of our parent company, CRC (Parent), our combined Guarantor Subsidiaries, our combined Non-Guarantor Subsidiaries and the consolidation and elimination entries necessary to arrive at the information for CRC on a consolidated basis.

The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Guarantor Subsidiaries operated as independent entities.

Condensed Consolidating Balance Sheet

As of June 30, 2017

	Parent			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated

	(in millions, except share data)
CURRENT ASSETS
Cash and cash equivalents	$	1		$	6		$	2		$	—		$	9
Trade receivables	—			193			—			—			193
Inventories	—			57			—			—			57
Other current assets, net	8			119			2			(1		)	128

Total current assets	9			375			4			(1		)	387


PROPERTY, PLANT AND EQUIPMENT	34			20,947			64			—			21,045
Accumulated depreciation, depletion and amortization	(10		)	(15,280		)	(17		)	—			(15,307		)

Total property, plant and equipment	24			5,667			47			—			5,738


INVESTMENTS IN CONSOLIDATED ENTITIES	5,977			562			—			(6,539		)	—

OTHER ASSETS	—			27			2			—			29

TOTAL ASSETS	$	6,010		$	6,631		$	53		$	(6,540	)	$	6,154


CURRENT LIABILITIES
Current maturities of long-term debt	$	100		$	—		$	—		$	—		$	100
Accounts payable	(2		)	245			—			—			243
Accrued liabilities	77			188			—			(1		)	264

Total current liabilities	175			433			—			(1		)	607


LONG-TERM DEBT - PRINCIPAL AMOUNT	5,069			—			—			—			5,069

DEFERRED GAIN AND ISSUANCE COSTS, NET	369			—			—			—			369

OTHER LONG-TERM LIABILITIES	137			462			1			—			600

AMOUNTS DUE TO (FROM) AFFILIATES	799			(799		)	—			—			—

EQUITY
Preferred stock	—			—			—			—			—
Common stock	—			—			—			—			—
Additional paid-in capital	4,871			14,432			51			(14,483		)	4,871
Accumulated deficit	(5,399		)	(7,855		)	(47		)	7,902			(5,399		)
Accumulated other comprehensive loss	(11		)	(42		)	—			42			(11		)

Total equity attributable to common stock	(539		)	6,535			4			(6,539		)	(539		)
Noncontrolling interest	—			—			48			—			48

Total equity	(539		)	6,535			52			(6,539		)	(491		)


TOTAL LIABILITIES AND EQUITY	$	6,010		$	6,631		$	53		$	(6,540	)	$	6,154

Condensed Consolidating Balance Sheet

As of December 31, 2016

	Parent			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated

	(in millions, except share data)
CURRENT ASSETS
Cash and cash equivalents	$	—		$	12		$	—		$	—		$	12
Trade receivables	—			232			—			—			232
Inventories	—			58			—			—			58
Other current assets, net	7			116			—			—			123

Total current assets	7			418			—			—			425


PROPERTY, PLANT AND EQUIPMENT	33			20,865			17			—			20,915
Accumulated depreciation, depletion and amortization	(8		)	(15,009		)	(13		)	—			(15,030		)

Total property, plant and equipment	25			5,856			4			—			5,885


INVESTMENTS IN CONSOLIDATED ENTITIES	5,713			537			—			(6,250		)	—

OTHER ASSETS	—			44			—			—			44


TOTAL ASSETS	$	5,745		$	6,855		$	4		$	(6,250	)	$	6,354


CURRENT LIABILITIES
Current maturities of long-term debt	$	100		$	—		$	—		$	—		$	100
Accounts payable	(1		)	220			—			—			219
Accrued liabilities	122			285			—			—			407

Total current liabilities	221			505			—			—			726


LONG-TERM DEBT - PRINCIPAL AMOUNT	5,168			—			—			—			5,168

DEFERRED GAIN AND ISSUANCE COSTS, NET	397			—			—			—			397

OTHER LONG-TERM LIABILITIES	132			487			1			—			620

AMOUNTS DUE TO (FROM) AFFILIATES	384			(384		)	—			—			—

EQUITY
Preferred stock	—			—			—			—			—
Common stock	—			—			—			—			—
Additional paid-in capital	4,861			14,432			51			(14,483		)	4,861
Accumulated deficit	(5,404		)	(8,139		)	(48		)	8,187			(5,404		)
Accumulated other comprehensive loss	(14		)	(46		)	—			46			(14		)

Total equity attributable to common stock	(557		)	6,247			3			(6,250		)	(557		)
Noncontrolling interest	—			—			—			—			—

Total equity	(557		)	6,247			3			(6,250		)	(557		)


TOTAL LIABILITIES AND EQUITY	$	5,745		$	6,855		$	4		$	(6,250	)	$	6,354

Condensed Consolidating Statement of Operations

For the three months ended June 30, 2017

	Parent			Combined Guarantor Subsidiaries		Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated

	(in millions)
REVENUES
Oil and gas net sales	—			439		—			—			439
Net derivative gains	—			43		—			—			43
Other revenue	18			33		4			(21		)	34

Total revenues and other	$	18		$	515	$	4		$	(21	)	$	516


COSTS AND OTHER
Production costs	—			216		—			—			216
General and administrative expenses	51			10		—			—			61
Depreciation, depletion and amortization	2			133		3			—			138
Taxes other than on income	—			31		—			—			31
Exploration expense	—			6		—			—			6
Other expenses (income), net	2			44		—			(21		)	25

Total costs and other	55			440		3			(21		)	477


OPERATING (LOSS) INCOME	(37		)	75		1			—			39

NON-OPERATING INCOME (LOSS)
Interest and debt expense, net	(84		)	1		—			—			(83		)
Net gains on early extinguishment of debt	—			—		—			—			—
Gains on asset divestitures	—			—		—			—			—
Other non-operating expense	(3		)	—		—			—			(3		)

(LOSS) INCOME BEFORE INCOME TAXES	(124		)	76		1			—			(47		)
Income tax benefit	—			—		—			—			—

NET (LOSS) INCOME	(124		)	76		1			—			(47		)
Net income attributable to noncontrolling interest	—			—		(1		)	—			(1		)

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK	$	(124	)	$	76	$	—		$	—		$	(48	)

Condensed Consolidating Statement of Operations

For the three months ended June 30, 2016

	Parent			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries		Eliminations		Consolidated

	(in millions)
REVENUES
Oil and gas net sales	—			403			1		—		404
Net derivative losses	—			(118		)	—		—		(118		)
Other revenue	—			31			—		—		31

Total revenues and other	$	—		$	316		$	1	$	—	$	317


COSTS AND OTHER
Production costs	—			187			1		—		188
General and administrative expenses	49			12			—		—		61
Depreciation, depletion and amortization	1			137			—		—		138
Taxes other than on income	—			42			—		—		42
Exploration expense	—			5			—		—		5
Other expenses, net	—			24			—		—		24

Total costs and other	50			407			1		—		458


OPERATING LOSS	(50		)	(91		)	—		—		(141		)

NON-OPERATING INCOME (LOSS)
Interest and debt expense, net	(75		)	1			—		—		(74		)
Net gains on early extinguishment of debt	44			—			—		—		44
Gains on asset divestitures	—			31			—		—		31
Other non-operating income (expense)	—			—			—		—		—

LOSS BEFORE INCOME TAXES	(81		)	(59		)	—		—		(140		)
Income tax benefit	—			—			—		—		—

NET LOSS	(81		)	(59		)	—		—		(140		)
Net (income) loss attributable to noncontrolling interest	—			—			—		—		—

NET LOSS ATTRIBUTABLE TO COMMON STOCK	$	(81	)	$	(59	)	$	—	$	—	$	(140	)

Condensed Consolidating Statement of Operations

For the six months ended June 30, 2017

	Parent			Combined Guarantor Subsidiaries		Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
REVENUES
Oil and gas net sales	—			925		1			—			926
Net derivative gains (losses)	—			117		(1		)	—			116
Other revenue	17			63		5			(21		)	64

Total revenues and other	$	17		$	1,105	$	5		$	(21	)	$	1,106


COSTS AND OTHER
Production costs	—			426		1			—			427
General and administrative expenses	104			24		—			—			128
Depreciation, depletion and amortization	3			272		3			—			278
Taxes other than on income	—			64		—			—			64
Exploration expense	—			12		—			—			12
Other expenses (income), net	2			65		1			(21		)	47

Total costs and other	109			863		5			(21		)	956


OPERATING (LOSS) INCOME	(92		)	242		—			—			150

NON-OPERATING INCOME (LOSS)
Interest and debt expense, net	(168		)	1		—			—			(167		)
Net gains on early extinguishment of debt	4			—		—			—			4
Gains on asset divestitures	—			21		—			—			21
Other non-operating expense	(3		)	—		—			—			(3		)

(LOSS) INCOME BEFORE INCOME TAXES	(259		)	264		—			—			5
Income tax benefit	—			—		—			—			—

NET (LOSS) INCOME	(259		)	264		—			—			5
Net (income) loss attributable to noncontrolling interest	—			—		—			—			—

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCK	$	(259	)	$	264	$	—		$	—		$	5

Condensed Consolidating Statement of Operations

For the six months ended June 30, 2016

	Parent			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries		Eliminations		Consolidated
	(in millions)
REVENUES
Oil and gas net sales	—			732			1		—		733
Net derivative losses	—			(143		)	—		—		(143		)
Other revenue	—			49			—		—		49

Total revenues and other	$	—		$	638		$	1	$	—	$	639


COSTS AND OTHER
Production costs	—			371			1		—		372
General and administrative expenses	102			26			—		—		128
Depreciation, depletion and amortization	3			282			—		—		285
Taxes other than on income	—			81			—		—		81
Exploration expense	—			10			—		—		10
Other expenses, net	—			47			—		—		47

Total costs and other	105			817			1		—		923


OPERATING LOSS	(105		)	(179		)	—		—		(284		)

NON-OPERATING INCOME (LOSS)
Interest and debt expense, net	(150		)	2			—		—		(148		)
Net gains on early extinguishment of debt	133			—			—		—		133
Gains on asset divestitures	—			31			—		—		31
Other non-operating income	—			—			—		—		—

LOSS BEFORE INCOME TAXES	(122		)	(146		)	—		—		(268		)
Income tax benefit	78			—			—		—		78

NET LOSS	(44		)	(146		)	—		—		(190		)
Net (income) loss attributable to noncontrolling interest	—			—			—		—		—

NET LOSS ATTRIBUTABLE TO COMMON STOCK	$	(44	)	$	(146	)	$	—	$	—	$	(190	)

Condensed Consolidating Statement of Cash Flows

For the six months ended June 30, 2017

	Parent			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries			Eliminations		Consolidated
	(in millions)
CASH FLOW FROM OPERATING ACTIVITIES
Net (loss) income	$	(259	)	$	264		$	—		$	—	$	5
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, depletion and amortization	3			272			3			—		278
Net derivative (gains) losses	—			(117		)	1			—		(116		)
Net proceeds on settled derivatives	—			7			—			—		7
Net gains on early extinguishment of debt	(4		)	—			—			—		(4		)
Deferred gain and issuance costs amortization	(26		)	—			—			—		(26		)
Gains on asset divestitures	—			(21		)	—			—		(21		)
Other non-cash losses in income, net	10			7			—			—		17
Dry hole expenses	—			1			—			—		1
Changes in operating assets and liabilities, net	(43		)	24			(2		)	—		(21		)

Net cash (used) provided by operating activities	(319		)	437			2			—		120


CASH FLOW FROM INVESTING ACTIVITIES
Capital investments	(1		)	(131		)	—			—		(132		)
Changes in capital investment accruals	—			26			—			—		26
Asset divestitures	—			33			—			—		33
Acquisitions and other	—			46			(47		)	—		(1		)

Net cash used by investing activities	(1		)	(26		)	(47		)	—		(74		)


CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility	728			—			—			—		728
Repayments of revolving credit facility	(733		)	—			—			—		(733		)
Payments on first-lien first-out term loan	(66		)	—			—			—		(66		)
Debt repurchases	(24		)	—			—			—		(24		)
Debt transaction costs	(2		)	—			—			—		(2		)
Contribution from noncontrolling interest, net	—			—			49			—		49
Dividends paid to noncontrolling interest	—			—			(1		)	—		(1		)
Intercompany	418			(417		)	(1		)	—		—

Net cash provided (used) by financing activities	321			(417		)	47			—		(49		)

Increase (decrease) in cash and cash equivalents	1			(6		)	2			—		(3		)
Cash and cash equivalents—beginning of period	—			12			—			—		12

Cash and cash equivalents—end of period	$	1		$	6		$	2		$	—	$	9

Condensed Consolidating Statement of Cash Flows

For the six months ended June 30, 2016

	Parent			Combined Guarantor Subsidiaries			Combined Non- Guarantor Subsidiaries		Eliminations		Consolidated
	(in millions)
CASH FLOW FROM OPERATING ACTIVITIES
Net (loss) income	$	(44	)	$	(146	)	$	—	$	—	$	(190	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, depletion and amortization	3			282			—		—		285
Deferred income tax benefit	(78		)	—			—		—		(78		)
Net derivative losses	—			143			—		—		143
Net proceeds on settled derivatives	—			75			—		—		75
Net gains on early extinguishment of debt	(133		)	—			—		—		(133		)
Deferred gain and issuance costs amortization	(29		)	—			—		—		(29		)
Gains on asset divestitures	—			(31		)	—		—		(31		)
Other non-cash losses in income, net	23			20			—		—		43

Changes in operating assets and liabilities, net	(50		)	9			—		—		(41		)

Net cash (used) provided by operating activities	(308		)	352			—		—		44


CASH FLOW FROM INVESTING ACTIVITIES
Capital investments	(1		)	(25		)	—		—		(26		)
Changes in capital investment accruals	—			(11		)	—		—		(11		)
Asset divestitures	—			19			—		—		19
Acquisitions and other	—			—			—		—		—

Net cash used by investing activities	(1		)	(17		)	—		—		(18		)


CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from revolving credit facility	743			—			—		—		743
Repayments of revolving credit facility	(701		)	—			—		—		(701		)
Payments on first-lien first-out term loan	(61		)	—			—		—		(61		)
Debt repurchases	(13		)	—			—		—		(13		)
Debt transaction costs	(7		)	—			—		—		(7		)
Intercompany	347			(347		)	—		—		—
Employee stock purchases and other	3			—			—		—		3

Net cash provided (used) by financing activities	311			(347		)	—		—		(36		)

Increase (decrease) in cash and cash equivalents	2			(12		)	—		—		(10		)
Cash and cash equivalents—beginning of period	—			12			—		—		12

Cash and cash equivalents—end of period	$	2		$	—		$	—	$	—	$	2